UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: September 30, ~~2020~~2021


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from: __________ to ___________

Commission file number: 001-36441

Investors Bancorp , Inc.

(Exact name of registrant as specified in its charter)

Delaware

46-4702118

(State or other jurisdiction of
incorporation or organization)

(I.R.S. Employer
Identification Number)

101 JFK Parkway,

Short Hills,

New Jersey

07078

(Address of Principal Executive Offices)

Zip Code

(973) 924-5100

(Registrant’s telephone number)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common

ISBC

The NASDAQ Stock Market

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding twelve months (or for such shorter period that the Registrant was required to file such reports) and (2) has been subject to such requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer

☑

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

As of October ~~30, 2020,~~29, 2021, the registrant had 361,869,872 shares of common stock, par value $0.01 per share, issued and ~~249,918,163~~247,746,235 outstanding.

Table of Contents

INVESTORS BANCORP, INC.

FORM 10-Q

Index


Part I. Financial Information
		Page
Item 1.	Financial Statements
	Consolidated Balance Sheets as of September 30, ~~2020~~2021 and December 31, ~~201~~92020 (unaudited)	1
	Consolidated Statements of Income for the Three and Nine Months Ended September 30, ~~2020~~2021 and ~~2019~~2020 (unaudited)	12
	Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended September 30, ~~2020~~2021 and ~~2019~~2020 (unaudited)	23
	Consolidated Statements of Stockholders’ Equity for the Nine Months Ended ~~September~~S e p tember 30, ~~2020~~2021 and ~~2019~~2020 (unaudited)	34
	Consolidated Statements of Cash Flows for the ~~Nine~~N ine Months Ended September 30, ~~2020~~2021 and ~~2019~~2020 (unaudited)	45
	Notes to Consolidated Financial Statements	67
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	49
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	6466
Item 4.	Controls and Procedures	6668
Part II. Other Information
Item 1.	Legal Proceedings	6769
Item 1A.	Risk Factors	6769
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	7071
Item 3.	Defaults Upon Senior Securities	7071
Item 4.	Mine Safety Disclosures	7071
Item 5.	Other Information	7071
Item 6.	Exhibits	7172
	Signature Page	7273

Table of Contents

Part I Financial Information


ITEM 1.			FINANCIAL STATEMENTS

INVESTORS BANCORP, INC. AND SUBSIDIARY

Consolidated Balance Sheets

(Unaudited)


		September 30, 2020		December 31, 2019		September 30, 2021		December 31, 2020
		(In thousands)				(In thousands)
ASSETS	ASSETS				ASSETS
Cash and cash equivalents	Cash and cash equivalents	$	557,749	174,915	Cash and cash equivalents	$	670,295	170,432
Equity securities	Equity securities	8,703		6,039	Equity securities	7,673		36,000
Debt securities available-for-sale, at estimated fair value	Debt securities available-for-sale, at estimated fair value	2,828,959		2,695,390	Debt securities available-for-sale, at estimated fair value	2,531,573		2,758,437
Debt securities held-to-maturity, net (estimated fair value of $1,304,693 and $1,190,104 at September 30, 2020 and December 31, 2019, respectively)		1,236,610		1,148,815
Debt securities held-to-maturity, net (estimated fair value of $1,336,957 and $1,320,872 at September 30, 2021 and December 31, 2020, respectively)					Debt securities held-to-maturity, net (estimated fair value of $1,336,957 and $1,320,872 at September 30, 2021 and December 31, 2020, respectively)	1,272,683		1,247,853
Loans receivable, net	Loans receivable, net	20,698,057		21,476,056	Loans receivable, net	21,624,728		20,580,451
Loans held-for-sale	Loans held-for-sale	19,984		29,797	Loans held-for-sale	397		30,357
Federal Home Loan Bank stock	Federal Home Loan Bank stock	214,255		267,219	Federal Home Loan Bank stock	177,058		159,829
Accrued interest receivable	Accrued interest receivable	84,317		79,313	Accrued interest receivable	81,549		79,705
Other real estate owned and other repossessed assets	Other real estate owned and other repossessed assets	8,884		13,538	Other real estate owned and other repossessed assets	5,849		7,115
Office properties and equipment, net	Office properties and equipment, net	164,220		169,614	Office properties and equipment, net	132,259		139,663
Operating lease right-of-use assets	Operating lease right-of-use assets	171,781		175,143	Operating lease right-of-use assets	203,522		199,981
Net deferred tax asset	Net deferred tax asset	116,347		64,220	Net deferred tax asset	109,588		116,805
Bank owned life insurance	Bank owned life insurance	223,576		218,517	Bank owned life insurance	227,822		223,714
Goodwill and intangible assets	Goodwill and intangible assets	110,068		97,869	Goodwill and intangible assets	133,237		109,633
Other assets	Other assets	163,467		82,321	Other assets	139,561		163,184
Total assets	Total assets	$	26,606,977	26,698,766	Total assets	$	27,317,794	26,023,159
LIABILITIES AND STOCKHOLDERS’ EQUITY	LIABILITIES AND STOCKHOLDERS’ EQUITY				LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities:	Liabilities:				Liabilities:
Deposits	Deposits	$	19,103,535	17,860,338	Deposits	$	20,400,424	19,525,419
Borrowed funds	Borrowed funds	4,307,523		5,827,111	Borrowed funds	3,534,536		3,295,790
Advance payments by borrowers for taxes and insurance	Advance payments by borrowers for taxes and insurance	144,212		121,719	Advance payments by borrowers for taxes and insurance	152,407		115,729
Operating lease liabilities	Operating lease liabilities	184,281		185,827	Operating lease liabilities	216,374		212,559
Other liabilities	Other liabilities	197,669		81,821	Other liabilities	161,494		163,659
Total liabilities	Total liabilities	23,937,220		24,076,816	Total liabilities	24,465,235		23,313,156
Commitments and contingencies	Commitments and contingencies				Commitments and contingencies	0		0
Stockholders’ equity:	Stockholders’ equity:				Stockholders’ equity:
Preferred stock, $0.01 par value, 100,000,000 authorized shares; NaN issued		0		0
Common stock, $0.01 par value, 1,000,000,000 shares authorized; 361,869,872 and 359,070,852 issued at September 30, 2020 and December 31, 2019, respectively; 249,919,417 and 247,439,902 outstanding at September 30, 2020 and December 31, 2019, respectively		3,619		3,591
Preferred stock, $0.01 par value, 100,000,000 authorized shares; none issued					Preferred stock, $0.01 par value, 100,000,000 authorized shares; none issued	—		—
Common stock, $0.01 par value, 1,000,000,000 shares authorized; 361,869,872 issued at September 30, 2021 and December 31, 2020; 247,684,887 and 247,929,216 outstanding at September 30, 2021 and December 31, 2020, respectively					Common stock, $0.01 par value, 1,000,000,000 shares authorized; 361,869,872 issued at September 30, 2021 and December 31, 2020; 247,684,887 and 247,929,216 outstanding at September 30, 2021 and December 31, 2020, respectively	3,619		3,619
Additional paid-in capital	Additional paid-in capital	2,854,844		2,822,364	Additional paid-in capital	2,867,057		2,856,935
Retained earnings	Retained earnings	1,293,840		1,245,793	Retained earnings	1,454,309		1,339,003
Treasury stock, at cost; 111,950,455 and 111,630,950 shares at September 30, 2020 and December 31, 2019, respectively		(1,355,459)		(1,352,910)
Treasury stock, at cost; 114,184,985 and 113,940,656 shares at September 30, 2021 and December 31, 2020, respectively					Treasury stock, at cost; 114,184,985 and 113,940,656 shares at September 30, 2021 and December 31, 2020, respectively	(1,379,014)		(1,375,996)
Unallocated common stock held by the employee stock ownership plan	Unallocated common stock held by the employee stock ownership plan	(76,019)		(78,266)	Unallocated common stock held by the employee stock ownership plan	(71,144)		(73,542)
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(51,068)		(18,622)	Accumulated other comprehensive loss	(22,268)		(40,016)
Total stockholders’ equity	Total stockholders’ equity	2,669,757		2,621,950	Total stockholders’ equity	2,852,559		2,710,003
Total liabilities and stockholders’ equity	Total liabilities and stockholders’ equity	$	26,606,977	26,698,766	Total liabilities and stockholders’ equity	$	27,317,794	26,023,159

See accompanying notes to consolidated financial statements.

Table of Contents

INVESTORS BANCORP, INC. AND SUBSIDIARY

Consolidated Statements of Income

(Unaudited)


		Three Months Ended September 30,			Nine Months Ended September 30,			Three Months Ended September 30,			Nine Months Ended September 30,
		2020		2019	2020	2019		2021		2020	2021	2020
		(Dollars in thousands, except per share data)						(Dollars in thousands, except per share data)
Interest and dividend income:	Interest and dividend income:						Interest and dividend income:
Loans receivable and loans held-for-sale	Loans receivable and loans held-for-sale	$	215,221	231,734	657,483	684,086	Loans receivable and loans held-for-sale	$	211,189	215,221	621,462	657,483
Securities:	Securities:						Securities:
Equity	Equity	45		36	110	108	Equity	65		45	394	110
Government-sponsored enterprise obligations	Government-sponsored enterprise obligations	378		343	994	876	Government-sponsored enterprise obligations	567		378	1,666	994
Mortgage-backed securities	Mortgage-backed securities	18,095		23,978	61,251	71,491	Mortgage-backed securities	13,321		18,095	42,738	61,251
Municipal bonds and other debt	Municipal bonds and other debt	3,277		3,186	9,928	8,442	Municipal bonds and other debt	3,601		3,277	10,596	9,928

Interest-bearing deposits	Interest-bearing deposits	233		821	1,367	1,965	Interest-bearing deposits	268		233	367	1,367
Federal Home Loan Bank stock	Federal Home Loan Bank stock	3,452		4,456	11,881	12,871	Federal Home Loan Bank stock	2,234		3,452	6,417	11,881
Total interest and dividend income	Total interest and dividend income	240,701		264,554	743,014	779,839	Total interest and dividend income	231,245		240,701	683,640	743,014
Interest expense:	Interest expense:						Interest expense:
Deposits	Deposits	34,109		67,972	126,279	201,222	Deposits	15,683		34,109	52,868	126,279
Borrowed funds	Borrowed funds	24,970		32,130	79,843	92,319	Borrowed funds	20,960		24,970	60,725	79,843
Total interest expense	Total interest expense	59,079		100,102	206,122	293,541	Total interest expense	36,643		59,079	113,593	206,122
Net interest income	Net interest income	181,622		164,452	536,892	486,298	Net interest income	194,602		181,622	570,047	536,892
Provision for credit losses	Provision for credit losses	8,336		(2,500)	72,840	(2,500)	Provision for credit losses	(13,015)		8,336	(25,677)	72,840
Net interest income after provision for credit losses	Net interest income after provision for credit losses	173,286		166,952	464,052	488,798	Net interest income after provision for credit losses	207,617		173,286	595,724	464,052
Non-interest income	Non-interest income						Non-interest income
Fees and service charges	Fees and service charges	5,579		5,796	12,981	16,785	Fees and service charges	5,196		5,579	15,937	12,981
Income on bank owned life insurance	Income on bank owned life insurance	2,067		1,832	5,059	4,949	Income on bank owned life insurance	1,508		2,067	5,012	5,059
Gain on loans, net	Gain on loans, net	5,285		1,679	10,688	3,127	Gain on loans, net	1,698		5,285	6,819	10,688
(Loss) gain on securities, net	(Loss) gain on securities, net	(8)		30	249	(5,523)	(Loss) gain on securities, net	(931)		(8)	3	249

Gain on sale of other real estate owned, net	Gain on sale of other real estate owned, net	133		358	784	863	Gain on sale of other real estate owned, net	34		133	86	784
Other income	Other income	6,870		5,085	14,965	12,754	Other income	8,447		6,870	21,172	14,965
Total non-interest income	Total non-interest income	19,926		14,780	44,726	32,955	Total non-interest income	15,952		19,926	49,029	44,726
Non-interest expense	Non-interest expense						Non-interest expense
Compensation and fringe benefits	Compensation and fringe benefits	59,896		63,603	176,079	184,455	Compensation and fringe benefits	60,231		59,896	184,043	176,079
Advertising and promotional expense	Advertising and promotional expense	2,344		2,994	6,906	10,888	Advertising and promotional expense	3,111		2,344	7,737	6,906
Office occupancy and equipment expense	Office occupancy and equipment expense	16,882		15,702	49,303	47,296	Office occupancy and equipment expense	23,535		16,882	58,683	49,303
Federal deposit insurance premiums	Federal deposit insurance premiums	2,925		3,300	10,726	9,900	Federal deposit insurance premiums	2,950		2,925	9,550	10,726
General and administrative	General and administrative	551		487	1,678	1,663	General and administrative	706		551	1,630	1,678
Professional fees	Professional fees	4,097		6,010	12,386	12,411	Professional fees	12,925		4,097	20,896	12,386
Data processing and communication	Data processing and communication	8,998		8,348	26,698	23,989	Data processing and communication	9,985		8,998	29,313	26,698

Debt extinguishment							Debt extinguishment	10,159		965	10,159	1,291
Other operating expenses	Other operating expenses	8,367		8,274	22,862	25,329	Other operating expenses	8,424		7,402	22,814	21,571
Total non-interest expenses	Total non-interest expenses	104,060		108,718	306,638	315,931	Total non-interest expenses	132,026		104,060	344,825	306,638
Income before income tax expense	Income before income tax expense	89,152		73,014	202,140	205,822	Income before income tax expense	91,543		89,152	299,928	202,140
Income tax expense	Income tax expense	24,840		21,042	55,705	59,068	Income tax expense	24,609		24,840	80,912	55,705
Net income	Net income	$	64,312	51,972	146,435	146,754	Net income	$	66,934	64,312	219,016	146,435
Basic earnings per share	Basic earnings per share	$	0.27	0.20	0.62	0.56	Basic earnings per share	$	0.28	0.27	0.93	0.62
Diluted earnings per share	Diluted earnings per share	$	0.27	0.20	0.62	0.55	Diluted earnings per share	$	0.28	0.27	0.93	0.62
Weighted average shares outstanding	Weighted average shares outstanding						Weighted average shares outstanding
Basic	Basic	236,833,099		261,678,994	235,453,133	264,104,402	Basic	235,602,277		236,833,099	235,106,490	235,453,133
Diluted	Diluted	236,872,505		261,812,970	235,550,801	264,422,265	Diluted	236,413,268		236,872,505	236,088,254	235,550,801

See accompanying notes to consolidated financial statements.

Table of Contents

INVESTORS BANCORP, INC. AND SUBSIDIARY

Consolidated Statements of Comprehensive Income

(Unaudited)


		For the Three Months Ended September 30,			For the Nine Months Ended September 30,			Three Months Ended September 30,			Nine Months Ended September 30,
		2020		2019	2020	2019		2021		2020	2021	2020
		(In thousands)						(In thousands)
Net income	Net income	$	64,312	51,972	146,435	146,754	Net income	$	66,934	64,312	219,016	146,435
Other comprehensive income (loss), net of tax:	Other comprehensive income (loss), net of tax:						Other comprehensive income (loss), net of tax:
Change in funded status of retirement obligations	Change in funded status of retirement obligations	300		13	619	40	Change in funded status of retirement obligations	120		300	363	619
Unrealized (losses) gains on debt securities available-for-sale	Unrealized (losses) gains on debt securities available-for-sale	(1,606)		6,798	35,025	39,605	Unrealized (losses) gains on debt securities available-for-sale	(8,423)		(1,606)	(30,451)	35,025

Accretion of loss on debt securities reclassified to held-to-maturity							Accretion of loss on debt securities reclassified to held-to-maturity	26		48	87	160

Accretion of loss on debt securities reclassified to held to maturity		48		41	160	472

Reclassification adjustment for security losses included in net income		0		0	0	4,221
Reclassification adjustment for security gains included in net income							Reclassification adjustment for security gains included in net income	—		—	(299)	—

Other-than-temporary impairment accretion on debt securities recorded prior to January 1, 2020	Other-than-temporary impairment accretion on debt securities recorded prior to January 1, 2020	184		228	641	589	Other-than-temporary impairment accretion on debt securities recorded prior to January 1, 2020	178		184	550	641
Net gains (losses) on derivatives	Net gains (losses) on derivatives	9,242		(9,564)	(68,891)	(54,253)	Net gains (losses) on derivatives	8,197		9,242	47,498	(68,891)

Total other comprehensive income (loss)	Total other comprehensive income (loss)	8,168		(2,484)	(32,446)	(9,326)	Total other comprehensive income (loss)	98		8,168	17,748	(32,446)
Total comprehensive income	Total comprehensive income	$	72,480	49,488	113,989	137,428	Total comprehensive income	$	67,032	72,480	236,764	113,989

See accompanying notes to consolidated financial statements.

Table of Contents

INVESTORS BANCORP, INC. AND SUBSIDIARY

Consolidated Statements of Stockholders’ Equity

Nine Months Ended September 30, ~~2020~~2021 and ~~2019~~2020

(Unaudited)


		Common stock		Additional paid-in capital	Retained earnings	Treasury stock	Unallocated common stock held by ESOP	Accumulated other comprehensive loss	Total stockholders’ equity		Common stock		Additional paid-in capital	Retained earnings	Treasury stock	Unallocated common stock held by ESOP	Accumulated other comprehensive loss	Total stockholders’ equity
		(In thousands)									(In thousands)
Balance at December 31, 2018		$	3,591	2,805,423	1,173,897	(884,750)	(81,262)	(11,569)	3,005,330

Balance at December 31, 2019										Balance at December 31, 2019	$	3,591	2,820,837	1,245,793	(1,352,910)	(76,739)	(18,622)	2,621,950
Cumulative effect of adopting ASU No. 2016-13										Cumulative effect of adopting ASU No. 2016-13	—		—	(8,491)	—	—	—	(8,491)
Balance at January 1, 2020										Balance at January 1, 2020	3,591		2,820,837	1,237,302	(1,352,910)	(76,739)	(18,622)	2,613,459
Net income	Net income	—		—	146,754	—	—	—	146,754	Net income	—		—	146,435	—	—	—	146,435
Other comprehensive loss, net of tax	Other comprehensive loss, net of tax	—		—	—	—	—	(9,326)	(9,326)	Other comprehensive loss, net of tax	—		—	—	—	—	(32,446)	(32,446)

Purchase of treasury stock (12,042,876 shares)		—		—	—	(140,241)	—	—	(140,241)
Treasury stock allocated to restricted stock plan (2,345,919 shares)		—		(29,140)	33	29,107	—	—	—
Compensation cost for stock options and restricted stock		—		15,875	—	—	—	—	15,875
Exercise of stock options		—		(573)	—	1,386	—	—	813
Restricted stock forfeitures (1,931,538 shares)		—		24,233	(1,455)	(22,778)	—	—	—
Cash dividend paid ($0.33 per common share)		—		—	(91,935)	—	—	—	(91,935)
ESOP shares allocated or committed to be released		—		1,850	—	—	2,247	—	4,097
Balance at September 30, 2019		$	3,591	2,817,668	1,227,294	(1,017,276)	(79,015)	(20,895)	2,931,367

Balance at December 31, 2019		$	3,591	2,822,364	1,245,793	(1,352,910)	(78,266)	(18,622)	2,621,950
Cumulative effect of adopting ASU No. 2016-13		—		—	(8,491)	—	—	—	(8,491)

Net income		—		—	146,435	—	—	—	146,435
Other comprehensive loss, net of tax		—		—	—	—	—	(32,446)	(32,446)

Common stock issued to finance acquisition		28		20,853	—	—	—	—	20,881
Common stock issued to finance acquisitions										Common stock issued to finance acquisitions	28		20,853	—	—	—	—	20,881
Purchase of treasury stock (390,712 shares)	Purchase of treasury stock (390,712 shares)	—		—	—	(3,418)	—	—	(3,418)	Purchase of treasury stock (390,712 shares)	—		—	—	(3,418)	—	—	(3,418)
Treasury stock allocated to restricted stock plan (90,067 shares)	Treasury stock allocated to restricted stock plan (90,067 shares)	—		(903)	(195)	1,098	—	—	—	Treasury stock allocated to restricted stock plan (90,067 shares)	—		(903)	(195)	1,098	—	—	—
Compensation cost for stock options and restricted stock	Compensation cost for stock options and restricted stock	—		11,329	—	—	—	—	11,329	Compensation cost for stock options and restricted stock	—		11,329	—	—	—	—	11,329

Restricted stock forfeitures (18,860 shares)	Restricted stock forfeitures (18,860 shares)	—		230	(1)	(229)	—	—	—	Restricted stock forfeitures (18,860 shares)	—		230	(1)	(229)	—	—	—
Cash dividend paid ($0.36 per common share)	Cash dividend paid ($0.36 per common share)	—		—	(89,701)	—	—	—	(89,701)	Cash dividend paid ($0.36 per common share)	—		—	(89,701)	—	—	—	(89,701)
ESOP shares allocated or committed to be released	ESOP shares allocated or committed to be released	—		971	—	—	2,247	—	3,218	ESOP shares allocated or committed to be released	—		820	—	—	2,398	—	3,218
Balance at September 30, 2020	Balance at September 30, 2020	$	3,619	2,854,844	1,293,840	(1,355,459)	(76,019)	(51,068)	2,669,757	Balance at September 30, 2020	$	3,619	2,853,166	1,293,840	(1,355,459)	(74,341)	(51,068)	2,669,757

Balance at December 31, 2020										Balance at December 31, 2020	$	3,619	2,856,935	1,339,003	(1,375,996)	(73,542)	(40,016)	2,710,003

Net income										Net income	—		—	219,016	—	—	—	219,016
Other comprehensive income, net of tax										Other comprehensive income, net of tax	—		—	—	—	—	17,748	17,748

Purchase of treasury stock (970,866 shares)										Purchase of treasury stock (970,866 shares)	—		—	—	(12,054)	—	—	(12,054)
Treasury stock allocated to restricted stock plan (251,634 shares)										Treasury stock allocated to restricted stock plan (251,634 shares)	—		(3,323)	204	3,119	—	—	—
Compensation cost for stock options and restricted stock										Compensation cost for stock options and restricted stock	—		10,739	—	—	—	—	10,739
Exercise of stock options										Exercise of stock options	—		(125)	—	6,235	—	—	6,110
Restricted stock forfeitures (26,267 shares)										Restricted stock forfeitures (26,267 shares)	—		310	8	(318)	—	—	—
Cash dividend paid ($0.42 per common share)										Cash dividend paid ($0.42 per common share)	—		—	(103,922)	—	—	—	(103,922)
ESOP shares allocated or committed to be released										ESOP shares allocated or committed to be released	—		2,521	—	—	2,398	—	4,919
Balance at September 30, 2021										Balance at September 30, 2021	$	3,619	2,867,057	1,454,309	(1,379,014)	(71,144)	(22,268)	2,852,559

See accompanying notes to consolidated financial statements.

Table of Contents

INVESTORS BANCORP, INC. AND SUBSIDIARY

Consolidated Statements of Cash Flows

(Unaudited)


		Nine Months Ended September 30,				Nine Months Ended September 30,
		2020		2019		2021		2020
		(In thousands)				(In thousands)
Cash flows from operating activities:	Cash flows from operating activities:				Cash flows from operating activities:
Net income	Net income	$	146,435	146,754	Net income	$	219,016	146,435
Adjustments to reconcile net income to net cash provided by operating activities:	Adjustments to reconcile net income to net cash provided by operating activities:				Adjustments to reconcile net income to net cash provided by operating activities:

ESOP and stock-based compensation expense	ESOP and stock-based compensation expense	14,547		19,972	ESOP and stock-based compensation expense	15,658		14,547
Amortization of premiums and accretion of discounts on securities, net	Amortization of premiums and accretion of discounts on securities, net	8,449		7,262	Amortization of premiums and accretion of discounts on securities, net	7,088		8,449
Amortization of premiums and accretion of fees and costs on loans, net	Amortization of premiums and accretion of fees and costs on loans, net	1,933		(3,479)	Amortization of premiums and accretion of fees and costs on loans, net	707		1,933
Amortization of other intangible assets	Amortization of other intangible assets	1,077		1,220	Amortization of other intangible assets	825		1,077
Amortization of debt modification costs and premium on borrowings	Amortization of debt modification costs and premium on borrowings	1,679		0	Amortization of debt modification costs and premium on borrowings	1,746		1,679
Provision for credit losses	Provision for credit losses	72,840		(2,500)	Provision for credit losses	(25,677)		72,840
Loss from extinguishment of debt	Loss from extinguishment of debt	1,291		0	Loss from extinguishment of debt	10,159		1,291
Depreciation and amortization of office properties and equipment	Depreciation and amortization of office properties and equipment	16,130		14,175	Depreciation and amortization of office properties and equipment	16,066		16,130
(Gain) loss on securities, net		(249)		5,523
Gain on securities, net					Gain on securities, net	(3)		(249)

Mortgage loans originated for sale	Mortgage loans originated for sale	(410,486)		(160,297)	Mortgage loans originated for sale	(144,180)		(410,486)
Proceeds from mortgage loan sales	Proceeds from mortgage loan sales	430,618		164,249	Proceeds from mortgage loan sales	178,996		430,618
Gain on sales of mortgage loans, net	Gain on sales of mortgage loans, net	(10,320)		(2,879)	Gain on sales of mortgage loans, net	(4,856)		(10,320)
Gain on sale of other real estate owned	Gain on sale of other real estate owned	(784)		(863)	Gain on sale of other real estate owned	(86)		(784)

Income on bank owned life insurance	Income on bank owned life insurance	(5,059)		(4,949)	Income on bank owned life insurance	(5,012)		(5,059)

Amortization of lease right-of-use assets	Amortization of lease right-of-use assets	15,430		12,869	Amortization of lease right-of-use assets	19,139		15,430
Increase in accrued interest receivable	Increase in accrued interest receivable	(3,721)		(6,450)	Increase in accrued interest receivable	(836)		(3,721)
Deferred tax (benefit) expense		(29,675)		2,521
Increase in other assets		(87,985)		(38,879)
Deferred tax benefit					Deferred tax benefit	(900)		(29,675)
Decrease (increase) in other assets					Decrease (increase) in other assets	21,624		(87,985)

Increase (decrease) in other liabilities		1,021		(67,364)
Increase in other liabilities					Increase in other liabilities	51,690		1,021
Net cash provided by operating activities	Net cash provided by operating activities	163,171		86,885	Net cash provided by operating activities	361,164		163,171
Cash flows from investing activities:	Cash flows from investing activities:				Cash flows from investing activities:
Purchases of loans receivable	Purchases of loans receivable	(90,000)		(349,766)	Purchases of loans receivable	(79,697)		(90,000)
Net payoffs of loans receivable		1,191,116		29,729
Net (originations) payoffs of loans receivable					Net (originations) payoffs of loans receivable	(803,725)		1,191,116
Proceeds from disposition of loans receivable	Proceeds from disposition of loans receivable	51,623		148,505	Proceeds from disposition of loans receivable	78,703		51,623
Gain on disposition of loans receivable	Gain on disposition of loans receivable	(368)		(248)	Gain on disposition of loans receivable	(1,963)		(368)

Gain on disposition of leased equipment	Gain on disposition of leased equipment	(1,842)		0	Gain on disposition of leased equipment	(3,075)		(1,842)
Net proceeds from sale of other real estate owned	Net proceeds from sale of other real estate owned	6,255		5,817	Net proceeds from sale of other real estate owned	1,421		6,255

Proceeds from sales of equity securities					Proceeds from sales of equity securities	33,983		—
Proceeds from principal repayments/calls/maturities of debt securities available for sale	Proceeds from principal repayments/calls/maturities of debt securities available for sale	709,764		304,765	Proceeds from principal repayments/calls/maturities of debt securities available for sale	748,586		709,764
Proceeds from sales of debt securities available for sale	Proceeds from sales of debt securities available for sale	0		399,435	Proceeds from sales of debt securities available for sale	8,171		—
Proceeds from principal repayments/calls/maturities of debt securities held to maturity	Proceeds from principal repayments/calls/maturities of debt securities held to maturity	191,011		210,115	Proceeds from principal repayments/calls/maturities of debt securities held to maturity	246,305		191,011

Purchases of equity securities	Purchases of equity securities	(2,565)		(72)	Purchases of equity securities	(6,051)		(2,565)
Purchases of debt securities available for sale	Purchases of debt securities available for sale	(753,011)		(786,011)	Purchases of debt securities available for sale	(575,860)		(753,011)
Purchases of debt securities held to maturity	Purchases of debt securities held to maturity	(273,416)		(166,338)	Purchases of debt securities held to maturity	(270,091)		(273,416)

Proceeds from redemptions of Federal Home Loan Bank stock	Proceeds from redemptions of Federal Home Loan Bank stock	113,627		244,632	Proceeds from redemptions of Federal Home Loan Bank stock	83,621		113,627
Purchases of Federal Home Loan Bank stock	Purchases of Federal Home Loan Bank stock	(60,042)		(258,394)	Purchases of Federal Home Loan Bank stock	(100,850)		(60,042)
Purchases of office properties and equipment	Purchases of office properties and equipment	(10,251)		(8,009)	Purchases of office properties and equipment	(8,298)		(10,251)

Death benefit proceeds from bank owned life insurance, net					Death benefit proceeds from bank owned life insurance, net	904		—

Cash received, net of cash consideration paid for acquisitions	Cash received, net of cash consideration paid for acquisitions	7,274		0	Cash received, net of cash consideration paid for acquisitions	391,640		7,274
Net cash provided by (used in) investing activities		1,079,175		(225,840)
Cash flows from financing activities:
Net increase in deposits		753,316		92,486

Repayments of principal under finance leases		(1,182)		0
Funds borrowed under other repurchase agreements		0		197,758
Net (repayments) proceeds of borrowed funds		(1,537,291)		61,115
Principal applied on affordable housing project advance		(118)		0
Net increase (decrease) in advance payments by borrowers for taxes and insurance		18,882		17,468
Net cash (used in) provided by investing activities					Net cash (used in) provided by investing activities	(256,276)		1,079,175

Table of Contents


Cash flows from financing activities:					Cash flows from financing activities:
Net increase in deposits					Net increase in deposits	242,616		753,316

Repayments of principal under finance leases					Repayments of principal under finance leases	(1,191)		(1,182)

Net proceeds (repayments) of borrowed funds					Net proceeds (repayments) of borrowed funds	837,000		(1,136,118)

Payments related to extinguishment of debt					Payments related to extinguishment of debt	(610,159)		(401,291)
Net increase in advance payments by borrowers for taxes and insurance					Net increase in advance payments by borrowers for taxes and insurance	36,575		18,882
Dividends paid	Dividends paid	(89,701)		(91,935)	Dividends paid	(103,922)		(89,701)
Exercise of stock options	Exercise of stock options	0		813	Exercise of stock options	6,110		—
Purchase of treasury stock	Purchase of treasury stock	(3,418)		(140,241)	Purchase of treasury stock	(12,054)		(3,418)
Net cash (used in) provided by financing activities		(859,512)		137,464
Net increase (decrease) in cash and cash equivalents		382,834		(1,491)
Net cash provided by (used in) financing activities					Net cash provided by (used in) financing activities	394,975		(859,512)
Net increase in cash and cash equivalents					Net increase in cash and cash equivalents	499,863		382,834
Cash and cash equivalents at beginning of period	Cash and cash equivalents at beginning of period	174,915		196,891	Cash and cash equivalents at beginning of period	170,432		174,915
Cash and cash equivalents at end of period	Cash and cash equivalents at end of period	$	557,749	195,400	Cash and cash equivalents at end of period	$	670,295	557,749
Supplemental cash flow information:	Supplemental cash flow information:				Supplemental cash flow information:
Non-cash investing activities:	Non-cash investing activities:				Non-cash investing activities:
Real estate acquired through foreclosure and other assets repossessed	Real estate acquired through foreclosure and other assets repossessed	$	1,050	11,289	Real estate acquired through foreclosure and other assets repossessed	$	69	1,050

Cash paid during the year for:	Cash paid during the year for:				Cash paid during the year for:
Interest	Interest	212,889		294,669	Interest	116,390		212,889
Income taxes	Income taxes	12,518		36,220	Income taxes	96,025		12,518
Significant non-cash transactions:	Significant non-cash transactions:				Significant non-cash transactions:
Debt securities transferred from held-to-maturity to available-for-sale		0		393,067
Loans transferred to held-for-sale portfolio		0		28,373

Investment in low income housing tax credit					Investment in low income housing tax credit	10,000		—
Right-of-use assets obtained in exchange for new lease liabilities	Right-of-use assets obtained in exchange for new lease liabilities	9,050		2,358	Right-of-use assets obtained in exchange for new lease liabilities	13,234		9,050
Acquisition:
Acquisitions:					Acquisitions:
Non-cash assets acquired:	Non-cash assets acquired:				Non-cash assets acquired:
Debt securities available-for-sale	Debt securities available-for-sale	51,524		0	Debt securities available-for-sale	—		51,524
Debt securities held to maturity	Debt securities held to maturity	8,402		0	Debt securities held to maturity	—		8,402
Loans receivable, net	Loans receivable, net	443,499		0	Loans receivable, net	212,538		443,499
Office properties and equipment, net	Office properties and equipment, net	485		0	Office properties and equipment, net	364		485
Accrued interest receivable	Accrued interest receivable	1,283		0	Accrued interest receivable	1,008		1,283
Right of use assets - leases	Right of use assets - leases	3,697		0	Right of use assets - leases	9,310		3,697
Deferred tax asset	Deferred tax asset	3,915		0	Deferred tax asset	1,212		3,915
Intangible assets, net	Intangible assets, net	14,491		0	Intangible assets, net	25,291		14,491
Other assets	Other assets	705		0	Other assets	509		705
Total non-cash assets acquired	Total non-cash assets acquired	528,001		0	Total non-cash assets acquired	250,232		528,001
Liabilities assumed:	Liabilities assumed:				Liabilities assumed:
Deposits	Deposits	489,881		0	Deposits	632,389		489,881
Borrowed funds	Borrowed funds	14,851		0	Borrowed funds	—		14,851
Advance payment by borrowers	Advance payment by borrowers	3,611		0	Advance payment by borrowers	103		3,611
Other liabilities	Other liabilities	6,051		0	Other liabilities	9,380		6,051
Total liabilities assumed	Total liabilities assumed	514,394		0	Total liabilities assumed	641,872		514,394

Net non-cash (liabilities) assets acquired					Net non-cash (liabilities) assets acquired	(391,640)		13,607
Common stock issued for acquisitions	Common stock issued for acquisitions	20,881		0	Common stock issued for acquisitions	—		20,881

See accompanying notes to consolidated financial statements.

Table of Contents

INVESTORS BANCORP, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

1. Summary of Significant Accounting Principles

Basis of Presentation

The consolidated financial statements are comprised of the accounts of Investors Bancorp, Inc. and its wholly owned subsidiary, Investors Bank (the “Bank”) and the Bank’s wholly-owned subsidiaries (collectively, the “Company”). All significant intercompany transactions have been eliminated in consolidation. In the opinion of management, all the adjustments (consisting of normal and recurring adjustments) necessary for the fair presentation of the consolidated financial condition and the consolidated results of operations for the unaudited periods presented have been included. The results of operations and other data presented for the three and nine months ended September 30, ~~2020~~2021 are not necessarily indicative of the results of operations that may be expected for subsequent periods or the full year results.

Certain information and note disclosures usually included in financial statements prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for the preparation of the Form 10-Q. The consolidated financial statements presented should be read in conjunction with the Company’s audited consolidated financial statements and notes to the audited consolidated financial statements included in the Company’s December 31, ~~2019~~2020 Annual Report on Form 10-K. Certain reclassifications have been made in the consolidated financial statements to conform with current year classifications.

~~Adoption~~The accounting and reporting policies of ~~New Accounting Standards~~

~~On January 1, 2020,~~ the Company ~~adopted~~ ~~ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement~~conform to U.S. GAAP and to general practice within the financial services industry. A discussion of Credit Losses on Financial Instruments”, which replaces the incurred loss methodology with an expected loss methodology that is referred to as the current expected credit loss (“CECL”) methodology. The Company adopted ASU 2016-13 using a modified retrospective approach. Results for reporting periods beginning after Januarythese policies can be found in Note 1, 2020 are presented under Topic 326, while prior period amounts continue to be reported in accordance with previously applicable GAAP. At adoption, the Company increased its allowance for credit losses by $11.7 million, comprisedSummary of $12.7 million and $2.6 million, respectively, for unfunded commitments and held-to-maturity debt securities, partially offset by a decrease of $3.6 million for loans. Upon adoption the Company recorded a cumulative effect adjustment that reduced stockholders’ equity by $8.5 million, net of tax.

~~Allowance for Credit Losses~~

The allowance for credit losses includes both the allowance for loan and lease losses and the reserve for unfunded lending commitments and represents the estimated amount considered necessary to cover lifetime expected credit losses inherent in financial assets at the balance sheet date. The measurement of expected credit losses is applicable to financial assets measured at amortized cost, including loan receivables and held-to-maturity debt securities. It also applies to off-balance sheet credit exposures such as loan commitments and unused lines of credit. The allowance is established through the provision for credit losses that is charged against income. The methodology for determining the allowance for credit losses is considered a critical accounting policy by management because of the high degree of judgment involved, the subjectivity of the assumptions used, and the potential for changesSignificant Accounting Policies, included in the ~~forecasted economic environment that could result in~~Company’s 2020 Annual Report on Form 10-K. There have been no changes to the amount of the recorded allowance for credit losses. The allowance for loan and security losses is reported separately as contra-assets to loans and securities on the consolidated balance sheet. The expected credit loss for unfunded lending commitments and unfunded loan commitments is reported on the consolidated balance sheet in other liabilities. The provision for credit losses related to loans, unfunded commitments and debt securities is reported on the consolidated statement of income.

~~Allowance for Credit Losses on Loans Receivable~~

The allowance for credit losses on loans is deducted from the amortized cost basis of the loan to present the net amount expected to be collected. Expected losses are evaluated and calculated on a collective basis for those loans which share similar risk characteristics. At each reporting period, the Company evaluates whether the loans in a pool continue to exhibit similar risk characteristics as the other loans in the pool. If the risk characteristics of a loan change, such that they are no longer similar to other loans in the pool, the Company will evaluate the loan with a different pool of loans that share similar risk characteristics. If the loan does not share risk characteristics with other loans, the Company will evaluate the allowance on an individual basis.The Company evaluates the segmentation at least annually to determine whether loans continue to share similar risk characteristics. Loans are charged off against the allowance when the Company believes the loan balances become uncollectible. Expected recoveries do not exceed the aggregate of amounts previously charged off or expected to be charged off.

~~Table of Contents~~

~~The Company has chosen to segment its portfolio consistent with the manner in which it manages the risk of the type of credit. The~~ Company’s ~~segments for loans include multi-family, commercial real estate, commercial and industrial, construction, residential and consumer.~~

The Company calculates estimated credit loss on its loan portfolio typically using a probability of default and loss given default quantitative model methodology. The point in time probability of default and loss given default are then conditioned by macroeconomic scenarios to incorporate reasonable and supportable forecasts that affect the collectability of the reported amount. For a small portion of the loan portfolio, i.e. unsecured consumer loans, small business loans and loans to individuals, the Company utilizes a loss rate method to calculate the expected credit loss of that asset segment.

The Company estimates the allowance for credit losses on loans using relevant available information from internal and external sources related to past events and current conditions as well as the incorporation of reasonable and supportable forecasts. The Company evaluates the use of multiple economic scenarios and the weighting of those scenarios on a quarterly basis. The scenarios that are chosen and the amount of weighting given to each scenario depend on a variety of factors including third party economists and firms, industry trends and other available published economic information.

After the reasonable and supportable forecast period, the Company reverts to average historical losses. Expected credit losses are estimated over the contractual term of the loans, adjusted for expected prepayments when appropriate. The contractual term excludes expected extensions, renewals, and modifications unless either of the following applies: management has a reasonable expectation at the reporting date that a troubled debt restructuring will be executed with an individual borrower or the extension or renewal options are included in the original or modified contract at the reporting date and are not unconditionally cancelable by the Company.

Also included in the allowance for loans are qualitative reserves to cover losses that are expected but, in the Company’s assessment, may not be adequately represented in the quantitative method or the economic assumptions described above. For example, factors that the Company considers include changes in lendingsignificant accounting policies and procedures, business conditions, the nature and size of the portfolio, portfolio concentrations, the volume and severity of past due loans and non-accrual loans, the effect of external factors such as competition, and the legal and regulatory requirements, among other. Furthermore, the Company considers the inherent uncertainty in quantitative models that are built on historical data.

~~Individually evaluated~~

On a case-by-case basis, the Company may conclude a loan should be evaluated on an individual basis based on its disparate risk characteristics. The Company individually evaluates loans that meet the following criteria for expected credit loss, as the Company has determined that these loans generally do not share similar risk characteristics with other loans in the portfolio:

•~~Commercial loans with an outstanding balance greater than $1.0 million and on non-accrual status;~~

•~~Troubled debt restructured loans; and~~

•Other commercial loans with greater than $1.0 million in outstanding principal, if management has specific information that it is probable they will not collect all principal amounts due under the contractual terms of the loan agreement.

When the Company determines that the loan no longer shares similar risk characteristics of other loans in the portfolio, the allowance will be determined on an individual basis using the present value of expected cash flows or, for collateral-dependent loans, the fair value of the collateral as of the reporting date, less estimated selling costs, as applicable, to ensure that the credit loss is not delayed until actual loss. If the fair value of the collateral is less than the amortized cost basis of the loan, the Company will charge off the difference between the fair value of the collateral, less costs to sell at the reporting date and the amortized cost basis of the loan.

~~Acquired assets~~

Acquired assets are included in the Company's calculation of the allowance for credit losses. How the allowance on an acquired asset is recorded depends on whether it has been classified as a Purchased Financial Asset with Credit Deterioration (“PCD”). PCD assets are assets acquired at a discount that is due, in part, to credit quality. PCD assets are accounted for in accordance with ASC Subtopic 326-20 and are initially recorded at fair value as determined by the sum of the present value of expected future cash flows and an allowance for credit losses at acquisition. The allowance for PCD assets is recorded through a gross-up effect, while the allowance for acquired non-PCD assets such as loans is recorded through provision expense, consistent with originated loans. Thus, the determination of which assets are PCD and non-PCD can have a significant effect on the accounting for these assets.

~~Subsequent to acquisition, the allowance for PCD loans will generally follow the same estimation, provision and~~

~~Table of Contents~~

~~charge-off process as non-PCD acquired and originated loans. Additionally, TDR identification for acquired loans (PCD and non-PCD) will be consistent with the TDR identification for originated loans.~~

~~Allowance for Credit Losses on Debt Securities~~

Management measures expected credit losses on held-to-maturity debt securities on a collective basis by major security type. Management classifies the held-to-maturity portfolio into the following major security types: mortgage-backed residential securities, municipal bonds, trust preferred securities (“TruPS”) and other. Nearly all of the mortgage-backed securities in the Company's portfolio are issued by U.S. government agencies and are either explicitly or implicitly guaranteed by the U.S government, are highly rated by major rating agencies and have a long history of no credit losses and therefore the expectation of non-payment is zero. Other securities consist primarily of investments in pooled trust preferred securities.

At each reporting period, the Company evaluates whether the securities in a segment continue to exhibit similar risk characteristics as the other securities in the segment. If the risk characteristics of a security change, such that they are no longer similar to other securities in the segment, the Company will evaluate the security with a different segment that shares more similar risk characteristics.

In estimating the net amount expected to be collected for mortgage-backed residential securities and municipal bonds, a range of historical losses method is utilized. In estimating the net amount expected to be collected for TruPS, the Company employs a single scenario forecast methodology. The scenario is informed by historical industry default data as well as current and near term operating conditions for the banks and other financial institutions that are the underlying issuers. In addition, prepayment assumptions are included in the analysis of the individually assessed TruPS applied at the collateral level.

~~Allowance for Credit Losses on Off-Balance Sheet Credit Exposures~~

The Company is required to include the unfunded commitment that is expected to be funded in the future within the allowance calculation. The Company participates in lending that results in an off-balance sheet unfunded commitment balance. The Company currently underwrites funding commitments with conditionally cancelable language. To determine the expected funding balance remaining, the Company uses a historical utilization rate for each of the segments to calculate the expected commitment balance. The reserve percentage for each respective loan portfolio is applied to the remaining unused portion of the expected commitment balance and the expected funded commitment in determining the allowance for credit loss on off-balance sheet credit exposures.

~~Section 4013 of the CARES Act~~

The Company implemented various consumer and commercial loan modification programs to provide its borrowers relief from the economic impacts of COVID-19. In accordance with the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”), the Company elected to not apply troubled debt restructuring classification to any COVID-19 related loan modifications that occurred after March 1, 2020 to borrowers who were current as ofsince December 31, 2019. Accordingly, these modifications are exempt from troubled debt restructuring classification under U.S. generally accepted accounting principles (“U.S. GAAP”) and were not classified as troubled debt restructurings (“TDRs”). In addition, for loans modified in response to the COVID-19 pandemic that did not meet the above criteria (e.g., current payment status at December 31, 2019), the Company applied the guidance included in an interagency statement issued by the bank regulatory agencies. This guidance states that loan modifications performed in light of the COVID-19 pandemic, including loan payment deferrals that are up to six months in duration, that were granted to borrowers who were current as of the implementation date of a loan modification program or modifications granted under government mandated modification programs, are not TDRs. For loan modifications that include a payment deferral and are not TDRs, the borrower’s past due and non-accrual status have not been impacted during the deferral period. The majority of our deferrals initially consisted of 90-day principal and interest deferrals with additional deferral periods granted on a case by case basis at the Bank’s option. Interest income has continued to be recognized over the contractual life of the loan. At September 30, 2020, loans with an aggregate outstanding balance of approximately $1.02 billion were in COVID-19 related deferment. For the nine months ended September 30, 2020, interest income on deferred loans totaled $44.3 million, of which $9.3 million was included in accrued interest receivable as of September 30, 2020.

2. Stock Transactions

Stock Repurchase Program

On October 25, 2018, the Company announced its fourth share repurchase program, which authorized the purchase of 10% of its publicly-held outstanding shares of common stock, or 28,886,780 shares. The fourth program commenced immediately upon completion of the third program on December 10, ~~2018~~2018. This program has no expiration date and ~~remains the Company’s current program~~has 12,000,202 shares yet to be repurchased as of September 30, ~~2020.~~

~~Table of Contents~~

2021.

During the nine months ended September 30, ~~2020,~~2021, the Company purchased ~~390,712~~approximately 1.0 million shares at a cost of ~~$3.4~~$12.1 million, or ~~$8.75~~$12.42 per share. ~~All shares purchased during~~During the nine months ended September 30, ~~2020 were~~2021, shares repurchased include 345,866 shares purchased in connection with the vesting of shares of restricted stock under our 2015 Equity Incentive Plan and the withholding of shares to pay income taxes. These shares are repurchased pursuant to the terms of the 2015 Equity Incentive Plan and therefore are not part of the Company’s repurchase program.

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3. Business Combinations

Citizens Financial Group, Inc. Merger Agreement

On July 28, 2021, Citizens Financial Group, Inc. (“Citizens”) and Investors Bancorp, Inc. (“Investors”) announced that they entered into a definitive agreement and plan of merger under which Citizens will acquire all of the outstanding shares of Investors for a combination of stock and cash. Under the terms of the agreement and plan of merger, shareholders of Investors will receive 0.297 of a share of Citizens common stock and $1.46 in cash for each share of Investors they own. Following completion of the transaction, former shareholders of Investors will collectively own approximately 14% of the combined company. The implied total transaction value based on closing prices on July 27, 2021 is approximately $3.5 billion. The agreement and plan of merger has been unanimously approved by the boards of directors of each company and the transaction is expected to close in the first half of 2022, subject to approval by the shareholders of Investors, receipt of required regulatory approvals and other customary closing conditions.

Berkshire Bank Branch Acquisition

As of the close of business on August 27, 2021, the Company completed its acquisition of 8 New Jersey and eastern Pennsylvania branches of Berkshire Bank, the wholly-owned subsidiary of Berkshire Hills Bancorp, Inc. pursuant to the definitive purchase and assumption agreement dated as of December 2, 2020 by and between the Company and Berkshire Bank. The acquisition included the assumption and acquisition of $632 million of deposits and $219 million of consumer and commercial loans, together with the related operations. The Company assumed a net liability of $413.0 million and received consideration of $391.3 million from Berkshire Bank.

The acquisition was accounted for under the acquisition method of accounting as prescribed by Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 805 “Business Combinations”, as amended. Under this method of accounting, the purchase price has been allocated to the respective assets acquired based on their estimated fair values, net of applicable income tax effects. The excess cost over fair value of assets and liabilities acquired, or $21.7 million, has been recorded as goodwill.

The acquired loans and deposits were fair valued on the date of acquisition based on guidance from ASC 820-10 which defines fair value as the price that would be received to sell an asset or transfer a liability in an orderly transaction between market participants at the measurement date. The valuation methods utilized took into consideration adjustments for interest rate risk, funding cost, servicing cost, residual risk, credit and liquidity risk.

As the Company finalizes its analysis of these assets, there may be adjustments to the recorded carrying values. Any adjustments to carrying values will be recorded in goodwill. The calculation of goodwill is subject to change for up to one year after closing date of the transaction as additional information relative to closing date estimates and uncertainties becomes available.

Financial assets acquired in a business combination after January 1, 2020 are recorded in accordance with ASC Topic 326, after which acquired assets are separated into two types. PCD assets are acquired assets that, as of the acquisition date, have experienced a more-than-insignificant deterioration in credit quality since origination. Non-PCD assets are acquired assets that have experienced no or insignificant deterioration in credit quality since origination. To distinguish between the two types of acquired assets, the Company evaluates risk characteristics that have been determined to be indicators of deteriorated credit quality. In the case of loans, the determining criteria may involve general characteristics, such as loan payment history or changes in creditworthiness since the loan was originated, while others are relevant to recent economic conditions, such as borrowers in industries impacted by the pandemic.

In its acquisition of the 8 branches of Berkshire Bank, the Company has purchased loans which have been determined to be PCD. The carrying amount of those loans was as follows:


	At August 27, 2021
	(In millions)
Purchase price of loans at acquisition	$	90.0
Allowance for credit losses at acquisition	1.0
Accretable fair value marks at acquisition	3.8
Par value of acquired loans at acquisition	$	94.8

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Fair Value Measurement of Assets Acquired and Liabilities Assumed

Described below are the methods used to determine the fair values of the assets acquired and liabilities assumed in the Berkshire Bank branch acquisition based on guidance from ASC 820-10 which defines fair value as the price that would be received to sell an asset or transfer a liability in an orderly transaction between market participants at the measurement date.

Loans. The estimated fair values of the loan portfolio generally consider adjustments for interest rate risk, required equity return, servicing costs, credit and liquidity risk. Level 3 inputs were utilized to determine the fair value of the acquired loan portfolio and included the use of present value techniques employing cash flow estimates and incorporated assumptions that market participants would use in estimating fair values. In instances where reliable market information was not available, the Company used its own assumptions in an effort to determine fair value. The primary approach to determining the fair value of the loan portfolio was a discounted cash flow methodology that considered factors including the type of loan, underlying collateral, classification status or grade, interest rate structure (fixed or variable interest rate), and remaining term. For the non-credit component, loans were grouped together according to similar characteristics when applying the various valuations techniques. For the credit component, loans were also grouped based on whether they had more than insignificant deterioration in credit since origination (purchase credit deteriorated “PCD” as defined by ASC 326-20). The estimated lifetime loan losses were calculated based on an annual loss rate developed by using the historical annual average charge-off percentages for Mid-Atlantic institutions as a proxy for how a market participant acquirer would value the portfolio.

Deposits / Core Deposit Intangible. The core deposit intangible represents the value assigned to the stable and below market rate funding sources within the acquired deposit base; typically demand deposits, interest checking, money market and savings accounts. The core deposit intangible value represents the value of the relationships with deposit customers as a below market rate funding source. The fair value was based on a discounted cash flow methodology that gave appropriate consideration to expected deposit attrition rates, net maintenance costs of the deposit base, projected interest costs and alternative funding costs. Certificates of deposit (time deposits) are not considered to be core deposits as they typically are less stable and generally do not have an “all-in” favorable funding advantage to alternative funding costs. The fair value of certificates of deposit represents the present value of the certificates’ expected contractual payments discounted by market rates for similar certificates and is determined utilizing Level 2 inputs.

Gold Coast Bancorp

As of the close of business on April 3, 2020, the Company completed its acquisition of Gold Coast Bancorp (“Gold Coast”) pursuant to the Agreement and Plan of Merger, dated as of July 24, 2019 by and between the Company and Gold Coast. As a result of the completion of the acquisition, the Company issued approximately 2.8 million shares to the former stockholders of Gold Coast and paid approximately $31.0 million in cash to the former stockholders of Gold Coast. Under the terms of the merger agreement, 50% of the common shares of Gold Coast were converted into Investors Bancorp common stock and the remaining 50% ~~was~~were exchanged for cash. For each share of Gold Coast Bancorp common stock, Gold Coast shareholders were given an option to receive either (i) 1.422 shares of Investors Bancorp common stock, $0.01 par value per share, (ii) a cash payment of $15.75, or (iii) a combination of Investors Bancorp common stock and cash. The foregoing was subject to proration to ensure that, in the aggregate, 50% of Gold Coast’s shares would be converted into Investors Bancorp common stock.

The acquisition was accounted for under the acquisition method of accounting as prescribed by Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 805 “Business Combinations”, as amended. Under this method of accounting, the purchase price has been allocated to the respective assets acquired based on their estimated fair values, net of applicable income tax effects. The excess cost over fair value of assets acquired, or $12.0 million, has been recorded as goodwill.

The acquired portfolio was fair valued on the date of acquisition based on guidance from ASC 820-10 which defines fair value as the price that would be received to sell an asset or transfer a liability in an orderly transaction between market participants at the measurement date. The valuation methods utilized took into consideration adjustments for interest rate risk, funding cost, servicing cost, residual risk, credit and liquidity risk. The accounting for the acquisition of Gold Coast is complete and is reflected in our Consolidated Financial Statements.

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the date of acquisition for Gold Coast, net of cash consideration paid:

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	At April 3, 2020
	(In millions)
Cash and cash equivalents	$	7.3
Debt securities available-for-sale	51.5
Debt securities held to maturity	8.4
Loans receivable, net	443.5
Accrued interest receivable	1.3
Right-of-use assets	3.7
Net deferred tax asset	3.9
Intangible assets	14.5
Other assets	1.2
Total assets acquired	535.3
Deposits	489.9
Borrowed funds	14.9
Other liabilities	9.7
Total liabilities assumed	514.5
Net assets acquired	$	20.8

~~Table of Contents~~

In its acquisition of Gold Coast, the Company has purchased loans which have been determined to be PCD. The carrying amount of those loans was as follows:


	At April 3, 2020
	(In millions)
Purchase price of loans at acquisition	$	244.7
Allowance for credit losses at acquisition	4.2
~~Non-credit discount (premium)~~Accretable fair value marks at acquisition	2.6
Par value of acquired loans at acquisition	$	251.5

~~There were no PCD securities in the acquisition.~~

Fair Value Measurement of Assets Acquired and Liabilities Assumed

Described below are the methods used to determine the fair values of the significant assets acquired and liabilities assumed in the Gold Coast acquisition based on guidance from ASC 820-10 which defines fair value as the price that would be received to sell an asset or transfer a liability in an orderly transaction between market participants at the measurement date.

Securities. The securities acquired are bought and sold in active markets. The estimated fair values of securities were calculated using external third party broker opinions of the market values. Due to the instability of the market at the time of acquisition as well as the odd lot position sizes of the securities, the Company reviewed the data and assumptions used in pricing the securities by third-parties and made qualitative adjustments to reflect the ~~odd lot size of the securities~~then current market conditions and the ~~price that would be received in an orderly transaction.~~characteristics of each position.

Loans. The estimated fair values of the loan portfolio generally consider adjustments for interest rate risk, required funding costs, servicing costs, prepayments, credit and liquidity. Level 3 inputs were utilized to determine the fair value of the acquired loan portfolio and included the use of present value techniques employing cash flow estimates and incorporated assumptions that market participants would use in estimating fair values. In instances where reliable market information was not available, the Company used its own assumptions in an effort to determine fair value. The primary approach to determining the fair value

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of the loan portfolio was a discounted cash flow methodology that considered factors including the type of loan, underlying collateral, classification status or grade, interest rate structure (fixed or variable interest rate), and remaining term. For the non-credit component, loans were grouped together according to similar characteristics when applying the various valuations techniques. For the credit component, loans were also grouped based on whether they had more than insignificant deterioration in credit since origination (purchase credit deteriorated “PCD” as defined by ASC 326-20). The ~~expected life of~~estimated lifetime loan ~~loss estimates~~losses were calculated based on an annual loss rate developed by using the historical annual average charge-off percentages for New York institutions as a proxy for how a market participant acquirer would value the portfolio. Additionally, a qualitative credit adjustment was applied to the historical annual loss rates, due to COVID-19 and the uncertainty of future losses.

Deposits / Core Deposit Intangible. The core deposit intangible represents the value assigned to the stable and below market rate funding sources within the acquired deposit base; typically demand deposits, interest checking, money market and savings accounts. The core deposit intangible value represents the value of the relationships with deposit customers as a below market rate funding source. The fair value was based on a discounted cash flow methodology that gave appropriate consideration to expected deposit attrition rates, net maintenance costs of the deposit base, projected interest costs and ~~the~~ alternative ~~cost of funds.~~funding costs. Certificates of deposit (time deposits) are not considered to be core deposits as they typically are less stable and generally do not have an “all-in” favorable funding advantage to ~~the~~ alternative ~~cost of funds.~~funding costs. The fair value of certificates of deposit represents the present value of the certificates’ expected contractual payments discounted by market rates for similar certificates and is determined utilizing Level 2 inputs.

~~Table of Contents~~

Borrowed Funds. A discounted cash flow approach was used to determine the fair value of the debt acquired. The fair value of the liability represents the present value of the expected payments discounted using a risk adjusted discount rate. The discount rate was developed based on comparable rated securities, as that backed by companies with similar credit ratings as the Company.

4. Earnings Per Share

The following is a summary of our earnings per share calculations and reconciliation of basic to diluted earnings per share.

For the Three Months Ended September 30,
2020 2019
(Dollars in thousands, except per share data)
Earnings for basic and diluted earnings per common share
Earnings applicable to common stockholders $ 64,312 $ 51,972
Shares
Weighted-average common shares outstanding - basic 236,833,099 261,678,994
Effect of dilutive common stock equivalents (1)
39,406 133,976
Weighted-average common shares outstanding - diluted 236,872,505 261,812,970
Earnings per common share
Basic $ 0.27 $ 0.20
Diluted $ 0.27 $ 0.20


	For the Three Months Ended September 30,
	2021		2020
	(Dollars in thousands, except per share data)
Earnings for basic and diluted earnings per common share
Earnings applicable to common stockholders	$	66,934	$	64,312

Shares
Weighted-average common shares outstanding - basic	235,602,277		236,833,099

Effect of dilutive common stock equivalents (1)	810,991		39,406
Weighted-average common shares outstanding - diluted	236,413,268		236,872,505

Earnings per common share
Basic	$	0.28	$	0.27
Diluted	$	0.28	$	0.27

(1) For the three months ended September 30, ~~2020~~2021 and ~~2019,~~2020, there were ~~7,504,227~~44,367 and 8,142,370 equity awards, respectively, that could potentially dilute basic earnings per share in the future that were not included in the computation of diluted earnings per share because to do so would have been anti-dilutive for the periods presented.

For the Nine Months Ended September 30,
2020 2019
(Dollars in thousands, except per share data)
Earnings for basic and diluted earnings per common share
Earnings applicable to common stockholders $ 146,435 $ 146,754
Shares
Weighted-average common shares outstanding - basic 235,453,133 264,104,402
Effect of dilutive common stock equivalents (1)
97,668 317,863
Weighted-average common shares outstanding - diluted 235,550,801 264,422,265
Earnings per common share
Basic $ 0.62 $ 0.56
Diluted $ 0.62 $ 0.55

~~(1) For the nine months ended September 30, 2020 and 2019, there were 7,433,286 and 6,723,858~~7,504,227 equity awards, respectively, that could potentially dilute basic earnings per share in the future that were not included in the computation of diluted earnings per share because to do so would have been anti-dilutive for the periods presented.

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	For the Nine Months Ended September 30,
	2021		2020
	(Dollars in thousands, except per share data)
Earnings for basic and diluted earnings per common share
Earnings applicable to common stockholders	$	219,016	$	146,435

Shares
Weighted-average common shares outstanding - basic	235,106,490		235,453,133
Effect of dilutive common stock equivalents (1)	981,764		97,668
Weighted-average common shares outstanding - diluted	236,088,254		235,550,801

Earnings per common share
Basic	$	0.93	$	0.62
Diluted	$	0.93	$	0.62

(1) For the six months ended September 30, 2021 and 2020, there were 219,597 and 7,433,286 equity awards, respectively, that could potentially dilute basic earnings per share in the future that were not included in the computation of diluted earnings per share because to do so would have been anti-dilutive for the periods presented.

5. Securities

Equity Securities

Equity securities are reported at fair value on the Company’s Consolidated Balance Sheets. The Company’s portfolio of equity securities had an estimated fair value of ~~$8.7~~$7.7 million and ~~$6.0~~$36.0 million as of September 30, ~~2020~~2021 and December 31, ~~2019,~~2020, respectively. Realized gains and losses from sales of equity securities, as well as changes in fair value of equity securities still held at the reporting date are recognized in the Consolidated Statements of Income.

The following table presents the disaggregated net gains and losses on equity securities reported in the Consolidated Statements of Income:


		For the Three Months Ended September 30,			For the Nine Months Ended September 30,			Three Months Ended September 30,			Nine Months Ended September 30,
		2020		2019	2020	2019		2021		2020	2021	2020
		(In thousands)						(In thousands)
Unrealized (losses) gains recognized on equity securities							Unrealized (losses) gains recognized on equity securities	$	(931)	(8)	(147)	99
Net losses recognized on equity securities sold							Net losses recognized on equity securities sold	—		—	(248)	—
Net (losses) gains recognized on equity securities	Net (losses) gains recognized on equity securities	$	(8)	30	99	165	Net (losses) gains recognized on equity securities	$	(931)	(8)	(395)	99
Less: Net gains recognized on equity securities sold		0		0	0	0
Unrealized (losses) gains recognized on equity securities		$	(8)	30	99	165

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Debt Securities

The following tables present the ~~carrying value,~~amortized cost, gross unrealized gains and losses, and estimated fair value for available-for-sale debt securities and the amortized cost, net unrealized losses, carrying value, gross unrecognized gains and losses, estimated fair value and allowance for credit losses for held-to-maturity debt securities as of the dates indicated.


		At September 30, 2020						At September 30, 2021
		Carrying value		Gross unrealized gains	Gross unrealized losses	Estimated fair value		Amortized cost		Gross unrealized gains	Gross unrealized losses	Estimated fair value
		(In thousands)						(In thousands)
Available-for-sale:	Available-for-sale:						Available-for-sale:
Debt securities:	Debt securities:						Debt securities:
Government-sponsored enterprises	Government-sponsored enterprises	$	4,501	240	0	4,741	Government-sponsored enterprises	$	3,636	175	—	3,811

Mortgage-backed securities:	Mortgage-backed securities:						Mortgage-backed securities:
Federal Home Loan Mortgage Corporation	Federal Home Loan Mortgage Corporation	1,312,343		33,927	10	1,346,260	Federal Home Loan Mortgage Corporation	1,260,933		19,507	4,597	1,275,843
Federal National Mortgage Association	Federal National Mortgage Association	1,175,909		44,010	276	1,219,643	Federal National Mortgage Association	1,099,289		24,632	6,661	1,117,260
Government National Mortgage Association	Government National Mortgage Association	251,447		6,957	89	258,315	Government National Mortgage Association	132,978		2,294	613	134,659
Total mortgage-backed securities available-for-sale	Total mortgage-backed securities available-for-sale	2,739,699		84,894	375	2,824,218	Total mortgage-backed securities available-for-sale	2,493,200		46,433	11,871	2,527,762
Total debt securities available-for-sale	Total debt securities available-for-sale	$	2,744,200	85,134	375	2,828,959	Total debt securities available-for-sale	$	2,496,836	46,608	11,871	2,531,573

~~Table of Contents~~


		At September 30, 2020								At September 30, 2021
		Amortized cost		Net unrealized losses (1)	Carrying value	Gross unrecognized gains (2)	Gross unrecognized losses (2)	Estimated fair value		Amortized cost		Net unrealized losses (1)	Carrying value	Gross unrecognized gains (2)	Gross unrecognized losses (2)	Estimated fair value
		(In thousands)								(In thousands)
Held-to-maturity:	Held-to-maturity:								Held-to-maturity:
Debt securities:	Debt securities:								Debt securities:
Government-sponsored enterprises	Government-sponsored enterprises	$	81,690	0	81,690	4,263	64	85,889	Government-sponsored enterprises	$	133,358	—	133,358	2,295	2,777	132,876
Municipal bonds	Municipal bonds	249,141		0	249,141	10,777	222	259,696	Municipal bonds	215,463		—	215,463	10,908	908	225,463
Corporate and other debt securities	Corporate and other debt securities	128,643		13,894	114,749	17,708	2,033	130,424	Corporate and other debt securities	140,985		12,879	128,106	35,678	277	163,507
Total debt securities held-to-maturity	Total debt securities held-to-maturity	459,474		13,894	445,580	32,748	2,319	476,009	Total debt securities held-to-maturity	489,806		12,879	476,927	48,881	3,962	521,846
Mortgage-backed securities:	Mortgage-backed securities:								Mortgage-backed securities:
Federal Home Loan Mortgage Corporation	Federal Home Loan Mortgage Corporation	288,394		82	288,312	9,871	22	298,161	Federal Home Loan Mortgage Corporation	354,446		36	354,410	5,689	3,636	356,463
Federal National Mortgage Association	Federal National Mortgage Association	455,310		214	455,096	22,515	0	477,611	Federal National Mortgage Association	418,020		92	417,928	14,991	628	432,291
Government National Mortgage Association	Government National Mortgage Association	50,717		0	50,717	2,195	0	52,912	Government National Mortgage Association	25,417		—	25,417	940	—	26,357

Total mortgage-backed securities held-to-maturity	Total mortgage-backed securities held-to-maturity	794,421		296	794,125	34,581	22	828,684	Total mortgage-backed securities held-to-maturity	797,883		128	797,755	21,620	4,264	815,111
Total debt securities held-to-maturity	Total debt securities held-to-maturity	$	1,253,895	14,190	1,239,705	67,329	2,341	1,304,693	Total debt securities held-to-maturity	$	1,287,689	13,007	1,274,682	70,501	8,226	1,336,957
Allowance for credit losses	Allowance for credit losses				3,095				Allowance for credit losses				1,999
Total debt securities held-to-maturity, net of allowance for credit losses	Total debt securities held-to-maturity, net of allowance for credit losses				1,236,610				Total debt securities held-to-maturity, net of allowance for credit losses				1,272,683
Total debt securities held-to-maturity, net of allowance for credit losses

(1) Net unrealized losses of held-to-maturity corporate and other debt securities represent the ~~previously recorded~~ other than temporary ~~charge~~impairment related to other non-credit factors ~~and~~recorded prior to the adoption of the current expected credit losses accounting standard on January 1, 2020 that is being amortized through accumulated other comprehensive income over the remaining life of the securities. For mortgage-backed securities, it represents the net loss on previously designated ~~available-for sale~~available-for-sale debt securities transferred to held-to-maturity at fair value and is being amortized through accumulated other comprehensive income over the remaining life of the securities.

(2) Unrecognized gains and losses of held-to-maturity debt securities are not reflected in the financial statements, as they represent fair value fluctuations from the later of: (i) the date a security is designated as held-to-maturity; or (ii) the date that an other than temporary impairment charge is recognized on a held-to-maturity security, through the date of the balance sheet. Effective January 1, 2020, held-to-maturity debt securities are evaluated for credit losses to determine if an allowance is necessary. Any allowance required is recorded through the provision for credit losses.

At December 31, 2019
Carrying value Gross
unrealized
gains Gross
unrealized
losses Estimated
fair value
(In thousands)
Available-for-sale:
Mortgage-backed securities:
Federal Home Loan Mortgage Corporation $ 1,223,587 17,528 736 1,240,379
Federal National Mortgage Association 1,159,446 18,917 314 1,178,049
Government National Mortgage Association 273,676 3,333 47 276,962
Total debt securities available-for-sale $ 2,656,709 39,778 1,097 2,695,390

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At December 31, 2019
Amortized cost
Net unrealized losses (1)
Carrying
value
Gross
unrecognized
gains (2)
Gross
unrecognized
losses (2)
Estimated
fair value
(In thousands)
Held-to-maturity:
Debt securities:
Government-sponsored enterprises $ 58,624 0 58,624 188 500 58,312
Municipal bonds 143,151 0 143,151 3,797 43 146,905
Corporate and other debt securities 87,322 14,785 72,537 26,158 0 98,695
Total debt securities held-to-maturity 289,097 14,785 274,312 30,143 543 303,912
Mortgage-backed securities:
Federal Home Loan Mortgage Corporation 262,079 134 261,945 3,533 129 265,349
Federal National Mortgage Association 542,583 373 542,210 7,959 307 549,862
Government National Mortgage Association 70,348 0 70,348 633 0 70,981
Total mortgage-backed securities held-to-maturity 875,010 507 874,503 12,125 436 886,192
Total debt securities held-to-maturity $ 1,164,107 15,292 1,148,815 42,268 979 1,190,104


	At December 31, 2020
	Amortized cost		Gross unrealized gains	Gross unrealized losses	Estimated fair value
	(In thousands)
Available-for-sale:
Debt securities:
Government-sponsored enterprises	$	4,260	222	—	4,482

Mortgage-backed securities:
Federal Home Loan Mortgage Corporation	1,286,195		30,930	73	1,317,052
Federal National Mortgage Association	1,167,057		38,568	199	1,205,426
Government National Mortgage Association	225,810		5,700	33	231,477

Total mortgage-backed securities available-for-sale	2,679,062		75,198	305	2,753,955
Total debt securities available-for-sale	$	2,683,322	75,420	305	2,758,437


	At December 31, 2020
	Amortized cost		Net unrealized losses (1)	Carrying value	Gross unrecognized gains (2)	Gross unrecognized losses (2)	Estimated fair value
	(In thousands)
Held-to-maturity:
Debt securities:
Government-sponsored enterprises	$	109,016	—	109,016	4,107	709	112,414
Municipal bonds	246,601		—	246,601	14,990	—	261,591
Corporate and other debt securities	144,209		13,644	130,565	20,033	885	149,713
Total debt securities held-to-maturity	499,826		13,644	486,182	39,130	1,594	523,718
Mortgage-backed securities:
Federal Home Loan Mortgage Corporation	308,285		66	308,219	9,733	266	317,686
Federal National Mortgage Association	413,601		175	413,426	20,905	—	434,331
Government National Mortgage Association	43,290		—	43,290	1,847	—	45,137


Total mortgage-backed securities held-to-maturity	765,176		241	764,935	32,485	266	797,154
Total debt securities held-to-maturity	$	1,265,002	13,885	1,251,117	71,615	1,860	1,320,872
Allowance for credit losses				3,264
Total debt securities held-to-maturity, net of allowance for credit losses				1,247,853

(1) Net unrealized losses of held-to-maturity corporate and other debt securities represent the other than temporary ~~charge~~impairment related to other non-credit factors ~~and~~recorded prior to the adoption of the current expected credit losses accounting standard on January 1, 2020 that is being amortized through accumulated other comprehensive income over the remaining life of the securities. For mortgage-backed securities, it represents the net loss on previously designated ~~available-for sale~~available-for-sale debt securities transferred to held-to-maturity at fair value and is being amortized through accumulated other comprehensive income over the remaining life of the securities.

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Gross unrealized losses on debt securities and the estimated fair value of the related securities, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at September 30, ~~2020~~2021 and December 31, ~~2019,~~2020, were as follows:


		September 30, 2020								September 30, 2021
		Less than 12 months			12 months or more		Total			Less than 12 months			12 months or more		Total
		Estimated fair value		Unrealized losses	Estimated fair value	Unrealized losses	Estimated fair value	Unrealized losses		Estimated fair value		Unrealized losses	Estimated fair value	Unrealized losses	Estimated fair value	Unrealized losses
		(In thousands)								(In thousands)
Available-for-sale:	Available-for-sale:								Available-for-sale:

Mortgage-backed securities:	Mortgage-backed securities:								Mortgage-backed securities:
Federal Home Loan Mortgage Corporation	Federal Home Loan Mortgage Corporation	$	40,309	10	0	0	40,309	10	Federal Home Loan Mortgage Corporation	$	261,325	4,597	—	—	261,325	4,597
Federal National Mortgage Association	Federal National Mortgage Association	100,557		276	0	0	100,557	276	Federal National Mortgage Association	368,423		6,623	98,283	38	466,706	6,661
Government National Mortgage Association	Government National Mortgage Association	43,399		89	0	0	43,399	89	Government National Mortgage Association	30,203		613	—	—	30,203	613

Total debt securities available-for-sale	Total debt securities available-for-sale	184,265		375	0	0	184,265	375	Total debt securities available-for-sale	659,951		11,833	98,283	38	758,234	11,871
Held-to-maturity:	Held-to-maturity:								Held-to-maturity:
Debt securities:	Debt securities:								Debt securities:
Government-sponsored enterprises	Government-sponsored enterprises	9,743		64	0	0	9,743	64	Government-sponsored enterprises	89,242		2,777	—	—	89,242	2,777
Municipal bonds	Municipal bonds	8,044		222	0	0	8,044	222	Municipal bonds	19,412		908	—	—	19,412	908
Corporate and other debt securities	Corporate and other debt securities	33,676		2,033	0	0	33,676	2,033	Corporate and other debt securities	6,750		277	—	—	6,750	277
Total debt securities held-to-maturity	Total debt securities held-to-maturity	51,463		2,319	0	0	51,463	2,319	Total debt securities held-to-maturity	115,404		3,962	—	—	115,404	3,962
Mortgage-backed securities:	Mortgage-backed securities:								Mortgage-backed securities:
Federal Home Loan Mortgage Corporation	Federal Home Loan Mortgage Corporation	12,096		22	0	0	12,096	22	Federal Home Loan Mortgage Corporation	176,957		2,954	11,366	682	188,323	3,636
Federal National Mortgage Association									Federal National Mortgage Association	66,647		628	—	—	66,647	628

Total mortgage-backed securities held-to-maturity									Total mortgage-backed securities held-to-maturity	243,604		3,582	11,366	682	254,970	4,264
Total debt securities held-to-maturity	Total debt securities held-to-maturity	63,559		2,341	0	0	63,559	2,341	Total debt securities held-to-maturity	359,008		7,544	11,366	682	370,374	8,226
Total	Total	$	247,824	2,716	0	0	247,824	2,716	Total	$	1,018,959	19,377	109,649	720	1,128,608	20,097


		December 31, 2019								December 31, 2020
		Less than 12 months			12 months or more		Total			Less than 12 months			12 months or more		Total
		Estimated fair value		Unrealized losses	Estimated fair value	Unrealized losses	Estimated fair value	Unrealized losses		Estimated fair value		Unrealized losses	Estimated fair value	Unrealized losses	Estimated fair value	Unrealized losses
		(In thousands)								(In thousands)
Available-for-sale:	Available-for-sale:								Available-for-sale:

Mortgage-backed securities:	Mortgage-backed securities:								Mortgage-backed securities:
Federal Home Loan Mortgage Corporation	Federal Home Loan Mortgage Corporation	$	215,160	736	0	0	215,160	736	Federal Home Loan Mortgage Corporation	$	60,502	73	—	—	60,502	73
Federal National Mortgage Association	Federal National Mortgage Association	80,298		297	12,972	17	93,270	314	Federal National Mortgage Association	123,329		199	—	—	123,329	199
Government National Mortgage Association	Government National Mortgage Association	20,078		47	0	0	20,078	47	Government National Mortgage Association	9,062		33	—	—	9,062	33

Total debt securities available-for-sale	Total debt securities available-for-sale	315,536		1,080	12,972	17	328,508	1,097	Total debt securities available-for-sale	192,893		305	—	—	192,893	305
Held-to-maturity:	Held-to-maturity:								Held-to-maturity:
Debt securities:	Debt securities:								Debt securities:
Government-sponsored enterprises	Government-sponsored enterprises	31,696		500	0	0	31,696	500	Government-sponsored enterprises	66,558		709	—	—	66,558	709
Municipal bonds		23,596		43	0	0	23,596	43

Corporate and other debt securities									Corporate and other debt securities	15,038		885	—	—	15,038	885
Total debt securities held-to-maturity	Total debt securities held-to-maturity	55,292		543	0	0	55,292	543	Total debt securities held-to-maturity	81,596		1,594	—	—	81,596	1,594
Mortgage-backed securities:	Mortgage-backed securities:								Mortgage-backed securities:
Federal Home Loan Mortgage Corporation	Federal Home Loan Mortgage Corporation	20,860		64	11,065	65	31,925	129	Federal Home Loan Mortgage Corporation	40,013		266	—	—	40,013	266
Federal National Mortgage Association		7,911		52	37,316	255	45,227	307

Total mortgage-backed securities held-to-maturity		28,771		116	48,381	320	77,152	436

Total debt securities held-to-maturity	Total debt securities held-to-maturity	84,063		659	48,381	320	132,444	979	Total debt securities held-to-maturity	121,609		1,860	—	—	121,609	1,860
Total	Total	$	399,599	1,739	61,353	337	460,952	2,076	Total	$	314,502	2,165	—	—	314,502	2,165

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We conduct periodic reviews of individual securities to assess whether an allowance for credit loss is required. Held-to-maturity debt securities are evaluated for expected credit loss utilizing a historical loss methodology, or a discounted cash flows approach which is assessed against the book value of the investment security excluding accrued interest. ~~Refer to~~ ~~Note 1, Summary of Significant Accounting Principles,~~ ~~for additional information.~~ Available-for-sale debt securities are evaluated to determine if a decline in fair value below the amortized cost basis has resulted from a credit loss or other factors. An impairment on available-for-sale securities related to credit factors would be recorded through an allowance for credit losses. The allowance iswould be limited to the amount by which the security’s amortized cost basis exceeds the fair value. An impairment on available-for-sale securities that has not been recorded through an allowance for credit losses shall be recorded through other comprehensive income, net of applicable taxes. Investment securities will be written down to fair value through the consolidated statement of income when management intends to sell (or may be required to sell) the securities before they recover in value.

The majority of our held-to-maturity debt securities portfolio is comprised of agency mortgage-backed securities. For agency (FNMA, FHLMC and GNMA) mortgage-backed securities, and other agency debt instruments, the expectation of non-payment is zero. The timely payment of principal and interest on FNMA and FHLMC securities is guaranteed by each corporation. As each of these corporations is in conservatorship with the federal government, the payment guarantees are considered implicit obligations of the US government. GNMA securities carry the full faith and credit guarantee of the federal government. Because of the existence of government guarantees of timely payment of principal and interest, expected losses on agency securities are assumed to be zero. Changes in the fair value of agency securities in this portfolio are primarily driven by changes in interest rates and other non-credit related factors. At September 30, ~~2020,~~2021, our held-to-maturity debt securities portfolio had an allowance for credit losses of ~~$3.1~~$2.0 million. The allowance is related to non-agency corporate and other debt securities. The majority of the allowance is related to a portfolio of collateralized debt obligations backed by pooled TruPS, principally issued by banks and to a lesser extent insurance companies and real estate investment trusts. At September 30, ~~2020,~~2021, the TruPS had a carrying value before allowance for credit losses and estimated fair value of ~~$49.3~~$50.6 million and ~~$64.1~~$82.8 million, respectively. The Company does not have the intent to sell these securities and does not believe it is more likely than not that the Company will be required to sell these securities before a recovery of amortized cost. Refer to Note 7, Allowance for Credit Losses, for additional information on the Company’s allowance for credit losses.

At September 30, ~~2020,~~2021, the available-for-sale debt securities portfolio was almost entirely comprised of agency securities. As such, the unrealized losses in this portfolio are primarily driven by changes in interest rates and other non-credit related factors. The Company does not have the intent to sell these securities and does not believe it is more likely than not that the Company will be required to sell these securities before a recovery of amortized cost. As of September 30, ~~2020,~~2021, there is no allowance for credit losses related to the Company’s available-for-sale debt securities as the decline in fair value did not result from credit issues.

For additional information about the review of securities under previous other-than-temporary impairment guidance, refer to page 82 in Note 4 to the consolidated financial statements included under Item 15. Exhibits and Financial Statement Schedules in the Company’s December 31, 2019 Form 10-K.

Debt securities with a carrying value before allowance for credit losses of ~~$1.57~~$1.91 billion and an estimated fair value of ~~$1.62~~$1.95 billion are pledged to secure borrowings and municipal deposits. The contractual maturities of the Bank’s mortgage-backed securities are generally less than 20 years with effective lives expected to be shorter due to prepayments. Expected maturities may differ from contractual maturities due to underlying loan prepayments or early call privileges of the issuer; therefore, mortgage-backed securities are not included in the following table. Excluding the allowance for credit losses, the amortized cost and estimated fair value of debt securities other than mortgage-backed securities at September 30, ~~2020,~~2021, by contractual maturity, are shown below.


		September 30, 2020				September 30, 2021
		Carrying value		Estimated fair value		Carrying value		Estimated fair value
		(In thousands)				(In thousands)
Due in one year or less	Due in one year or less	$	58,975	58,975	Due in one year or less	$	10,490	10,503
Due after one year through five years	Due after one year through five years	10,294		10,534	Due after one year through five years	10,367		10,549
Due after five years through ten years	Due after five years through ten years	107,658		110,853	Due after five years through ten years	158,622		161,926
Due after ten years	Due after ten years	268,653		295,647	Due after ten years	301,084		342,679
Total	Total	$	445,580	476,009	Total	$	480,563	525,657

Gains and Losses

Gains and losses ~~on the sale of all securities~~ are determined using the specific identification method. The Company recognized net unrealized losses on equity securities of $931,000 and $147,000, respectively, for the three and nine months ended September 30, 2021. For the three months ended September 30, 2021, the Company received proceeds of $1.1 million from the sale of equity securities which resulted in no net gain. For the nine months ended September 30, 2021, the Company received proceeds of

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$34.0 million from the sale of equity securities which resulted in a net loss of $248,000 and received proceeds of $8.2 million from the sale of available-for-sale debt securities which resulted in gains of $398,000.

For the three and nine months ended September 30, 2020, there were 0no sales of securities; however, ~~for the nine months ended September 30,~~

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~~2020,~~ the Company received proceeds of $16.5 million from the call of a held-to-maturity debt security which resulted in a gain of $124,000 and received a principal payment of $26,000 on a held-to-maturity debt ~~security.~~security during the nine months ended September 30, 2020. The Company recognized net unrealized losses on equity securities of $8,000 and net unrealized gains of $99,000, respectively, for the three and nine months ended September 30, 2020.

For the three months ended September 30, 2019, there were 0 sales of securities. For the nine months ended September 30, 2019, the Company received proceeds of $399.4 million on securities sold from the debt securities available-for-sale portfolio resulting in a loss of $5.7 million recognized in non-interest income. Proceeds from the sale were reinvested in higher yielding debt securities. There were 0 other sales of securities for the nine months ended September 30, 2019. The Company recognized net unrealized gains on equity securities of $30,000 and $165,000, respectively, for the three and nine months ended September 30, 2019.

6. Loans Receivable, Net

~~The~~On January 1, 2020, the Company adopted ASU 2016-13, “Financial Instruments- Credit Losses (Topic 326)” that is referred to as the ~~CECL~~current expected credit loss methodology, (“CECL”) for measuring credit ~~losses as of January 1, 2020.~~losses. Refer to Note 7, Allowance for Credit Losses, for further details. All disclosures as of and for the ~~three and~~ nine months ended September 30, 2021 and December 31, 2020 are presented in accordance with Topic 326. ~~The Company did not recast comparative financial periods and has presented those disclosures under previously applicable GAAP.~~

The detail of the loan portfolio as of September 30, ~~2020~~2021 and December 31, ~~2019~~2020 was as follows:


		September 30, 2020		December 31, 2019		September 30, 2021		December 31, 2020
		(In thousands)				(In thousands)
Multi-family loans	Multi-family loans	$	7,256,015	7,813,236	Multi-family loans	$	7,655,135	7,122,840
Commercial real estate loans	Commercial real estate loans	4,912,155		4,831,347	Commercial real estate loans	5,135,123		4,947,212
Commercial and industrial loans	Commercial and industrial loans	3,399,059		2,951,306	Commercial and industrial loans	3,933,926		3,575,641
Construction loans	Construction loans	341,449		262,866	Construction loans	509,620		404,367
Total commercial loans	Total commercial loans	15,908,678		15,858,755	Total commercial loans	17,233,804		16,050,060
Residential mortgage loans	Residential mortgage loans	4,407,224		5,144,718	Residential mortgage loans	3,930,683		4,119,894
Consumer and other loans	Consumer and other loans	681,940		699,796	Consumer and other loans	740,827		702,801
Total loans	Total loans	20,997,842		21,703,269	Total loans	21,905,314		20,872,755
Deferred fees, premiums and other, net (1)		(12,274)		907
Deferred fees, premiums and accretable purchase accounting adjustments, net					Deferred fees, premiums and accretable purchase accounting adjustments, net	(17,071)		(9,318)
Allowance for credit losses	Allowance for credit losses	(287,511)		(228,120)	Allowance for credit losses	(263,515)		(282,986)
Net loans	Net loans	$	20,698,057	21,476,056	Net loans	$	21,624,728	20,580,451

~~(1) Included in deferred fees and premiums are accretable purchase accounting adjustments in connection with loans acquired.~~

Credit Quality Indicators

The Company has lending policies and procedures that provide target market, underwriting and other criteria for identified lending segments to codify the level of credit risk the Company is willing to accept. Approval authority levels are delegated to qualified individuals and approval bodies for the extension of credit within the guidance of these policies and procedures. In addition, the Company maintains an independent loan review department that reviews and validates risk assessment on a continual basis.

The Company assigns ratings to borrowers and transactions based on the assessment of a borrower’s ability to service their debt based on relevant information such as: current financial information, historical payment experience, credit documentation, public information and current economic trends, among other factors.

In connection with the adoption of ~~Topic 326~~CECL on January 1, 2020, the Company implemented new risk rating models for borrowers and transactions within its commercial loan portfolio. The risk rating methodology transitioned to a dual risk rating framework which bifurcates ratings into probability of default (PD) and loss given default (LGD). Relevant risks are evaluated prior to approving a transaction to determine if the transaction is within the Company’s risk appetite and the appropriate rating. Strong credit analysis requires current, reliable financial information and documented assessment of the customer’s:

•ability to perform in accordance with the terms of the credit, including adherence to covenants;

•assets and liabilities, liquidity, net worth, and contingent and other off-balance sheet items;

•tax liabilities;

•cash reserves and ability to convert assets to cash;

•income statement and the sources, level, stability, and quality of ~~earnings:~~earnings;

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•projected performance, sensitized for stressed circumstances; and

•industry performance relative to peers and industry.

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Each commercial credit facility is assigned a PD and LGD rating for the purpose of informing a credit decision, facilitating the determination of the expected level of credit loss and other portfolio management activities (as well as relationship profitability). The dual risk rating framework and risk rating methodologies allow for consistent determination of risk across the Commercial business as indicated by the risk rating assigned. The methodology used by the Bank applies the same criteria for identification of a credit as for the regulatory definitions of risk ratings:

Pass - “Pass” assets are well protected by the current net worth and paying capacity of the obligor (or guarantors, if any) or by the fair value, less cost to acquire and sell, of any underlying collateral in a timely manner.

Watch - A “Watch” asset has all the characteristics of a Pass asset but warrants more than the normal level of supervision. These loans may require more detailed reporting to management because some aspects of underwriting may not conform to policy or adverse events may have affected or could affect the cash flow or ability to continue operating profitably, provided, however, the events do not constitute an undue credit risk. Residential and consumer loans delinquent 30-59 days are considered watch if not a troubled debt restructuring (“TDR”). In addition, any residential or consumer loan currently on deferment in accordance with the CARES Act or the interagency statement issued by bank regulatory agencies are considered watch.

Special Mention - A “Special Mention” asset has potential weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the asset or in the institution’s credit position at some future date. Special Mention assets are not adversely classified and do not expose an institution to sufficient risk to warrant adverse classification. Residential and consumer loans delinquent 60-89 days are considered special mention if not a TDR.

Substandard - A “Substandard” asset is inadequately protected by the current worth and paying capacity of the obligor or by the collateral pledged, if any. Assets so classified must 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. Residential and consumer loans delinquent 90 days or greater as well as TDRs are considered substandard.

Doubtful - An asset classified “Doubtful” has all the weaknesses inherent in one classified substandard with the added characteristic that the weaknesses make collection or liquidation in full highly questionable and improbable on the basis of currently known facts, conditions, and values.

Loss - An asset or portion thereof, classified “Loss” is considered uncollectible and of such little value that its continuance on the institution’s books as an asset, without establishment of a specific valuation allowance or charge-off, is not warranted. This classification does not necessarily mean that an asset has no recovery or salvage value; but rather, there is much doubt about whether, how much, or when the recovery will occur. As such, it is not practical or desirable to defer the write-off.

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The following table presents the risk category of loans as of September 30, ~~2020~~2021 by class of loan and vintage year:


		Term Loans by Origination Year											Term Loans by Origination Year
		2020		2019	2018	2017	2016	Prior	Revolving Loans		Total		2021		2020	2019	2018	2017	Prior	Revolving Loans	Total
		(In thousands)								(In thousands)

Multi-family	Multi-family											Multi-family
Pass	Pass	$	714,438	584,165	1,173,766	691,828	1,094,102	1,502,917	9,202		5,770,418	Pass	$	1,840,359	959,801	482,833	800,467	496,385	1,558,078	7,205	6,145,128
Watch	Watch	15,890		118,314	214,485	117,757	136,394	250,427	0		853,267	Watch	28,466		17,514	87,446	271,270	100,945	359,263	1,001	865,905
Special mention	Special mention	4,578		0	60,203	12,823	91,279	94,057	0		262,940	Special mention	—		—	—	21,715	14,935	154,572	—	191,222
Substandard	Substandard	0		5,053	0	11,415	83,298	268,233	1,391		369,390	Substandard	—		—	7,255	13,857	20,064	409,813	1,891	452,880

Total Multi-family	Total Multi-family	734,906		707,532	1,448,454	833,823	1,405,073	2,115,634	10,593		7,256,015	Total Multi-family	1,868,825		977,315	577,534	1,107,309	632,329	2,481,726	10,097	7,655,135
Commercial real estate	Commercial real estate											Commercial real estate
Pass	Pass	356,538		769,134	698,811	503,280	501,682	1,257,028	23,468		4,109,941	Pass	572,305		528,024	673,703	579,294	457,991	1,377,149	35,790	4,224,256
Watch	Watch	5,196		98,135	83,156	42,028	32,543	88,866	3,449		353,373	Watch	10,042		73,215	108,599	114,693	52,897	162,973	3,527	525,946
Special mention	Special mention	9,000		4,948	15,595	16,684	82,123	97,628	5,534		231,512	Special mention	—		383	7,029	24,476	15,035	103,961	1,646	152,530
Substandard	Substandard	0		0	5,512	39,833	46,784	125,200	0		217,329	Substandard	—		—	—	26,453	31,810	174,128	—	232,391

Total Commercial real estate	Total Commercial real estate	370,734		872,217	803,074	601,825	663,132	1,568,722	32,451		4,912,155	Total Commercial real estate	582,347		601,622	789,331	744,916	557,733	1,818,211	40,963	5,135,123
Commercial and industrial	Commercial and industrial											Commercial and industrial
Pass	Pass	767,028		629,363	329,700	147,277	196,927	394,161	171,026		2,635,482	Pass	597,479		785,048	663,076	337,196	155,281	435,335	287,367	3,260,782
Watch	Watch	36,337		103,990	32,748	92,865	16,428	36,531	48,772		367,671	Watch	45,851		18,324	84,845	28,194	22,940	41,026	41,320	282,500
Special mention	Special mention	1,167		108,694	91,743	24,436	21,388	78,678	6,054		332,160	Special mention	—		15,136	134,373	58,237	10,442	79,931	1,500	299,619
Substandard	Substandard	563		5,995	7,659	4,504	6,693	24,227	14,105		63,746	Substandard	—		3,862	5,499	3,500	49,827	24,263	4,074	91,025

Total Commercial and industrial	Total Commercial and industrial	805,095		848,042	461,850	269,082	241,436	533,597	239,957		3,399,059	Total Commercial and industrial	643,330		822,370	887,793	427,127	238,490	580,555	334,261	3,933,926
Construction	Construction											Construction
Pass	Pass	42,328		65,457	23,375	0	0	0	159,486		290,646	Pass	71,295		121,996	38,310	12,000	—	—	212,034	455,635
Watch	Watch	6,360		0	0	0	0	0	17,214		23,574	Watch	—		—	2,543	—	—	—	—	2,543
Special mention	Special mention	0		0	15,099	0	0	0	0		15,099	Special mention	—		—	—	—	—	—	28,067	28,067
Substandard	Substandard	0		0	0	0	0	0	12,130		12,130	Substandard	—		—	—	23,375	—	—	—	23,375

Total Construction	Total Construction	48,688		65,457	38,474	0	0	0	188,830		341,449	Total Construction	71,295		121,996	40,853	35,375	—	—	240,101	509,620
Residential mortgage	Residential mortgage											Residential mortgage
Pass	Pass	350,568		531,692	495,300	617,633	446,886	1,778,689	0		4,220,768	Pass	981,933		519,062	281,213	270,561	336,506	1,441,290	—	3,830,565
Watch	Watch	2,100		16,913	15,577	15,188	11,175	65,589	0		126,542	Watch	—		608	6,751	5,163	10,601	27,468	—	50,591
Special mention	Special mention	0		0	713	0	0	3,258	0		3,971	Special mention	—		—	119	300	—	1,795	—	2,214
Substandard	Substandard	340		1,523	1,294	1,342	247	51,098	99		55,943	Substandard	—		—	1,523	2,508	1,737	41,455	90	47,313

Total residential mortgage	Total residential mortgage	353,008		550,128	512,884	634,163	458,308	1,898,634	99		4,407,224	Total residential mortgage	981,933		519,670	289,606	278,532	348,844	1,512,008	90	3,930,683
Consumer and other	Consumer and other											Consumer and other
Pass	Pass	4,345		8,115	6,520	8,023	5,890	61,947	570,363		665,203	Pass	5,655		3,202	4,685	4,847	9,746	44,532	658,524	731,191
Watch	Watch	0		119	160	56	274	1,002	11,718		13,329	Watch	—		—	37	137	111	204	7,061	7,550
Special mention	Special mention	0		0	0	0	0	0	1,124		1,124	Special mention	—		—	—	—	106	—	164	270
Substandard	Substandard	0		0	0	0	0	1,817	467		2,284	Substandard	—		—	—	—	299	1,113	404	1,816

Total Consumer and other	Total Consumer and other	4,345		8,234	6,680	8,079	6,164	64,766	583,672		681,940	Total Consumer and other	5,655		3,202	4,722	4,984	10,262	45,849	666,153	740,827
Total		$	2,316,776	3,051,610	3,271,416	2,346,972	2,774,113	6,181,353	1,055,602		20,997,842
All classes												All classes
Pass												Pass	4,069,026		2,917,133	2,143,820	2,004,365	1,455,909	4,856,384	1,200,920	18,647,557
Watch												Watch	84,359		109,661	290,221	419,457	187,494	590,934	52,909	1,735,035
Special mention												Special mention	—		15,519	141,521	104,728	40,518	340,259	31,377	673,922
Substandard												Substandard	—		3,862	14,277	69,693	103,737	650,772	6,459	848,800

Total loans												Total loans	$	4,153,385	3,046,175	2,589,839	2,598,243	1,787,658	6,438,349	1,291,665	21,905,314

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The following table presents the risk category of loans as of December 31, ~~2019~~2020 by class of ~~loan:~~loan and vintage year:


		Pass		Watch	Special Mention	Substandard	Doubtful	Loss	Total		Term Loans by Origination Year
		(In thousands)									2020		2019	2018	2017	2016	Prior	Revolving Loans	Total
Commercial loans:
											(In thousands)

Multi-family	Multi-family	$	6,326,412	942,438	167,748	376,638	0	0	7,813,236	Multi-family
Pass										Pass	$	1,002,259	515,446	912,910	601,440	850,781	1,199,133	6,986	5,088,955
Watch										Watch	21,366		153,404	374,363	135,348	299,413	220,668	—	1,204,562
Special mention										Special mention	4,560		—	86,119	32,506	48,020	205,916	—	377,121
Substandard										Substandard	—		7,285	8,436	17,580	139,975	277,535	1,391	452,202

Total Multi-family										Total Multi-family	1,028,185		676,135	1,381,828	786,874	1,338,189	1,903,252	8,377	7,122,840
Commercial real estate	Commercial real estate	4,023,642		489,514	118,426	199,765	0	0	4,831,347	Commercial real estate
Pass										Pass	529,244		684,807	646,708	461,097	495,822	1,081,512	32,509	3,931,699
Watch										Watch	87,137		132,932	117,598	74,379	61,794	165,702	3,428	642,970
Special mention										Special mention	375		6,988	5,279	13,295	51,880	71,745	250	149,812
Substandard										Substandard	—		—	8,212	40,024	29,488	144,758	249	222,731

Total Commercial real estate										Total Commercial real estate	616,756		824,727	777,797	588,795	638,984	1,463,717	36,436	4,947,212
Commercial and industrial	Commercial and industrial	2,031,148		693,397	111,389	115,372	0	0	2,951,306	Commercial and industrial
Pass										Pass	1,007,949		619,275	328,917	156,596	176,557	348,278	203,302	2,840,874
Watch										Watch	49,208		115,888	43,791	48,230	28,708	34,697	31,931	352,453
Special mention										Special mention	16,813		111,399	48,887	14,770	14,102	76,554	798	283,323
Substandard										Substandard	—		6,128	8,236	42,297	4,341	22,707	15,282	98,991

Total Commercial and industrial										Total Commercial and industrial	1,073,970		852,690	429,831	261,893	223,708	482,236	251,313	3,575,641
Construction	Construction	169,236		75,319	0	18,311	0	0	262,866	Construction
Total commercial loans		12,550,438		2,200,668	397,563	710,086	0	0	15,858,755
Pass										Pass	85,915		58,041	23,375	—	—	—	197,437	364,768
Watch										Watch	6,891		5,350	—	—	—	—	—	12,241
Special mention										Special mention	—		—	15,228	—	—	—	—	15,228
Substandard										Substandard	—		—	—	—	—	—	12,130	12,130

Total Construction										Total Construction	92,806		63,391	38,603	—	—	—	209,567	404,367
Residential mortgage	Residential mortgage	5,074,334		14,414	5,429	50,541	0	0	5,144,718	Residential mortgage
Pass										Pass	556,761		450,363	425,617	530,676	407,201	1,601,457	—	3,972,075
Watch										Watch	809		12,929	13,465	14,704	8,517	44,299	—	94,723
Special mention										Special mention	—		—	584	—	—	3,402	—	3,986
Substandard										Substandard	—		1,523	1,972	1,336	246	43,936	97	49,110

Total residential mortgage										Total residential mortgage	557,570		464,815	441,638	546,716	415,964	1,693,094	97	4,119,894
Consumer and other	Consumer and other	687,302		9,157	1,174	2,163	0	0	699,796	Consumer and other
Total		$	18,312,074	2,224,239	404,166	762,790	0	0	21,703,269
Pass										Pass	5,031		6,853	5,693	7,448	6,692	57,103	601,481	690,301
Watch										Watch	—		39	137	56	156	440	7,655	8,483
Special mention										Special mention	—		—	—	—	—	292	1,184	1,476
Substandard										Substandard	—		—	—	—	—	1,796	745	2,541

Total Consumer and other										Total Consumer and other	5,031		6,892	5,830	7,504	6,848	59,631	611,065	702,801
All classes										All classes
Pass										Pass	3,187,159		2,334,785	2,343,220	1,757,257	1,937,053	4,287,483	1,041,715	16,888,672
Watch										Watch	165,411		420,542	549,354	272,717	398,588	465,806	43,014	2,315,432
Special mention										Special mention	21,748		118,387	156,097	60,571	114,002	357,909	2,232	830,946
Substandard										Substandard	—		14,936	26,856	101,237	174,050	490,732	29,894	837,705

Total loans										Total loans	$	3,374,318	2,888,650	3,075,527	2,191,782	2,623,693	5,601,930	1,116,855	20,872,755

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Delinquent and Non-Accrual Loans

In the absence of other intervening factors, loans ~~granted~~on active payment ~~deferrals~~deferral status related to COVID-19 are not reported as past due or placed on non-accrual status ~~provided the borrowers have met the criteria~~ in accordance with the CARES Act ~~or otherwise have met the criteria included in an interagency statement issued by bank regulatory agencies. See~~ ~~Note 1, Summary of Significant Accounting Principles~~.and Interagency Guidance.

The following tables present the payment status of the recorded investment in past due loans as of September 30, ~~2020~~2021 and December 31, ~~2019~~2020 by class of loans:


		September 30, 2020								September 30, 2021
		30-59 Days		60-89 Days	Greater than 90 Days	Total Past Due	Current	Total Loans Receivable		30-59 Days		60-89 Days	Greater than 90 Days	Total Past Due	Current	Total Loans Receivable
		(In thousands)								(In thousands)
Commercial loans:	Commercial loans:								Commercial loans:
Multi-family	Multi-family	$	5,327	2,103	48,402	55,832	7,200,183	7,256,015	Multi-family	$	13,659	9,429	15,193	38,281	7,616,854	7,655,135
Commercial real estate	Commercial real estate	8,881		26,632	5,035	40,548	4,871,607	4,912,155	Commercial real estate	19,658		364	3,455	23,477	5,111,646	5,135,123
Commercial and industrial	Commercial and industrial	3,707		2,191	2,894	8,792	3,390,267	3,399,059	Commercial and industrial	2,289		993	445	3,727	3,930,199	3,933,926
Construction	Construction	0		0	0	0	341,449	341,449	Construction	—		—	—	—	509,620	509,620
Total commercial loans	Total commercial loans	17,915		30,926	56,331	105,172	15,803,506	15,908,678	Total commercial loans	35,606		10,786	19,093	65,485	17,168,319	17,233,804
Residential mortgage	Residential mortgage	11,112		4,092	35,601	50,805	4,356,419	4,407,224	Residential mortgage	5,693		2,726	29,245	37,664	3,893,019	3,930,683
Consumer and other	Consumer and other	7,463		1,124	1,686	10,273	671,667	681,940	Consumer and other	7,089		270	1,329	8,688	732,139	740,827
Total	Total	$	36,490	36,142	93,618	166,250	20,831,592	20,997,842	Total	$	48,388	13,782	49,667	111,837	21,793,477	21,905,314


	December 31, 2020
	30-59 Days		60-89 Days	Greater than 90 Days	Total Past Due	Current	Total Loans Receivable
	(In thousands)
Commercial loans:
Multi-family	$	7,421	—	32,884	40,305	7,082,535	7,122,840
Commercial real estate	12,805		2,450	6,356	21,611	4,925,601	4,947,212
Commercial and industrial	986		3,116	1,769	5,871	3,569,770	3,575,641
Construction	—		—	—	—	404,367	404,367
Total commercial loans	21,212		5,566	41,009	67,787	15,982,273	16,050,060
Residential mortgage	13,768		4,258	29,124	47,150	4,072,744	4,119,894
Consumer and other	5,645		1,476	1,984	9,105	693,696	702,801
Total	$	40,625	11,300	72,117	124,042	20,748,713	20,872,755

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December 31, 2019
30-59 Days 60-89 Days Greater
than 90
Days Total Past
Due Current Total
Loans
Receivable
(In thousands)
Commercial loans:
Multi-family $ 45,606 1,946 22,055 69,607 7,743,629 7,813,236
Commercial real estate 7,958 525 3,787 12,270 4,819,077 4,831,347
Commercial and industrial 7,774 2,767 5,053 15,594 2,935,712 2,951,306
Construction 0 0 0 0 262,866 262,866
Total commercial loans 61,338 5,238 30,895 97,471 15,761,284 15,858,755
Residential mortgage 16,980 6,195 27,729 50,904 5,093,814 5,144,718
Consumer and other 9,157 1,174 1,330 11,661 688,135 699,796
Total $ 87,475 12,607 59,954 160,036 21,543,233 21,703,269

The following table presents non-accrual loans at the ~~date~~dates indicated:


		September 30, 2020			December 31, 2019				September 30, 2021			December 31, 2020
		# of loans	Amount		# of loans	Amount			# of loans	Amount		# of loans	Amount
		(Dollars in thousands)							(Dollars in thousands)
Non-accrual:	Non-accrual:							Non-accrual:
Multi-family	Multi-family	13	$	51,132	8	$	23,322	Multi-family	15	$	19,860	15	$	35,567
Commercial real estate	Commercial real estate	28	17,756		22	11,945		Commercial real estate	22	9,836		29	15,894
Commercial and industrial	Commercial and industrial	19	10,901		18	12,482		Commercial and industrial	16	3,320		21	9,212
Construction	Construction	0	0		0	0		Construction	—	—		—	—
Total commercial loans	Total commercial loans	60	79,789		48	47,749		Total commercial loans	53	33,016		65	60,673
Residential mortgage and consumer	Residential mortgage and consumer	250	52,251		260	47,566		Residential mortgage and consumer	231	43,451		246	46,452
Total non-accrual loans	Total non-accrual loans	310	$	132,040	308	$	95,315	Total non-accrual loans	284	$	76,467	311	$	107,125

The Company recognized ~~$1.2 million~~$844,000 of interest income on non-accrual loans during the nine months ended September 30, ~~2020.~~2021.

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Individually Evaluated Loans

Loans which do not share common risk characteristics with other loans are individually evaluated as part of the process of calculating the allowance for credit losses. The evaluation is determined on an individual basis using the present value of expected cash flows or the fair value of the collateral as of the reporting date. When management determines that the fair value of collateral securing a collateral dependent loan inadequately covers the balance of net principal, the net principal balance is written down to the fair value of the collateral, net of estimated selling costs as applicable, rather than assigning an allowance. See Note 16, Fair Value Measurements,, for information regarding the valuation process for collateral dependent loans.

The following table presents individually evaluated collateral-dependent loans by class of loans at the ~~date~~dates indicated:

~~Table of Contents~~


		September 30, 2020					September 30, 2021				December 31, 2020
		Real Estate		Other	Total		Real Estate		Other	Total	Real Estate		Other	Total
		(Dollars in thousands)					(Dollars in thousands)
Multi-family	Multi-family	$	49,571	0	49,571	Multi-family	$	13,800	—	13,800	$	31,484	—	31,484
Commercial real estate	Commercial real estate	11,749		0	11,749	Commercial real estate	4,366		—	4,366	8,758		—	8,758
Commercial and industrial	Commercial and industrial	3,019		4,611	7,630	Commercial and industrial	—		0	—	2,994		3,549	6,543
Construction	Construction	0		0	0	Construction	—		—	—	—		—	—
Total commercial loans	Total commercial loans	64,339		4,611	68,950	Total commercial loans	18,166		—	18,166	43,236		3,549	46,785
Residential mortgage and consumer	Residential mortgage and consumer	26,401		109	26,510	Residential mortgage and consumer	21,961		87	22,048	25,158		103	25,261
Total collateral-dependent loans	Total collateral-dependent loans	$	90,740	4,720	95,460	Total collateral-dependent loans	$	40,127	87	40,214	$	68,394	3,652	72,046

For leases, the Company records a residual value of the equipment based on an estimate of the equipment’s value at the end of the lease. On at least an annual basis, the Company reviews the residual values of leased assets and assets off-lease and recognizes an impairment charge if the equipment’s current market value has declined below the estimated value. For the year ended December 31, 2019, the Company recorded an impairment charge of $2.6 million as the fair value of certain equipment decreased at a rate greater than originally projected. An additional impairment charge of $2.2 million was recorded on the same equipment class during the year ended December 31, 2020 given the extended downturn in the market for these assets. For the nine months ended September 30, 2021, the Company recognized an impairment charge of $150,000 on the value of equipment coming off lease in the third quarter of 2021.

TDR Loans Included in Non-Accrual

Included in the non-accrual ~~tables~~table above are TDR loans whose payment status is current but the Company has classified as non-accrual as the loans have not maintained their current payment status for six consecutive months under the restructured terms and therefore do not meet the criteria for accrual status. As of September 30, ~~2020~~2021 and December 31, ~~2019,~~2020, these loans are comprised of the following:


		September 30, 2020			December 31, 2019				September 30, 2021			December 31, 2020
		# of loans	Amount		# of loans	Amount			# of loans	Amount		# of loans	Amount
		(Dollars in thousands)							(Dollars in thousands)
TDR with payment status current classified as non-accrual:	TDR with payment status current classified as non-accrual:							TDR with payment status current classified as non-accrual:

Commercial real estate	Commercial real estate	3	$	5,378	2	$	2,360	Commercial real estate	2	$	2,580	3	$	3,907

Residential mortgage and consumer	Residential mortgage and consumer	32	4,828		25	4,218		Residential mortgage and consumer	29	4,840		32	5,634
Total TDR with payment status current classified as non-accrual	Total TDR with payment status current classified as non-accrual	35	$	10,206	27	$	6,578	Total TDR with payment status current classified as non-accrual	31	$	7,420	35	$	9,541

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The following table presents TDR loans which were also 30-89 days delinquent and classified as non-accrual at the dates indicated:


		September 30, 2020			December 31, 2019				September 30, 2021			December 31, 2020
		# of loans	Amount		# of loans	Amount			# of loans	Amount		# of loans	Amount
		(Dollars in thousands)							(Dollars in thousands)
TDR 30-89 days delinquent classified as non-accrual:	TDR 30-89 days delinquent classified as non-accrual:							TDR 30-89 days delinquent classified as non-accrual:

Commercial real estate								Commercial real estate	1	$	166	1	$	1,780

Residential mortgage and consumer	Residential mortgage and consumer	9	$	1,296	18	$	3,331	Residential mortgage and consumer	5	808		10	942
Total TDR 30-89 days delinquent classified as non-accrual	Total TDR 30-89 days delinquent classified as non-accrual	9	$	1,296	18	$	3,331	Total TDR 30-89 days delinquent classified as non-accrual	6	$	974	11	$	2,722

The Company has 0no loans past due 90 days or more delinquent that are still accruing interest.

Guidance on Non-TDR Loan Modifications due to COVID-19

Troubled Debt Restructurings

On a case-by-case basis, the Company may agree to modify the contractual terms of a borrower’s loan to remain competitive and assist customers who may be experiencing financial difficulty, as well as preserve the Company’s position in the loan. If the borrower is experiencing financial difficulties and a concession has been made at the time of such modification, the loan is classified as a TDR.

Substantially all of our TDR loan modifications involve lowering the monthly payments on such loans through either a reduction in interest rate below a market rate, an extension of the term of the loan, or a combination of these two methods. These modifications rarely result in the forgiveness of principal or accrued interest. In addition, we frequently obtain additional collateral or guarantor support when modifying commercial loans. Restructured loans remain on non-accrual status until ~~there has been a sustained period of repayment performance~~payment is reasonably assured (generally six consecutive months of payments) and both principal and interest are deemed collectible.

Consistent with the CARES Act and interagency guidance which allows temporary relief for current borrowers affected by COVID-19, we ~~are working~~have worked with borrowers and ~~granting~~granted certain modifications through programs related to

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COVID-19 relief. At September 30, ~~2020,~~2021, loans with an aggregate outstanding balance of approximately ~~$1.02 billion~~$496.0 million have been granted ~~modifications~~payment deferment as a result of financial disruptions associated with the COVID-19 pandemic. ~~Also, consistent with the CARES Act and the interagency guidelines, such~~Such modifications that met the criteria ~~discussed in Note 1~~ are not included in our TDR totals and discussion below. ~~For more information on the criteria for classifying loans as TDRs, see~~ ~~Note 1, Summary of Significant Accounting Principles - Section 4013 of the CARES Act.~~

The following tables present the total TDR loans at September 30, ~~2020~~2021 and December 31, ~~2019:~~2020:


		September 30, 2020										September 30, 2021
		Accrual			Non-accrual			Total				Accrual			Non-accrual			Total
		# of loans	Amount		# of loans	Amount		# of loans	Amount			# of loans	Amount		# of loans	Amount		# of loans	Amount
		(Dollars in thousands)										(Dollars in thousands)
Commercial loans:

Commercial real estate	Commercial real estate	0	$	0	3	$	5,379	3	$	5,379	Commercial real estate	—	$	—	4	$	4,366	4	$	4,366
Commercial and industrial		1	480		2	3,381		3	3,861

Total commercial loans		1	480		5	8,760		6	9,240

Residential mortgage and consumer	Residential mortgage and consumer	50	9,329		84	17,181		134	26,510		Residential mortgage and consumer	47	8,072		72	13,976		119	22,048
Total	Total	51	$	9,809	89	$	25,941	140	$	35,750	Total	47	$	8,072	76	$	18,342	123	$	26,414

December 31, 2019
Accrual Non-accrual Total
# of loans Amount # of loans Amount # of loans Amount
(Dollars in thousands)
Commercial loans:
Commercial real estate 0 $ 0 3 $ 2,362 3 $ 2,362
Commercial and industrial 3 2,535 2 4,682 5 7,217
Total commercial loans 3 2,535 5 7,044 8 9,579
Residential mortgage and consumer 54 10,549 78 16,458 132 27,007
Total 57 $ 13,084 83 $ 23,502 140 $ 36,586

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	December 31, 2020
	Accrual			Non-accrual			Total
	# of loans	Amount		# of loans	Amount		# of loans	Amount
	(Dollars in thousands)
Commercial loans:

Commercial real estate	—	$	—	4	$	5,687	4	$	5,687
Commercial and industrial	2	630		2	2,919		4	3,549

Total commercial loans	2	630		6	8,606		8	9,236
Residential mortgage and consumer	45	8,602		83	16,659		128	25,261
Total	47	$	9,232	89	$	25,265	136	$	34,497

The following tables present information about TDRs that occurred during the three and nine months ended September 30, ~~2020~~2021 and ~~2019:~~2020:


		Three Months Ended September 30,											Three Months Ended September 30,
		2020					2019						2021					2020
		Number of Loans	Pre-modification Recorded Investment		Post- modification Recorded Investment		Number of Loans	Pre-modification Recorded Investment		Post- modification Recorded Investment			Number of Loans	Pre-modification Recorded Investment		Post- modification Recorded Investment		Number of Loans	Pre-modification Recorded Investment		Post- modification Recorded Investment
		(Dollars in thousands)											(Dollars in thousands)
Troubled Debt Restructurings:	Troubled Debt Restructurings:											Troubled Debt Restructurings:

Commercial real estate	Commercial real estate	1	$	1,780	$	1,780	1	$	96	$	96	Commercial real estate	—	$	—	$	—	1	$	1,780	$	1,780

Commercial and industrial		0	0		0		1	270		270

Residential mortgage and consumer	Residential mortgage and consumer	7	1,813		1,813		4	453		453		Residential mortgage and consumer	—	—		—		7	1,813		1,813

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		Nine Months Ended September 30,											Nine Months Ended September 30,
		2020					2019						2021					2020
		Number of Loans	Pre-modification Recorded Investment		Post- modification Recorded Investment		Number of Loans	Pre-modification Recorded Investment		Post- modification Recorded Investment			Number of Loans	Pre-modification Recorded Investment		Post- modification Recorded Investment		Number of Loans	Pre-modification Recorded Investment		Post- modification Recorded Investment
		(Dollars in thousands)											(Dollars in thousands)
Troubled Debt Restructurings:	Troubled Debt Restructurings:											Troubled Debt Restructurings:

Commercial real estate	Commercial real estate	2	$	3,110	$	3,110	1	$	96	$	96	Commercial real estate	1	$	170	$	170	2	$	3,110	$	3,110

Commercial and industrial	Commercial and industrial	1	933		933		1	270		270		Commercial and industrial	—	—		—		1	933		933
Residential mortgage and consumer	Residential mortgage and consumer	7	1,813		1,813		14	2,850		2,850		Residential mortgage and consumer	4	226		226		7	1,813		1,813

Post-modification recorded investment represents the net book balance immediately following modification.

Collateral dependent loans classified as TDRs were written down to the estimated fair value of the collateral. There were 0$160,000 in charge offs of TDRs of collateral dependent commercial loans during the three months ended September 30, 2021. There were $171,000 in charge offs of TDRs of collateral dependent residential and commercial loans during the nine months ended September 30, 2021. There were no charge offs for TDRs during the three months ended September 30, 2020. There were $163,000 in charge-offs for a TDR of an unsecured commercial and industrial loan during the nine months ended September 30, 2020. ~~There were $156,000 and $729,000 in charge-offs for TDRs of unsecured commercial and industrial loans during the three and nine months ended September 30, 2019, respectively.~~ The allowance for ~~loan~~credit losses associated with the TDRs presented in the above tables totaled ~~$1.6 million and $1.8~~$1.4 million as of September 30, ~~2020~~2021 and December 31, ~~2019, respectively.~~2020.

Loan modifications generally involve the reduction in loan interest rate and/or extension of loan maturity dates and also may include step up interest rates in their modified terms which will impact their weighted average yield in the future. ~~Prior to 2020, all~~The commercial loan modification which qualified as a TDR in the nine months ended September 30, 2021 resulted from a forbearance agreement. The residential ~~loans deemed to be~~loan modifications which qualified as TDRs ~~were modified to reflect a reduction~~ in the nine months ended September 30, 2021 had their maturity extended and/or interest ~~rates~~rate reduced to current market ~~rates.~~terms. Residential loans modified in the nine months ended September 30, 2020 and deemed to be TDRs were granted a payment deferral related to COVID-19 but did not meet the criteria to be excluded from TDR ~~as described in~~ ~~Note 1, Summary of Significant Accounting Principles - Section 4013 of~~under the CARES Act. NaN of the commercial loan modifications which qualified as a TDR in the nine months ended September 30, 2020 were loans which had already been on non-accrual status and were

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granted a deferral of payment due to circumstances related to COVID-19. Another commercial loan modification which qualified as a TDR in the first quarter of 2020 had its maturity extended. ~~The commercial loan modifications which qualified as TDRs in the nine months ended September 30, 2019 had their maturity extended.~~

The following ~~tables present~~table presents information about pre and post modification interest yield for TDRs which occurred during the three and nine months ended September 30, ~~2020~~2021 and ~~2019:~~2020:


		Three Months Ended September 30,											Three Months Ended September 30,
		2020					2019						2021					2020
		Number of Loans	Pre-modification Interest Yield		Post- modification Interest Yield		Number of Loans	Pre-modification Interest Yield		Post- modification Interest Yield			Number of Loans	Pre-modification Interest Yield		Post- modification Interest Yield		Number of Loans	Pre-modification Interest Yield		Post- modification Interest Yield
Troubled Debt Restructurings:	Troubled Debt Restructurings:											Troubled Debt Restructurings:

Commercial real estate	Commercial real estate	1	4.25	%	4.25	%	1	5.75	%	5.75	%	Commercial real estate	—	—	%	—	%	1	4.25	%	4.25	%

Commercial and industrial		0	0	%	0	%	1	6.25	%	6.25	%

Residential mortgage and consumer	Residential mortgage and consumer	7	5.94	%	5.94	%	4	4.00	%	3.82	%	Residential mortgage and consumer	—	—	%	—	%	7	5.94	%	5.94	%

Nine Months Ended September 30,
2020 2019
Number of
Loans Pre-modification
Interest Yield Post-
modification
Interest Yield Number of
Loans Pre-modification
Interest Yield Post-
modification
Interest Yield
Troubled Debt Restructurings:
Commercial real estate 2 4.09 % 4.09 % 1 5.75 % 5.75 %
Commercial and industrial 1 4.75 % 4.75 % 1 6.25 % 6.25 %
Residential mortgage and consumer 7 5.94 % 5.94 % 14 5.07 % 4.96 %


	Nine Months Ended September 30,
	2021					2020
	Number of Loans	Pre-modification Interest Yield		Post- modification Interest Yield		Number of Loans	Pre-modification Interest Yield		Post- modification Interest Yield
Troubled Debt Restructurings:

Commercial real estate	1	6.00	%	6.00	%	2	4.09	%	4.09	%

Commercial and industrial	—	—	%	—	%	1	4.75	%	4.75	%

Residential mortgage and consumer	4	6.82	%	3.07	%	7	5.94	%	5.94	%

Payment defaults for loans modified as a TDR in the previous 12 months to September 30, 2021 consisted of 1 commercial real estate loan with a recorded investment of $166,000. There were 0no payment defaults for loans modified as a TDR in the previous 12 months to September 30, 2020. ~~Payment defaults for~~

Non-Performing Loan Sales

During the nine months ended September 30, 2021, the Company sold 3 non-performing multi-family loans ~~modified as~~with a ~~TDR~~net book balance of $19.9 million. The Company recognized a recovery of $1.4 million in the ~~previous 12~~allowance for credit losses on the sale of one of the loans. Also during the nine months toended September 30, ~~2019 consisted of 1 residential~~

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~~loan and 1~~2021, the Company sold a non-performing commercial real estate loan with a ~~recorded investment~~net book balance of ~~$132,000 and $2.5 million, respectively, at September 30, 2019.~~

~~Impaired Loans~~

~~The following table presents, under previously applicable GAAP, loans individually evaluated for impairment by portfolio segment as of December 31, 2019:~~

December 31, 2019
Recorded
Investment Unpaid Principal
Balance Related
Allowance Average
Recorded
Investment Interest
Income
Recognized
(In thousands)
With no related allowance:
Multi-family $ 22,169 23,581 — 23,298 47
Commercial real estate 7,875 10,913 — 8,127 199
Commercial and industrial 12,476 21,090 — 14,860 351
Construction 0 0 — 0 0
Total commercial loans 42,520 55,584 — 46,285 597
Residential mortgage and consumer 13,783 18,066 — 13,811 267
With an allowance recorded:
Multi-family 0 0 0 0 0
Commercial real estate 0 0 0 0 0
Commercial and industrial 0 0 0 0 0
Construction 0 0 0 0 0
Total commercial loans 0 0 0 0 0
Residential mortgage and consumer 13,220 13,881 1,763 13,321 153
Total:
Multi-family 22,169 23,581 0 23,298 47
Commercial real estate 7,875 10,913 0 8,127 199
Commercial and industrial 12,476 21,090 0 14,860 351
Construction 0 0 0 0 0
Total commercial loans 42,520 55,584 0 46,285 597
Residential mortgage and consumer 27,003 31,947 1,763 27,132 420
Total impaired loans $ 69,523 87,531 1,763 73,417 1,017

The average recorded investment is the annual average calculated based upon the ending quarterly balances. The interest income recognized is the year to date interest income recognized on a cash basis.$762,000.

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7. Allowance for Credit Losses

On January 1, 2020, the Company adopted ASU 2016-13,, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments”, which replaces the incurred loss methodology with an expected loss methodology that is referred to as the CECL methodology. ~~See~~ ~~Note 1,~~ ~~Summary of Significant Accounting Principle~~s.

An analysis of the provision for credit losses is summarized as follows:


		Three Months Ended September 30,			Nine Months Ended September 30,			Three Months Ended September 30,			Nine Months Ended September 30,
		2020		2019	2020	2019		2021		2020	2021	2020
		(In thousands)						(In thousands)
Provision for loan losses	Provision for loan losses	$	14,859	(2,500)	71,535	(2,500)	Provision for loan losses	$	(7,345)	14,859	(22,758)	71,535
Provision for debt securities held-to-maturity	Provision for debt securities held-to-maturity	(149)		0	531	0	Provision for debt securities held-to-maturity	(80)		(149)	(1,265)	531
Provision for off-balance sheet credit exposures	Provision for off-balance sheet credit exposures	(6,374)		0	774	0	Provision for off-balance sheet credit exposures	(5,590)		(6,374)	(1,654)	774
Total provision for credit losses	Total provision for credit losses	$	8,336	(2,500)	72,840	(2,500)	Total provision for credit losses	$	(13,015)	8,336	(25,677)	72,840

Allowance for Credit Losses on Loans Receivable

An analysis of the allowance for credit losses for loans receivable is summarized as follows:


		Three Months Ended September 30,			Nine Months Ended September 30,			Three Months Ended September 30,			Nine Months Ended September 30,
		2020		2019	2020	2019		2021		2020	2021	2020
		(In thousands)						(In thousands)
Balance at beginning of period	Balance at beginning of period	$	273,319	231,937	228,120	235,817	Balance at beginning of period	$	270,114	273,319	282,986	228,120
Adjustment for adoption of ASC 326	Adjustment for adoption of ASC 326	—		—	(3,551)	—	Adjustment for adoption of ASC 326	—		—	—	(3,551)
Gross charge offs	Gross charge offs	(1,472)		(3,354)	(17,459)	(10,980)	Gross charge offs	(1,106)		(1,472)	(2,484)	(17,459)
Recoveries	Recoveries	805		1,902	4,686	5,648	Recoveries	855		805	4,774	4,686
Net charge-offs	Net charge-offs	(667)		(1,452)	(12,773)	(5,332)	Net charge-offs	(251)		(667)	2,290	(12,773)
Allowance at acquisition on loans purchased with credit deterioration	Allowance at acquisition on loans purchased with credit deterioration	0		0	4,180	0	Allowance at acquisition on loans purchased with credit deterioration	997		—	997	4,180
Provision for credit loss expense	Provision for credit loss expense	14,859		(2,500)	71,535	(2,500)	Provision for credit loss expense	(7,345)		14,859	(22,758)	71,535
Balance at end of the period	Balance at end of the period	$	287,511	227,985	287,511	227,985	Balance at end of the period	$	263,515	287,511	263,515	287,511

Accrued interest receivable on loans, reported as a component of accrued interest receivable on the balance sheet, totaled ~~$74.3~~$73.0 million at September 30, ~~2020.~~2021 and is excluded from credit losses. For the ~~period~~nine months ended September 30, ~~2020, the Company recorded a provision for loan loss related to interest accrued on residential and consumer~~2021 loans in payment ~~deferral.~~deferral with accrued interest and deferred escrow are included in credit losses.

The allowance for credit losses represents the estimated amount considered necessary to cover lifetime expected credit losses inherent in financial assets at the balance sheet date. The lifetime estimate considers multiple economic scenarios, including recessionary scenarios that assume deterioration in key economic variables such as gross domestic product, unemployment rate and real estate prices. As of January 1, 2020, the Company’s economic outlook was weighted to include a moderate potential of a recession with some expectation of tail risk similar to the severely adverse scenario used in stress testing. During the nine months ended September 30, 2020, there was a significant change in the economic outlook impacting the allowance for credit losses, with key economic factors such as the unemployment rate and gross domestic product severely affected by the impact of COVID-19. For the three months ended September 30, 2020, there was improvement in the U.S. and global macroeconomic consensus outlooks, which resulted in an improvement in the economic outlook used to determine the allowance for credit losses when compared to June 30, 2020. In response to these changes, theThe Company ~~continues to assess~~assesses the selection and probability weightings of ~~the~~each economic ~~scenarios. Multiple economic outlooks were used for the September 30, 2020 estimate of~~scenario. In estimating the allowance for credit losses, multiple economic outlooks are used that ~~included~~include a base or consensus case, a downside recessionary case and an upside scenario to reflect the potential for continued improvement in the economic outlook. In addition, the allowance for credit losses ~~at September 30, 2020 included~~includes qualitative reserves for certain segments that may not be fully recognized through its quantitative models. There are still many unknowns including the duration of the impact of COVID-19 on the economy and the results of the government fiscal and monetary actions along with ~~recently implemented~~ payment deferral ~~programs, and the~~programs. The Company will continue to evaluate the allowance for credit losses and the related economic outlook each quarter.

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The following tables present the balance in the allowance for credit losses for loans by portfolio segment as of September 30, ~~2020~~2021 and December 31, ~~2019:~~2020:


		September 30, 2020										September 30, 2021
		Multi- Family Loans		Commercial Real Estate Loans	Commercial and Industrial Loans	Construction Loans	Residential Mortgage Loans	Consumer and Other Loans	Unallocated	Total		Multi- Family Loans		Commercial Real Estate Loans	Commercial and Industrial Loans	Construction Loans	Residential Mortgage Loans	Consumer and Other Loans	Unallocated	Total
		(Dollars in thousands)										(Dollars in thousands)
Allowance for credit losses:	Allowance for credit losses:										Allowance for credit losses:
Balance as of December 31, 2019		$	74,099	50,925	74,396	6,816	17,391	2,548	1,945	228,120
Adjustment for adoption of ASC 326		(9,741)		(4,631)	(7,511)	(1,901)	20,089	2,089	(1,945)	(3,551)
Balance as of January 1, 2020		64,358		46,294	66,885	4,915	37,480	4,637	0	224,569
Balance as of December 31, 2020											Balance as of December 31, 2020	$	56,731	115,918	79,327	7,267	19,941	3,802	—	282,986
Charge-offs	Charge-offs	(4,490)		(235)	(11,767)	0	(932)	(35)	0	(17,459)	Charge-offs	(644)		(322)	(694)	—	(427)	(397)	—	(2,484)
Recoveries	Recoveries	30		352	3,457	0	632	215	0	4,686	Recoveries	1,928		296	1,488	—	982	80	—	4,774
Allowance at acquisition on loans purchased with credit deterioration	Allowance at acquisition on loans purchased with credit deterioration	209		3,208	287	127	344	5	0	4,180	Allowance at acquisition on loans purchased with credit deterioration	149		730	17	46	41	14	—	997
Provision for credit loss expense	Provision for credit loss expense	(3,226)		62,139	19,847	501	(7,344)	(382)	0	71,535	Provision for credit loss expense	1,005		(29,606)	4,898	2,046	(1,209)	108	—	(22,758)
Ending balance-September 30, 2020		$	56,881	111,758	78,709	5,543	30,180	4,440	0	287,511
Ending balance-September 30, 2021											Ending balance-September 30, 2021	$	59,169	87,016	85,036	9,359	19,328	3,607	—	263,515


		December 31, 2019										December 31, 2020
		Multi- Family Loans		Commercial Real Estate Loans	Commercial and Industrial Loans	Construction Loans	Residential Mortgage Loans	Consumer and Other Loans	Unallocated	Total		Multi- Family Loans		Commercial Real Estate Loans	Commercial and Industrial Loans	Construction Loans	Residential Mortgage Loans	Consumer and Other Loans	Unallocated	Total
		(Dollars in thousands)										(Dollars in thousands)
Allowance for credit losses:	Allowance for credit losses:										Allowance for credit losses:
Beginning balance-December 31, 2018		$	82,876	48,449	71,084	7,486	20,776	3,102	2,044	235,817
Balance as of December 31, 2019											Balance as of December 31, 2019	$	74,099	50,925	74,396	6,816	17,391	2,548	1,945	228,120
Adjustment for adoption of ASC 326											Adjustment for adoption of ASC 326	(9,741)		(4,631)	(7,511)	(1,901)	20,089	2,089	(1,945)	(3,551)
Balance as of January 1, 2020											Balance as of January 1, 2020	64,358		46,294	66,885	4,915	37,480	4,637	—	224,569
Charge-offs	Charge-offs	(2,973)		(151)	(6,833)	0	(2,241)	(934)	0	(13,132)	Charge-offs	(4,631)		(521)	(12,005)	—	(1,190)	(41)	—	(18,388)
Recoveries	Recoveries	1,244		2,204	1,203	0	1,448	336	0	6,435	Recoveries	1,965		412	4,459	—	677	222	—	7,735
Allowance at acquisition on loans purchased with credit deterioration											Allowance at acquisition on loans purchased with credit deterioration	209		3,208	287	127	344	5	—	4,180
Provision for credit loss expense	Provision for credit loss expense	(7,048)		423	8,942	(670)	(2,592)	44	(99)	(1,000)	Provision for credit loss expense	(5,170)		66,525	19,701	2,225	(17,370)	(1,021)	—	64,890
Ending balance-December 31, 2019		$	74,099	50,925	74,396	6,816	17,391	2,548	1,945	228,120
Ending balance-December 31, 2020											Ending balance-December 31, 2020	$	56,731	115,918	79,327	7,267	19,941	3,802	—	282,986

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Allowance for Credit Losses on Debt Securities

An analysis of the allowance for credit losses for debt securities held-to-maturity is summarized as follows:


		Three Months Ended September 30,		Nine Months Ended September 30,			Three Months Ended September 30,			Nine Months Ended September 30,
		2020		2020			2021		2020	2021	2020
		(In thousands)			(In thousands)
Balance at beginning of the period	Balance at beginning of the period	$	3,244	0		Balance at beginning of the period	$	2,079	3,244	3,264	—
Impact of adopting ASC 326	Impact of adopting ASC 326	—		2,564		Impact of adopting ASC 326	—		—	—	2,564

Provision for credit losses	Provision for credit losses	(149)		531		Provision for credit losses	(80)		(149)	(1,265)	531
Balance at end of the period	Balance at end of the period	$	3,095	3,095		Balance at end of the period	$	1,999	3,095	1,999	3,095

The following tables present the balance in the allowance for credit losses for debt securities held-to-maturity by portfolio segment as of September 30, 2021 and December 31, 2020:

September 30, 2020
Municipal Bonds Corporate and Other Debt Securities Total
(Dollars in thousands)
Allowance for credit losses:
Beginning balance-December 31, 2019 $ 0 0 0
Impact of adopting ASC 326
17 2,547 2,564
Provision for credit loss 25 506 531
Ending balance-September 30, 2020 $ 42 3,053 3,095


	September 30, 2021
	Municipal Bonds		Corporate and Other Debt Securities	Total
	(Dollars in thousands)
Allowance for credit losses:
Beginning balance-December 31, 2020	$	34	3,230	3,264



Provision for credit loss	(9)		(1,256)	(1,265)
Ending balance-September 30, 2021	$	25	1,974	1,999


	December 31, 2020
	Municipal Bonds		Corporate and Other Debt Securities	Total
	(Dollars in thousands)
Allowance for credit losses:
Beginning balance - December 31, 2019	$	—	—	—
Impact of adopting ASC 326	17		2,547	2,564



Provision for credit loss	17		683	700
Ending balance - December 31, 2020	$	34	3,230	3,264

Accrued interest receivable on debt securities held-to-maturity totaled $4.9 million at September 30, ~~2020~~2021 and is excluded from the estimate of credit losses.

Allowance for Credit Losses on Off-Balance Sheet Credit Exposures

An analysis of the allowance for credit losses for off-balance sheet credit exposures is as follows:


		Three Months Ended September 30,		Nine Months Ended September 30,	Three Months Ended September 30,				Nine Months Ended September 30,
		2020		2020			2021		2020	2021	2020
		(In thousands)			(In thousands)
Balance at beginning of the period	Balance at beginning of the period	$	20,247	425		Balance at beginning of the period	$	21,603	20,247	17,667	425
Impact of adopting ASC 326	Impact of adopting ASC 326	—		12,674		Impact of adopting ASC 326	—		—	—	12,674
Provision for credit losses	Provision for credit losses	(6,374)		774		Provision for credit losses	(5,590)		(6,374)	(1,654)	774
Balance at end of the period	Balance at end of the period	$	13,873	13,873		Balance at end of the period	$	16,013	13,873	16,013	13,873

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8. Deposits

Deposits are summarized as follows:


		September 30, 2020		December 31, 2019		September 30, 2021		December 31, 2020
		(In thousands)				(In thousands)
Non-interest bearing:	Non-interest bearing:				Non-interest bearing:
Checking accounts	Checking accounts	$	3,345,011	2,472,232	Checking accounts	$	4,345,871	3,663,073
Interest bearing:	Interest bearing:				Interest bearing:
Checking accounts	Checking accounts	5,696,645		5,512,979	Checking accounts	6,917,964		6,043,393
Money market deposits	Money market deposits	4,369,733		3,817,718	Money market deposits	4,768,986		5,037,327
Savings	Savings	2,008,540		2,050,101	Savings	2,052,819		2,063,447

Certificates of deposit	Certificates of deposit	3,683,606		4,007,308	Certificates of deposit	2,314,784		2,718,179
Total deposits	Total deposits	$	19,103,535	17,860,338	Total deposits	$	20,400,424	19,525,419

9. Goodwill and Other Intangible Assets

The following table summarizes goodwill and intangible assets at September 30, ~~2020~~2021 and December 31, ~~2019:~~2020:


		September 30, 2020		December 31, 2019		September 30, 2021		December 31, 2020
		(In thousands)				(In thousands)
Mortgage servicing rights	Mortgage servicing rights	$	10,976	12,125	Mortgage servicing rights	$	10,147	10,957
Core deposit premiums	Core deposit premiums	3,954		2,530	Core deposit premiums	6,333		3,560
Other	Other	603		668	Other	529		581
Total other intangible assets	Total other intangible assets	15,533		15,323	Total other intangible assets	17,009		15,098
Goodwill	Goodwill	94,535		82,546	Goodwill	116,228		94,535
Goodwill and intangible assets	Goodwill and intangible assets	$	110,068	97,869	Goodwill and intangible assets	$	133,237	109,633

For the nine months ended September 30, ~~2020,~~2021, the increase in goodwill reflects the ~~acquisition of Gold Coast Bancorp.~~Berkshire Bank branch acquisition. See Note 3, Business ~~Combinations.~~Combinations.

The following table summarizes other intangible assets as of September 30, ~~2020~~2021 and December 31, ~~2019:~~2020:


		Gross Intangible Asset		Accumulated Amortization	Valuation Allowance	Net Intangible Assets		Gross Intangible Asset		Accumulated Amortization	Valuation Allowance	Net Intangible Assets
		(In thousands)						(In thousands)
September 30, 2020
September 30, 2021							September 30, 2021
Mortgage servicing rights	Mortgage servicing rights	$	18,004	(5,570)	(1,458)	10,976	Mortgage servicing rights	$	15,560	(5,330)	(83)	10,147
Core deposit premiums	Core deposit premiums	23,063		(19,109)	0	3,954	Core deposit premiums	26,661		(20,328)	—	6,333
Other	Other	1,150		(547)	0	603	Other	850		(321)	—	529
Total other intangible assets	Total other intangible assets	$	42,217	(25,226)	(1,458)	15,533	Total other intangible assets	$	43,071	(25,979)	(83)	17,009

December 31, 2019
December 31, 2020							December 31, 2020
Mortgage servicing rights	Mortgage servicing rights	$	19,368	(7,140)	(103)	12,125	Mortgage servicing rights	$	17,559	(5,592)	(1,010)	10,957
Core deposit premiums	Core deposit premiums	20,561		(18,031)	0	2,530	Core deposit premiums	23,063		(19,503)	—	3,560
Other	Other	1,150		(482)	0	668	Other	1,150		(569)	—	581
Total other intangible assets	Total other intangible assets	$	41,079	(25,653)	(103)	15,323	Total other intangible assets	$	41,772	(25,664)	(1,010)	15,098

Mortgage servicing rights are accounted for using the amortization method. Under this method, the Company amortizes the loan servicing asset in proportion to, and over the period of, estimated net servicing revenues. The Company sells loans on a servicing-retained basis. ~~Loans that were sold on this basis had an~~The unpaid principal balance of ~~$1.74~~these loans were $1.42 billion and ~~$1.67~~$1.69 billion at September 30, ~~2020~~2021 and December 31, ~~2019,~~2020, respectively, all of which relate to mortgage loans. At September 30, ~~2020~~2021 and

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December 31, ~~2019,~~2020, the servicing asset, included in other intangible assets, had an estimated fair value of ~~$11.2~~$11.3 million and ~~$14.1~~$11.2 million, respectively. At September 30, ~~2020,~~2021, fair value was based on expected future cash flows considering a weighted average discount rate of ~~12.03%~~11.32%, a weighted average constant prepayment rate on mortgages of ~~19.14%~~

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13.74% and a weighted average life of ~~4.2~~5.3 years. Based on an analysis of fair values as of September 30, ~~2020,~~2021, the Company determined that a ~~$1.5 million~~$83,000 valuation allowance for mortgage servicing rights was required, ~~a decrease~~an increase of ~~$1.2 million~~approximately $10,000 from the previous quarter. See Note 16, Fair Value Measurements, for additional details.

Core deposit premiums are amortized using an accelerated method and having a weighted average amortization period of 10 years. For the nine months ended September 30, 2021, the Company recorded $3.6 million in core deposit premiums resulting from the Berkshire Bank branch acquisition. For the year ended December 31, 2020, the Company recorded $2.5 million in core deposit premiums resulting from the acquisition of Gold Coast.

10. Leases

The Company has operating leases for corporate offices, branch locations and certain equipment. For these operating leases, the Company recognizes a lease liability and a right-of-use asset, measured at the present value of the future minimum lease payments, at the lease commencement date. The Company’s leases have remaining lease terms of up to 1615 years, some of which include options to extend the leases for up to 10 ~~years, and some of which include options to terminate the leases within 1 year.~~years. Certain of our operating leases for branch locations contain variable lease payments related to consumer price index adjustments.

The following table presents the balance sheet information related to our operating leases:


		September 30, 2020			December 31, 2019			September 30, 2021			December 31, 2020
		(Dollars in thousands)						(Dollars in thousands)
Operating lease right-of-use assets	Operating lease right-of-use assets	$	171,781		175,143		Operating lease right-of-use assets	$	203,522		199,981
Operating lease liabilities	Operating lease liabilities	184,281			185,827		Operating lease liabilities	216,374			212,559
Weighted average remaining lease term	Weighted average remaining lease term	9.0 years			9.7 years		Weighted average remaining lease term	8.7 years			9.4 years
Weighted average discount rate	Weighted average discount rate	2.66		%	2.74	%	Weighted average discount rate	2.41		%	2.49	%

In determining the present value of lease payments, the discount rate used for each individual lease is the rate implicit in the lease, unless that rate cannot be readily determined, in which case the Company is required to use its incremental borrowing rate based on the information available at commencement date. For its incremental borrowing rate, the Company uses the borrowing rates offered to the Company by the Federal Home Loan Bank, which reflects the rates a lender would charge the Company to obtain a collateralized loan.

The following table presents the components of total operating lease cost recognized in the Consolidated Statements of Income:


		Three Months Ended September 30,			Nine Months Ended September 30,			Three Months Ended September 30,			Nine Months Ended September 30,
		2020		2019	2020	2019		2021		2020	2021	2020
		(In thousands)						(In thousands)
Included in office occupancy and equipment expense:	Included in office occupancy and equipment expense:						Included in office occupancy and equipment expense:
Operating lease cost	Operating lease cost	$	6,589	6,320	19,396	18,963	Operating lease cost	$	7,534	6,589	21,963	19,396
Short-term lease cost	Short-term lease cost	104		74	293	229	Short-term lease cost	227		104	657	293
Variable lease cost		0		0	(1)	(1)

Included in other income:	Included in other income:						Included in other income:
Sublease income	Sublease income	67		67	185	201	Sublease income	39		67	125	185

The following table presents supplemental cash flow information related to operating leases:


		Three Months Ended September 30,			Nine Months Ended September 30,			Three Months Ended September 30,			Nine Months Ended September 30,
		2020		2019	2020	2019		2021		2020	2021	2020
		(In thousands)						(In thousands)
Cash paid for amounts included in the measurement of operating lease liabilities:	Cash paid for amounts included in the measurement of operating lease liabilities:						Cash paid for amounts included in the measurement of operating lease liabilities:
Operating cash flows from operating leases	Operating cash flows from operating leases	$	6,419	6,173	17,998	18,470	Operating cash flows from operating leases	$	7,372	6,419	21,905	17,998
Operating lease liabilities arising from obtaining right-of-use assets (non-cash):	Operating lease liabilities arising from obtaining right-of-use assets (non-cash):						Operating lease liabilities arising from obtaining right-of-use assets (non-cash):
Operating leases	Operating leases	4,909		577	12,746	2,358	Operating leases	9,310		4,909	22,544	12,746

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Future minimum operating lease payments and reconciliation to operating lease liabilities at September 30, ~~2020~~2021 and December 31, ~~2019:~~2020:


		September 30, 2020		December 31, 2019		September 30, 2021		December 31, 2020
		(In thousands)				(In thousands)
2020		$	6,716	24,013
2021	2021	25,950		23,888	2021	$	7,634	28,844
2022	2022	24,412		22,270	2022	30,431		27,448
2023	2023	23,312		21,227	2023	29,317		26,354
2024	2024	23,252		21,162	2024	29,009		26,300
2025					2025	28,345		25,496
Thereafter	Thereafter	104,967		100,662	Thereafter	115,765		104,729
Total lease payments	Total lease payments	208,609		213,222	Total lease payments	240,501		239,171
Less: Imputed interest	Less: Imputed interest	(24,328)		(27,395)	Less: Imputed interest	(24,127)		(26,612)
Total operating lease liabilities	Total operating lease liabilities	$	184,281	185,827	Total operating lease liabilities	$	216,374	$	212,559

The Company also has finance leases for certain equipment. The Company’s right-of-use assets and lease liabilities for finance leases were ~~$2.7~~both $1.2 million ~~and $2.8 million, respectively,~~ at September 30, ~~2020.~~2021. The finance lease right-of-use assets and finance lease liabilities are included within Other assets and Other liabilities, respectively, on the Consolidated Balance Sheet.

11. Equity Incentive Plan

At the annual meeting held on June 9, 2015, stockholders of the Company approved the Investors Bancorp, Inc. 2015 Equity Incentive Plan (“2015 Plan”) which provides for the issuance or delivery of up to 30,881,296 shares (13,234,841 restricted stock awards and 17,646,455 stock options) of Investors Bancorp, Inc. common stock.

Restricted shares granted under the 2015 Plan vest in equal installments, over the service period generally ranging from 5 to 7 years beginning one year from the date of grant. Additionally, certain restricted shares awarded are performance vesting awards, which may or may not vest depending upon the attainment of certain corporate financial targets. The vesting of restricted stock may accelerate in accordance with the terms of the 2015 Plan. The product of the number of shares granted and the grant date closing market price of the Company’s common stock determine the fair value of restricted shares under the 2015 Plan. Management recognizes compensation expense for the fair value of restricted shares on a straight-line basis over the requisite service period. For the nine months ended September 30, ~~2020~~2021 and September 30, ~~2019,~~2020, the Company granted ~~90,067~~251,634 and ~~2,345,919~~90,067 shares of restricted stock awards under the 2015 Plan, respectively.

Stock options granted under the 2015 Plan vest in equal installments, over the service period generally ranging from 5 to 7 years beginning one year from the date of grant. The vesting of stock options may accelerate in accordance with the terms of the 2015 Plan. Stock options were granted at an exercise price equal to the fair value of the Company’s common stock on the grant date based on the closing market price and have an expiration period of 10 years. For the nine months ended September 30, ~~2020~~2021 and September 30, ~~2019,~~2020, the Company granted ~~0 stock options and 995,216~~no stock options under the 2015 ~~Plan, respectively.~~Plan.

The fair value of stock options granted as part of the 2015 Plan ~~was~~are estimated utilizing the Black-Scholes option pricing ~~model using the following assumptions for the periods presented below:~~


	~~Nine Months Ended September 30,~~
	~~2019~~
~~Weighted average expected life (in years)~~	~~4.83~~
~~Weighted average risk-free rate of return~~	~~1.86~~		%
~~Weighted average volatility~~	~~19.92~~		%
~~Dividend yield~~	~~3.96~~		%
~~Weighted average fair value of options granted~~	$	~~0.89~~
~~Total stock options granted~~	~~995,216~~

model. The weighted average expected life of the stock option represents the period of time that stock options are expected to be outstanding and is estimated using historical data of stock option exercises and forfeitures. The risk-free interest rate is

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based on the U.S. Treasury yield curve in effect at the time of grant. The expected volatility is based on the historical volatility of the Company’s stock. The Company recognizes compensation expense for the fair values of these awards, which have graded vesting, on a straight-line basis over the requisite service period of the awards. Upon exercise of vested options, management expects to draw on treasury stock as the source for shares.

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The following table presents the share-based compensation expense for the three and nine months ended September 30, ~~2020~~2021 and ~~2019:~~2020:

Three Months Ended September 30, Nine Months Ended September 30,
2020 2019 2020 2019
(In thousands)
Stock option expense $ 941 2,285 2,940 4,937
Restricted stock expense 2,539 4,026 8,383 10,933
Total share-based compensation expense (1)
$ 3,480 6,311 11,323 15,870

(1) Included in share-based compensation expense for the three months and nine months ended September 30, 2019 was $2.0 million of accelerated stock compensation expense resulting from the settlement of shareholder litigation during the third quarter of 2019. There was no incremental expense resulting from the modification of the original awards associated with the settlement. For additional information about the settlement, refer to page 105 in Note 12 to the consolidated financial statements included under Item 15. Exhibits and Financial Statement Schedules in the Company’s December 31, 2019 Form 10-K.


	Three Months Ended September 30,			Nine Months Ended September 30,
	2021		2020	2021	2020
	(In thousands)
Stock option expense	$	927	941	2,783	2,940
Restricted stock expense	2,645		2,539	7,956	8,383
Total share-based compensation expense	$	3,572	3,480	10,739	11,323

The following is a summary of the Company’s stock option activity and related information for the nine months ended September 30, ~~2020:~~2021:


		Number of Stock Options	Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (in years)	Aggregate Intrinsic Value			Number of Stock Options	Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (in years)	Aggregate Intrinsic Value
Outstanding at December 31, 2019		5,654,461	$	12.46	5.5	$	363
Outstanding at December 31, 2020								Outstanding at December 31, 2020	5,570,858	$	12.46	4.5	$	191
Granted	Granted	0	0		—			Granted	—	—		—
Exercised	Exercised	0	0		—			Exercised	(501,173)	12.19		3.7
Forfeited	Forfeited	(10,802)	12.55					Forfeited	(32,144)	12.54
Expired	Expired	(47,087)	12.54					Expired	(14,297)	12.54
Outstanding at September 30, 2020		5,596,572	12.46		4.8	0
Exercisable at September 30, 2020		3,810,659	$	12.42	4.7	$	0
Outstanding at September 30, 2021								Outstanding at September 30, 2021	5,023,244	12.49		3.8	13,184
Exercisable at September 30, 2021								Exercisable at September 30, 2021	4,126,295	$	12.48	3.8	$	10,872

Expected future expense relating to the non-vested options outstanding as of September 30, ~~2020~~2021 is ~~$6.5~~$2.8 million over a weighted average period of ~~1.45~~0.66 years.

The following is a summary of the status of the Company’s restricted shares as of September 30, ~~2020~~2021 and changes therein during the nine months ended:


		Number of Shares Awarded	Weighted Average Grant Date Fair Value			Number of Shares Awarded	Weighted Average Grant Date Fair Value
Outstanding at December 31, 2019		2,894,352	$	12.57
Outstanding at December 31, 2020					Outstanding at December 31, 2020	1,974,235	$	12.44
Granted	Granted	90,067	10.02		Granted	251,634	13.20
Vested	Vested	(974,221)	12.61		Vested	(793,115)	12.36
Forfeited	Forfeited	(18,860)	12.18		Forfeited	(26,267)	11.79
Outstanding and non-vested at September 30, 2020		1,991,338	$	12.44
Outstanding and non-vested at September 30, 2021					Outstanding and non-vested at September 30, 2021	1,406,487	$	12.50

Expected future expense relating to the non-vested restricted shares outstanding as of September 30, ~~2020~~2021 is ~~$20.1~~$12.7 million over a weighted average period of ~~2.28~~2.03 years.

12. Net Periodic Benefit Plan Expense

The Company has an Executive Supplemental Retirement Wage Replacement Plan (“SERP II”) and the Supplemental ESOP and Retirement Plan (“SERP I”) (collectively, the “SERPs”). The SERP II is a nonqualified, defined benefit plan which provides benefits to certain executives as designated by the Compensation and Benefits Committee of the Board of Directors. More specifically, the SERP II was designed to provide participants with a normal retirement benefit equal to an annual benefit of 60% of the participant’s highest annual base salary and cash incentive (over a consecutive 36-month period within the

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participant’s credited service period) reduced by the sum of the benefits provided under the Pentegra Defined Benefit Plan for Financial Institutions (“Pentegra DB Plan”) and the SERP I. Effective as of the close of business of December 31, 2016, the SERP II was amended to freeze future benefit accruals subsequent to the 2016 year of service.

The SERP I compensates certain executives (as designated by the Compensation and Benefits Committee of the Board of Directors) participating in the ESOP whose contributions are limited by the Internal Revenue Code. The Company also maintains the Amended and Restated Director Retirement Plan (“Directors’ Plan”) for certain directors, which is a nonqualified, defined benefit plan. The Directors’ Plan was frozen on November 21, 2006 such that no new benefits accrued under, and no

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new directors were eligible to participate in the plan. The SERPs and the Directors’ Plan are unfunded and the costs of the plans are recognized over the period that services are provided.

The components of net periodic benefit cost for the Directors’ Plan and the SERP II are as follows:


		Three Months Ended September 30,			Nine Months Ended September 30,			Three Months Ended September 30,			Nine Months Ended September 30,
		2020		2019	2020	2019		2021		2020	2021	2020
		(In thousands)						(In thousands)

Interest cost	Interest cost	$	325	397	973	1,191	Interest cost	$	250	325	750	973
Amortization of:	Amortization of:						Amortization of:

Net loss	Net loss	298		0	896	0	Net loss	142		298	426	896
Total net periodic benefit cost	Total net periodic benefit cost	$	623	397	1,869	1,191	Total net periodic benefit cost	$	392	623	1,176	1,869

Due to the unfunded nature of the SERPs and the Directors’ Plan, no contributions have been made or were expected to be made during the nine months ended September 30, ~~2020.~~2021.

The Company also maintains the Pentegra DB Plan. As of December 31, 2016, the annual benefit provided under the Pentegra DB plan was frozen by an amendment to the plan. Freezing the plan ~~eliminates~~eliminated all future benefit accruals and each participant’s frozen accrued benefit was determined as of December 31, 2016 and no further benefits ~~will accrue beyond such date.~~accrued subsequent to December 31, 2016. Since it is a multi-employer plan, costs of the pension plan are based on contributions required to be made to the pension plan. There was 0no contribution required during the nine months ended September 30, ~~2020.~~2021. We anticipate contributing funds to the plan to meet any minimum funding requirements for the remainder of ~~2020.~~2021.

13. Derivatives and Hedging Activities

The Company is exposed to certain ~~risk~~risks arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risks, including interest rate, liquidity, and credit risk primarily by managing the amount, sources, and duration of its assets and liabilities and the use of derivative financial instruments. Specifically, the Company enters into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates. The Company’s derivative financial instruments are used to manage differences in the amount, timing, and duration of the Company’s known or expected cash receipts and its known or expected cash payments principally related to the Company’s floating rate ~~borrowings~~wholesale fundings and pools of fixed-rate assets.

Cash Flow Hedges of Interest Rate Risk

The Company’s objectives in using interest rate derivatives are primarily to reduce cost and add stability to interest expense in an effort to manage its exposure to interest rate movements. Interest rate swaps designated as cash flow hedges involve the receipt of amounts subject to variability caused by changes in interest rates from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. Changes in the fair value of derivatives designated and that qualify as cash flow hedges are initially recorded in other comprehensive income and are subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. Such derivatives were used to hedge the variability in cash flows associated with ~~borrowings.~~wholesale funding. The Company is hedging its exposure to the variability in future cash flows for forecasted transactions over a maximum period of ~~fourteen~~sixteen months (excluding forecasted transactions related to the payment of variable interest on existing financial instruments).

During the year ended December 31, 2020, the Company terminated 4 interest rate swaps with an aggregate notional of $400.0 million. Upon termination, the Company accelerated the reclassification of amounts in other comprehensive income to earnings as a result of the hedged forecasted transactions becoming probable not to occur.

Amounts reported in accumulated other comprehensive income (loss) related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s variable-rate borrowings. During the next twelve months, the Company estimates that an additional ~~$46.7~~$41.4 million will be reclassified as an increase to interest expense.

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Fair Value Hedges of Interest Rate Risk

The Company is exposed to changes in the fair value of certain of its pools of fixed-rate assets due to changes in benchmark interest rates. The Company may use interest rate swaps to manage its exposure to changes in fair value on these instruments attributable to changes in the designated benchmark interest rate. Interest rate swaps designated as fair value hedges involve the payment of fixed-rate amounts to a counterparty in exchange for the Company receiving variable-rate payments

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over the life of the agreements without the exchange of the underlying notional amount. Such derivatives were used to hedge the changes in fair value of certain of its pools of prepayable fixed-rate assets.

For derivatives designated and that qualify as fair value hedges, the gain or loss on the derivative as well as the offsetting loss or gain on the hedged item attributable to the hedged risk are recognized in interest income.

The Company terminated 2 interest rate swaps with an aggregate notional of $475.0 million during the ~~nine months ended September 30, 2020. The Company terminated 3 interest rate swaps with an aggregate notional amount of $1.00 billion during the~~ year ended December 31, ~~2019.~~2020. The terminated swaps were due to mature in ~~February 2020. There were no interest rate swaps designated as~~April and May 2021. The remaining balance of the fair value ~~hedges as~~hedging adjustment included in the carrying amount of ~~September 30, 2020.~~the assets previously hedged is being amortized into interest income on a straight-line basis over the remaining lives of the assets previously hedged.

Derivatives Not Designated as Hedges

The Company has credit derivatives resulting from participation in interest rate swaps provided to external lenders as part of loan participation arrangements which are, therefore, not used to manage interest rate risk in the Company’s assets or liabilities. Additionally, the Company provides interest rate risk management services to commercial customers, primarily interest rate swaps. The Company’s market risk from unfavorable movements in interest rates related to these derivative contracts is economically hedged by concurrently entering into offsetting derivative contracts that have identical notional values, terms and indices.

Derivatives not designated as hedges are not speculative and result from a service the Company provides to certain lenders which participate in loans and commercial customers.

Fair Values of Derivative Instruments on the Balance Sheet

Asset Derivatives Liability Derivatives
September 30, 2020 December 31, 2019 September 30, 2020 December 31, 2019
Notional Amount Balance
Sheet
Location Fair Value Notional Amount Balance
Sheet
Location Fair Value Notional Amount Balance
Sheet
Location Fair Value Notional Amount Balance
Sheet
Location Fair Value
(in millions) (In thousands) (in millions) (In thousands) (in millions) (In thousands) (in millions) (In thousands)
Derivatives designated as hedging instruments:
Interest Rate Swaps $ 3,525 Other assets $ 153 $ 2,675 Other assets $ 559 $ 0 Other liabilities $ 0 $ 0 Other liabilities $ 0
Total derivatives designated as hedging instruments $ 153 $ 559 $ 0 $ 0
Derivatives not designated as hedging instruments:
Interest Rate Swaps $ 933 Other assets $ 36,399 $ 652 Other assets $ 5,430 $ 17 Other liabilities $ 452 $ 0 Other liabilities $ 0
Other Contracts 0 Other assets 0 0 Other assets 0 22 Other liabilities 230 22 Other liabilities 125
Total derivatives not designated as hedging instruments $ 36,399 $ 5,430 $ 682 $ 125
Amounts included in the Consolidated Balance Sheet related to the fair value of the Company’s derivative instruments are shown below. Asset derivatives depicted below represent derivatives with a positive fair value position, while liability derivatives represent derivatives with a negative fair value position.


	September 30, 2021
	Asset Derivatives				Liability Derivatives
	Notional Amount		Fair Value		Notional Amount		Fair Value
	(in millions)		(In thousands)		(in millions)		(In thousands)
Derivatives designated as hedging instruments:
Interest Rate Swaps	$	1,150	$	26,703	$	2,425	$	74,844
Total derivatives designated as hedging instruments			$	26,703			$	74,844
Derivatives not designated as hedging instruments:
Interest Rate Swaps	$	883	$	26,251	$	883	$	26,251
Other Contracts	—		—		34		128
Total derivatives not designated as hedging instruments			$	26,251			$	26,379
Netting Adjustments (1)			34,529				91,957
Net Derivatives on the Balance Sheet			$	18,425			$	9,266
Cash Collateral (2)			—				—
Net Derivative Amounts			$	18,425			$	9,266

(1) Netting adjustments represents the amounts recorded to convert derivative assets and liabilities from a gross basis to a net basis in accordance with the applicable accounting guidance on the settle to market rules for cleared derivatives. The Chicago Mercantile Exchange (“CME”) legally characterizes the variation margin posted between counterparties as settlements of the outstanding derivative contracts instead of cash collateral.

(2) Cash collateral represents the amount that cannot be used to offset our derivative assets and liabilities from a gross basis to a net basis in accordance with the applicable accounting guidance. The application of collateral cannot reduce the net derivative position below zero. Therefore, excess collateral, if any, is not reflected above.

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	December 31, 2020
	Asset Derivatives				Liability Derivatives
	Notional Amount		Fair Value		Notional Amount		Fair Value
	(in millions)		(In thousands)		(in millions)		(In thousands)
Derivatives designated as hedging instruments:
Interest Rate Swaps	$	400	$	1,419	$	2,925	$	115,166
Total derivatives designated as hedging instruments			$	1,419			$	115,166
Derivatives not designated as hedging instruments:
Interest Rate Swaps	$	641	$	34,155	$	641	$	34,155
Other Contracts	—		—		34		217
Total derivatives not designated as hedging instruments			$	34,155			$	34,372
Netting Adjustments (1)			997				149,046
Net Derivatives on the Balance Sheet			$	34,577			$	492
Cash Collateral (2)			—				237
Net Derivative Amounts			$	34,577			$	255

Effect of Derivative Instruments on Accumulated Other Comprehensive Income (Loss)

The following table presents the effect of the Company’s derivative financial instruments on the Accumulated Comprehensive Income (Loss) for the three and nine months ended September 30, ~~2020~~2021 and ~~2019.~~2020.

Three Months Ended September 30, Nine Months Ended September 30,
2020 2019 2020 2019
(In thousands)
Cash Flow Hedges - Interest rate swaps
Amount of loss recognized in other comprehensive income (loss) $ 1,698 (12,794) (115,703) (71,139)
Amount of (loss) gain reclassified from accumulated other comprehensive income (loss) to interest expense (11,158) 509 (19,875) 4,327


	Three Months Ended September 30,			Nine Months Ended September 30,
	2021		2020	2021	2020
	(In thousands)
Cash Flow Hedges - Interest rate swaps
Amount of gain (loss) recognized in other comprehensive income (loss)	$	486	1,698	34,667	(115,703)
Amount of loss reclassified from accumulated other comprehensive income (loss) to interest expense	(10,917)		(11,158)	(31,404)	(19,875)

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Location and Amount of Gain or (Loss) Recognized in Income on Fair Value and Cash Flow Hedging Relationships

The following table presents the effect of the Company’s derivative financial instruments on the Consolidated Statements of Income as of September 30, ~~2020~~2021 and ~~2019.~~2020.


			For the Three Months Ended September 30,			For the Nine Months Ended September 30,				For the Three Months Ended September 30,			For the Nine Months Ended September 30,
			2020		2019	2020	2019			2021		2020	2021	2020
The effects of fair value and cash flow hedging:	The effects of fair value and cash flow hedging:	Income statement location	(In thousands)					The effects of fair value and cash flow hedging:	Income statement location	(In thousands)
Gain or (loss) on fair value hedging relationships in Subtopic 815-20
Fair Value Hedges - Gain or (loss) on relationships in Subtopic 815-20								Fair Value Hedges - Gain or (loss) on relationships in Subtopic 815-20
Interest contracts	Interest contracts							Interest contracts
Hedged items	Hedged items	Interest income on loans	$	0	1,179	4,529	7,398	Hedged items	Interest income	$	15	—	(35)	4,529
Derivatives designated as hedging instruments [1]		Interest income on loans	(411)		(1,268)	(7,734)	(7,550)
Gain or (loss) on cash flow hedging relationships in Subtopic 815-20
Derivatives designated as hedging instruments								Derivatives designated as hedging instruments	Interest income	(22)		(411)	35	(7,734)
Cash Flow Hedges - Gain or (loss) on relationships in Subtopic 815-20								Cash Flow Hedges - Gain or (loss) on relationships in Subtopic 815-20
Interest contracts	Interest contracts							Interest contracts
Amount of (loss) gain reclassified from accumulated other comprehensive income (loss)		Interest expense on borrowings	(11,158)		509	(19,875)	4,327
Amount of loss reclassified from accumulated other comprehensive income (loss)								Amount of loss reclassified from accumulated other comprehensive income (loss)	Interest expense	(10,917)		(11,158)	(31,404)	(19,875)
Amount of gain or (loss) reclassified from accumulated other comprehensive income (loss) as a result that a forecasted transaction is no longer probable of occurring	Amount of gain or (loss) reclassified from accumulated other comprehensive income (loss) as a result that a forecasted transaction is no longer probable of occurring	Interest expense on borrowings	0		0	0	0	Amount of gain or (loss) reclassified from accumulated other comprehensive income (loss) as a result that a forecasted transaction is no longer probable of occurring	Other expense	—		—	—	—
Total amounts of income and expense line items presented in the income statement in which the effects of fair value are recorded	Total amounts of income and expense line items presented in the income statement in which the effects of fair value are recorded		$	(11,569)	420	(23,080)	4,175	Total amounts of income and expense line items presented in the income statement in which the effects of fair value are recorded		$	(10,924)	(11,569)	(31,404)	(23,080)

~~[1]~~ ~~The amount includes reclassification~~There was $4.3 million of ~~ineffectiveness~~fee income related to derivative interest rate swaps executed with commercial loan customers for the three months ended September 30, 2021. Fee income related to derivative interest rate swaps executed with commercial loan customers totaled $3.1 million for the three months ended September 30, 2020. Fee income related to derivative interest rate swaps executed with commercial loan customers totaled $6.1 million and ~~gains on fair value hedging relationships which have been terminated.~~$4.1 million for the nine months ended September 30, 2021 and September 30, 2020, respectively.

As of September 30, ~~2020~~2021 and December 31, ~~2019,~~2020, the following amounts were recorded on the Consolidated Balance Sheets related to cumulative basis adjustment for fair value hedges:

Carrying Amount of the Hedged Assets/(Liabilities)

Cumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Amount of the Hedged Assets/(Liabilities)

Balance sheet location

Carrying Amount of the Hedged Assets/(Liabilities)

Cumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Amount of the Hedged Assets/(Liabilities)

Balance sheet location

September 30, 2021

December 31, 2020

September 30, 2021

December 31, 2020

September 30, 2020

December 31, 2019

September 30, 2020

December 31, 2019

(In thousands)

Loans receivable, net ~~(1)~~(2)

478,120

9,150

6,426

Loans receivable, net ~~(1)~~(2)

149,966

—

5,134

8,798

(1) At September 30, 2021, the amortized cost basis of the closed portfolios used in these hedging relationships was $390.0 million; the cumulative basis adjustments associated with these hedging relationships was $5.1 million; and the amounts of the designated hedged items were $150.0 million.

(2) The balance of Cumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Amount of the Hedged Assets/(Liabilities) as of September 30, ~~2020 represents $9.1~~2021 includes $5.2 million of hedging adjustment on discontinued hedging relationships.

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Location and Amount of Gain or (Loss) Recognized in Income on Derivatives Not Designated as Hedging Instruments

The table below presents the effect of the Company’s derivative financial instruments that are not designated as hedging instruments on the Consolidated Statements of Income as of September 30, ~~2020:~~2021:


		Consolidated Statements of Income location	Amount of Gain (Loss) Recognized in Income on Derivative						Consolidated Statements of Income location	Amount of Gain (Loss) Recognized in Income on Derivative
			For the Three Months Ended September 30,			For the Nine Months Ended September 30,				For the Three Months Ended September 30,			For the Nine Months Ended September 30,
			2020		2019	2020	2019			2021		2020	2021	2020
			(In thousands)							(In thousands)
Other Contracts	Other Contracts	Other income / (expense)	$	19	(47)	(106)	(57)	Other Contracts	Other income / (expense)	$	18	19	89	(106)
Total	Total		$	19	(47)	(106)	(57)	Total		$	18	19	89	(106)

~~Offsetting Derivatives~~

~~The following table presents a gross presentation, the effects~~Table of offsetting, and a net presentation of the Company’s derivatives in the Consolidated Balance Sheets as of September 30, 2020 and December 31, 2019. The net amounts of derivative assets and liabilities can be reconciled to the tabular disclosure of the fair value hierarchy, see ~~Note 16, Fair Value Measurements. The tabular disclosure of fair value provides the location that derivative assets and liabilities are presented on the Company’s Consolidated Balance Sheets.~~Contents

Gross Amounts Not Offset
Gross Amounts Recognized Gross Amounts Offset Net Amounts Presented Financial Instruments Cash Collateral Posted Net Amount
(In thousands)
September 30, 2020
Assets:
Derivative contracts $ 179 0 179 0 0 179
Liabilities:
Derivative contracts $ 682 0 682 0 450 232
December 31, 2019
Assets:
Derivative contracts $ 821 0 821 0 0 821
Liabilities:
Derivative contracts $ 125 0 125 0 0 125

14. Comprehensive Income

The components of comprehensive income, gross and net of tax, are as follows:


		Three Months Ended September 30,								Three Months Ended September 30,
		2020				2019				2021				2020
		Gross		Tax	Net	Gross	Tax	Net		Gross		Tax	Net	Gross	Tax	Net
		(Dollars in thousands)								(Dollars in thousands)
Net income	Net income	$	89,152	(24,840)	64,312	73,014	(21,042)	51,972	Net income	$	91,543	(24,609)	66,934	89,152	(24,840)	64,312
Other comprehensive income (loss):
Other comprehensive income:									Other comprehensive income:
Change in funded status of retirement obligations	Change in funded status of retirement obligations	417		(117)	300	19	(6)	13	Change in funded status of retirement obligations	167		(47)	120	417	(117)	300
Unrealized (losses) gains on debt securities available-for-sale		(2,115)		509	(1,606)	8,856	(2,058)	6,798
Unrealized losses on debt securities available-for-sale									Unrealized losses on debt securities available-for-sale	(11,061)		2,638	(8,423)	(2,115)	509	(1,606)

Accretion of loss on debt securities reclassified to held-to-maturity from available-for-sale	Accretion of loss on debt securities reclassified to held-to-maturity from available-for-sale	63		(15)	48	94	(53)	41	Accretion of loss on debt securities reclassified to held-to-maturity from available-for-sale	34		(8)	26	63	(15)	48

Other-than-temporary impairment accretion on debt securities recorded prior to January 1, 2020	Other-than-temporary impairment accretion on debt securities recorded prior to January 1, 2020	257		(73)	184	317	(89)	228	Other-than-temporary impairment accretion on debt securities recorded prior to January 1, 2020	248		(70)	178	257	(73)	184
Net gains (losses) on derivatives		12,856		(3,614)	9,242	(13,303)	3,739	(9,564)
Net gains on derivatives									Net gains on derivatives	11,403		(3,206)	8,197	12,856	(3,614)	9,242

Total other comprehensive income (loss)		11,478		(3,310)	8,168	(4,017)	1,533	(2,484)
Total other comprehensive income									Total other comprehensive income	791		(693)	98	11,478	(3,310)	8,168
Total comprehensive income	Total comprehensive income	$	100,630	(28,150)	72,480	68,997	(19,509)	49,488	Total comprehensive income	$	92,334	(25,302)	67,032	100,630	(28,150)	72,480


	Nine Months Ended September 30,
	2021				2020
	Gross		Tax	Net	Gross	Tax	Net
	(Dollars in thousands)
Net income	$	299,928	(80,912)	219,016	202,140	(55,705)	146,435
Other comprehensive income (loss):
Change in funded status of retirement obligations	505		(142)	363	861	(242)	619
Unrealized (losses) gains on debt securities available-for-sale	(39,980)		9,529	(30,451)	46,078	(11,053)	35,025

Accretion of loss on securities reclassified to held-to-maturity from available-for-sale	114		(27)	87	210	(50)	160

Reclassification adjustment for security gains included in net income	(398)		99	(299)	—	—	—

Other-than-temporary impairment accretion on debt securities recorded prior to January 1, 2020	765		(215)	550	892	(251)	641
Net gains (losses) on derivatives	66,071		(18,573)	47,498	(95,828)	26,937	(68,891)

Total other comprehensive income (loss)	27,077		(9,329)	17,748	(47,787)	15,341	(32,446)
Total comprehensive income	$	327,005	(90,241)	236,764	154,353	(40,364)	113,989

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Nine Months Ended September 30,
2020 2019
Gross Tax Net Gross Tax Net
(Dollars in thousands)
Net income $ 202,140 (55,705) 146,435 205,822 (59,068) 146,754
Other comprehensive loss:
Change in funded status of retirement obligations 861 (242) 619 56 (16) 40
Unrealized gains on debt securities available-for-sale 46,078 (11,053) 35,025 52,137 (12,532) 39,605
Accretion of loss on securities reclassified to held-to-maturity from available-for-sale 210 (50) 160 694 (222) 472
Reclassification adjustment for security losses included in net income 0 0 0 5,690 (1,469) 4,221
Other-than-temporary impairment accretion on debt securities recorded prior to January 1, 2020 892 (251) 641 819 (230) 589
Net losses on derivatives (95,828) 26,937 (68,891) (75,466) 21,213 (54,253)
Total other comprehensive loss (47,787) 15,341 (32,446) (16,070) 6,744 (9,326)
Total comprehensive income $ 154,353 (40,364) 113,989 189,752 (52,324) 137,428

The following table presents the after-tax changes in the balances of each component of accumulated other comprehensive loss for the nine months ended September 30, ~~2020~~2021 and ~~2019:~~2020:


		Change in funded status of retirement obligations		Accretion of loss on debt securities reclassified to held-to-maturity	Unrealized gains (losses) on debt securities available-for-sale and gains included in net income	Other-than- temporary impairment accretion on debt securities	Unrealized (losses) gains on derivatives	Total accumulated other comprehensive loss		Change in funded status of retirement obligations		Accretion of loss on debt securities reclassified to held-to-maturity	Unrealized gains on debt securities available-for-sale and gains included in net income	Other-than- temporary impairment accretion on debt securities	Unrealized losses on derivatives	Total accumulated other comprehensive loss
										(Dollars in thousands)
Balance - December 31, 2020									Balance - December 31, 2020	$	(9,485)	(184)	57,204	(9,809)	(77,742)	(40,016)
Net change									Net change	363		87	(30,750)	550	47,498	17,748

Balance - September 30, 2021									Balance - September 30, 2021	$	(9,122)	(97)	26,454	(9,259)	(30,244)	(22,268)
		(Dollars in thousands)
Balance - December 31, 2019	Balance - December 31, 2019	$	(6,690)	(386)	29,456	(10,629)	(30,373)	(18,622)	Balance - December 31, 2019	$	(6,690)	(386)	29,456	(10,629)	(30,373)	(18,622)
Net change	Net change	619		160	35,025	641	(68,891)	(32,446)	Net change	619		160	35,025	641	(68,891)	(32,446)

Balance - September 30, 2020	Balance - September 30, 2020	$	(6,071)	(226)	64,481	(9,988)	(99,264)	(51,068)	Balance - September 30, 2020	$	(6,071)	(226)	64,481	(9,988)	(99,264)	(51,068)

Balance - December 31, 2018		$	(3,018)	(921)	(8,884)	(11,397)	12,651	(11,569)
Net change		40		472	43,826	589	(54,253)	(9,326)

Balance - September 30, 2019		$	(2,978)	(449)	34,942	(10,808)	(41,602)	(20,895)

The following table presents information about amounts reclassified from accumulated other comprehensive loss to the consolidated statements of income and the affected line item in the statement where net income is presented.

Three Months Ended September 30, Nine Months Ended September 30,
2020 2019 2020 2019
(In thousands)
Reclassification adjustment for losses included in net income
Loss on securities, net $ 0 0 0 5,690
Change in funded status of retirement obligations
Amortization of net loss (gain) 299 (2) 898 (6)
Interest expense
Reclassification adjustment for unrealized losses (gains) on derivatives 9,450 (509) 17,631 (4,327)
Total before tax 9,749 (511) 18,529 1,357
Income tax (expense) benefit (2,716) 147 (5,106) (225)
Net of tax $ 7,033 (364) 13,423 1,132


	Three Months Ended September 30,			Nine Months Ended September 30,
	2021		2020	2021	2020
	(In thousands)
Reclassification adjustment for gains included in net income
Gain on securities, net	$	—	—	(398)	—

Change in funded status of retirement obligations




Amortization of net loss	168		299	505	898
Compensation and fringe benefits	168		299	505	898
Reclassification adjustment for unrealized losses on derivatives
Interest expense	10,917		11,158	31,404	19,875
Total before tax	11,085		11,457	31,511	20,773
Income tax expense	(2,980)		(3,192)	(8,509)	(5,725)
Net of tax	$	8,105	8,265	23,002	15,048

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15. Stockholders’ Equity

The changes in the components of stockholders’ equity for the three months ended September 30, ~~2020~~2021 and ~~2019~~2020 are as follows:

Common
stock Additional
paid-in
capital Retained
earnings Treasury
stock Unallocated
common
stock held
by ESOP Accumulated
other
comprehensive
loss Total
stockholders’
equity
(In thousands)
Balance at June 30, 2019 $ 3,591 2,809,851 1,206,873 (995,265) (79,764) (18,411) 2,926,875
Net income — — 51,972 — — — 51,972
Other comprehensive loss, net of tax — — — — — (2,484) (2,484)
Purchase of treasury stock (2,004,717 shares) — — — (22,486) — — (22,486)
Treasury stock allocated to restricted stock plan (1,687,500 shares) — (21,129) 101 21,028 — — 0
Compensation cost for stock options and restricted stock — 6,309 — — — — 6,309
Exercise of stock options — (287) — 441 — — 154
Restricted stock forfeitures (1,782,205 shares) — 22,348 (1,354) (20,994) — — 0
Cash dividend paid ($0.11 per common share) — — (30,298) — — — (30,298)
ESOP shares allocated or committed to be released — 576 — — 749 — 1,325
Balance at September 30, 2019 $ 3,591 2,817,668 1,227,294 (1,017,276) (79,015) (20,895) 2,931,367
Balance at June 30, 2020 $ 3,619 2,851,306 1,259,605 (1,355,626) (76,768) (59,236) 2,622,900
Net income — — 64,312 — — — 64,312
Other comprehensive income, net of tax — — — — — 8,168 8,168
Purchase of treasury stock (7,346 shares) — — — (57) — — (57)
Treasury stock allocated to restricted stock plan (21,144 shares) — (167) (92) 259 — — 0
Compensation cost for stock options and restricted stock — 3,479 — — — — 3,479
Restricted stock forfeitures (2,887 shares) — 33 2 (35) — — 0
Cash dividend paid ($0.12 per common share) — — (29,987) — — — (29,987)
ESOP shares allocated or committed to be released — 193 — — 749 — 942
Balance at September 30, 2020 $ 3,619 2,854,844 1,293,840 (1,355,459) (76,019) (51,068) 2,669,757


	Common stock		Additional paid-in capital	Retained earnings	Treasury stock	Unallocated common stock held by ESOP	Accumulated other comprehensive loss	Total stockholders’ equity
	(In thousands)
Balance at June 30, 2020	$	3,619	2,849,678	1,259,605	(1,355,626)	(75,140)	(59,236)	2,622,900

Net income	—		—	64,312	—	—	—	64,312
Other comprehensive income, net of tax	—		—	—	—	—	8,168	8,168


Purchase of treasury stock (7,346 shares)	—		—	—	(57)	—	—	(57)
Treasury stock allocated to restricted stock plan (21,144 shares)	—		(167)	(92)	259	—	—	—
Compensation cost for stock options and restricted stock	—		3,479	—	—	—	—	3,479

Restricted stock forfeitures (2,887 shares)	—		33	2	(35)	—	—	—
Cash dividend paid ($0.12 per common share)	—		—	(29,987)	—	—	—	(29,987)
ESOP shares allocated or committed to be released	—		143	—	—	799	—	942
Balance at September 30, 2020	$	3,619	2,853,166	1,293,840	(1,355,459)	(74,341)	(51,068)	2,669,757

Balance at June 30, 2021	$	3,619	2,862,730	1,422,029	(1,380,042)	(71,943)	(22,366)	2,814,027
Net income	—		—	66,934	—	—	—	66,934
Other comprehensive income, net of tax	—		—	—	—	—	98	98

Purchase of treasury stock (6,752 shares)	—		—	—	(96)	—	—	(96)
Treasury stock allocated to restricted stock plan (12,468 shares)	—		(174)	19	155	—	—	—
Compensation cost for stock options and restricted stock	—		3,572	—	—	—	—	3,572
Exercise of stock options	—		8	—	1,040	—	—	1,048
Restricted stock forfeitures (5,700 shares)	—		69	2	(71)	—	—	—
Cash dividend paid ($0.14 per common share)	—		—	(34,675)	—	—	—	(34,675)
ESOP shares allocated or committed to be released	—		852	—	—	799	—	1,651
Balance at September 30, 2021	$	3,619	2,867,057	1,454,309	(1,379,014)	(71,144)	(22,268)	2,852,559

16. Fair Value Measurements

We use fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. Our debt securities available-for-sale and derivatives are recorded at fair value on a recurring basis. Additionally, from time to time, we may be required to record at fair value other assets or liabilities on a non-recurring basis, such as held-to-maturity debt securities, mortgage servicing rights (“MSR”), loans receivable and other real estate owned. These non-recurring fair value adjustments involve the application of lower-of-cost-or-market accounting or write-downs of individual assets. Additionally, in connection with our mortgage banking activities we may have commitments to fund loans held-for-sale and commitments to sell loans, which are considered free-standing derivative instruments, the fair values of which are not material to our financial condition or results of operations.

In accordance with FASB ASC 820, “Fair Value Measurements and Disclosures”, we group our assets and liabilities at fair value in three levels, based on the markets in which the assets are traded and the reliability of the assumptions used to determine fair value. These levels are:

•Level 1 – Valuation is based upon quoted prices for identical instruments traded in active markets.

•Level 2 – Valuation is based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and model-based valuation techniques for which all significant assumptions are observable in the market.

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•Level 3 – Valuation is generated from model-based techniques that use significant assumptions not observable in the market. These unobservable assumptions reflect our own estimates of assumptions that market participants would use in pricing the asset or liability. Valuation techniques include the use of option pricing models, discounted cash flow models and similar techniques. The results cannot be determined with precision and may not be realized in an actual sale or immediate settlement of the asset or liability.

We base our fair values on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 requires us to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

Assets Measured at Fair Value on a Recurring Basis

Equity securities

Our equity securities portfolio is carried at estimated fair value on a recurring basis, with any unrealized gains and losses recognized in the Consolidated Statements of Income. The fair values of equity securities are based on quoted market prices (Level 1).

Debt securities available-for-sale

Our debt securities available-for-sale portfolio is carried at estimated fair value on a recurring basis, with any unrealized gains and losses, net of taxes, reported as accumulated other comprehensive income (loss) in stockholders’ equity. The fair values of debt securities available-for-sale are ~~based upon quoted prices for similar instruments in active markets (Level 2).~~provided by a third-party pricing service. The pricing service may use quoted market prices of comparable instruments or ~~discounted cash flow analyses,~~a variety of other forms of analysis, incorporating inputs that are currently observable in the markets for similar ~~securities.~~securities (Level 2). Inputs that are often used in the valuation methodologies include, but are not limited to, benchmark yields, credit spreads, default rates, prepayment speeds and non-binding broker quotes. As the Company is responsible for the determination of fair value, ~~it performs~~a quarterly ~~analyses on~~analysis of the prices received from the pricing service is performed to determine whether the prices are reasonable estimates of fair value. Specifically, the Company compares the prices received from the pricing service to a secondary pricing source. Additionally, the Company compares changes in the reported market values ~~and returns~~ to relevant market indices to test the reasonableness of the reported prices. The Company’s internal price verification procedures and the review of the fair value methodology documentation provided by the independent pricing services has not ~~historically~~ resulted in ~~adjustment~~material adjustments in the prices obtained from the pricing ~~service.~~services.

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Derivatives

Derivatives are reported at fair value utilizing Level 2 inputs. The fair values of interest rate swap and risk participation agreements are based on a valuation model that uses primarily observable inputs, such as benchmark yield curves and interest rate spreads.

The following tables ~~provide the level of valuation assumptions used to determine the carrying value of~~present our assets and liabilities measured at fair value on a recurring basis by level within the valuation hierarchy at September 30, ~~2020~~2021 and December 31, ~~2019.~~2020.


		Carrying Value at September 30, 2020						At September 30, 2021
		Total		Level 1	Level 2	Level 3		Total		Level 1	Level 2	Level 3
		(In thousands)						(In thousands)
Assets:	Assets:						Assets:
Equity securities	Equity securities	$	8,703	8,703	0	0	Equity securities	$	7,673	7,673	—	—
Debt securities available for sale:	Debt securities available for sale:						Debt securities available for sale:

Government-sponsored enterprises	Government-sponsored enterprises	$	4,741	0	4,741	0	Government-sponsored enterprises	$	3,811	—	3,811	—

Mortgage-backed securities:	Mortgage-backed securities:						Mortgage-backed securities:
Federal Home Loan Mortgage Corporation	Federal Home Loan Mortgage Corporation	1,346,260		0	1,346,260	0	Federal Home Loan Mortgage Corporation	1,275,843		—	1,275,843	—
Federal National Mortgage Association	Federal National Mortgage Association	1,219,643		0	1,219,643	0	Federal National Mortgage Association	1,117,260		—	1,117,260	—
Government National Mortgage Association	Government National Mortgage Association	258,315		0	258,315	0	Government National Mortgage Association	134,659		—	134,659	—

Total debt securities available-for-sale	Total debt securities available-for-sale	$	2,828,959	0	2,828,959	0	Total debt securities available-for-sale	$	2,531,573	—	2,531,573	—
Interest rate swaps	Interest rate swaps	$	36,552	0	36,552	0	Interest rate swaps	$	18,425	—	18,425	—
Liabilities:	Liabilities:						Liabilities:
Derivatives:	Derivatives:						Derivatives:
Interest rate swaps	Interest rate swaps	$	452	0	452	0	Interest rate swaps	$	9,138	—	9,138	—
Other contracts	Other contracts	230		0	230	0	Other contracts	128		—	128	—
Total derivatives	Total derivatives	$	682	0	682	0	Total derivatives	$	9,266	—	9,266	—


		Carrying Value at December 31, 2019						At December 31, 2020
		Total		Level 1	Level 2	Level 3		Total		Level 1	Level 2	Level 3
		(In thousands)						(In thousands)
Assets:	Assets:						Assets:
Equity securities	Equity securities	$	6,039	6,039	0	0	Equity securities	$	36,000	36,000	—	—
Debt securities available for sale:	Debt securities available for sale:						Debt securities available for sale:

Debt securities:							Debt securities:
Government-sponsored enterprises							Government-sponsored enterprises	4,482		—	4,482	—

Mortgage-backed securities:	Mortgage-backed securities:						Mortgage-backed securities:
Federal Home Loan Mortgage Corporation	Federal Home Loan Mortgage Corporation	$	1,240,379	0	1,240,379	0	Federal Home Loan Mortgage Corporation	$	1,317,052	—	1,317,052	—
Federal National Mortgage Association	Federal National Mortgage Association	1,178,049		0	1,178,049	0	Federal National Mortgage Association	1,205,426		—	1,205,426	—
Government National Mortgage Association	Government National Mortgage Association	276,962		0	276,962	0	Government National Mortgage Association	231,477		—	231,477	—

Total debt securities available-for-sale	Total debt securities available-for-sale	$	2,695,390	0	2,695,390	0	Total debt securities available-for-sale	$	2,758,437	—	2,758,437	—
Interest rate swaps	Interest rate swaps	$	5,989	0	5,989	0	Interest rate swaps	$	34,577	—	34,577	—
Liabilities:	Liabilities:						Liabilities:
Derivatives:	Derivatives:						Derivatives:

Interest rate swaps							Interest rate swaps	$	275	—	275	—
Other contracts	Other contracts	$	125	0	125	0	Other contracts	217		—	217	—
Total derivatives	Total derivatives	$	125	0	125	0	Total derivatives	$	492	—	492	—

There have been no changes in the methodologies used at September 30, ~~2020~~2021 from December 31, ~~2019,~~2020, and there were no transfers between Level 1 and Level 2 during the nine months ended September 30, ~~2020.~~2021.

Table of Contents

There were no Level 3 assets measured at fair value on a recurring basis for the nine months ended September 30, ~~2020~~2021 and December 31, ~~2019.~~2020.

~~Table of Contents~~

Assets Measured at Fair Value on a Non-Recurring Basis

Mortgage Servicing Rights, Net

Mortgage servicing rights are carried at the lower of cost or estimated fair value. The estimated fair value of MSR is obtained through independent third-party valuations through an analysis of future cash flows, incorporating assumptions market participants would use in determining fair value including market discount rates, prepayment speeds, servicing income, servicing costs, default rates and other market driven data, including the market’s perception of future interest rate movements. The prepayment speed and the discount rate are considered two of the most significant inputs in the model. At September 30, ~~2020,~~2021, the fair value model used prepayment speeds ranging from ~~14.88%~~4.61% to ~~32.40%~~31.62% and a discount rate of ~~12.03%~~11.32% for the valuation of the mortgage servicing rights. At December 31, ~~2019,~~2020, the fair value model used prepayment speeds ranging from ~~6.60%~~14.46% to ~~29.10%~~23.58% and a discount rate of ~~12.05%~~12.03% for the valuation of the mortgage servicing rights. A significant degree of judgment is involved in valuing the mortgage servicing rights using Level 3 inputs. The use of different assumptions could have a significant positive or negative effect on the fair value estimate.

~~Collateral-Dependent Loans/Impaired~~Collateral Dependent Loans ~~Receivable~~

~~With~~A collateral dependent loan is a loan for which repayment is expected to be provided substantially through the ~~adoption of ASU 2016-13, loans which meet certain criteria are individually evaluated as part~~operation or sale of the ~~process of calculating the allowance for credit losses. Prior to adoption, such loans were evaluated for impairment. However, the valuation method remains unchanged.~~collateral. A loan is individually evaluated when it is a collateral dependent commercial loan with an outstanding balance greater than $1.0 million and on non-accrual status, ~~loans~~a loan modified in a troubled debt restructuring, ~~and other~~or is a commercial ~~loans~~loan with $1.0 million in outstanding principal if management has specific information that it is probable they will not collect all amounts due under the contractual terms of the loan agreement. Collateral-dependent loans secured by property are carried at the estimated fair value of the collateral less estimated selling costs. Estimated fair value is calculated using an independent third-party appraiser. In the event the most recent appraisal does not reflect the current market conditions due to the passage of time and other factors, management will obtain an updated appraisal or make downward adjustments to the existing appraised value based on their knowledge of the property, local real estate market conditions, recent real estate transactions, and for estimated selling costs, if applicable. Appraisals were generally discounted in a range of 0% to 25%. Collateral securing a loan may consist of real estate or other property such as equipment or inventory. Collateral securing commercial and industrial loans may include real estate, other property or the operating results of the business. For ~~non-collateral-dependent~~non-collateral dependent loans, management estimates the fair value using discounted cash flows based on inputs that are largely unobservable and instead reflect management’s own estimates of the assumptions as a market participant would in pricing such loans.

Other Real Estate Owned and Other Repossessed Assets

Other Real Estate Owned and Other Repossessed Assets are recorded at estimated fair value, less estimated selling costs when acquired, thus establishing a new cost basis. Repossessed assets that are available for lease are included in operating lease equipment reviewed below. Fair value of foreclosed real estate property and other repossessed assets is generally based on independent appraisals. These appraisals include adjustments to comparable assets based on the appraisers’ market knowledge and experience, and are discounted an additional 0% to 25% for estimated costs to sell. When an asset is acquired, the excess of the loan balance over fair value, less estimated selling costs, is charged to the allowance for loan losses. If further declines in the estimated fair value of the asset occur, a writedown is recorded through expense. The valuation of foreclosed and repossessed assets is subjective in nature and may be adjusted in the future because of changes in economic conditions. Operating costs after acquisition are generally expensed.

~~Loans Held~~Operating Lease Equipment

On at least an annual basis, the Company reviews the lease residuals and off-lease equipment for ~~Sale~~

~~Residential mortgage loans held~~potential impairment. Repossessed assets are also available for ~~sale~~lease and are included in operating lease equipment reviewed. Operating lease equipment is recorded at ~~the lower of cost or~~estimated fair value, ~~and are therefore measured at~~generally determined by independent appraisal. If declines in the estimated fair value onof the asset occur, a ~~non-recurring basis. When available, the Company uses observable secondary market data, including pricing on recent closed market transactions for loans with similar characteristics.~~writedown is recorded through expense.

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The following tables provide the level of valuation assumptions used to determine the carrying value of our assets measured at fair value on a non-recurring basis atthat have changed for the periods ended September 30, ~~2020~~2021 and December 31, ~~2019.~~2020. For the three months ended September 30, 2021, there was no change to the carrying value of other real estate owned. For the three months ended December 31, 2020, there was no change to the carrying value of ~~collateral-dependent loans,~~ other real estate owned or ~~loans held for sale. For the three months ended December 31, 2019, there was no change to the carrying value of impaired loans or loans held for sale.~~collateral dependent loans.


Security Type	Security Type	Valuation Technique	Unobservable Input	Range		Weighted Average Input	Carrying Value at September 30, 2020					Security Type	Valuation Technique	Unobservable Input	Range		Weighted Average Input	Carrying Value at September 30, 2021
				Minimum	Maximum		Total		Level 1	Level 2	Level 3				Minimum	Maximum		Total		Level 1	Level 2	Level 3
							(In thousands)											(In thousands)
MSR, net	MSR, net	Estimated cash flow	Prepayment speeds	14.9%	32.4%	19.14%	$	10,871	0	0	10,871	MSR, net	Estimated cash flow	Prepayment speeds	4.6%	31.6%	13.74%	$	8,561	—	—	8,561
Collateral-dependent loans												Collateral-dependent loans	Market comparable	Lack of marketability	0.8%	4.7%	8.98%	1,620		—	—	1,620

Operating lease equipment												Operating lease equipment	Market comparable	Lack of marketability	0.0%	10.4%	0.99%	342		—	—	342
																		$	10,523	—	—	10,523

							$	10,871	0	0	10,871


Security Type	Security Type	Valuation Technique	Unobservable Input	Range		Weighted Average Input	Carrying Value at December 31, 2019					Security Type	Valuation Technique	Unobservable Input	Range		Weighted Average Input	Carrying Value at December 31, 2020
				Minimum	Maximum		Total		Level 1	Level 2	Level 3				Minimum	Maximum		Total		Level 1	Level 2	Level 3
							(In thousands)											(In thousands)
MSR, net	MSR, net	Estimated cash flow	Prepayment speeds	6.6%	29.1%	11.04%	$	10,409	0	0	10,409	MSR, net	Estimated cash flow	Prepayment speeds	14.5%	23.6%	17.76%	$	10,663	—	—	10,663

Other real estate owned		Market comparable	Lack of marketability	0.0%	25.0%	2.70%	262		0	0	262

Operating lease equipment												Operating lease equipment	Market comparable	Lack of marketability	0.0%	10.4%	10.41%	15,007		—	—	15,007
							$	10,671	0	0	10,671							$	25,670	—	—	25,670

Other Fair Value Disclosures

Fair value estimates, methods and assumptions for the Company’s financial instruments that are not recorded at fair value on a recurring or non-recurring basis are set forth below.

Cash and Cash Equivalents

For cash, short-term U.S. Treasury securities and due from banks, the carrying amount approximates fair value.

Debt Securities Held-to-Maturity, net

Our debt securities held-to-maturity portfolio, consisting primarily of agency mortgage-backed securities and other debt securities for which we have a positive intent and ability to hold to maturity, is carried at amortized cost less any allowance for credit losses. ~~Management utilizes various inputs to determine~~The fair values of for the ~~fair value~~majority of ~~the portfolio. The Company obtains one price for each security primarily from~~debt securities held-to-maturity are provided by a third-party pricing ~~service, which generally uses quoted or other observable inputs for the determination of fair value.~~service. The pricing service normally derives the security prices through recently reported trades for identical or similar securities, making adjustments through the reporting date based upon available observable market information. For securities not actively traded, the pricing service may use quoted market prices of comparable instruments or ~~discounted cash flow analyses,~~a variety of other forms of analysis, incorporating inputs that are currently observable in the markets for similar ~~securities.~~securities (Level 2). Inputs that are often used in the valuation methodologies include, but are not limited to, benchmark yields, credit spreads, default rates, prepayment speeds and non-binding broker quotes. InAs the ~~absence~~Company is responsible for the determination of ~~quoted~~fair value, a quarterly analysis of the prices received from the pricing service is performed to determine whether the prices are reasonable estimates of fair value. Specifically, the Company compares the prices received from the pricing service to a secondary pricing source. Additionally, the Company compares changes in the reported market values to relevant market indices to test the reasonableness of the reported prices. The Company’s internal price verification procedures and the review of the fair value methodology documentation provided by the independent pricing services has not resulted in anmaterial adjustments in the prices obtained from the pricing services. For certain held-to-maturity debt securities that trade in illiquid ~~market,~~markets, valuation techniques, which require inputs that are both significant to the fair value measurement and unobservable, are used to determine fair value of the investment. Valuation techniques are based on various assumptions, including, but not limited to forecasted cash flows, discount rates, required rate of return, adjustments for nonperformance and liquidity, and liquidation values. As the Company is responsible for the determination of fair value, it performs quarterly analyses on the prices received from the pricing service to determine whether the prices are reasonable estimates of fair value. Specifically, the Company compares the prices received from the pricing service to a secondary pricing source. Additionally, the Company compares changes in the reported market values and returns to relevant market indices to test the reasonableness of the reported prices. The Company’s internal price verification procedures and review of fair value methodology documentation provided by independent pricing services has not historically resulted in adjustment in the prices obtained from the pricing service.(Level 3).

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FHLB Stock

The fair value of the Federal Home Loan Bank of New York (“FHLB”) stock is its carrying value, since this is the amount for which it could be redeemed. There is no active market for ~~this stock and the~~FHLB stock. The Bank is required to hold ~~a minimum investment~~and purchase FHLB stock based upon the balance of mortgage related assets held by the member and orthe amount of outstanding FHLB ~~advances outstanding.~~advances.

Loans

Fair values are estimated for portfolios of loans with similar financial characteristics. Loans are segregated by type such as residential mortgage and consumer. Each loan category is further segmented into fixed and adjustable rate interest terms and by performing and non-performing categories.

The fair value estimates are made at a specific point in time based on relevant market information. ~~They~~The fair value estimates do not reflect any premium or discount that could result from offering for sale a particular financial instrument. Fair value estimates are based on judgments regarding future expected loss experience, risk characteristics and economic conditions. These estimates are subjective, involve uncertainties, and cannot be determined with precision.

Loans Held for Sale

Residential mortgage loans held for sale are recorded at the lower of cost or fair value and are therefore measured at fair value on a non-recurring basis. When available, the Company uses observable secondary market data, including pricing on recent closed market transactions for loans with similar characteristics.

Deposit Liabilities

The fair value of deposits with no stated maturity, such as savings, checking ~~accounts~~ and money market accounts, is equal to the amount payable on demand. The fair value of certificates of deposit is based on the discounted value of contractual cash flows. The discount rate is estimated using ~~the~~ rates ~~which approximate~~for currently offered ~~for~~ deposits of similar remaining maturities.

Borrowings

The fair value of borrowings are based on securities dealers’ estimated fair values, when available, or estimated using discounted ~~contractual~~ cash ~~flows using~~flow analysis. The discount rates ~~which~~used approximate the rates offered for similar borrowings of similar remaining ~~maturities.~~terms.

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Commitments to Extend Credit

The fair value of commitments to extend credit is estimated using the fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the present creditworthiness of the counterparties. For commitments to originate fixed rate loans, fair value also considers the difference between current levels of interest rates and the committed rates. Due to the short-term nature of our outstanding commitments, the fair values of these commitments are immaterial to our financial condition.

The carrying values and estimated fair values of the Company’s financial instruments are presented in the following table.


		September 30, 2020							September 30, 2021
		Carrying		Estimated Fair Value					Carrying		Estimated Fair Value
		value		Total	Level 1	Level 2	Level 3		value		Total	Level 1	Level 2	Level 3
		(In thousands)							(In thousands)
Financial assets:	Financial assets:							Financial assets:
Cash and cash equivalents	Cash and cash equivalents	$	557,749	557,749	557,749	0	0	Cash and cash equivalents	$	670,295	670,295	670,295	—	—
Equities	Equities	8,703		8,703	8,703	0	0	Equities	7,673		7,673	7,673	—	—
Debt securities available-for-sale	Debt securities available-for-sale	2,828,959		2,828,959	0	2,828,959	0	Debt securities available-for-sale	2,531,573		2,531,573	—	2,531,573	—
Debt securities held-to-maturity, net	Debt securities held-to-maturity, net	1,236,610		1,304,693	0	1,240,586	64,107	Debt securities held-to-maturity, net	1,272,683		1,336,957	—	1,254,192	82,765
FHLB stock	FHLB stock	214,255		214,255	214,255	0	0	FHLB stock	177,058		177,058	177,058	—	—
Loans held for sale	Loans held for sale	19,984		19,984	0	19,984	0	Loans held for sale	397		397	—	397	—
Net loans	Net loans	20,698,057		20,975,033	0	0	20,975,033	Net loans	21,624,728		21,688,163	—	—	21,688,163
Derivative financial instruments	Derivative financial instruments	36,552		36,552	0	36,552	0	Derivative financial instruments	18,425		18,425	—	18,425	—
Financial liabilities:	Financial liabilities:							Financial liabilities:
Deposits, other than time deposits	Deposits, other than time deposits	$	15,419,929	15,419,929	15,419,929	0	0	Deposits, other than time deposits	$	18,085,640	18,085,640	18,085,640	—	—
Time deposits	Time deposits	3,683,606		3,697,232	0	3,697,232	0	Time deposits	2,314,784		2,315,906	—	2,315,906	—
Borrowed funds	Borrowed funds	4,307,523		4,391,922	0	4,391,922	0	Borrowed funds	3,534,536		3,571,056	—	3,571,056	—
Derivative financial instruments	Derivative financial instruments	682		682	0	682	0	Derivative financial instruments	9,266		9,266	—	9,266	—


		December 31, 2019							December 31, 2020
		Carrying		Estimated Fair Value					Carrying		Estimated Fair Value
		value		Total	Level 1	Level 2	Level 3		value		Total	Level 1	Level 2	Level 3
		(In thousands)							(In thousands)
Financial assets:	Financial assets:							Financial assets:
Cash and cash equivalents	Cash and cash equivalents	$	174,915	174,915	174,915	0	0	Cash and cash equivalents	$	170,432	170,432	170,432	—	—
Equities	Equities	6,039		6,039	6,039	0	0	Equities	36,000		36,000	36,000	—	—
Debt securities available-for-sale	Debt securities available-for-sale	2,695,390		2,695,390	0	2,695,390	0	Debt securities available-for-sale	2,758,437		2,758,437	—	2,758,437	—
Debt securities held-to-maturity		1,148,815		1,190,104	0	1,116,771	73,333
Debt securities held-to-maturity, net								Debt securities held-to-maturity, net	1,247,853		1,320,872	—	1,253,566	67,306
FHLB stock	FHLB stock	267,219		267,219	267,219	0	0	FHLB stock	159,829		159,829	159,829	—	—
Loans held for sale	Loans held for sale	29,797		29,797	0	29,797	0	Loans held for sale	30,357		30,357	—	30,357	—
Net loans	Net loans	21,476,056		21,563,627	0	0	21,563,627	Net loans	20,580,451		20,787,917	—	—	20,787,917
Derivative financial instruments	Derivative financial instruments	5,989		5,989	0	5,989	0	Derivative financial instruments	34,577		34,577	—	34,577	—
Financial liabilities:	Financial liabilities:							Financial liabilities:
Deposits, other than time deposits	Deposits, other than time deposits	$	13,853,030	13,853,030	13,853,030	0	0	Deposits, other than time deposits	$	16,807,240	16,807,240	16,807,240	—	—
Time deposits	Time deposits	4,007,308		4,007,342	0	4,007,342	0	Time deposits	2,718,179		2,726,230	—	2,726,230	—
Borrowed funds	Borrowed funds	5,827,111		5,834,895	0	5,834,895	0	Borrowed funds	3,295,790		3,367,491	—	3,367,491	—
Derivative financial instruments	Derivative financial instruments	125		125	0	125	0	Derivative financial instruments	492		492	—	492	—

Limitations

Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument. These estimates do not reflect any premium or discount that could result from offering for sale at one time the Company’s entire holdings of a particular financial instrument. Because no market exists for a portion of the Company’s financial instruments, fair value estimates are based on judgments regarding future expected loss experience,

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current economic conditions, risk characteristics of various financial instruments, and other factors. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates.

Fair value estimates are based on existing on- and off-balance-sheet financial instruments without attempting to estimate the value of anticipated future business and the value of assets and liabilities that are not considered financial instruments. Significant assets that are not considered financial assets include deferred tax assets, premises and equipment and bank owned life insurance. Liabilities for pension and other postretirement benefits are not considered financial liabilities. In addition, the tax ramifications related to the realization of the unrealized gains and losses can have a significant effect on fair value estimates and have not been considered in the estimates.

17. Revenue Recognition

The Company’s contracts with customers in the scope of Topic 606, Revenue from Contracts with Customers, are contracts for deposit accounts and contracts for non-deposit investment accounts through a third-party service provider. Both types of contracts result in non-interest income being recognized. The revenue resulting from deposit accounts, which includes fees such as insufficient funds fees, wire transfer fees and out-of-network ATM transaction fees, is included as a component of fees and service charges on the ~~consolidated statements~~Consolidated Statements of ~~income.~~Income. The revenue resulting from non-deposit investment accounts is included as a component of other income on the Consolidated Statements of Income.

Revenue from contracts with customers included in fees and service charges and other income was as follows:


		Three Months Ended September 30,			Nine Months Ended September 30,			Three Months Ended September 30,			Nine Months Ended September 30,
		2020		2019	2020	2019		2021		2020	2021	2020
		(Dollars in thousands)						(Dollars in thousands)
Revenue from contracts with customers included in:	Revenue from contracts with customers included in:						Revenue from contracts with customers included in:
Fees and service charges	Fees and service charges	$	3,369	4,337	10,227	11,350	Fees and service charges	$	3,854	3,369	11,185	10,227
Other income	Other income	3,444		2,230	8,428	6,961	Other income	3,740		3,444	12,943	8,428
Total revenue from contracts with customers	Total revenue from contracts with customers	$	6,813	6,567	18,655	18,311	Total revenue from contracts with customers	$	7,594	6,813	24,128	18,655

For our contracts with customers, we satisfy our performance obligations each day as services are rendered. For our deposit account revenue, we receive payment on a daily basis as services are rendered and for our non-deposit investment account revenue, we receive payment on a monthly basis from our third-party service provider as services are rendered.

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18. Recent Accounting Pronouncements


Standard	Description	Required date of adoption	Effect on Consolidated Financial Statements
Standards Adopted in ~~2020~~2021
~~Measurement of Credit Losses on Financial Instruments~~Codification Improvements	~~This ASU changes how entities report credit losses for financial assets held at amortized cost and available-for-sale debt securities.~~ The amendments ~~replace~~include all disclosure guidance in the ~~“incurred loss” approach with a methodology~~Disclosure Section to reduce the potential that incorporates macroeconomic forecast assumptions and management judgments applicable to and through the expected life of the portfolios based on relevant information about past events, including historical loss experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amounts. The amendments apply to financial assets such as loans, leases and held-to-maturity investments; and certain off-balance sheet credit exposures. The amendments expand credit quality disclosure ~~requirements.~~requirements would be missed.	January 1, ~~2020~~2021	The ~~Company adopted~~amendments in ASU 2020-10 do not change current GAAP. The update did not impact the ~~standard’s provisions~~Company’s Consolidated Financial Statements.
Codification Improvements to Subtopic 310-20, Receivables—Nonrefundable Fees and ~~all~~Other Costs	The amendments in this update clarify guidance as to whether a callable debt security with multiple call dates is within the scope of ~~its related~~ paragraph 310-20-35-33.	~~updates on~~January 1, ~~2020.~~ 2021	The amendments ~~were~~in ASU 2020-08 will be applied onunder a ~~modified retrospective basis. See~~ ~~Note 1 - Summary of Significant Accounting Principles~~ ~~for information on the impact of the~~prospective approach. The adoption of this ASU ~~2016-13~~did not have a material impact on the Company’s Consolidated Financial Statements.
~~Intangibles-Goodwill~~Investments-Equity Securities (Topic 321), Investments-Equity Method and ~~Other- Internal-Use Software (Subtopic 350-40)~~Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815): ~~Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract~~Clarifying the Interactions between Topic 321, Topic 323, and Topic 815 (a consensus of the ~~FASB~~ Emerging Issues Task Force)	This ~~new guidance aligns~~update clarifies the ~~requirements~~application of the alternative provided in ASU 2016-01 to measure certain equity securities without a readily determinable fair value. The amendments in this update clarify that a company should consider observable transactions that require it to either apply or discontinue the equity method of accounting under Topic 323 for ~~capitalizing implementation costs incurred in a hosting arrangement that is a service contract with~~ the ~~requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. Specifically, where a cloud computing arrangement includes a license to internal-use software,~~purposes of applying the ~~software license is accounted for by the customer~~measurement alternative in accordance with ~~Subtopic 350-40, “Intangibles- Goodwill~~Topic 321 immediately before applying or upon discontinuing the equity method. The amendments further provide clarification related to the accounting for certain forward contracts and ~~Other-Internal-Use Software”.~~purchased options.	January 1, 2021	The amendments in ASU 2020-01 will be applied prospectively. The Company does not currently apply the measurement alternative in Topic 321 to any of its investments and the update did not have a material impact on the Company’s Consolidated Financial Statements.
Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes	The amendments simplify the accounting for income taxes by removing certain exceptions to general principles in Topic 740 and also clarify and amend existing guidance.	January 1, 2021	The Company adopted ASU 2019-12 with no material impact on its Consolidated Financial Statements.
Compensation-Retirement Benefits-Defined Benefit Plans-General (Subtopic 715-20): Disclosure Framework-Changes to the Disclosure Requirements for Defined Benefit Plans.	The amendments in this update modify the disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans by removing disclosures that no longer are considered cost beneficial, clarifying the specific requirements of disclosures, and adding disclosure requirements identified as relevant.	January 1, 2021	ASU 2018-14 will be applied under a retrospective approach to disclosures with regard to the Company’s employee benefit plans. The adoption of this update did not have a material impact on the Company’s Consolidated Financial Statements.
Standards Not Yet Adopted
Lessors – Certain Leases with Variable Lease Payments	The update affects lessors with lease contracts that have variable lease payments that do not depend on a reference index or a rate and where the lessor would have recognized a selling loss at lease commencement if classified as sales-type or direct financing even if the lessor expects the arrangement to be profitable. To reduce the risk of recognizing losses at lease commencement in such circumstances, the update requires lessors to classify and account for such leases as operating.	January 1, ~~2020~~2022 Early adoption permitted	The ~~Company will apply the~~ amendments ~~in this Update prospectively to all implementation costs incurred after January 1, 2020. The adoption of ASU No. 2018-15 did not have an impact on the Company’s Consolidated Financial Statements.~~
~~Fair Value Measurement (Topic 820): Disclosure Framework-Changes~~ ~~to the Disclosure Requirements for Fair Value Measurement~~	The amendments remove the requirement to disclose the amount of, and reasons for, transfers between Level 1 and Level 2 of the fair value hierarchy, the policy for timing of such transfers and the valuation processes for Level 3 fair value measurements. The ASU modifies the disclosure requirements for investments in certain entities that calculate net asset value and clarify the purpose of the measurement uncertainty disclosure. The ASU adds disclosure requirements about the changes in unrealized gains and losses included in other comprehensive income for recurring Level 3 fair value measurements and the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements.	~~January 1, 2020~~ ~~Early adoption permitted to any removed or modified disclosures and delay of adoption of additional disclosures until the effective date~~	~~Changes should~~may be applied either retrospectively or prospectively. The update is not expected to all periods presented upon the effective date with the exception of the following, which should be applied prospectively: disclosures relating to changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the disclosures for uncertainty measurement. The adoption of ASU 2018-13 did not have ana material impact on the Company’s Consolidated Financial Statements.

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Standard	Description	Required date of adoption	Effect on Consolidated Financial Statements
~~Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment~~	This ASU simplifies subsequent measurement of goodwill by eliminating Step 2 of the impairment test while retaining the option to perform the qualitative assessment for a reporting unit to determine whether the quantitative impairment test is necessary. The ASU also eliminates the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative test, to perform Step 2 of the goodwill impairment test. Therefore, the same impairment assessment applies to all reporting units.	~~January 1, 2020~~ ~~Early adoption permitted for interim or annual goodwill impairment testing dates beginning after January 1, 2017~~	~~The Company is applying the amendments in ASU 2017-04 prospectively for goodwill impairment testing conducted after January 1, 2020.~~
~~Standards Not Yet Adopted~~
Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity	The amendments simplify the accounting for certain financial instruments with the characteristics of liabilities and equity by reducing the number of models for convertible debt instruments and convertible preferred stock and amends how convertible instruments and equity contracts with an option to be settled in cash or shares affect the EPS calculation. ~~The update also amends the derivatives scope exception for contracts in an entity’s own equity.~~	January 1, 2022 Early adoption permitted not earlier than fiscal years beginning 2021	The amendments are to be applied under either a modified retrospective or a fully retrospective approach. The update is not expected to have a material impact on the Company’s Consolidated Financial Statements.
Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting	The amendments provide expedients and exceptions for applying GAAP to contracts or hedging relationships affected by the discontinuance of LIBOR as a benchmark rate to alleviate the burden and cost of such modifications. The expedients and exceptions provided by the amendments do not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022, except for hedging relationships existing as of December 31, 2022, that an entity has elected certain optional expedients for and that are retained through the end of the hedging relationship. The amendments also provide a one-time election to sell and/or transfer debt securities classified as held to maturity that reference a rate affected by reference rate reform.	Effective for a limited time as of March 12, 2020 through December 31, 2022	The Company ~~is evaluating~~continues to evaluate its financial instruments indexed to USD-LIBOR for which Topic 848 provides expedients, exceptions and elections. The Company has established a crossfunctional team to develop transition plans to address potential revisions to documentation, as well as customer management and communication, internal training, financial, operational and risk management implications, and legal and contract management. In addition, the ~~amendments provide expedients~~Company has engaged with its regulators and ~~administrative relief.~~with industry working groups and trade associations to develop strategies for transitioning away from LIBOR.
~~Investments-Equity Securities~~Reference Rate Reform (Topic 321), Investments-Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815): Clarifying the Interactions between Topic 321, Topic 323, and Topic 815 (a consensus of the Emerging Issues Task Force)848)	This update clarifies the application of the alternative provided in ASU 2016-01 to measure certain equity securities without a readily determinable fair value. The amendments in this update clarify that a company should consider observable transactions that require it to either apply or discontinue the equity method of accounting under Topic 323 for the purposes of applying the measurement alternative in accordance with Topic 321 immediately before applying or upon discontinuing the equity method. The amendments further provide clarification related to the accounting for certain forward contracts and purchased options.	~~January 1, 2021~~ ~~Early adoption permitted~~	The update specifically addresses whether Topic 848 applies to derivative instruments that do not reference a rate that is expected to be ~~applied prospectively. The Company does not expect~~discontinued but that instead use an interest rate for margining, discounting, or contract price alignment that is modified as a result of reference rate reform, commonly referred to as the “discounting transition.” This ASU ~~2020-01 to have a material impact on its Consolidated Financial Statements.~~

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~~Standard~~	~~Description~~	~~Required date of adoption~~	~~Effect on Consolidated Financial Statements~~
~~Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes~~	~~The amendments simplify the accounting for income taxes by removing~~extends certain ~~exceptions to general principles~~optional expedients provided in Topic ~~740~~848 to contract modifications and ~~also clarify and amend existing guidance.~~derivatives affected by the discounting transition.	~~January 1, 2021~~ ~~Early adoption permitted~~	~~This update will be effective~~Effective for ~~the Company January 1, 2021 with early adoption permitted. The Company does not expect ASU No. 2019-12 to have~~ a ~~material impact on its Consolidated Financial Statements.~~
~~Compensation-Retirement Benefits-Defined Benefit Plans-General~~ limited time as of March 12, 2020 through December 31, 2022~~(Subtopic 715-20): Disclosure Framework-Changes to the Disclosure Requirements for Defined Benefit Plans~~	The amendments in this update modify the disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans by removing disclosures that no longer are considered cost beneficial, clarifying the specific requirements of disclosures, and adding disclosure requirements identified as relevant.	~~January 1, 2021~~ ~~Early adoption permitted~~	~~The update is to~~ASU 2021-01 may be applied onunder a retrospective ~~basis.~~approach as of any date from the beginning of an interim period that includes or is after March 12, 2020 or prospectively to new modifications made on or after any date within the interim period including January 7, 2021. The ~~Company will evaluate the effect of ASU 2018-14 on disclosures with regard~~Update is not expected to ~~employee benefit plans but does not expect~~have a material impact on the Company’s Consolidated Financial Statements.

19. Subsequent Events

As defined in FASB ASC 855, “Subsequent Events”, subsequent events are events or transactions that occur after the balance sheet date but before financial statements are issued or available to be issued. Financial statements are considered issued when they are widely distributed to stockholders and other financial statement users for general use and reliance in a form and format that complies with U.S. GAAP.

Dividend

On October ~~28, 2020,~~27, 2021, the Company declared a cash dividend of ~~$0.12~~$0.14 per share. The ~~$0.12~~$0.14 dividend per share will be paid to stockholders on November ~~25, 2020,~~26, 2021, with a record date of November 10, ~~2020.~~2021.

~~Sale-Leaseback Transactions~~

On August 3, 2020, the Bank entered into an agreement for the sale-leaseback of 15 branch locations, subject to buyer due diligence. The transaction was not completed as of September 30, 2020 and therefore, was not reflected in the Consolidated Financial Statements as of September 30, 2020. As of November 6, 2020, a portion of the transaction has been completed and the remainder of the transaction is expected to be completed in the fourth quarter of 2020. The Company expects to realize an after-tax gain of approximately $7 million net of transaction related expenses in the fourth quarter of 2020.

On November 3, 2020, the Bank entered into an agreement for the sale-leaseback of a corporate office location, subject to buyer due diligence. The transaction is expected to close in the fourth quarter of 2020 and the Company expects to realize an after-tax gain of approximately $10 million net of transaction related expenses.

~~Non-Performing Loan Sale~~

On October 30, 2020, the Company sold a non-performing multi-family loan with a net unpaid principal balance of $18.1 million as of September 30, 2020. The Company expects to recognize a recovery of approximately $2 million in the allowance for credit losses in connection with the sale.

~~Debt Extinguishment~~

~~During October 2020, the Company extinguished approximately $600 million of borrowings, which resulted in a cost of approximately $8.6 million.~~

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ITEM 2.			MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward Looking Statements

Certain statements contained herein are not based on historical facts and are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements may be identified by reference to a future period or periods or by the use of forward-looking terminology, such as “may,” “will,” “believe,” “expect,” “estimate,” “anticipate,” “continue,” or similar terms or variations on those terms, or the negative of those terms. Forward-looking statements are subject to numerous risks and uncertainties, including, but not limited to, those related to the economic environment, particularly in the market areas in which Investors Bancorp, Inc. (the “Company”) operates, competitive products and pricing, fiscal and monetary policies of the U.S. Government, changes in government regulations or interpretations of regulations affecting financial institutions, changes in prevailing interest rates, acquisitions and the integration of acquired businesses, credit risk management, asset-liability management, the financial and securities markets, ~~and~~ the availability of and costs associated with sources of ~~liquidity.~~liquidity, expenses related to our proposed merger with Citizens Financial Group, Inc., unexpected delays relating to the merger, or the inability to obtain shareholder or regulatory approvals or satisfy the other closing conditions required to complete the merger. In addition, the COVID-19 pandemic is having an adverse impact on us, our customers and the communities we serve. The adverse effect of the COVID-19 pandemic on us, our customers and the communities where we operate may adversely affect our business, results of operations and financial condition for an indefinite period of time. Reference is made to Item 1A “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2019 as well as the Company’s~~2020 and subsequent ~~quarterly reports on Form 10-Q and the~~ additional risk ~~factor~~factors included in Part II, Item 1A of ~~this~~our Quarterly ~~Report~~Reports on Form 10-Q.

The Company wishes to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. The Company wishes to advise that the factors listed above could affect the Company’s financial performance and could cause the Company’s actual results for future periods to differ materially from any opinions or statements expressed with respect to future periods in any current statements. The Company does not undertake and specifically declines any obligation to publicly release the result of any revisions, which may be made to any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events except as may be required by law.

Critical Accounting Policies

We consider accounting policies that require management to exercise significant judgment or discretion or to make significant assumptions that have, or could have, a material impact on the carrying value of certain assets or on income to be critical accounting policies. As of September 30, ~~2020,~~2021, we consider the following to be our critical accounting policies.

Allowance for Credit Losses. The allowance for credit losses ~~includes both the allowance for loan and lease losses and the reserve for unfunded lending commitments and~~ represents the estimated amount considered necessary to cover lifetime expected credit losses inherent in financial assets at the balance sheet date. The measurement of expected credit losses is applicable to financial assets measured at amortized cost, including loan receivables and held-to-maturity debt securities. It also applies to off-balance sheet credit exposures such as loan commitments and unused lines of credit. The allowance is established through the provision for credit losses that is charged against income. The methodology for determining the allowance for credit losses is considered a critical accounting policy by management because of the high degree of judgment involved, the subjectivity of the assumptions used, and the potential for changes in the forecasted economic environment that could result in changes to the amount of the recorded allowance for credit losses. The allowance for loan and security losses is reported separately as contra-assets to loans and securities on the consolidated balance sheet. The expected credit loss for unfunded lending commitments and unfunded loan commitments is reported on the consolidated balance sheet in other liabilities. The provision for credit losses related to loans, unfunded commitments and debt securities is reported on the consolidated statement of income.

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Allowance for Credit Losses on Loans Receivable

Collectively evaluated.The allowance for credit losses on loans is deducted from the amortized cost basis of the loan to present the net amount expected to be collected. Expected losses are evaluated and calculated on a collective basis for those loans which share similar risk characteristics. At each reporting period, the Company evaluates whether the loans in a pool continue to exhibit similar risk characteristics as the other loans in the pool. If the risk characteristics of a loan change, such that they are no longer similar to other loans in the pool, the Company will evaluate the loan with a different pool of loans that share similar risk characteristics. If the loan does not share risk characteristics with other loans, the Company will evaluate the allowance on an individual basis. The Company evaluates the segmentation at least annually to determine whether loans continue to share similar risk characteristics. Loans are charged off against the allowance when the Company believes the loan balances become

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uncollectible. Expected recoveries do not exceed the aggregate of amounts previously charged off or expected to be charged off.

The Company has chosen to segment its portfolio consistent with the manner in which it manages the risk of the type of credit. The Company’s segments for loans include multi-family, commercial real estate, commercial and industrial, construction, residential and consumer.

The Company calculates estimated credit loss on its loan portfolio ~~typically~~primarily using quantitative methodologies that consider a variety of factors such as historical loss experience, loan characteristics, the current credit quality of the portfolio as well as an economic outlook over the life of the loan. The expected credit losses are the product of multiplying the Company’s estimates of probability of default ~~and~~(PD), loss given default ~~quantitative model methodology. The point in time probability of~~(LGD) and individual loan level exposure at default ~~and loss given default are then conditioned by macroeconomic scenarios to incorporate reasonable and supportable forecasts that affect the collectability of the reported amount.~~on an undiscounted basis. For a small portion of the loan portfolio, i.e. unsecured consumer loans, small business loans and loans to individuals, the Company utilizes a loss rate method to calculate the expected credit loss of that asset segment.

~~The Company estimates~~Included in the ~~allowance~~Company’s framework for estimating credit losses, ~~on loans using relevant available~~the Company incorporates forward-looking information ~~from internal and external sources related to past events and current conditions as well as~~through the ~~incorporation~~use of macroeconomic scenarios applied over a two-year reasonable and supportable forecast period, after which, the Company reverts to average historical losses on a straight line basis over a two-year period. These macroeconomic scenarios include variables that have historically been key drivers of increases and decreases in credit losses and include, but are not limited to, unemployment rates, real estate prices, gross domestic product levels, corporate bond spreads and long-term interest rate forecasts. The Company evaluates the use of multiple economic scenarios and the weighting of those scenarios on a quarterly basis. The scenarios that are chosen and the amount of weighting given to each scenario ~~depend on~~consider a variety of factors including third party economists and firms, industry trends and other available published economic information.

~~After the reasonable and supportable forecast period, the Company reverts to average historical losses.~~ Expected credit losses are estimated over the contractual term of ~~the loans, adjusted for~~each loan taking into consideration expected prepayments ~~when appropriate.~~which are developed using industry standard estimation techniques. The contractual term excludes expected extensions, renewals, and modifications unless either of the following applies: management has a reasonable expectation at the reporting date that a troubled debt restructuring will be executed with an individual borrower or the extension or renewal options are included in the original or modified contract at the reporting date and are not unconditionally cancelable by the Company.

Also included in the allowance for loans are qualitative reserves to cover losses that are expected but, in the Company’s assessment, may not be adequately represented in the quantitative method or the economic assumptions described above. For example, factors that the Company considers include changes in lending policies and procedures, business conditions, the nature and size of the portfolio, portfolio concentrations, the volume and severity of past due loans and non-accrual loans, the effect of external factors such as competition, and the legal and regulatory requirements, among ~~other. Furthermore, the Company considers the inherent uncertainty in quantitative models that are built on historical data.~~others.

Individually ~~evaluated~~

evaluated.On a case-by-case basis, the Company may conclude a loan should be evaluated on an individual basis based on its disparate risk characteristics. The Company individually evaluates loans that meet the following criteria for expected credit loss, as the Company has determined that these loans generally do not share similar risk characteristics with other loans in the portfolio:

•Commercial loans with an outstanding balance greater than $1.0 million and on non-accrual status;

•Troubled debt restructured loans; and

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the Company will charge off the difference between the fair value of the collateral, less costs to sell at the reporting date and the amortized cost basis of the loan.

In determining the fair value for collateral-dependent loans, the Company reviews whether there has been an adverse change in the collateral value supporting the loan. As a substantial amount of the Company’s loan portfolio is collateralized by real estate, appraisals of the underlying value of property are used. The Company utilizes information from its commercial lending officers and its credit department and special assets department’s knowledge of changes in real estate conditions to identify if possible deterioration has occurred. Based on the severity of the changes in market conditions, management determines if an updated appraisal is warranted or if downward adjustments to the previous appraisal are warranted.

For residential mortgage loans, the Company’s policy is to obtain an appraisal upon the origination of the loan and an updated appraisal in the event a loan becomes 90 days delinquent. Thereafter, the appraisal is updated every two years if the loan remains in non-performing status and the foreclosure process has not been completed. Management adjusts the appraised value of residential loans to reflect estimated selling costs and declines in the real estate market.

Management believes the potential risk for outdated appraisals has been mitigated due to the fact that the loans are individually assessed to determine that the loan’s carrying value is not in excess of the fair value of the collateral. Loans are generally charged off after an analysis is completed which indicates that collectability of the full principal balance is in doubt.

Consistent with the CARES Act, modifications that met the criteria as discussed in Note 6, Loans Receivable, Net, are not included in individually evaluated loans discussed above.

Acquired ~~assets~~

~~Acquired~~assets. Subsequent to the adoption of CECL, acquired assets are included in the Company's calculation of the allowance for credit losses. How the allowance on an acquired asset is recorded depends on whether ~~or not~~ it has been classified as a Purchased Financial Asset with Credit Deterioration (“PCD”). PCD assets are assets acquired at a discount that is due, in part, to credit quality. PCD assets are accounted for in accordance with ASC Subtopic 326-20 and are initially recorded at fair value as determined by the sum of the present value of expected future cash flows and an allowance for credit losses at acquisition. The allowance for PCD assets is recorded through a gross-up effect, while the allowance for acquired non-PCD assets such as loans is recorded through provision expense, consistent with originated loans. Thus, the determination of which assets are PCD and non-PCD can have a

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significant effect on the accounting for these assets.

Subsequent to acquisition, the allowance for PCD loans will generally follow the same estimation, provision and charge-off process as non-PCD acquired and originated loans. Additionally, TDR identification for acquired loans (PCD and non-PCD) will be consistent with the TDR identification for originated loans.

Allowance for Credit Losses on Debt Securities

Management measures expected credit losses on held-to-maturity debt securities on a collective basis by major security type. Management classifies the held-to-maturity portfolio into the following major security types: mortgage-backed securities, municipal and corporate bonds, trust preferred securities (“TruPS”) and other. Nearly all of the mortgage-backed securities in the Company's portfolio are issued by U.S. government agencies and are either explicitly or implicitly guaranteed by the U.S. government, are highly rated by major rating agencies and have a long history of no credit losses and therefore the expectation of non-payment is zero.

In estimating the net amount expected to be collected for mortgage-backed securities and municipal and corporate bonds, a range of historical losses method is utilized. In estimating the net amount expected to be collected for TruPS, the Company employs a single scenario forecast methodology. The scenario is informed by historical industry default data as well as current and near term operating conditions for the banks and other financial institutions that are the underlying issuers. In addition, expected prepayments are included in the analysis of the individually assessed TruPS applied at the collateral level.

Allowance for Credit Losses on Off-Balance Sheet Credit Exposures

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expected commitment balance and the expected funded commitment in determining the allowance for credit loss on off-balance sheet credit exposures.

Derivative Financial Instruments. As required by ASC 815, the Company records all derivatives on the balance sheet at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether the Company has elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Derivatives designated and qualifying as a hedge of the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges. Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with the recognition of the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk in a fair value hedge or the earnings effect of the hedged forecasted transactions in a cash flow hedge. The Company may enter into derivative contracts that are intended to economically hedge certain of its risks, even though hedge accounting does not apply or the Company elects not to apply hedge accounting.

Executive Summary

During 2020 and 2021, the entire country has been negatively impacted by the COVID-19 ~~Pandemic~~

pandemic. Beginning in March 2020, the impacts of the COVID-19 pandemic, including social distancing guidelines, closure of non-essential businesses and shelter-at-home mandates, caused a global economic downturn. The economic downturn ~~has~~ included an increase in unemployment and a decline in gross domestic ~~product and an increase in unemployment. During the third quarter of~~product. Since April 2020, the unemployment rate ~~continued to decline~~has declined but ~~remained significantly~~remains elevated above the pre-pandemic unemployment rate. ~~The COVID-19 pandemic~~Gross domestic product has grown each quarter beginning with the third quarter of 2020 after declining in the first and ~~its impact on the economy have led to actions including the enactment~~second quarters of the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”), including the establishment of the Paycheck Protection Program (“PPP”) administered by the U.S. Small Business Administration (“SBA”).2020.

We continue to monitor developments related to COVID-19, including, but not limited to, its impact on our employees, customers, communities and results of operations. During the first quarter of 2020, the majority of our corporate workforce had transitioned to working remotely and we successfully transitioned to a “limited service” branch model including drive-thru operations and ATM services, as well as in-branch services available by appointment only. During the second quarter of 2020, allAll of our branches ~~resumed~~have normal operating hours and all lobbies have re-opened for our clients. In addition, the majority of our corporate workforce ~~have~~has returned to our corporate offices in some capacity ~~and~~while the remainder ~~continues~~continue to work remotely in an effective manner. Proper protocols have been put in place in our branches and corporate offices to ensure the continued safety of our employees and customers.

As a result of the pandemic, certain borrowers are currently unable to meet their contractual payment obligations. While we have continued to support our customers by granting ~~second~~ payment deferrals for those experiencing continued hardship because of the pandemic, we have also worked diligently with our customers to ensure a return to current payment status for a significant portion of our clients who have ended their ~~initial~~ deferral period. At October ~~20, 2020,~~19, 2021, loans with an aggregate outstanding balance of approximately ~~$730~~$410 million, or 3%1.9% of ~~total~~ loans, were in COVID-19 related deferment. ~~Based~~

Citizens Financial Group, Inc. Merger Agreement

On July 28, 2021, Citizens Financial Group, Inc. (“Citizens”) and Investors Bancorp, Inc. (“Investors”) announced that they entered into a definitive agreement and plan of merger under which Citizens will acquire all of the outstanding shares of Investors for a combination of stock and cash. Under the terms of the agreement and plan of merger, shareholders of Investors will receive 0.297 of a share of Citizens common stock and $1.46 in cash for each share of Investors they own. Following completion of the transaction, former shareholders of Investors will collectively own approximately 14% of the combined company. The implied total transaction value based on ~~information available as~~closing prices on July 27, 2021 is approximately $3.5 billion. The agreement and plan of ~~October 20, 2020, approximately $300 million~~merger has been unanimously approved by the boards of ~~deferments are~~directors of each company and the transaction is expected to ~~expire during~~close in the ~~fourth quarter~~first half of ~~2020.~~

~~Table~~2022, subject to approval by the shareholders of ~~Contents~~

~~The following table presents the Company’s loan portfolio at September 30, 2020 by industry sector~~Investors, receipt of required regulatory approvals and ~~the balance~~other customary closing conditions. A special meeting of ~~deferrals by loan portfolio as of October 20, 2020:~~

Segment/Industry
Loan Balance
(in millions)
Active Deferrals
(in millions)
Active Deferrals / Loans
Commercial and industrial:
Accommodation and Food Service $ 297 $ 205 69 %
Administrative and Support and Waste Management 114 10 9 %
Agriculture, Forestry, Fishing and Hunting 20 — 0 %
Arts, Entertainment, and Recreation 56 18 32 %
Construction 276 — 0 %
Educational Service 110 — 0 %
Finance and Insurance 149 — 0 %
Health Care and Social Assistance 655 11 2 %
Information 76 — 0 %
Management of Companies and Enterprises 6 — 0 %
Manufacturing 187 15 8 %
Mining, Quarrying, and Oil and Gas Extraction 51 — 0 %
Professional, Scientific, and Technical Services 133 — 0 %
Public Administration 1 — 0 %
Real Estate and Rental 568 20 4 %
Retail Trade - clothing, home, gasoline, health 104 — 0 %
Retail Trade - sporting, hobby, vending, e-commerce 31 — 0 %
Transportation - air, rail, truck, water, pipeline 233 — 0 %
Utilities 6 — 0 %
Wholesale Trade 139 — 0 %
Other 187 3 2 %
Total Commercial and Industrial $ 3,399 $ 282 8 %
Commercial real estate:
Accommodation and Food Service $ 111 $ 61 55 %
Arts, Entertainment, and Recreation 18 — 0 %
Health Care and Social Assistance 54 — 0 %
Mixed Use Property 476 11 2 %
Office 1,208 10 1 %
Retail Store 947 6 1 %
Shopping Center 891 13 1 %
Warehouse 761 1 0 %
Other 446 6 1 %
Total Commercial Real Estate $ 4,912 $ 108 2 %
Multi-Family 7,256 188 3 %
Construction 342 15 4 %
Residential and Consumer 5,089 137 3 %
Total Loans $ 20,998 $ 730 3 %

~~Given the unprecedented uncertainty and continually evolving economic effects and social impacts of the COVID-19 pandemic, the future direct and indirect impact~~Investors shareholders is scheduled to be held on our business, results of operations and financial condition are highly uncertain. Should current economic conditions persist or continue to deteriorate, we expect that this macroeconomic environment will have a continued adverse effect on our business and results of operations, including additional borrower deferral requests, delinquent loans and non-accrual loans. For more information on how the risks related to COVID-19 may adversely affect our business, results of operations and financial condition, see the additional risk factor included in ~~Part II, Item 1A~~ ~~of this Quarterly Report on Form 10-Q.~~

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November 19, 2021.

Third Quarter of ~~2020~~2021 Results Summary

~~During the third quarter of 2020, we demonstrated financial strength as previously deteriorated economic conditions continued to improve.~~

•We reported net income of $66.9 million, or $0.28 per diluted share, for the three months ended September 30, 2021 as compared to $79.8 million, or $0.34 per diluted share, for the three months ended June 30, 2021 and $64.3 million, or $0.27 per diluted share, for the three months ended September 30, ~~2020 as compared to $42.6 million, or $0.18 per diluted share, for the three months ended June 30, 2020 and $52.0 million, or $0.20 per diluted share,~~2020.

•Net income for the three months ended September 30, ~~2019. For the nine months ended September 30, 2020, net income totaled $146.4~~2021 included approximately $10.9 million, or ~~$0.62~~$0.05 per diluted share, ~~compared to $146.8~~of after-tax costs associated with our pending merger with Citizens and completed Berkshire Bank branch acquisition and approximately $7.4 million, or ~~$0.55~~$0.03 per diluted share, ~~for the nine months ended September 30, 2019.~~of after-tax costs in connection with our extinguishment of $600 million of FHLB borrowings announced in August 2021.

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•Net interest margin ~~increased six~~decreased 12 basis points to ~~2.79%~~2.99% for the three months ended September 30, ~~2020~~2021 compared to the three months ended June 30, ~~2020. Net interest margin continued to be negatively impacted by~~2021 as a result of lower prepayment penalties and an elevated average cash ~~position during the quarter.~~position.

•~~Cash and cash equivalents were $557.7 million at September 30, 2020 as compared to $735.2 million at June 30, 2020. Average interest-earning cash and cash equivalents were $978.0~~Provision for credit losses was a negative $13.0 million for the three months ended September 30, ~~2020~~2021 compared with ~~$1.29 billion~~a negative $9.7 million for the three months ended June 30, ~~2020.~~

•~~Non-interest-bearing deposits increased $304.6 million, or 10.0%,~~2021. We recorded net charge-offs of $251,000 during the ~~three months~~quarter ended September 30, ~~2020. The cost of interest-bearing deposits decreased 9 basis points to 0.84% for the three months ended September 30, 2020~~2021 compared to net recoveries of $807,000 during the ~~three months~~quarter ended June 30, ~~2020.~~2021. The allowance for loan losses as a percent of total loans was 1.20% at September 30, 2021 compared to 1.26% at June 30, 2021.

•Total ~~loans decreased $364.2 million, or 1.7%, to $21.00 billion at September 30, 2020 from $21.36 billion at June 30, 2020.~~

•~~Provision for credit losses~~non-interest income was ~~$8.3~~$16.0 million for the three months ended September 30, ~~2020 compared with $33.3 million for the three months ended June 30, 2020.~~

•~~Total non-interest income was $19.9 million for the three months ended September 30, 2020,~~2021, an increase of ~~$9.8~~$2.9 million compared to the three months ended June 30, 2021 and a decrease of $4.0 million compared to the three months ended September 30, 2020.

•Total non-interest expenses were ~~$104.1~~$132.0 million for the three months ended September 30, ~~2020,~~2021, an increase of ~~$4.0~~$23.6 million ~~or 4.0%,~~ compared to the three months ended June 30, 2021 and an increase of $28.0 million compared to the three months ended September 30, 2020. Included in ~~total~~ non-interest expenses for the third quarter of 2021 were ~~$965,000~~$10.2 million of costs associated with our extinguishment of $600 million of FHLB borrowings and $14.9 million of merger and acquisition related costs resulting from the ~~early extinguishment~~Berkshire Bank branch acquisition and Citizens proposed merger transaction, inclusive of ~~$200~~$6.6 million of ~~borrowings~~occupancy costs resulting from anticipated branch closures related to branch rationalization plans connected with the Berkshire Bank branch acquisition.

•Non-interest-bearing deposits increased $176.1 million, or 4.2%, during the three months ended September 30, ~~2020.~~2021. The ~~efficiency ratio declined~~cost of interest-bearing deposits decreased 3 basis points to ~~51.63%~~0.40% for the three months ended September 30, ~~2020 from 52.06% for~~2021 compared to the three months ended June 30, ~~2020.~~2021.

•~~As of October 20, 2020, COVID-19 related loan deferrals totaled $730~~Total loans increased $539.3 million, or ~~3% of~~2.5%, to $21.91 billion during the three months ended September 30, 2021. C&I loans ~~compared to $2.7 billion,~~increased $167.4 million, or ~~13% of loans, as of July 22, 2020.~~4.4%, during the three months ended September 30, 2021.

•Non-accrual loans ~~were~~decreased to $76.5 million, or 0.35% of total loans, at September 30, 2021 as compared to $77.6 million, or 0.36% of total loans, at June 30, 2021 and $132.0 million, or 0.63% of total loans, at September 30, ~~2020 as~~2020.

•At September 30, 2021, COVID-19 related loan deferrals totaled $496 million, or 2.3% of loans, compared to ~~$126.8~~$599 million, or ~~0.59%~~2.8% of ~~total~~ loans, atas of June 30, ~~2020 and $92.1~~2021. Approximately 90% of borrowers with a loan payment deferral are making interest payments as of September 30, 2021. As of October 19, 2021, COVID-19 related loan deferrals totaled $410 million, or ~~0.42%~~1.9% of ~~total loans, at September 30, 2019.~~loans.

•Tier 1 Leverage, Common Equity Tier 1 Risk-Based, Tier 1 Risk-Based and Total Risk-Based Capital Ratios were ~~9.76%~~10.24%, ~~13.24%~~12.83%, ~~13.24%~~12.83% and ~~14.49%~~14.11%, respectively, at September 30, ~~2020.~~2021.

•On July 28, 2021, Citizens and the Company announced that they entered into a definitive agreement and plan of merger under which Citizens will acquire all of the outstanding shares of the Company. The agreement and plan of merger has been unanimously approved by the boards of directors of each company and the transaction is expected to close in the first half of 2022, subject to approval by the shareholders of the Company, receipt of required regulatory approvals and other customary closing conditions.

•On August 27, 2021, we completed the acquisition of Berkshire Bank’s New Jersey and eastern Pennsylvania branches including $219 million of loans and $632 million of deposits.

Comparison of Operating Results for the Three and Nine Months Ended September 30, ~~2020~~2021 and ~~2019~~2020

Net Income. Net income for the three months ended September 30, ~~2020~~2021 was ~~$64.3~~$66.9 million compared to net income of ~~$52.0~~$64.3 million for the three months ended September 30, ~~2019.~~2020. Net income for the nine months ended September 30, ~~2020~~2021 was ~~$146.4~~$219.0 million compared to net income of ~~$146.8~~$146.4 million for the nine months ended September 30, ~~2019.~~2020.

Net Interest Income. Net interest income increased by ~~$17.2~~$13.0 million, or ~~10.4%~~7.1%, to $194.6 million for the three months ended September 30, 2021 from $181.6 million for the three months ended September 30, ~~2020 from $164.5 million~~2020. Net interest margin increased 20 basis points to 2.99% for the three months ended September 30, ~~2019. The net interest margin increased 26 basis points to~~2021 from 2.79% for the three months ended September 30, ~~2020 from 2.53% for the three months ended September 30, 2019.~~2020.

Net interest income increased by ~~$50.6~~$33.2 million, or ~~10.4%~~6.2%, to $570.0 million for the nine months ended September 30, 2021 from $536.9 million for the nine months ended September 30, ~~2020 from $486.3 million~~2020. Net interest margin increased 26 basis points to 3.00% for the nine months ended September 30, ~~2019. The net interest margin increased 22 basis points to~~2021 from 2.74% for the nine months ended September 30, ~~2020 from 2.52% for the nine months ended September 30, 2019.~~2020.

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Total interest and dividend income decreased by ~~$23.9~~$9.5 million, or ~~9.0%~~3.9%, to $231.2 million for the three months ended September 30, 2021from $240.7 million for the three months ended September 30, 2020. Interest income on loans decreased by ~~$16.5~~$4.0 million, or ~~7.1%~~1.9%, to ~~$215.2~~$211.2 million for the three months ended September 30, ~~2020,~~2021, primarily ~~as a result of a 15 basis point decrease in~~attributed to the weighted average yield on net loans which decreased 15 basis points to ~~4.12%~~3.97%. ~~In addition,~~Partially offsetting this decrease, the average balance of net loans ~~decreased $843.1~~increased $404.6 million to ~~$20.88~~$21.28 billion, driven by ~~paydowns and~~

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~~payoffs, partially offset by~~ loan originations ~~including $334.7 million of PPP loans,~~ and ~~$453.3~~$219 million of loans acquired from ~~Gold Coast.~~Berkshire Bank, reduced by paydowns and payoffs. Prepayment penalties, which are included in interest income, totaled $5.3 million for the three months ended September 30, 2021 compared to $7.4 million for the three months ended September 30, ~~2020 compared to $5.2 million for the three months ended September 30, 2019.~~2020. Interest income on all other interest-earning assets, excluding loans, decreased by ~~$7.3~~$5.4 million, or ~~22.4%~~21.3%, to ~~$25.5~~$20.1 million for the three months ended September 30, ~~2020~~2021 which is attributed to the weighted average yield on interest-earning assets, excluding loans, which decreased ~~113~~27 basis points to ~~1.97%. Partially offsetting this decrease,~~1.70% for the three months ended September 30, 2021. In addition, the average balance of all other interest-earning assets, excluding loans, ~~increased $935.4~~decreased $447.1 million to ~~$5.17~~$4.72 billion for the three months ended September 30, ~~2020.~~2021.

Total interest and dividend income decreased by ~~$36.8~~$59.4 million, or ~~4.7%~~8.0%, to $683.6 million for the nine months ended September 30, 2021from $743.0 million for the nine months ended September 30, 2020. Interest income on loans decreased by ~~$26.6~~$36.0 million, or ~~3.9%~~5.5%, to ~~$657.5~~$621.5 million for the nine months ended September 30, ~~2020,~~2021, primarily as a result of ~~an 8~~a 17 basis point decrease in the weighted average yield on net loans to ~~4.14%~~3.97%. In addition, the average balance of net loans decreased ~~$438.9~~$302.9 million to ~~$21.16~~$20.85 billion, ~~driven by~~mainly from paydowns and payoffs, partially offset by loan originations, ~~including $334.7~~$219 million of ~~PPP~~ loans acquired from Berkshire Bank and $453.3 million of loans acquired from Gold ~~Coast.~~Coast in April 2020. Prepayment penalties, which are included in interest income, totaled $18.4 million for the nine months ended September 30, 2021 compared to $23.2 million for the nine months ended September 30, ~~2020 compared to $11.4 million for the nine months ended September 30, 2019.~~2020. Interest income on all other interest-earning assets, excluding loans, decreased by ~~$10.2~~$23.4 million, or ~~10.7%~~27.3%, to ~~$85.5~~$62.2 million for the nine months ended September 30, ~~2020~~2021 which is attributed to the weighted average yield on interest-earning assets, excluding loans, which decreased 7644 basis points to ~~2.30%~~1.86%. ~~Partially offsetting this decrease,~~In addition, the average balance of all other interest-earning assets, excluding loans, ~~increased $778.8~~decreased $481.4 million to ~~$4.95~~$4.47 billion for the nine months ended September 30, ~~2020.~~2021.

Total interest expense decreased by ~~$41.0~~$22.4 million, or ~~41.0%~~38.0%, to $36.6 million for the three months ended September 30, 2021 from $59.1 million for the three months ended September 30, 2020. Interest expense on interest-bearing deposits decreased ~~$33.9~~$18.4 million, or ~~49.8%~~54.0%, to ~~$34.1~~$15.7 million for the three months ended September 30, ~~2020.~~2021. The weighted average cost of interest-bearing deposits decreased 9344 basis points to ~~0.84%~~0.40% for the three months ended September 30, ~~2020. Partially offsetting this decrease,~~2021. In addition, the average balance of total interest-bearing deposits ~~increased $848.1~~decreased $576.4 million, or ~~5.5%~~3.6%, to ~~$16.21~~$15.63 billion for the three months ended September 30, ~~2020.~~2021. Interest expense on borrowed funds decreased by ~~$7.2~~$4.0 million, or ~~22.3%~~16.1%, to ~~$25.0~~$21.0 million for the three months ended September 30, ~~2020.~~2021. The average balance of borrowed funds decreased ~~$1.26 billion,~~$630.1 million, or ~~21.9%~~14.0%, to ~~$4.49~~$3.86 billion for the three months ended September 30, ~~2020.~~2021. In addition, the weighted average cost of borrowings decreased 15 basis ~~point~~points to ~~2.22%~~2.17% for the three months ended September 30, ~~2020.~~2021.

Total interest expense decreased by ~~$87.4~~$92.5 million, or ~~29.8%~~44.9%, to $113.6 million for the nine months ended September 30, 2021from $206.1 million for the nine months ended September 30, 2020. Interest expense on interest-bearing deposits decreased ~~$74.9~~$73.4 million, or ~~37.2%~~58.1%, to ~~$126.3~~$52.9 million for the nine months ended September 30, ~~2020.~~2021. The weighted average cost of interest-bearing deposits decreased 7059 basis points to ~~1.05%~~0.46% for the nine months ended September 30, ~~2020. Partially offsetting this decrease,~~2021. In addition, the average balance of total interest-bearing deposits ~~increased $753.2~~decreased $758.1 million, or ~~4.9%~~4.7%, to ~~$16.08~~$15.32 billion for the nine months ended September 30, ~~2020.~~2021. Interest expense on borrowed funds decreased by ~~$12.5~~$19.1 million, or ~~13.5%~~23.9%, to ~~$79.8~~$60.7 million for the nine months ended September 30, ~~2020.~~2021. The average balance of borrowed funds decreased ~~$500.0 million,~~$1.29 billion, or ~~9.0%~~25.5%, to ~~$5.07~~$3.77 billion for the nine months ended September 30, ~~2020. In addition,~~2021. Partially offsetting this decrease, the weighted average cost of borrowings ~~decreased 11~~increased 5 basis points to ~~2.10%~~2.15% for the nine months ended September 30, ~~2020.~~2021.

Provision for Credit Losses. Our provision for credit losses is primarily a result of the expected credit losses on our loans, unfunded commitments and held-to-maturity debt securities over the life of these financial instruments ~~including~~based on historical experience, current conditions, and reasonable and supportable forecasts. Our provision for credit losses is also impacted by the inherent credit risk in these financial instruments, the composition of and changes in our portfolios of these financial instruments, and the level of charge-offs. At September 30, ~~2020,~~2021, our allowance for credit losses ~~and related provision~~ continued to be affected by the impact of the COVID-19 pandemic on the current and forecasted economic conditions. For the three months ended September 30, ~~2020, there was improvement in the U.S. and global macroeconomic consensus outlooks, which resulted in an improvement in the economic outlook used to determine the~~2021, our provision for credit losses ~~when~~was impacted by improving economic conditions and commercial real estate prices. For the three months ended September 30, 2021, our provision for credit losses was negative $13.0 million, compared to ~~June~~$8.3 million for the three months ended September 30, 2020. For the three months ended September 30, ~~2020, our provision for credit losses was $8.3 million,~~2021, net loan charge-offs were $251,000 compared to ~~a negative provision of $2.5 million for the three months ended September 30, 2019. For the three months ended September 30, 2020, net charge-offs were~~ $667,000 compared to $1.5 million for the three months ended September 30, 2019. For the nine months ended September 30, 2020, our provision for credit losses was $72.8 million, compared to a negative provision of $2.5 million for the nine months ended September 30, 2019. For the nine months ended September 30, 2020, net charge-offs were $12.8 million compared to $5.3 million for the nine months ended September 30, 2019.

~~Non-Interest Income.~~ ~~Total non-interest income increased $5.1 million to $19.9 million~~ for the three months ended September 30, 2020. ~~This increase~~For the nine months ended September 30, 2021, our provision for credit losses was ~~primarily due~~negative $25.7 million, compared to ~~gain on loans, which increased $3.6 million due to a higher volume of mortgage banking loan sales to third parties.~~

~~Total non-interest income increased $11.8 million to $44.7~~$72.8 million for the nine months ended September 30, 2020. ~~This increase was primarily due~~For the nine months ended September 30, 2021, net loan recoveries were $2.3 million compared to ~~gain on loans, which increased $7.6~~net loan charge-offs of $12.8 million ~~as a result of a higher volume of mortgage~~for the nine months ended September 30, 2020.

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Non-Interest Income. Total non-interest income decreased $4.0 million to $16.0 million for the three months ended September 30, 2021from $19.9 million for the three months ended September 30, 2020. The decrease was due primarily to a decrease of $3.6 million in gain on loans due to a lower volume of mortgage banking loan sales to third parties and a $931,000 unrealized loss on equity securities during the three months ended September 30, 2021, partially offset by an increase of $1.2 million in customer swap fee income.

Total non-interest income increased $4.3 million to $49.0 million for the nine months ended September 30, 2021from $44.7 million for the nine months ended September 30, 2020. The increase in non-interest income was due primarily to an increase of $3.0 million in fees and service charges predominately related to our mortgage servicing rights valuation, an increase of $2.8 million in income from our wealth and investment products and an increase of $2.0 million in customer swap fee income, partially offset by a decrease of $3.9 million in gain on loans due to a lower volume of mortgage banking loan sales to third parties. ~~In addition, the Company recognized a $5.7 million loss on the sale of securities during the second quarter of 2019.~~

Non-Interest Expenses. Total non-interest expenses were ~~$104.1~~$132.0 million for the three months ended September 30, ~~2020, a decrease~~2021, an increase of ~~$4.7~~$28.0 million, or ~~4.3%~~26.9%, compared to the three months ended September 30, ~~2019.~~2020. The ~~decrease~~increase was ~~due to a decrease of $3.7 million in compensation and benefit expense~~primarily driven by ~~lower headcount, stock-based compensation expense and benefits expense. Included in non-interest expenses for the three months ended September 30, 2020 were $965,000~~$10.2 million of costs associated with our extinguishment of $600 million of FHLB borrowings and $14.9 million of merger and acquisition related costs resulting from the ~~early extinguishment~~Berkshire Bank and Citizens transactions inclusive of ~~$200~~$6.6 million of ~~borrowings.~~occupancy costs resulting from anticipated branch closures related to branch rationalization plans connected with the Berkshire Bank branch acquisition.

Total non-interest expenses were ~~$306.6~~$344.8 million for the nine months ended September 30, ~~2020, a decrease~~2021, an increase of ~~$9.3~~$38.2 million, or ~~2.9%~~12.5%, compared to the nine months ended September 30, ~~2019.~~2020. This ~~decrease~~increase was ~~due to a decrease~~driven by an increase of ~~$8.4~~$8.9 million in debt extinguishment costs, an increase of $8.5 million in professional fees driven by acquisition-related fees, an increase of $8.0 million in compensation and fringe benefit expense ~~a decrease~~primarily related to incentive compensation and medical expenses and $6.6 million of $4.0 million in advertising and promotional expense and a decrease of $2.5 million in other non-interest expense. These decreases were partially offset by an increase of $2.7 million in data processing and communication expense and an increase of $2.0 million in occupancy ~~expense.~~costs resulting from anticipated branch closures related to branch rationalization plans connected with the Berkshire Bank branch acquisition. Included in non-interest expenses for the nine months ended September 30, ~~2020~~2021 were ~~$3.6~~$10.0 million of ~~Gold Coast~~ acquisition-related ~~expenses.~~costs.

Income Taxes. Income tax expense for the third quarter of ~~2020~~2021 was ~~$24.8~~$24.6 million compared to ~~$21.0~~$24.8 million for the third quarter ~~2019.~~2020. The effective tax rate was 26.9% for the three months ended September 30, 2021 and 27.9% for the three months ended September 30, ~~2020 and 28.8% for the three months ended September 30, 2019.~~2020. Income tax expense for the nine months ended September 30, ~~2020~~2021 was ~~$55.7~~$80.9 million compared to ~~$59.1~~$55.7 million for the nine months ended September 30, ~~2019.~~2020. The effective tax rate was 27.0% for the nine months ended September 30, 2021 and 27.6% for the nine months ended September 30, ~~2020 and 28.7% for the nine months ended September 30, 2019.~~2020. The effective tax rate is affected by the level of income earned that is exempt from tax relative to the overall level of pre-tax income and the level of expenses not deductible for tax purposes relative to the overall level of pre-tax income. In addition, the effective tax rate is affected by the level of income allocated to the various state and local jurisdictions where we operate, because tax rates differ among such jurisdictions.

Analysis of Net Interest Income

Net interest income represents the difference between income we earn on our interest-earning assets and the expense we pay on interest-bearing liabilities. Net interest income depends on the volume of interest-earning assets and interest-bearing liabilities and the interest rates earned on such assets and paid on such liabilities.

Average Balances and Yields. The following tables set forth average balance sheets, average yields and costs, and certain other information for the periods indicated. No tax-equivalent yield adjustments were made, as the effect thereof was not material. All average balances are daily average balances. Non-accrual loans were included in the computation of average balances, however interest receivable on these loans have been fully reserved for and not included in interest income. The yields set forth below include the effect of deferred fees, discounts and premiums ~~and purchase accounting adjustments and other adjustments~~ that are amortized or accreted to interest income or expense.

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		Three Months Ended September 30,													Three Months Ended September 30,
		2020						2019							2021						2020
		Average Outstanding Balance		Interest Earned/ Paid		Average Yield/ Rate		Average Outstanding Balance		Interest Earned/ Paid		Average Yield/ Rate			Average Outstanding Balance		Interest Earned/ Paid		Average Yield/ Rate		Average Outstanding Balance		Interest Earned/ Paid		Average Yield/ Rate
		(Dollars in thousands)													(Dollars in thousands)
Interest-earning assets:	Interest-earning assets:													Interest-earning assets:
Interest-bearing deposits	Interest-bearing deposits	$	978,037	$	233	0.10	%	$	224,882	$	821	1.46	%	Interest-bearing deposits	$	844,365	$	268	0.13	%	$	978,037	$	233	0.10	%
Equity securities	Equity securities	7,177		45		2.51	%	6,001��		36		2.40	%	Equity securities	8,747		65		2.97	%	7,177		45		2.51	%
Debt securities available-for-sale	Debt securities available-for-sale	2,758,679		13,473		1.95	%	2,591,055		18,167		2.80	%	Debt securities available-for-sale	2,501,016		9,683		1.55	%	2,758,679		13,473		1.95	%
Debt securities held-to-maturity		1,200,933		8,277		2.76	%	1,131,194		9,340		3.30	%
Debt securities held-to-maturity, net														Debt securities held-to-maturity, net	1,174,563		7,806		2.66	%	1,200,933		8,277		2.76	%
Net loans	Net loans	20,879,661		215,221		4.12	%	21,722,751		231,734		4.27	%	Net loans	21,284,262		211,189		3.97	%	20,879,661		215,221		4.12	%
Stock in FHLB	Stock in FHLB	223,032		3,452		6.19	%	279,356		4,456		6.38	%	Stock in FHLB	192,111		2,234		4.65	%	223,032		3,452		6.19	%
Total interest-earning assets	Total interest-earning assets	26,047,519		240,701		3.70	%	25,955,239		264,554		4.08	%	Total interest-earning assets	26,005,064		231,245		3.56	%	26,047,519		240,701		3.70	%
Non-interest-earning assets	Non-interest-earning assets	1,157,358						992,118						Non-interest-earning assets	1,151,571						1,157,358
Total assets	Total assets	$	27,204,877					$	26,947,357					Total assets	$	27,156,635					$	27,204,877
Interest-bearing liabilities:	Interest-bearing liabilities:													Interest-bearing liabilities:
Savings deposits	Savings deposits	$	2,033,495	$	2,690	0.53	%	$	1,958,748	$	4,377	0.89	%	Savings deposits	$	2,060,893	$	1,381	0.27	%	$	2,033,495	$	2,690	0.53	%
Interest-bearing checking	Interest-bearing checking	5,901,759		8,658		0.59	%	4,894,643		21,094		1.72	%	Interest-bearing checking	6,658,248		6,833		0.41	%	5,901,759		8,658		0.59	%
Money market accounts	Money market accounts	4,349,536		8,520		0.78	%	3,750,846		16,065		1.71	%	Money market accounts	4,613,066		4,475		0.39	%	4,349,536		8,520		0.78	%
Certificates of deposit	Certificates of deposit	3,923,651		14,241		1.45	%	4,756,086		26,436		2.22	%	Certificates of deposit	2,299,850		2,994		0.52	%	3,923,651		14,241		1.45	%
Total interest-bearing deposits	Total interest-bearing deposits	16,208,441		34,109		0.84	%	15,360,323		67,972		1.77	%	Total interest-bearing deposits	15,632,057		15,683		0.40	%	16,208,441		34,109		0.84	%
Borrowed funds	Borrowed funds	4,493,591		24,970		2.22	%	5,756,197		32,130		2.23	%	Borrowed funds	3,863,460		20,960		2.17	%	4,493,591		24,970		2.22	%
Total interest-bearing liabilities	Total interest-bearing liabilities	20,702,032		59,079		1.14	%	21,116,520		100,102		1.90	%	Total interest-bearing liabilities	19,495,517		36,643		0.75	%	20,702,032		59,079		1.14	%
Non-interest-bearing liabilities	Non-interest-bearing liabilities	3,856,553						2,892,067						Non-interest-bearing liabilities	4,827,551						3,856,553
Total liabilities	Total liabilities	24,558,585						24,008,587						Total liabilities	24,323,068						24,558,585
Stockholders’ equity	Stockholders’ equity	2,646,292						2,938,770						Stockholders’ equity	2,833,567						2,646,292
Total liabilities and stockholders’ equity	Total liabilities and stockholders’ equity	$	27,204,877					$	26,947,357					Total liabilities and stockholders’ equity	$	27,156,635					$	27,204,877
Net interest income	Net interest income			$	181,622					$	164,452			Net interest income			$	194,602					$	181,622
Net interest rate spread(1)	Net interest rate spread(1)					2.56	%					2.18	%	Net interest rate spread(1)					2.81	%					2.56	%
Net interest-earning assets(2)	Net interest-earning assets(2)	$	5,345,487					$	4,838,719					Net interest-earning assets(2)	$	6,509,547					$	5,345,487
Net interest margin(3)	Net interest margin(3)					2.79	%					2.53	%	Net interest margin(3)					2.99	%					2.79	%
Ratio of interest-earning assets to total interest-bearing liabilities	Ratio of interest-earning assets to total interest-bearing liabilities	1.26						1.23						Ratio of interest-earning assets to total interest-bearing liabilities	1.33						1.26

(1)Net interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities.

(2)Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.

(3)Net interest margin represents net interest income divided by average total interest-earning assets.

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		Nine Months Ended September 30,													Nine Months Ended September 30,
		2020						2019							2021						2020
		Average Outstanding Balance		Interest Earned/ Paid		Average Yield/ Rate		Average Outstanding Balance		Interest Earned/ Paid		Average Yield/ Rate			Average Outstanding Balance		Interest Earned/ Paid		Average Yield/ Rate		Average Outstanding Balance		Interest Earned/ Paid		Average Yield/ Rate
		(Dollars in thousands)													(Dollars in thousands)
Interest-earning assets:	Interest-earning assets:													Interest-earning assets:
Interest-bearing deposits	Interest-bearing deposits	$	880,015	$	1,367	0.21	%	$	193,427	$	1,965	1.35	%	Interest-bearing deposits	$	496,273	$	367	0.10	%	$	880,015	$	1,367	0.21	%
Equity securities	Equity securities	6,480		110		2.26	%	5,905		108		2.44	%	Equity securities	19,074		394		2.75	%	6,480		110		2.26	%
Debt securities available-for-sale	Debt securities available-for-sale	2,657,564		46,371		2.33	%	2,317,685		49,801		2.86	%	Debt securities available-for-sale	2,578,106		31,538		1.63	%	2,657,564		46,371		2.33	%
Debt securities held-to-maturity	Debt securities held-to-maturity	1,158,357		25,802		2.97	%	1,379,982		31,008		3.00	%	Debt securities held-to-maturity	1,189,302		23,462		2.63	%	1,158,357		25,802		2.97	%
Net loans	Net loans	21,157,077		657,483		4.14	%	21,596,000		684,086		4.22	%	Net loans	20,854,173		621,462		3.97	%	21,157,077		657,483		4.14	%
Stock in FHLB	Stock in FHLB	247,260		11,881		6.41	%	273,885		12,871		6.27	%	Stock in FHLB	185,520		6,417		4.61	%	247,260		11,881		6.41	%
Total interest-earning assets	Total interest-earning assets	26,106,753		743,014		3.79	%	25,766,884		779,839		4.04	%	Total interest-earning assets	25,322,448		683,640		3.60	%	26,106,753		743,014		3.79	%
Non-interest-earning assets	Non-interest-earning assets	1,080,136						964,031						Non-interest-earning assets	1,137,556						1,080,136
Total assets	Total assets	$	27,186,889					$	26,730,915					Total assets	$	26,460,004					$	27,186,889
Interest-bearing liabilities:	Interest-bearing liabilities:													Interest-bearing liabilities:
Savings deposits	Savings deposits	$	2,039,596	$	9,505	0.62	%	$	1,966,427	$	12,556	0.85	%	Savings deposits	$	2,028,057	$	4,265	0.28	%	$	2,039,596	$	9,505	0.62	%
Interest-bearing checking	Interest-bearing checking	5,786,659		34,191		0.79	%	4,912,085		65,295		1.77	%	Interest-bearing checking	6,328,197		20,397		0.43	%	5,786,659		34,191		0.79	%
Money market accounts	Money market accounts	4,172,144		32,624		1.04	%	3,691,378		46,126		1.67	%	Money market accounts	4,557,672		16,136		0.47	%	4,172,144		32,624		1.04	%
Certificates of deposit	Certificates of deposit	4,082,118		49,959		1.63	%	4,757,446		77,245		2.16	%	Certificates of deposit	2,408,527		12,070		0.67	%	4,082,118		49,959		1.63	%
Total interest-bearing deposits	Total interest-bearing deposits	16,080,517		126,279		1.05	%	15,327,336		201,222		1.75	%	Total interest-bearing deposits	15,322,453		52,868		0.46	%	16,080,517		126,279		1.05	%
Borrowed funds	Borrowed funds	5,066,253		79,843		2.10	%	5,566,273		92,319		2.21	%	Borrowed funds	3,774,346		60,725		2.15	%	5,066,253		79,843		2.10	%
Total interest-bearing liabilities	Total interest-bearing liabilities	21,146,770		206,122		1.30	%	20,893,609		293,541		1.87	%	Total interest-bearing liabilities	19,096,799		113,593		0.79	%	21,146,770		206,122		1.30	%
Non-interest-bearing liabilities	Non-interest-bearing liabilities	3,402,930						2,881,242						Non-interest-bearing liabilities	4,574,136						3,402,930
Total liabilities	Total liabilities	24,549,700						23,774,851						Total liabilities	23,670,935						24,549,700
Stockholders’ equity	Stockholders’ equity	2,637,189						2,956,064						Stockholders’ equity	2,789,069						2,637,189
Total liabilities and stockholders’ equity	Total liabilities and stockholders’ equity	$	27,186,889					$	26,730,915					Total liabilities and stockholders’ equity	$	26,460,004					$	27,186,889
Net interest income	Net interest income			$	536,892					$	486,298			Net interest income			$	570,047					$	536,892
Net interest rate spread(1)	Net interest rate spread(1)					2.49	%					2.17	%	Net interest rate spread(1)					2.81	%					2.49	%
Net interest-earning assets(2)	Net interest-earning assets(2)	$	4,959,983					$	4,873,275					Net interest-earning assets(2)	$	6,225,649					$	4,959,983
Net interest margin(3)	Net interest margin(3)					2.74	%					2.52	%	Net interest margin(3)					3.00	%					2.74	%
Ratio of interest-earning assets to total interest-bearing liabilities	Ratio of interest-earning assets to total interest-bearing liabilities	1.23						1.23						Ratio of interest-earning assets to total interest-bearing liabilities	1.33						1.23

(1)Net interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities.

(2)Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.

(3)Net interest margin represents net interest income divided by average total interest-earning assets.

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Comparison of Financial Condition at September 30, ~~2020~~2021 and December 31, ~~2019~~2020

Total Assets. Total assets ~~decreased~~increased by ~~$91.8 million,~~$1.29 billion, or ~~0.3%~~5.0%, to ~~$26.61~~$27.32 billion at September 30, ~~2020~~2021 from December 31, ~~2019.~~2020. Cash and cash equivalents increased by ~~$382.8~~$499.9 million to ~~$557.7~~$670.3 million at September 30, ~~2020~~2021 from December 31, ~~2019 and securities~~2020. Net loans increased by ~~$224.0 million,~~$1.04 billion, or ~~5.8%~~5.1%, to ~~$4.07~~$21.62 billion at September 30, ~~2020~~2021 from December 31, ~~2019. Net loans~~2020. Securities decreased by ~~$778.0~~$230.4 million, or ~~3.6%~~5.7%, to ~~$20.70~~$3.81 billion at September 30, ~~2020~~2021 from December 31, ~~2019.~~2020.

Net Loans. Net loans ~~decreased~~increased by ~~$778.0 million, or 3.6%,~~$1.04 billion to ~~$20.70~~$21.62 billion at September 30, ~~2020~~2021 from ~~$21.48~~$20.58 billion at December 31, ~~2019.~~2020. The detail of the loan portfolio is below:


		September 30, 2020		December 31, 2019		September 30, 2021		December 31, 2020
		(Dollars in thousands)				(Dollars in thousands)
Commercial loans:	Commercial loans:				Commercial loans:
Multi-family loans	Multi-family loans	$	7,256,015	7,813,236	Multi-family loans	$	7,655,135	7,122,840
Commercial real estate loans	Commercial real estate loans	4,912,155		4,831,347	Commercial real estate loans	5,135,123		4,947,212
Commercial and industrial loans	Commercial and industrial loans	3,399,059		2,951,306	Commercial and industrial loans	3,933,926		3,575,641
Construction loans	Construction loans	341,449		262,866	Construction loans	509,620		404,367
Total commercial loans	Total commercial loans	15,908,678		15,858,755	Total commercial loans	17,233,804		16,050,060
Residential mortgage loans	Residential mortgage loans	4,407,224		5,144,718	Residential mortgage loans	3,930,683		4,119,894
Consumer and other	Consumer and other	681,940		699,796	Consumer and other	740,827		702,801
Total loans	Total loans	20,997,842		21,703,269	Total loans	21,905,314		20,872,755
Deferred fees, premiums and other, net	Deferred fees, premiums and other, net	(12,274)		907	Deferred fees, premiums and other, net	(17,071)		(9,318)
Allowance for loan losses	Allowance for loan losses	(287,511)		(228,120)	Allowance for loan losses	(263,515)		(282,986)
Net loans	Net loans	$	20,698,057	21,476,056	Net loans	$	21,624,728	20,580,451

During the nine months ended September 30, ~~2020,~~2021, we originated or funded ~~$814.3~~$1.87 billion in multi-family loans, $1.01 billion in residential loans, $858.0 million in commercial and industrial loans, ~~(including $334.7 million of PPP loans), $733.9 million in multi-family loans, $447.8 million in residential loans, $368.9~~$580.0 million in commercial real estate loans, ~~$67.3~~$101.6 million in construction loans and $86.1 million in consumer and other ~~loans and $59.0 million in construction~~ loans. Our originations reflect our continued focus on diversifying our loan portfolio. In addition, we acquired ~~$453.3~~$219 million of loans from ~~Gold Coast on April 3, 2020.~~Berkshire Bank. A significant portion of our commercial loan portfolio, including commercial and industrial loans, are secured by commercial real estate and are primarily on properties and businesses located in New Jersey and New York.

One of our key operating objectives has been, and continues to be, maintaining a high level of asset quality. We maintain sound credit standards for new loan originations and purchases. We do not originate or purchase sub-prime loans, negative amortization loans or option ARM loans. Our portfolio contains interest-only and no income verification residential mortgage loans. AtWe have not originated residential mortgage loans without verifying income in recent years. As of September 30, ~~2020,~~2021, these loans totaled $87.8 million. As of September 30, 2021, interest-only residential and consumer loans totaled ~~$35.4~~$21.6 million, which represented less than 1% of the residential and consumer ~~portfolios. We no longer originate residential mortgage loans without verifying income. At September 30, 2020, these loans totaled $116.4 million. From time to time and~~portfolio. Although it is not a standard product offering for ~~competitive purposes, we originate interest-only~~ commercial real estate and multi-family ~~loans. At~~loans, we originate interest-only in addition to amortizing loans in these segments. As of September 30, ~~2020,~~2021, these loans totaled ~~$1.32~~$2.11 billion. As part of our underwriting, these loans are evaluated as fully amortizing for risk classification purposes, with the interest-only period ranging from one to ten years. In addition, we evaluate our policy limits on a regular basis. We believe these criteria adequately control the potential risks of such loans and that adequate provisions for loan losses are provided for all known and inherent risks. Since April 2020, we have, at the request of commercial borrowers experiencing financial difficulty resulting from the pandemic, temporarily deferred the payment of principal and/or interest for an agreed-upon period of time. Although a significant portion of these loans are paying interest-only during the deferral period, they are not included in the amount of interest-only loans disclosed in this section.

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Loan Deferrals. While we have continued to support our customers by granting payment deferrals for those experiencing continued hardship because of the pandemic, we have also worked diligently with our customers to ensure a return to current payment status for a significant portion of our clients who have ended their initial deferral period. At May 4, 2020, loans with an aggregated outstanding balance of $4.3 billion, or 20.1% of total loans, were in COVID-19 related deferment. Since then, customers representing approximately $3.9 billion in loan balances have ended their COVID-19 related deferrals and as of October 19, 2021, loans with an aggregate outstanding balance of approximately $410.0 million, or 1.9% of total loans, were in COVID-19 related deferment.

The following table presents the balance of deferred loans in the Company’s loan portfolio by loan segment, industry sector and type of deferral as of October 19, 2021.


Segment and industry sector	Principal and Interest Deferral		Principal Deferral	Total	Deferred Loan % of Total Loans (1)
	(Dollars in millions)
Commercial and industrial
Accommodation and food service	$	—	170	170	0.8	%
Arts, entertainment and recreation	—		23	23	0.1	%
Real estate and rental	—		1	1	—	%

Total deferred commercial and industrial	—		194	194	0.9	%
Commercial real estate

Accommodation and food service	—		61	61	0.3	%
Other	—		7	7	—	%
Total deferred commercial real estate	—		68	68	0.3	%
Construction	—		—	—	—	%
Multi-family	—		99	99	0.5	%
Total deferred commercial loans	—		361	361	1.7	%
Residential and consumer	49		—	49	0.2	%
Total deferred loans (2)	$	49	361	410	1.9	%

(1) Percentage calculated using total loan balance as of September 30, 2021.

(2) Of the total deferred loans, approximately 35% of the deferments expire in the fourth quarter of 2021 with the remainder expiring in January 2022.

Given the unprecedented uncertainty and continually evolving economic effects and social impacts of the COVID-19 pandemic, the future direct and indirect impact on our business, results of operations and financial condition are highly uncertain. Should economic conditions deteriorate the macroeconomic environment may have an adverse effect on our business and results of operations, including additional borrower deferral requests, delinquent loans and non-accrual loans. For more information on how the risks related to COVID-19 may adversely affect our business, results of operations and financial condition, reference is made to Item 1A “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.

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The following table presents the Company’s loan portfolio at September 30, 2021 by industry sector:


Segment/Industry	Loan Balance (in millions)		% of Total Segment
Commercial and industrial:
Accommodation and food service	$	285	7	%
Administrative and support and waste management	149		4	%
Agriculture, forestry, fishing and hunting	23		1	%
Arts, entertainment, and recreation	101		3	%
Construction	307		8	%
Educational service	134		3	%
Finance and insurance	267		7	%
Health care and social assistance	622		16	%
Information	136		3	%
Management of companies and enterprises	6		0	%
Manufacturing	216		5	%
Mining, quarrying, and oil and gas extraction	48		1	%
Professional, scientific, and technical services	125		3	%
Public administration	1		0	%
Real estate and rental	619		16	%
Retail trade - clothing, home, gasoline, health	167		4	%
Retail trade - sporting, hobby, vending, e-commerce	7		0	%
Transportation - air, rail, truck, water, pipeline	265		7	%
Utilities	2		0	%
Wholesale trade	223		6	%
Other	231		6	%
Total commercial and industrial	$	3,934	100	%

Commercial real estate:
Accommodation and food service	$	113	2	%
Arts, entertainment, and recreation	17		0	%
Health care and social assistance	159		3	%
Mixed use property	504		10	%
Office	1,244		24	%
Retail store	926		18	%
Shopping center	1,000		20	%
Warehouse	698		14	%
Other	474		9	%
Total commercial real estate	$	5,135	100	%

Multi-family	7,655		100	%
Construction	510		100	%
Residential and consumer	4,671		100	%
Total loans	$	21,905	100	%

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Non-Performing Loans. The following table sets forth non-accrual loans (excluding loans held-for-sale) and accruing troubled debt restructured loans on the dates indicated as well as certain asset quality ratios:


		September 30, 2020				June 30, 2020				March 31, 2020				December 31, 2019				September 30, 2019					September 30, 2021				June 30, 2021				March 31, 2021				December 31, 2020				September 30, 2020
		# of Loans	Amount			# of Loans	Amount			# of Loans	Amount			# of Loans	Amount			# of Loans	Amount				# of Loans	Amount			# of Loans	Amount			# of Loans	Amount			# of Loans	Amount			# of Loans	Amount
		(dollars in millions)																					(dollars in millions)

Multi-family	Multi-family	13	$	51.1		14	$	48.3		9	$	23.4		8	$	23.3		6	$	19.6		Multi-family	15	$	19.9		11	$	16.6		13	$	19.2		15	$	35.6		13	$	51.1
Commercial real estate	Commercial real estate	28	17.8			22	12.3			21	11.4			22	12.0			30	12.3			Commercial real estate	22	9.8			24	13.0			25	14.0			29	15.9			28	17.8
Commercial and industrial	Commercial and industrial	19	10.9			29	15.6			22	17.0			18	12.5			16	12.0			Commercial and industrial	16	3.3			13	5.2			15	4.4			21	9.2			19	10.9
Construction	Construction	—	—			—	—			—	—			—	—			—	—			Construction	—	—			—	—			—	—			—	—			—	—
Total commercial loans	Total commercial loans	60	79.8			65	76.2			52	51.8			48	47.8			52	43.9			Total commercial loans	53	33.0			48	34.8			53	37.6			65	60.7			60	79.8
Residential and consumer	Residential and consumer	250	52.2			255	50.6			258	46.6			255	47.4			261	48.2			Residential and consumer	231	43.5			232	42.8			239	45.7			246	46.4			250	52.2
Total non-accrual loans	Total non-accrual loans	310	$	132.0		320	$	126.8		310	$	98.4		303	$	95.2		313	$	92.1		Total non-accrual loans	284	$	76.5		280	$	77.6		292	$	83.3		311	$	107.1		310	$	132.0
Accruing troubled debt restructured loans	Accruing troubled debt restructured loans	51	$	9.8		52	$	12.2		55	$	12.8		57	$	13.1		58	$	12.5		Accruing troubled debt restructured loans	47	$	8.1		49	$	9.3		45	$	9.1		47	$	9.2		51	$	9.8
Non-accrual loans to total loans	Non-accrual loans to total loans		0.63		%		0.59		%		0.46		%		0.44		%		0.42		%	Non-accrual loans to total loans		0.35		%		0.36		%		0.40		%		0.51		%		0.63		%
Allowance for loan losses as a percent of non-accrual loans	Allowance for loan losses as a percent of non-accrual loans		217.75		%		215.48		%		247.22		%		239.66		%		247.62		%	Allowance for loan losses as a percent of non-accrual loans		344.61		%		348.05		%		340.60		%		264.17		%		217.75		%
Allowance for loan losses as a percent of total loans	Allowance for loan losses as a percent of total loans		1.37		%		1.28		%		1.14		%		1.05		%		1.05		%	Allowance for loan losses as a percent of total loans		1.20		%		1.26		%		1.36		%		1.36		%		1.37		%

Total non-accrual loans were $76.5 million at September 30, 2021 compared to $77.6 million at June 30, 2021 and $132.0 million at September 30, ~~2020 compared to $126.8 million at June 30, 2020 and $92.1 million at September 30, 2019.~~2020. At September 30, ~~2020~~2021, there were ~~$7.1~~$4.7 million of ~~commercial real estate~~multi-family loans, ~~$5.4~~$2.9 million of commercial and industrial loans and ~~$1.6~~$1.9 million of ~~multi-family~~commercial real estate loans that were classified as non-accrual which were performing in accordance with their contractual terms. Criticized and classified loans as a percent of total loans ~~increased~~decreased to ~~7.47%~~6.95% at September 30, ~~2020~~2021 from ~~5.36%~~7.99% at December 31, ~~2019.~~2020. We continue to proactively and diligently work to resolve our troubled loans.

~~On October~~During the nine months ended September 30, ~~2020, the Company~~2021, we sold athree non-performing multi-family ~~loan with a net unpaid principal balance of $18.1~~loans totaling $19.9 million ~~as of September 30, 2020. The Company expects to recognize~~and recognized a recovery of ~~approximately $2~~$1.4 million in the allowance for credit losses ~~in connection with~~on the ~~sale.~~sale of one of the loans. During the nine months ended September 30, 2021, we also sold a $762,000 non-performing commercial real estate loan.

At September 30, ~~2020,~~2021, there were ~~$35.7~~$26.4 million of loans deemed as TDRs, of which ~~$26.5~~$22.0 million were residential and consumer loans ~~$5.4~~and $4.4 million were commercial real estate ~~loans and $3.8 million were commercial and industrial~~ loans. TDRs of ~~$9.8~~$8.1 million were classified as accruing and ~~$25.9~~$18.3 million were classified as non-accrual at September 30, ~~2020.~~2021. Included ~~are $1.8~~were $1.3 million of residential loans deemed to be TDRs as the borrower was granted a payment deferral related to COVID-19 but did not meet the criteria to be excluded from TDR as described in Note 6~~Note 1, Summary of Significant Accounting Principles - Section 4013 of the CARES Act~~, Loans Receivable, Net.

In addition to non-accrual loans, we continue to monitor our portfolio for potential problem loans. Potential problem loans are defined as loans about which we have concerns as to the ability of the borrower to comply with the current loan repayment terms and which may cause the loan to be placed on non-accrual status. As of September 30, ~~2020, the Company has~~2021, we have deemed potential problem loans totaling ~~$192.1~~$81.1 million, which is comprised of 1614 multi-family loans totaling $57.4 million, 12 commercial real estate loans totaling $21.3 million and 13 commercial and industrial loans totaling ~~$119.5 million, 15 commercial real estate loans totaling $65.2 million and 7 multi-family loans totaling $7.4~~$2.4 million. In addition, we continue to support our customers by deferring payments for borrowers experiencing hardship because of the COVID-19 pandemic. As of October ~~20, 2020, $730~~19, 2021, $410.0 million, or 3%1.9%, of loans were deferring principal and/or interest payments. For further information, please refer to the ~~Executive Summary above and the additional risk factor included in~~ ~~Part II, Item 1A~~ ~~of this Quarterly Report on Form 10-Q.~~Loan Deferrals disclosure above. Management is actively monitoring all of these loans.

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The ratio of non-accrual loans to total loans was ~~0.63%~~0.35% at September 30, ~~2020~~2021 compared to ~~0.44%~~0.51% at December 31, ~~2019.~~2020. The allowance for loan losses as a percentage of non-accrual loans was ~~217.75%~~344.61% at September 30, ~~2020~~2021 compared to ~~239.66%~~

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264.17% at December 31, ~~2019.~~2020. At September 30, ~~2020,~~2021, our allowance for loan losses as a percentage of total loans was ~~1.37%~~1.20% compared to ~~1.05%~~1.36% at December 31, ~~2019.~~2020.

Allowance for Credit Losses on Loans. The allowance for loan losses ~~increased~~decreased by ~~$59.4~~$19.5 million to ~~$287.5~~$263.5 million at September 30, ~~2020~~2021 from ~~$228.1~~$283.0 million at December 31, ~~2019.~~2020. The ~~increase~~decrease reflects a negative provision for loan losses of $22.8 million, partially offset by an increase of ~~$71.5~~$2.3 million resulting from ~~the provision for credit losses related to our~~net loan ~~portfolio~~recoveries and an increase of ~~$4.2~~approximately $1.0 million from the initial allowance on loans identified as PCD ~~loans upon acquisition, partially offset by a decrease of $12.8 million resulting~~which were acquired from ~~net charge-offs and a decrease of $3.6 million upon CECL adoption.~~Berkshire Bank. Our allowance for loan losses at September 30, ~~2020 continued to be~~2021 was affected by the ~~impact of COVID-19 on~~improving current and forecasted economic ~~conditions.~~conditions and commercial real estate prices. Future increases in the allowance for loan losses may be necessary based on the composition of and change in the loan portfolio, the level of loan delinquency and the current and forecasted economic condition over the life of our loans.

The following table sets forth the allowance for ~~loan~~credit losses ~~at September 30, 2020 and December 31, 2019~~on loans allocated by loan category and the percent of loans in each category to total loans at the dates indicated. The allowance for ~~loan~~credit losses allocated to each category is ~~not necessarily indicative of future~~the estimated amount considered necessary to cover lifetime expected credit losses inherent in any particular category as of the balance sheet date and does not restrict the use of the allowance to absorb losses in other categories.


		September 30, 2020				December 31, 2019					September 30, 2021				December 31, 2020
		Allowance for Loan Losses		Percent of Loans in Each Category to Total Loans		Allowance for Loan Losses		Percent of Loans in Each Category to Total Loans			Allowance for Loan Losses		Percent of Loans in Each Category to Total Loans		Allowance for Loan Losses		Percent of Loans in Each Category to Total Loans
		(Dollars in thousands)									(Dollars in thousands)
End of period allocated to:	End of period allocated to:									End of period allocated to:
Multi-family loans	Multi-family loans	$	56,881	34.6	%	$	74,099	36.0	%	Multi-family loans	$	59,169	35.0	%	$	56,731	34.1	%
Commercial real estate loans	Commercial real estate loans	111,758		23.4	%	50,925		22.3	%	Commercial real estate loans	87,016		23.4	%	115,918		23.7	%
Commercial and industrial loans	Commercial and industrial loans	78,709		16.2	%	74,396		13.6	%	Commercial and industrial loans	85,036		18.0	%	79,327		17.1	%
Construction loans	Construction loans	5,543		1.6	%	6,816		1.2	%	Construction loans	9,359		2.3	%	7,267		2.0	%
Residential mortgage loans	Residential mortgage loans	30,180		21.0	%	17,391		23.7	%	Residential mortgage loans	19,328		17.9	%	19,941		19.7	%
Consumer and other loans	Consumer and other loans	4,440		3.2	%	2,548		3.2	%	Consumer and other loans	3,607		3.4	%	3,802		3.4	%
Unallocated		—		—		1,945		—
Total allowance	Total allowance	$	287,511	100.0	%	$	228,120	100.0	%	Total allowance	$	263,515	100.0	%	$	282,986	100.0	%

Securities. Securities are held primarily for liquidity, interest rate risk management and yield enhancement. Our Investment Policy requires that investment transactions conform to Federal and State investment regulations. Our investments purchased may include, but are not limited to, U.S. Treasury obligations, securities issued by various Federal Agencies, State and Municipal subdivisions, mortgage-backed securities, certain certificates of deposit of insured financial institutions, overnight and short-term loans to other banks, ~~investment grade~~ corporate debt instruments, and mutual funds. In addition, ~~the Company~~we may invest in equity securities subject to certain limitations. Purchase and sale decisions are based upon a thorough pre-transaction analysis of each ~~security~~instrument to determine if it conforms to our overall asset/liability management objectives. The analysis must consider its effect on our risk-based capital measurement, prospects for yield and/or appreciation and other risk factors. Debt securities are classified as held-to-maturity or available-for-sale when purchased.

At September 30, ~~2020,~~2021, our securities portfolio represented ~~15.3%~~14.0% of our total assets. Securities, in the aggregate, ~~increased~~decreased by ~~$224.0~~$230.4 million, or ~~5.8%~~5.7%, to ~~$4.07~~$3.81 billion at September 30, ~~2020~~2021 from December 31, ~~2019.~~2020. This ~~increase~~decrease was primarily a result of ~~purchases,~~paydowns and sales, partially offset by ~~paydowns.~~purchases. At September 30, ~~2020,~~2021, our allowance for credit losses on held-to-maturity debt securities was ~~$3.1~~$2.0 million.

Stock in the Federal Home Loan Bank, Bank Owned Life Insurance and Other Assets. The amount of stock we own in the FHLB ~~decreased~~increased by ~~$53.0~~$17.2 million, or ~~19.8%~~10.8%, to ~~$214.3~~$177.1 million at September 30, ~~2020~~2021 from ~~$267.2~~$159.8 million at December 31, ~~2019.~~2020. The amount of stock we own in the FHLB is primarily related to the balance of our outstanding borrowings from the FHLB. Bank owned life insurance was ~~$223.6~~$227.8 million at September 30, ~~2020~~2021 and ~~$218.5~~$223.7 million at December 31, ~~2019.~~2020. Other assets were ~~$163.5~~$139.6 million at September 30, ~~2020~~2021 and ~~$82.3~~$163.2 million at December 31, ~~2019.~~2020. The ~~increase~~decrease in other assets was primarily driven by hedge-related assets.

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Deposits. At September 30, ~~2020,~~2021, deposits totaled ~~$19.10~~$20.40 billion, representing ~~79.8%~~83.4% of our total liabilities. Our ~~long-term~~ deposit strategy is focused on attracting core deposits (savings, checking and money market accounts), resulting in a deposit mix of lower cost core products. We ~~remain~~are committed to our plan of attracting more core deposits because ~~core deposits~~they represent a more stable source of low cost ~~funding~~funds and may be less sensitive to changes in market interest ~~rates than other types of funding including borrowed funds.~~rates.

We have a suite of commercial deposit and treasury management products, designed to appeal to small and mid-sized businesses and non-profit ~~organizations.~~ organizations including electronic deposit services such as mobile and remote deposit capture.

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Interest rates, maturity terms, service fees and withdrawal penalties are all reviewed on a periodic basis. Deposit rates and terms are based primarily on our current operating strategies, market rates, liquidity requirements and competitive ~~forces and growth goals.~~forces. We also rely on personalized customer service, long-standing relationships with customers and an active marketing program to attract and retain deposits.

Deposits increased by ~~$1.24 billion,~~$875.0 million, or ~~7.0%~~4.5%, to ~~$19.10~~$20.40 billion at September 30, ~~2020~~2021 from ~~$17.86~~$19.53 billion at December 31, ~~2019~~2020 primarily driven by ~~increases~~an increase in checking account deposits, partially offset by decreases in time deposits and money market ~~deposits, offset by a decrease in time~~ deposits. Checking ~~accounts~~account deposits increased ~~$1.06~~$1.56 billion to ~~$9.04~~$11.26 billion at September 30, ~~2020~~2021 from ~~$7.99~~$9.71 billion at December 31, ~~2019.~~2020. Core deposits represented approximately ~~81%~~89% of our total deposit portfolio at September 30, ~~2020~~2021 compared to ~~78%~~86% at December 31, ~~2019.~~2020. We acquired $632 million of deposits from Berkshire Bank during the quarter ended September 30, 2021.

The following table sets forth the distribution of total deposit accounts, by account type, at the dates indicated:


		September 30, 2020				December 31, 2019					September 30, 2021				December 31, 2020
		Balance		Percent of Total Deposit		Balance		Percent of Total Deposit			Balance		Percent of Total Deposits		Balance		Percent of Total Deposits
		(Dollars in thousands)									(Dollars in thousands)
Non-interest bearing:	Non-interest bearing:									Non-interest bearing:
Checking accounts	Checking accounts	$	3,345,011	17.5	%	$	2,472,232	13.8	%	Checking accounts	$	4,345,871	21.3	%	$	3,663,073	18.8	%
Interest-bearing:	Interest-bearing:									Interest-bearing:
Checking accounts	Checking accounts	5,696,645		29.8	%	5,512,979		30.9	%	Checking accounts	6,917,964		33.9	%	6,043,393		30.9	%
Money market deposits	Money market deposits	4,369,733		22.9	%	3,817,718		21.4	%	Money market deposits	4,768,986		23.4	%	5,037,327		25.8	%
Savings	Savings	2,008,540		10.5	%	2,050,101		11.5	%	Savings	2,052,819		10.1	%	2,063,447		10.6	%

Certificates of deposit	Certificates of deposit	3,683,606		19.3	%	4,007,308		22.4	%	Certificates of deposit	2,314,784		11.3	%	2,718,179		13.9	%
Total Deposits	Total Deposits	$	19,103,535	100.0	%	$	17,860,338	100.0	%	Total Deposits	$	20,400,424	100.0	%	$	19,525,419	100.0	%

Borrowed Funds. Borrowings are primarily with the FHLB and are collateralized by our residential and commercial mortgage portfolios. Borrowed funds ~~decreased~~increased by ~~$1.52 billion,~~$238.7 million, or ~~26.1%~~7.2%, to ~~$4.31~~$3.53 billion at September 30, ~~2020~~2021 from ~~$5.83~~$3.30 billion at December 31, 2019 primarily driven by the increase in deposits. The decrease includes the early extinguishment of $400 million of borrowings during the second and third quarters of 2020. The extinguishments resulted in the recognition of $326,000 and $965,000 of costs during the second and third quarter, respectively, included in Other operating expenses on the Consolidated Statement of Income.

~~Other Liabilities.~~ ~~Other liabilities increased by $115.8 million, or 141.6%,~~2020 to $197.7 million at September 30, 2020 from $81.8 million at December 31, 2019 primarily driven by increases in income taxes payable and our allowance for credit losses on unfunded commitments, as well as a commitment to purchase investment securities. At September 30, 2020, our allowance for credit losses on unfunded commitments was $13.9 million.support balance sheet growth.

Stockholders’ Equity. Stockholders’ equity increased by ~~$47.8~~$142.6 million to ~~$2.67~~$2.85 billion at September 30, ~~2020~~2021 from ~~$2.62~~$2.71 billion at December 31, ~~2019.~~2020. The increase was primarily attributed to net income of ~~$146.4~~$219.0 million, ~~common stock issued to finance the Gold Coast acquisition of $20.9 million and~~ share-based plan activity of ~~$14.5~~$21.8 million and other comprehensive income of $17.7 million for the nine months ended September 30, ~~2020.~~2021. These increases were partially offset by ~~other comprehensive loss of $32.4 million and~~ cash dividends paid of ~~$0.36~~$0.42 per share totaling ~~$89.7~~$103.9 million and the repurchase of approximately 1.0 million shares of common stock for $12.1 million during the nine months ended September 30, ~~2020. In addition, stockholders’ equity decreased by $8.5 million on January 1, 2020 in connection with the adoption of CECL.~~2021.

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Liquidity and Capital Resources

The Company’s primary sources of funds are deposits, principal and interest payments on loans and ~~mortgage-backed~~ securities, FHLB advances and other borrowings and, to a lesser extent, proceeds from the sale of loans and investment maturities. While scheduled amortization of loans is usually a predictable source of funds, deposit flows and mortgage and loan prepayments are greatly influenced by general interest rates, economic conditions and competition. The Company has other sources of liquidity, including unsecured overnight lines of credit, brokered deposits and other types of borrowings. The Company’s total borrowing capacity from the FHLB and other borrowing sources was approximately $22.77 billion at September 30, 2021. Excluding outstanding borrowings ~~from correspondent banks. Available~~and encumbered collateral, available borrowing capacity and other available liquidity sources totaled approximately ~~$11.27~~$12.89 billion at September 30, ~~2020.~~2021. Our Asset Liability Committee is responsible for establishing and monitoring our liquidity targets and strategies to ensure that sufficient liquidity exists for meeting the needs of our customers as well as unanticipated contingencies. These liquidity risk management practices have allowed us to effectively manage the market stress related to the COVID-19 pandemic that began in the first quarter of ~~2020 from the COVID-19 pandemic.~~2020.

At September 30, ~~2020,~~2021, the Company had no overnight borrowings outstanding. The Company had ~~$461.0~~$188.0 million of overnight borrowings outstanding at December 31, ~~2019.~~2020. The Company borrows directly from the FHLB and various financial institutions. The Company had total borrowings of ~~$4.31~~$3.53 billion at September 30, ~~2020, a decrease~~2021, an increase of ~~$1.52 billion~~$238.7 million from ~~$5.83~~$3.30 billion at December 31, ~~2019.~~2020.

In the normal course of business, the Company routinely enters into various commitments, primarily relating to the origination of loans. At September 30, ~~2020, outstanding~~2021, commitments to originate loans totaled ~~$260.2~~$266.7 million; ~~outstanding~~ unused home equity lines of credit and undisbursed business and construction loans totaled ~~$1.90~~approximately $2.48 billion; and outstanding standby letters of credit totaled ~~$39.8 million and~~$45.3 million. There were no outstanding commitments to sell ~~loans totaled $69.0 million.~~loans. The Company expects to have sufficient

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funds available to meet current commitments in the normal course of business. Time deposits scheduled to mature in one year or less totaled ~~$3.34~~$2.01 billion at September 30, ~~2020.~~2021. Based upon historical experience, management estimates that a significant portion of such deposits will remain with the Company.

Credit ratings and outlooks are opinions expressed by rating agencies on our creditworthiness and that of our obligations or securities, including long-term debt, short-term borrowings, preferred stock and other securities. On July 30, 2021 our rating was placed on positive after the acquisition agreement with Citizens Financial Group was announced. On May 4,24, 2021 S&P revised our rating outlook to stable from negative to reflect decreasing economic risks. In May 2020, S&P had revised our rating outlook to negative due to economic downturn from COVID-19.

Regulatory Capital and Developments.

Capital Requirements. Federal regulations require FDIC insured depository institutions to meet several minimum capital standards: a common equity Tier 1 capital to risk-based assets ratio of 4.5%, a Tier 1 capital to risk-based assets ratio of 6.0%, a total capital to risk-based assets of 8.0%, and a 4.0% Tier 1 capital to total assets leverage ratio.

Common equity Tier 1 capital is generally defined as common stockholders’ equity and retained earnings. Tier 1 capital is generally defined as common equity Tier 1 and additional Tier 1 capital. Additional Tier 1 capital includes certain noncumulative perpetual preferred stock and related surplus and minority interests in equity accounts of consolidated subsidiaries. Total capital includes Tier 1 capital (common equity Tier 1 capital plus additional Tier 1 capital) and Tier 2 capital. Tier 2 capital is comprised of capital instruments and related surplus meeting specified requirements, and may include cumulative preferred stock and long-term perpetual preferred stock, mandatory convertible securities, intermediate preferred stock and subordinated debt. Also included in Tier 2 capital is the allowance for loan and lease losses limited to a maximum of 1.25% of risk-weighted assets and, for institutions that have exercised an opt-out election regarding the treatment of accumulated other comprehensive income (“AOCI”), up to 45% of net unrealized gains on available-for-sale equity securities with readily determinable fair market values. Institutions that have not exercised the AOCI opt-out have AOCI incorporated into common equity Tier 1 capital (including unrealized gains and losses on available-for-sale-securities). The Bank exercised its AOCI opt-out election. Calculation of all types of regulatory capital is subject to deductions and adjustments specified in the regulations.

In determining the amount of risk-weighted assets for purposes of calculating risk-based capital ratios, all assets, including certain off-balance sheet assets (e.g., recourse obligations, direct credit substitutes, residual interests) are multiplied by a risk weight factor assigned by the regulations based on the risks believed inherent in the type of asset. Higher levels of capital are required for asset categories believed to present greater risk. For example, a risk weight of 0% is assigned to cash and U.S. government securities, a risk weight of 50% is generally assigned to prudently underwritten first lien one to four- family residential real estate loans, a risk weight of 100% is assigned to commercial and consumer loans, a risk weight of 150% is assigned to certain past due loans and a risk weight of between 0% to 600% is assigned to permissible equity interests, depending on certain specified factors.

In addition to establishing the minimum regulatory capital requirements, the regulations limit capital distributions and certain discretionary bonus payments to management if the institution does not hold a “capital conservation buffer” consisting of 2.5% of common equity Tier 1 capital to risk-weighted asset above the amount necessary to meet its minimum risk-based capital requirements.The capital conservation buffer requirement was phased in beginning January 1, 2016 until fully implemented at 2.5% on January 1, 2019.

CECL Capital Implications. On January 1, 2020, the Company adopted the new accounting standard that requires the measurement of the allowance for credit loss to be based on the best estimate of lifetime expected credit losses inherent in the Company’s relevant financial asset. ~~For more information, see~~ ~~Note 1, Summary of Significant Accounting Principles~~. On March 27, 2020, in response to the COVID-19 pandemic, U.S. banking regulators issued an interim final rule that the Company adopted to delay for two years the initial adoption impact of CECL on regulatory capital, followed by a three-year transition period to phase out the aggregate amount of the capital benefit provided during 2020 and 2021 (i.e. a five-year transition period). During the two-year delay, the Company will add back to common equity tier 1 capital (“CET1”) 100% of the initial adoption impact of CECL plus 25% of the cumulative quarterly changes in the allowance for credit losses (i.e., quarterly transitional amounts). After two years, starting on January 1, 2022, the quarterly transitional amounts along with the initial adoption impact of CECL will be phased out of CET1 capital over the three-year period.

Paycheck Protection Program. On April 9, 2020, in response to the economic impact of the COVID-19 pandemic, the Federal Reserve, OCC and FDIC issued an interim final rule that excludes loans pledged as collateral to the Federal Reserve’s PPP Lending Facility from supplemental leverage ratio exposure, average total consolidated assets and Advanced and Standardized risk-weighted assets. Additionally, PPP loans, which are guaranteed by the Small Business Administration, will receive a zero percent risk weight under the Basel 3 Advanced and Standardized approaches regardless of whether they are ~~pledged as collateral to the PPP Lending Facility.~~

~~Minimum Capital Requirements.~~ In July 2013, the Federal Deposit Insurance Corporation and the other federal bank regulatory agencies issued a final rule that revised their leverage and risk-based capital requirements and the method for calculating risk-weighted assets to make them consistent with agreements that were reached by the Basel Committee on Banking Supervision and certain provisions of the Dodd-Frank Act. The Final Capital Rules also revised the quantity and quality of required minimum risk-based and leverage capital requirements, consistent with the Reform Act and the Third Basel Accord adopted by the Basel Committee on Banking Supervision, or Basel III capital standards. In doing so, the Final Capital Rules:

•Established a new minimum Common equity tier 1 risk-based capital ratio (common equity tier 1 capital to total risk-weighted assets) of 4.5% and increased the minimum Tier 1 risk-based capital ratio from 4.0% to 6.0%, while maintaining the minimum Total risk-based capital ratio of 8.0% and the minimum Tier 1 leverage capital ratio of 4.0%.

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•~~Revised the rules for calculating risk-weighted assets to enhance their risk sensitivity.~~

•~~Phased out trust preferred securities and cumulative perpetual preferred stock~~pledged as ~~Tier 1 capital.~~

•~~Added a requirement to maintain a minimum Conservation Buffer, composed of Common equity tier 1 capital, of 2.5% of risk-weighted assets, to be applied~~collateral to the ~~new Common equity tier 1 risk-based capital ratio,~~PPP Lending Facility. On December 27, 2020, the ~~Tier 1 risk-based capital ratio~~Consolidated Appropriations Act, 2021, was enacted and ~~the Total risk-based capital ratio, which means that banking organizations, on~~included a fully phased in basis as of January 1, 2019, must maintain a minimum Common equity tier 1 risk-based capital ratio of 7.0%, a minimum Tier 1 risk-based capital ratio of 8.5% and a minimum Total risk-based capital ratio of 10.5% or have restrictions imposed on capital distributions and discretionary cash bonus payments.

•~~Changed the definitions of capital categories for insured depository institutions for purposes~~reopening of the ~~Federal Deposit Insurance Corporation Improvement Act~~PPP. The majority of ~~1991 prompt corrective action provisions. Under these revised definitions, to be considered well-capitalized, an insured depository institution must have a Tier 1 leverage capital ratio~~the Company’s PPP loans were sold in the fourth quarter of ~~at least 5.0%, a Common equity tier 1 risk-based capital ratio~~2020 with the remainder being forgiven by the Small Business Administration in the second quarter of ~~at least 6.5%, a Tier 1 risk-based capital ratio of at least 8.0% and a Total risk-based capital ratio of at least 10.0%.~~

The new minimum regulatory capital ratios and changes to the calculation of risk-weighted assets became effective for the Bank and Company on January 1, 2015. The required minimum Conservation Buffer commenced on January 1, 2016 at 0.625% and increased in annual increments to 2.5% on January 1, 2019, which is the fully phased in Conservation Buffer. The rules impose restrictions on capital distributions and certain discretionary cash bonus payments if the minimum Conservation Buffer is not met. As of September 30, 2020, the Company and the Bank met the required Conservation Buffer of 2.5%.2021.

As of September 30, ~~2020,~~2021, the Bank and the Company were considered “well capitalized” under applicable regulations and exceeded all regulatory capital requirements as follows:


		As of September 30, 2020 (1)													As of September 30, 2021 (1)
		Actual				Minimum Capital Requirement with Conservation Buffer				To be Well Capitalized under Prompt Corrective Action Provisions (2)					Actual				Minimum Capital Requirement with Conservation Buffer				To be Well Capitalized under Prompt Corrective Action Provisions (2)
		Amount		Ratio		Amount		Ratio		Amount		Ratio			Amount		Ratio		Amount		Ratio		Amount		Ratio
		(Dollars in thousands)													(Dollars in thousands)
Bank:	Bank:													Bank:
Tier 1 Leverage Ratio	Tier 1 Leverage Ratio	$	2,387,419	8.83	%	$	1,082,087	4.00	%	$	1,352,609	5.00	%	Tier 1 Leverage Ratio	$	2,435,271	9.02	%	$	1,079,893	4.00	%	$	1,349,866	5.00	%
Common Equity Tier 1 Risk-Based Capital	Common Equity Tier 1 Risk-Based Capital	2,387,419		11.97	%	1,395,774		7.00	%	1,296,076		6.50	%	Common Equity Tier 1 Risk-Based Capital	2,435,271		11.32	%	1,506,273		7.00	%	1,398,682		6.50	%
Tier 1 Risk Based Capital	Tier 1 Risk Based Capital	2,387,419		11.97	%	1,694,868		8.50	%	1,595,170		8.00	%	Tier 1 Risk Based Capital	2,435,271		11.32	%	1,829,046		8.50	%	1,721,455		8.00	%
Total Risk-Based Capital	Total Risk-Based Capital	2,637,043		13.23	%	2,093,660		10.50	%	1,993,962		10.00	%	Total Risk-Based Capital	2,697,950		12.54	%	2,259,409		10.50	%	2,151,818		10.00	%

Investors Bancorp, Inc.:	Investors Bancorp, Inc.:													Investors Bancorp, Inc.:
Tier 1 Leverage Ratio	Tier 1 Leverage Ratio	$	2,644,342	9.76	%	$	1,084,229	4.00	%	n/a		n/a		Tier 1 Leverage Ratio	$	2,769,611	10.24	%	$	1,081,515	4.00	%	n/a		n/a
Common Equity Tier 1 Risk-Based Capital	Common Equity Tier 1 Risk-Based Capital	2,644,342		13.24	%	1,398,352		7.00	%	n/a		n/a		Common Equity Tier 1 Risk-Based Capital	2,769,611		12.83	%	1,510,878		7.00	%	n/a		n/a
Tier 1 Risk Based Capital	Tier 1 Risk Based Capital	2,644,342		13.24	%	1,697,998		8.50	%	n/a		n/a		Tier 1 Risk Based Capital	2,769,611		12.83	%	1,834,637		8.50	%	n/a		n/a
Total Risk-Based Capital	Total Risk-Based Capital	2,894,423		14.49	%	2,097,527		10.50	%	n/a		n/a		Total Risk-Based Capital	3,045,823		14.11	%	2,266,317		10.50	%	n/a		n/a

(1) For purposes of calculating Tier 1 leverage ratio, assets are based on adjusted total average assets. In calculating Tier 1 risk-based capital and Total risk-based capital, assets are based on total risk-weighted assets.

(2) Prompt corrective action provisions do not apply to the bank holding company.

Contractual Obligations and Off-Balance Sheet Arrangements

Contractual Obligations and ~~Aggregate Contractual Obligations~~

Commitments. In the ordinary course of ~~its operations,~~business, we routinely enter into various financial obligations, including contractual obligations that may require future cash payments. As a financial provider, we routinely enter into commitments to extend credit, including loan commitments, standby and commercial letters of credit as well as unused lines of credit as discussed above in Liquidity and Capital Resources. While these contractual obligations represent our potential future cash requirements, a significant portion of our commitments to extend credit may expire without being drawn upon. Such commitments are subject to the ~~Company engages in a variety of financial transactions~~same credit policies and approval processes that ~~in accordance with U.S. generally accepted accounting principles, are not recorded in the financial statements.~~we use for loans that we originate.

The following table shows the contractual obligations of the Company by expected payment period as of September 30, ~~2020:~~2021:


Contractual Obligations	Contractual Obligations	Total		Less than One Year	One-Two Years	Two-Three Years	More than Three Years	Contractual Obligations	Total		Less than One Year	One-Two Years	Two-Three Years	More than Three Years
		(In thousands)							(In thousands)
Debt obligations (excluding capitalized leases)		$	4,307,523	350,000	1,198,975	1,199,363	1,559,185
Debt obligations (excluding finance leases)								Debt obligations (excluding finance leases)	$	3,534,536	2,350,000	348,965	821,019	14,552
Commitments to originate and purchase loans	Commitments to originate and purchase loans	$	260,157	260,157	—	—	—	Commitments to originate and purchase loans	$	266,741	266,741	—	—	—
Commitments to sell loans	Commitments to sell loans	$	69,000	69,000	—	—	—	Commitments to sell loans	$	—	—	—	—	—

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Debt obligations include borrowings from the FHLB and other borrowings. The borrowings have defined terms, and none of the borrowings were callable at the option of the lender as of September 30, ~~2020.~~2021. Additionally, at September 30, ~~2020,~~2021, the Company’s commitments to fund unused lines of credit totaled ~~$1.90~~$2.48 billion. Commitments to ~~originate loans, commitments to fund unused lines of credit and standby letters of~~extend credit are agreements to lend ~~additional funds~~ to customers as long as there ~~have been~~is no ~~violations~~violation of any ~~of the conditions~~condition established in the ~~agreements.~~contract. Commitments generally have a fixed expiration dates or other termination clauses ~~which~~and may ~~or may not~~ require a payment of a fee. Since ~~some of these loan~~the commitments ~~are expected to~~may expire without being drawn upon, the total ~~commitments~~commitment amounts do not necessarily represent future cash requirements.

In addition to the contractual obligations previously discussed, we have other liabilities which include ~~$184.3~~$216.4 million of operating lease liabilities of which $9.3 million was acquired in the Berkshire Bank acquisition during the nine months ended September 30, 2021 and $3.6 million was acquired from Gold Coast during the ~~three months~~year ended ~~June 30,~~December 31, 2020. We have ~~$2.8~~$1.2 million of finance lease liabilities. These contractual obligations as of September 30, ~~2020~~2021 have not changed significantly from December 31, ~~2019.~~2020.

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In the normal course of business, the Company sells residential mortgage loans to third parties. These loan sales are subject to customary representations and warranties. In the event that we are found to be in breach of these representations and warranties, we may be obligated to repurchase certain of these loans.

Derivative Instruments and Hedging Activities. The Company has entered into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates. ~~Derivative~~The Company’s derivative financial instruments ~~present on the Company’s balance sheet as of September 30. 2020~~ are used to manage differences in the amount, timing, and duration of the Company’s known or expected cash receipts and its known or expected cash payments principally related to the Company’s ~~borrowings.~~borrowings and loans. During the three and nine months ended September 30, ~~2020,~~2021, such derivatives were used (i) to hedge the variability in cash flows associated with ~~borrowings.~~borrowings and (ii) to hedge changes in the fair value of certain pools of prepayable fixed rate assets. These derivatives had an aggregate notional amount of ~~$3.53~~$3.58 billion as of September 30, ~~2020. The fair value of derivatives designated as hedging activities as of September 30,~~2021. During the year ended December 31, 2020, ~~was an asset of $153,000, inclusive of accrued~~the Company terminated two interest ~~and variation margin posted in accordance with the Chicago Mercantile Exchange. Derivatives~~rate swaps with an aggregate notional amount of $475.0 million that had been used to hedge changes in the fair value of certain pools of prepayable fixed- and adjustable-rate ~~assets were terminated~~assets. Also during the ~~three months~~year ended ~~September 30, 2020.~~December 31, 2020, the Company terminated four interest rate swaps with an aggregate notional of $400.0 million that had been designated as cash flow hedges on wholesale funding.

The Company has credit derivatives resulting from ~~participations~~participation in interest rate swaps provided to external lenders as part of loan participation arrangements which are, therefore, not used to manage interest rate risk in the Company’s assets or liabilities. Additionally, the Company provides interest rate risk management services to commercial customers, primarily interest rate swaps. The Company’s market risk from unfavorable movements in interest rates related to these derivative contracts is minimized by concurrently entering into offsetting derivative contracts that have identical notional values, terms and indices.

For further information regarding our off-balance sheet arrangements and contractual obligations, see Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in our December 31, ~~2019~~2020 Annual Report on Form 10-K.


ITEM 3.			QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

Qualitative Analysis. One significant form of market risk is interest rate risk. Interest rate risk results from timing differences in the cash flow or re-pricing of our assets, liabilities and off-balance sheet contracts ~~(i.e.~~(e.g., loan commitments); the effect of loan and securities prepayments, deposit activity; “basis risk” arising from potential differences in the behavior of lending and funding rates arising from the use of different indices; and “yield curve risk” arising from changes in the term structure of interest rates. Changes in market interest rates can affect net interest income by influencing the ~~amount~~volume and ~~rate~~pricing of new loan originations and securities purchases, the ability of borrowers to repay variable rate loans, the volume of loan and securities prepayments and the mix and flow of deposits.

The general objective of our interest rate risk management process is to ~~determine the appropriate level of~~align and manage forecasted interest rate risk ~~given~~with our business model and ~~then to manage that risk in a manner consistent with that~~ risk appetite. Our Asset Liability Committee, which consists of senior management and executives, evaluates the interest rate risk inherent in our balance sheet ~~the~~and operating environment ~~and~~to assess capital and liquidity requirements and ~~may~~ modify our lending, investing and deposit gathering strategies accordingly. On a quarterly basis, our Board of Directors reviews various Asset Liability Committee reports that estimate the sensitivity of the economic value of equity and net interest income under various interest rate scenarios.

Our tactics and strategies may include the use of various financial instruments, including derivatives, to manage our exposure to interest rate risk. Certain derivatives are designated as hedging instruments in a qualifying hedge accounting relationship (fair value or cash flow hedge). Hedged items can be either assets or liabilities. Given the historically low interest rate environment during 2020 and continuing into 2021, the Company proactively positioned the balance sheet in an effort to better protect against rising rates.

As of September 30, ~~2020, the~~

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~~Company had cash flow hedges with aggregate notional amounts of $3.53 billion. As of December 31, 2019,~~2021, the Company had cash flow and fair value hedges with aggregate notional amounts of ~~$2.68~~$3.58 billion. ~~Included in the fair value hedges at~~As of December 31, ~~2019 were $475.0 million in asset swap transactions where fixed rate loan payments were exchanged for variable rate payments executed in an effort to reduce~~2020, the ~~Company’s exposure to rising rates.~~Company had cash flow hedges with aggregate notional amounts of $3.33 billion. During the ~~nine months~~year ended ~~September 30,~~December 31, 2020, the Company terminated ~~such asset swap transactions.~~cash flow hedges with an aggregate notional of $400.0 million. Also during the year ended December 31, 2020, the Company terminated fair value hedges with an aggregate notional of $475.0 million, and the Company had no interest rate swaps designated as fair value hedges as of December 31, 2020.

We actively evaluate interest rate risk in connection with our lending, investing and deposit activities and our off-balance sheet positions. At September 30, ~~2020, 21.0%~~2021, 17.9% of our total loan portfolio was comprised of residential mortgages, of which approximately ~~28.3%~~24.6% was in variable rate products, while ~~71.7%~~75.4% was in fixed rate products. Our variable rate and short

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term fixed rate mortgage related assets have helped to reduce our exposure to interest rate fluctuations. Long term fixed-rate products may adversely impact our net interest income in a rising rate environment. The origination of commercial loans, particularly commercial and industrial loans, commercial real estate loans and multi-family loans, which have outpaced the growth in the residential portfolio in recent years, generally help reduce our interest rate risk due to their shorter term compared to fixed rate residential mortgage loans. In addition, we primarily invest in securities which display relatively conservative interest rate risk characteristics.

In July 2017, the Chief Executive of the United Kingdom Financial Conduct Authority, which regulates LIBOR, announced that it intends to stop persuading or compelling banks to submit rates for the calibration of LIBOR to the administrator of LIBOR after 2021. In November 2020, the LIBOR administrator announced plans to consult on easing publication of USD LIBOR on December 31, 2021 for only the one-week and two-month USD LIBOR tenors, and on June 30, 2023 for all other USD LIBOR tenors. The United States banking regulators concurrently issued a joint statement advising banks to stop new USD LIBOR issuances by the end of 2021. The Alternative Reference Rates Committee (“ARRC”) has proposed that the Secured Overnight Financing Rate (“SOFR”) is the recommended alternative rate to USD-LIBOR for use in derivatives and other financial contracts that are currently indexed to USD-LIBOR. The ARRC has proposed a paced market transition plan to SOFR from USD-LIBOR and organizations are currently working on industry wide and company specific transition plans as it relates to derivatives and cash markets exposed to USD-LIBOR. The Company has approximately $8.47 billion in financial instruments which are indexed to USD-LIBOR for which it is monitoring the activity and evaluating the related risks.

We use an internally managed and implemented industry standard asset/liability model to complete our quarterly interest rate risk reports. The model projects net interest income based on various interest rate scenarios and horizons. We use a combination of analyses to monitor our exposure to changes in interest rates.

Our net interest income sensitivity analysis determines the relative balance between the repricing of assets, liabilities and off-balance sheet positions over various horizons. This asset and liability analysis includes expected cash flows from loans and securities, using forecasted prepayment rates, reinvestment rates, as well as contractual and forecasted liability cash flows. This analysis identifies mismatches in the timing of asset and liability cash flows but does not necessarily provide an accurate indicator of interest rate risk because the rate forecasts and assumptions used in the analysis may not reflect actual experience. The economic value of equity (“EVE”) analysis estimates the change in the net present value (“NPV”) of assets and liabilities and off-balance sheet contracts over a range of immediate rate shock interest rate scenarios. In calculating changes in EVE, for the various scenarios we forecast loan and securities prepayment rates ~~reinvestment rates~~ and deposit decay rates.

In July 2017, the Financial Conduct Authority (the authority that regulates LIBOR) announced it intends to stop compelling banks to submit rates for the calculation of LIBOR after 2021. The Alternative Reference Rates Committee (“ARRC”) has proposed that the Secured Overnight Financing Rate (“SOFR”) is the rate that represents best practice as the alternative to USD-LIBOR for use in derivatives and other financial contracts that are currently indexed to USD-LIBOR. The ARRC has proposed a paced market transition plan to SOFR from USD-LIBOR and organizations are currently working on industry wide and company specific transition plans as it relates to derivatives and cash markets exposed to USD-LIBOR. The Company has approximately $7.10 billion in financial instruments which are indexed to USD-LIBOR for which it is monitoring the activity and evaluating the related risks.

Quantitative Analysis. The table below sets forth, as of September 30, ~~2020,~~2021, the estimated changes in our EVE and our net interest income that would result from the designated changes in interest rates. Such changes to interest rates are calculated as an immediate and permanent change for the purposes of computing EVE and a gradual change over a one-year period for the purposes of computing net interest income. Computations of prospective effects of hypothetical interest rate changes are based on numerous assumptions including relative levels of market interest rates, loan prepayments and deposit decay, ~~and funding dynamics in a potential negative rate environment,~~ and should not be relied upon as indicative of actual results. The following table reflects management’s expectations of the changes in EVE and net interest income for an interest rate decrease of 100 basis points and increase of 200 basis points.


		EVE (1)					Net Interest Income (2)						EVE (1)					Net Interest Income (2)
Change in Interest Rates (basis points)	Change in Interest Rates (basis points)	Estimated EVE		Estimated Increase (Decrease)			Estimated Net Interest Income		Estimated Increase (Decrease)			Change in Interest Rates (basis points)	Estimated EVE		Estimated Increase (Decrease)			Estimated Net Interest Income		Estimated Increase (Decrease)
				Amount	Percent				Amount	Percent					Amount	Percent				Amount	Percent
		(Dollars in thousands)											(Dollars in thousands)
+ 200bp	+ 200bp	$	3,353,226	88,119	2.7	%	$	690,219	(37,834)	(5.2)	%	+ 200bp	$	4,292,312	(217,356)	(4.8)	%	$	763,046	(21,606)	(2.8)	%
0bp	0bp	$	3,265,107	—	—		$	728,053	—	—		0bp	$	4,509,668	—	—		$	784,652	—	—
-100bp	-100bp	$	3,071,156	(193,951)	(5.9)	%	$	735,677	7,624	1.0	%	-100bp	$	4,270,157	(239,511)	(5.3)	%	$	787,255	2,603	0.3	%

(1)EVE is the discounted present value of expected cash flows from assets, liabilities and off-balance sheet contracts.

(2)Assumes a gradual change in interest rates over a ~~one-year~~one year period at all maturities.

The table above indicates that at September 30, ~~2020,~~2021, in the event of a 200 basis point increase in interest rates, we would be expected to experience a ~~2.7% increase~~4.8% decrease in EVE and a ~~$37.8~~$21.6 million, or ~~5.2%~~2.8%, decrease in net interest income. In the

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event of a 100 basis point decrease in interest rates, we would be expected to experience a ~~5.9%~~5.3% decrease in EVE and a ~~$7.6~~$2.6 million, or ~~1.0%~~0.3%, increase in net interest income. This data does not reflect any future actions we may take in response to changes in interest rates, such as changing the mix in or growth of our assets and liabilities, which could change the results of the EVE and net interest income calculations.

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As mentioned above, we use an internally developed asset liability model to compute our quarterly interest rate risk reports. Certain shortcomings are inherent in any methodology used to calculate interest rate risk. Modeling EVE and net interest income sensitivity requires certain assumptions that may or may not reflect the manner in which actual yields and market values respond to changes in market interest rates. The EVE and net interest income results presented above ~~assumes~~assume no balance sheet growth and that generally the composition of our interest-rate sensitive assets and liabilities existing at the beginning of the analysis remains constant over the period being measured and, accordingly, the data does not reflect any actions we may take in response to changes in interest rates. The EVE and net interest income results presented in the table above provide an indication of our sensitivity to interest rate changes at a point in time. ~~The results as presented are not intended to, and do not, provide a precise forecast of the effects of changes in market interest rates on our EVE and net interest income.~~


ITEM 4.			CONTROLS AND PROCEDURES

Under the supervision and with the participation of our management, including our Principal Executive Officer and Principal Financial Officer, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this report. Based upon that evaluation, the Principal Executive Officer and Principal Financial Officer concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were effective.

There were no changes in our internal control over financial reporting that occurred during the quarter ended September 30, ~~2020~~2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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Part II Other Information


ITEM 1.			LEGAL PROCEEDINGS

The Company, the Bank and its subsidiaries are subject to various legal actions arising in the normal course of business. In the opinion of management, the resolution of these legal actions is not expected to have a material adverse effect on the Company’s financial condition or results of operations.


ITEM 1A.			RISK FACTORS

In addition to the other information contained in this Quarterly Report on Form 10-Q, the following risk ~~factor represents~~factors relating to the Company’s proposed merger (“Merger”) with Citizens Financial Group, Inc. (“Citizens”) represent a material update and addition to the risk factors previously disclosed in our Annual Report on Form ~~10-K~~10- K for the fiscal year ended December 31, ~~2019~~2020, as filed with the Securities and Exchange ~~Commission.~~Commission, as updated by our Quarterly Reports on Form 10-Q. To the extent that any of the information contained in this Quarterly Report on Form 10-Q constitutes forward-looking statements, the risk ~~factor~~factors set forth below also ~~is a~~are cautionary ~~statement~~statements identifying important factors that could cause our actual results to differ materially from those expressed in any forward-looking statements made by or on behalf of us. The following risk factors are consistent with the risk factors previously disclosed in our Quarterly Report on Form 10-Q for the period ended June 30, 2021, as filed with the Securities and Exchange Commission.

There is no assurance when or even if the Merger will be completed.

~~The economic impact~~Completion of the ~~COVID-19 pandemic~~Merger is subject to satisfaction or waiver of a number of conditions. There can be no assurance that the Company and Citizens will be able to satisfy the closing conditions or that closing conditions beyond their control will be satisfied or waived. Additionally, the Company and/or Citizens can terminate the merger agreement under specified circumstances. Moreover, the Company could face stockholder litigation relating to the Merger, which could prevent or delay the consummation of the Merger.

Regulatory approvals may not be received, may take longer than expected, or may impose conditions that are not presently anticipated or that could have an adverse effect on the combined company following the Merger.

Before the Merger may be completed, Citizens and the Company must obtain approvals (or waivers) from the Federal Reserve and the Office of the Comptroller of the Currency. Other approvals, waivers or consents from regulators may also be required. In determining whether to grant these approvals the regulators consider a variety of factors, including the regulatory standing of each party. An adverse development in either party’s regulatory standing or other factors could result in an inability to obtain approval or delay their receipt. These regulators may impose conditions on the completion of the Merger or require changes to the terms of the Merger. Such conditions or changes could have the effect of delaying or preventing completion of the Merger or imposing additional costs on or limiting the revenues of the combined company following the Merger, any of which might have an adverse effect on the combined company following the Merger.

Failure to complete the Merger could negatively impact ~~on our~~the Company’s stock price, business and ~~results~~financial results.

If the Merger is not completed, the ongoing business of ~~operations.~~

~~The COVID-19 pandemic, which was declared a national emergency in~~ the ~~United States in March 2020, continues to create extensive disruptions to the global economy and financial markets and to businesses~~Company may be adversely affected and the ~~lives of individuals throughout the world. Federal and state governments, including in New Jersey and New York, are taking unprecedented actions~~Company may be subject to contain the spread of the disease, including quarantines, travel bans, shelter-in-place orders, closures of businesses and schools, fiscal stimulus, and legislation designed to deliver monetary aid and other relief to businesses and individuals impacted by the pandemic. Although in various locations certain activity restrictions have been relaxed with some level of success, including in New Jersey and New York, in many states and localities the number of individuals diagnosed with COVID-19 has increased significantly. Reporting of COVID-19 case data as of November 2, 2020 indicates that, on a national level, the number of average positive cases per day has increased by 44% since mid-October. This resurgence of positive cases across a number of ~~jurisdictions has increased pressure~~risks, including the following:

•the Company will be required to pay certain costs relating to the Merger, whether or not the Merger is completed, such as legal, accounting, financial advisor, proxy solicitation and printing fees;

•under the Merger agreement, the Company is subject to certain restrictions on ~~governmental officials~~the conduct of its business before completing the Merger, which may adversely affect its ability to ~~reverse~~execute certain of its business strategies if the ~~relaxation~~Merger is terminated; and

•matters relating to the Merger may require substantial commitments of ~~activity restrictions,~~time and resources by the Company’s management, which could ~~lead~~otherwise have been devoted to other opportunities that may have been beneficial to the ~~shutdown of certain businesses and operations and exacerbate economic uncertainty and instability related to~~Company as an independent company.

In addition, if the ~~pandemic.~~

~~The governmental and social response to~~Merger is not completed, the COVID-19 pandemic has resulted in an unprecedented slow-down in economic activity and a related increase in unemployment. Since the outbreak of COVID-19 in the United States, more than 60 million people nationwide have filed claims for unemployment, and stock markets have declined in value and in particular, bank stocks have significantly declined in value. As of the end of September 2020, the national unemployment rate was 7.9%. Although an improvementCompany may experience negative reactions from the 11.1% national unemployment rate observed in June 2020, the current rate of unemployment is substantially higher than the 3.6% national unemployment rate observed in January 2020 prior to the outbreak of COVID-19 in the United States. Further, the Federal Pandemic Unemployment Compensation Program, which under Section 2104 of the CARES Act allows for additional payments to covered individuals of up to $600 per week, expired as of July 31, 2020 and it is uncertain whether this benefit will be renewed by Congress.

~~The COVID-19 pandemic, and related efforts to contain it, have caused significant disruptions in the functioning of~~ the financial markets and from its customers and employees. The Company could be subject to litigation related to any failure to complete the Merger, or to proceedings commenced by Citizens seeking damages or to compel the Company to perform its obligations under the merger agreement. These factors and similar risks could have ~~increased economic~~an adverse effect on the Company’s results of operation, business and market uncertainty and volatility. To help address these issues, the Federal Open Market Committee (“FOMC”) has reduced the benchmark federal funds rate to a target range of 0% to 0.25%, and the yields on 10- and 30-year U.S. Treasury notes have declined to historic lows. At its June and July meetings, the FOMC continued its commitment to this approach, indicating that the target federal funds rate would remain at current levels until the economy is in position to achieve the FOMC’s maximum-employment and price-stability goals. At its September meeting, the FOMC confirmed its commitment to maintaining this approach, indicating that, although financial conditions have improved in the months preceding its meeting, additional stimulus from the federal government is essential to the economy’s recovery. In addition, in order to support the flow of credit to households and businesses, the Federal Reserve indicated that it will continue to increase its holdings of U.S. Treasury securities and agency residential and commercial mortgage-backed securities to sustain proper functioning of the financial markets.

Congress and various state governments and federal agencies have taken actions to require lenders to provide forbearance and other relief to borrowers (e.g., waiving late payment and other fees). The federal banking agencies have encouraged financial institutions to prudently work with affected borrowers, and recently passed legislation has provided reliefstock price.

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~~from reporting loan classifications due~~Combining the Company and Citizens may be more difficult, costly or time consuming than expected and the Company and Citizens may fail to ~~modifications related to~~realize the ~~COVID-19 pandemic. More specifically, through Section 4022~~anticipated benefits of the CARES Act, Congress provided relief to borrowers with federally-backed one-to-four family mortgage loans experiencing a financial hardship due to COVID-19 by allowing such borrowers to request forbearance, regardless of delinquency status, for up to 360 days. Such relief will be available until the earlier of December 31, 2020 and the date of terminationMerger.

The success of the ~~national emergency declaration. Section 4022~~Merger will depend, in part, on the ability to realize the anticipated cost savings from combining the businesses of the ~~CARES Act also prohibited servicers of federally-backed mortgage loans~~Company and Citizens. To realize the anticipated benefits and cost savings from ~~initiating foreclosures during~~ the ~~60-day period beginning March 18, 2020. In addition, on August 27, 2020,~~Merger, the ~~Federal Housing Finance Agency (“FHFA”) announced~~Company and Citizens must successfully integrate and combine their businesses in a manner that ~~Fannie Mae~~permits those cost savings to be realized. If the Company and ~~Freddie Mac would extend their single-family moratorium on foreclosures and evicitions through December 31, 2020. At~~Citizens are not able to successfully achieve these objectives, the same time, the Federal Housing Administration (“FHA”) announced an extension of its moratorium on foreclosures and evictions for homeowners with FHA-insured loans, also through December 31, 2020. Under Section 4023anticipated benefits of the CARES Act, until the earlier of December 31, 2020 and the date of termination of the national emergency declaration, borrowers with federally-backed multifamily mortgage loans whose payments were current as of February 1, 2020, but who have since experienced financial hardship due to COVID-19, may request a forbearance for up to 90 days. Borrowers receiving such forbearanceMerger may not ~~evict~~be realized fully or ~~charge late fees~~at all or may take longer to ~~tenants during the duration of such forbearance.~~

Additionally, in many states in which we do business or in which our borrowers and loan collateral are located, temporary bans on evictions and foreclosures have been enacted through a mix of executive orders, regulations, and judicial orders. Certain such relief orders have since expired, although several states, including New York and New Jersey, have extended their temporary orders and may continue to do so for so long as the public health emergency persists. In addition, in New York, Governor Andrew Cuomo signed legislation on June 17, 2020 that expands mortgage forbearance available for those experiencing financial hardship during the crisis caused by the COVID-19 pandemic. The legislation applies to those who have mortgages with state-regulated financial institutions and is intended to be an expansion of the CARES Act’s mortgage forbearance provisions. The legislation provides up to one year of forbearance if the borrower’s hardship persists and provides flexible payment options. The New Jersey Legislature currently is debating several comparable legislative proposals.

Certain industries have been particularly hard-hit by the COVID-19 pandemic, including the travel and hospitality industry, the restaurant industry and the retail industry. Refer to the Executive Summary included in Part I, Item 2 of this Quarterly Report on Form 10-Q for details on the Company’s loan portfolio by industry as of September 30, 2020.realize than expected. In addition, the ~~spread of COVID-19 has caused us to modify our business practices, including employee travel, employee work locations,~~actual cost savings and cancellation of physical participation in meetings, events and conferences. We have many employees working remotely and we may take further actions as may be required by government authorities or that we determine are in the best interests of our employees, customers and business partners.

~~Given the ongoing and dynamic nature~~anticipated benefits of the ~~circumstances, it is difficult to predict~~Merger could be less than anticipated, and integration may result in additional unforeseen expenses.

The Company and Citizens have operated and, until the ~~full impact~~completion of the COVID-19 outbreak on our business. The extent of such impact will depend on future developments, which are highly uncertain, including when the spread of COVID-19 can be controlled and abated and when and how the economy may be fully reopened. As the result of the COVID-19 pandemic and the related adverse local and national economic consequences, we may be subject to any of the following risks, any of which could have a material, adverse effect on our business, financial condition, liquidity, results of operations, risk-weighted assets and regulatory capital:

•because the incidence of reported COVID-19 cases and related hospitalizations and deaths varies significantly by state and locality, the economic downturn caused by the pandemic may be deeper and more sustained in certain areas, including those in which we do business relative to other areas of the country;

•our ability to market our products and services maybe impaired by a variety of external factors, including a prolonged reduction in economic activity and continued economic and financial market volatility, which could cause demand for our products and services to decline, in turn making it difficult for us to grow assets and income;

•if the economy is unable to substantially reopen, and high levels of unemployment continue for an extended period of time, loan delinquencies, problem assets, and foreclosures may increase, resulting in increased charges and reduced income;

•collateral for loans, especially real estate, may decline in value, which may reduce our ability to liquidate such collateral and could cause loan losses to increase and impair our ability over the long run to maintain our targeted loan origination volume;

•~~our delinquent and non-accrual loans could increase substantially if borrowers~~Merger, must continue to experience financial difficulties beyond forbearance/payment deferral periods resulting in adversely impacted asset quality, capital and earnings. As of October 20, 2020, we had $730 million, or 3%, of loans deferring principal and/or interest payments as a result of COVID-19;

•~~our allowance for loan losses may have to be increased if borrowers experience financial difficulties beyond forbearance periods, which will adversely affect our net income;~~

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•~~an increase in non-performing loans due to~~operate, independently. It is possible that the ~~COVID-19 pandemic would result in a corresponding increase in the risk-weighting of assets and therefore an increase in required regulatory capital;~~

•~~the net worth and liquidity of loan guarantors may decline, impairing their ability to honor commitments to us;~~

•as the result of the reduction of the Federal Reserve’s target federal funds rate to near 0%, the yield on our assets may decline to a greater extent than the decline in our cost of interest-bearing liabilities, reducing our net interest margin and spread and reducing net income;

•~~deposits, including municipal deposits, could decline if customers need to draw on available balances as a result of the economic downturn;~~

•~~a material decrease in net income or a net loss over several quarters~~integration process could result in ~~a decrease~~the loss of key employees, the disruption of each company’s ongoing businesses or inconsistencies in ~~our quarterly cash dividend;~~

•~~we face heightened cybersecurity risk in connection with our operation of a remote working environment, which risks include, among others, greater phishing, malware,~~standards, controls, procedures and other cybersecurity attacks, vulnerability to disruptions of our information technology infrastructure and telecommunications systems, increased risk of unauthorized dissemination of confidential information, limitedpolicies that adversely affect the companies’ ability to ~~restore our systems in~~maintain relationships with clients, customers, depositors and employees or to achieve the ~~event~~anticipated benefits and cost savings of ~~a systems failure or interruption, greater risk of a security breach resulting in destruction or misuse of valuable information,~~the Merger. Integration efforts between the two companies may also divert management attention and potential impairment of our ability to perform critical functions--all of which could expose us to risks of data or financial loss, litigation and liability and could seriously disrupt our operations and the operations of any impacted customers;

•we rely on third party vendors for certain services and the unavailability of a critical service or limitations on the business capacities of our vendors for extended periods of time due to the COVID-19 pandemicresources. These integration matters could have an adverse effect on ~~our operations;~~the Company during this transition period and

•~~as a result~~ for an undetermined period after completion of the ~~COVID-19 pandemic, there~~Merger on the combined company.

The Company’s shareholders will have significantly reduced ownership and voting interests after the Merger and will exercise less influence over management of the combined organization.

The Company’s shareholders currently have the right to vote in the election of the Company’s board of directors and on various other matters affecting the Company. Upon the completion of the Merger, the Company’s shareholders will become shareholders of Citizens with ownership of approximately 14% of the combined company. Therefore, the Company’s shareholders will have significantly reduced ownership and voting interests after the Merger.

The Company will be subject to business uncertainties and contractual restrictions while the Merger is pending.

Uncertainty about the effect of the Merger on employees and customers may have an adverse effect on the Company. These uncertainties may impair the Company’s ability to attract, retain and motivate key personnel until the Merger is completed, and could cause customers and others who deal with the Company to seek to change existing business relationships with the Company. Employee retention and recruitment may be ~~unexpected developments in financial markets, legislation, regulations~~particularly challenging prior to the effective time of the Merger, as employees and ~~consumer~~prospective employees may experience uncertainty about their future roles with the combined company.

The pursuit of the Merger and ~~customer behavior.~~

~~The Company is not~~the preparation for the integration may place a ~~traditional SBA lender however, we are an active participant~~significant burden on management and internal resources. Any significant diversion of management attention away from ongoing business and any difficulties encountered in the ~~PPP.~~ transition and integration process could affect our financial results. In addition, the Merger Agreement requires that the Company operate in the ordinary course of business and restricts the Company from taking certain actions prior to the effective time of the Merger or termination of the Merger Agreement without Citizen’s consent. These restrictions may prevent the Company from pursuing attractive business opportunities that may arise prior to the completion of the Merger.

The PPP authorizes financial institutions to make federally-guaranteed loans to qualifying small businesses and non-profits organizations. These loans carry an interest rate of 1% per annum and a maturity of two years if originated before June 5, 2020 and five years if originated on or after June 5, 2020. The PPP provides that such loanscombined company may be ~~forgiven if~~unable to retain the ~~borrowers meet certain requirements with respect to maintaining employee headcount and payroll and~~Company’s or Citizens’ personnel successfully after the ~~use~~Merger is completed.

The success of the ~~loan proceeds~~Merger will depend in part on the combined company’s ability to retain the talents and dedication of key employees currently employed by the Company and Citizens. It is possible that these employees may decide not to remain with the Company or Citizens, as applicable, while the Merger is pending or with the combined company after the ~~loan~~Merger is ~~originated.~~consummated. If ~~not forgiven, these loans will be guaranteed by~~ the ~~SBA under~~Company and Citizens are unable to retain key employees, including management, who are critical to the ~~SBA’s section 7(a) program. We had approximately $333.4 million of PPP outstanding as of September 30, 2020.~~

~~In light~~successful integration and future operations of the ~~speed at~~companies, the Company could face disruptions in their operations, loss of existing customers, loss of key information, expertise or know-how and unanticipated additional recruitment costs. In addition, if key employees terminate their employment, the combined company’s business activities may be adversely affected and management’s attention may be diverted from successfully integrating the Company and Citizens to hiring suitable replacements, all of which may cause the ~~PPP was implemented, particularly due~~combined company’s business to suffer. In addition, the ~~“first come first served” nature of the program, the loans originated under this program may present potential fraud risk~~Company and ~~operational risk, increasing the risk that loan forgiveness~~Citizens may not be ~~obtained by the borrowers and that the guaranty may not be honored. In addition, there is risk that the borrowers may not qualify~~able to locate or retain suitable replacements for the loan forgiveness feature due to the conduct of the borrower after the loan is originated. Further, although the SBA recently has streamlined the loan forgiveness process for loans of $50,000 or less, it has taken longer than initially anticipated for the SBA to finalize its forgiveness process. Accordingly, absent regulatory relief, extended forbearance waiting times due to SBA-related delays are likely. These factors may result in us having to hold a significant amount of these low-yield loans on our books for a significant period of time. We will continue to face operational demands and pressures as we monitor and service our book of PPP loans, process applications for loan forgiveness and pursue recourse under the SBA’s guarantees and against borrowers for PPP loan defaults. In addition, as a result of our participation in the PPP, we may be subject to litigation and claims by borrowers in connection with the PPP loans that we have made, as well as investigation and scrutiny by our regulators, Congress, the SBA, the U.S. Treasury Department and other governmental authorities. Regardless of whether these claims and investigations may be founded or unfounded, if such claims and investigations are not resolved in a timely and favorable manner for us, they may result in significant costs and liabilities (including increased legal and professional costs) and/or adversely affect the market perception of us and our products and services.

Moreover, our future success and profitability substantially depends on the management skills of our executive officers and directors, many of whom have held officer and director positions with us for many years. The unanticipated loss or unavailability ofany key employees due to COVID-19 pandemic could harm our ability to operate our business or execute our business strategy. We may not be successful in finding and integrating suitable successors in the event of key employee loss or unavailability. Any one or a combination of the factors identified above could negatively impact our business, financial condition and results of operations and prospects.who leave either company.

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ITEM 2.			UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

(a) Not applicable.

(b) Not applicable.

(c) The following table reports information regarding repurchases of our common stock during the quarter ended September 30, ~~2020~~2021 and the stock repurchase plans approved by our Board of Directors.

Period
Total Number of Shares Purchased (1)(2)
Average Price paid Per Share As part of Publicly Announced Plans or Programs
Yet to be Purchased Under the Plans or Programs (1)
July 1, 2020 through July 31, 2020 606 $ 8.12 — 14,607,794
August 1, 2020 through August 31, 2020 3,443 8.11 — 14,607,794
September 1, 2020 through September 30, 2020 3,297 7.26 — 14,607,794
Total 7,346 $ 7.73 — 14,607,794


Period	Total Number of Shares Purchased (1)(2)	Average Price paid Per Share		As part of Publicly Announced Plans or Programs	Yet to be Purchased Under the Plans or Programs (1)
July 1, 2021 through July 31, 2021	588	$	14.33	—	12,000,202
August 1, 2021 through August 31, 2021	2,344	13.82		—	12,000,202
September 1, 2021 through September 30, 2021	3,820	14.43		—	12,000,202
Total	6,752	$	14.21	—	12,000,202

(1) On October 25, 2018, the Company announced its fourth share repurchase program, which authorized the purchase of 10% of its publicly-held outstanding shares of common stock, or approximately 28,886,780 shares. The plan commenced upon the completion of the third repurchase plan on December 10, 2018. This program has no expiration date and has ~~14,607,794~~12,000,202 shares yet to be repurchased as of September 30, ~~2020.~~2021.

(2) ~~7,346~~6,752 shares were withheld to cover income taxes related to restricted stock vesting under our 2015 Equity Incentive Plan. Shares withheld to pay income taxes are repurchased pursuant to the terms of the 2015 Equity Incentive Plan and not under our share repurchase program.


ITEM 3.			DEFAULTS UPON SENIOR SECURITIES

Not applicable.


ITEM 4.			MINE SAFETY DISCLOSURES

Not applicable.


ITEM 5.			OTHER INFORMATION

Not applicable.

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ITEM 6.			EXHIBITS

The following exhibits are either filed as part of this report or are incorporated herein by reference:


2.1						Agreement and Plan of Merger by and among Investors Bancorp, Inc. and Gold Coast Bancorp, Inc. dated as of July 24, 2019. (1)

2.2						Agreement and Plan of Merger by and between Citizens Financial Group, Inc. and Investors Bancorp, Inc. dated as of July 28, 2021.(2)

3.1						Certificate of Incorporation of Investors Bancorp, Inc. ~~(2)~~(3)

3.2						Bylaws of Investors Bancorp, Inc. ~~(2)~~(3)

31.1						Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2						Certification of Principal Financial and Accounting Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1						Certification of Principal Executive Officer and Principal Financial and Accounting Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS						The instance document does not appear in the interactive data file because its XBRL tags are embedded within the Inline XBRL document
101.SCH						Inline XBRL Taxonomy Extension Schema Document
101.CAL						Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF						Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB						Inline XBRL Taxonomy Extension Labels Linkbase Document
101.PRE						Inline XBRL Taxonomy Presentation Linkbase Document
104						Inline XBRL Cover Page Interactive Data File


(1)			Incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K of Investors Bancorp, Inc. (Commission File no. 001-36441), originally filed with the Securities and Exchange Commission on July 30, 2019.

(2)			Incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K of Investors Bancorp, Inc. (Commission File no. 001-36441), originally filed with the Securities and Exchange Commission on July 30, 2021.

(3)			Incorporated by reference to the Registration Statement on Form S-1 of Investors Bancorp, Inc. (Commission File no. 333-192966), originally filed with the Securities and Exchange Commission on December 20, 2013.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

INVESTORS BANCORP, INC.

Date:

November ~~6, 2020~~5, 2021

By:

/s/ Kevin Cummings

Kevin Cummings
Chief Executive Officer
(Principal Executive Officer)

By:

/s/ Sean Burke

Sean Burke
Executive Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)

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	At December 31, 2019
	Carrying value		Gross unrealized gains	Gross unrealized losses	Estimated fair value
	(In thousands)
Available-for-sale:



Mortgage-backed securities:
Federal Home Loan Mortgage Corporation	$	1,223,587	17,528	736	1,240,379
Federal National Mortgage Association	1,159,446		18,917	314	1,178,049
Government National Mortgage Association	273,676		3,333	47	276,962


Total debt securities available-for-sale	$	2,656,709	39,778	1,097	2,695,390


	December 31, 2019
	Recorded Investment		Unpaid Principal Balance	Related Allowance	Average Recorded Investment	Interest Income Recognized
	(In thousands)
With no related allowance:
Multi-family	$	22,169	23,581	—	23,298	47
Commercial real estate	7,875		10,913	—	8,127	199
Commercial and industrial	12,476		21,090	—	14,860	351
Construction	0		0	—	0	0
Total commercial loans	42,520		55,584	—	46,285	597
Residential mortgage and consumer	13,783		18,066	—	13,811	267
With an allowance recorded:
Multi-family	0		0	0	0	0
Commercial real estate	0		0	0	0	0
Commercial and industrial	0		0	0	0	0
Construction	0		0	0	0	0
Total commercial loans	0		0	0	0	0
Residential mortgage and consumer	13,220		13,881	1,763	13,321	153
Total:
Multi-family	22,169		23,581	0	23,298	47
Commercial real estate	7,875		10,913	0	8,127	199
Commercial and industrial	12,476		21,090	0	14,860	351
Construction	0		0	0	0	0
Total commercial loans	42,520		55,584	0	46,285	597
Residential mortgage and consumer	27,003		31,947	1,763	27,132	420
Total impaired loans	$	69,523	87,531	1,763	73,417	1,017


					Gross Amounts Not Offset
	Gross Amounts Recognized		Gross Amounts Offset	Net Amounts Presented	Financial Instruments	Cash Collateral Posted	Net Amount
	(In thousands)
September 30, 2020
Assets:
Derivative contracts	$	179	0	179	0	0	179
Liabilities:
Derivative contracts	$	682	0	682	0	450	232


December 31, 2019
Assets:
Derivative contracts	$	821	0	821	0	0	821
Liabilities:
Derivative contracts	$	125	0	125	0	0	125


Segment/Industry	Loan Balance (in millions)		Active Deferrals (in millions)		Active Deferrals / Loans
Commercial and industrial:
Accommodation and Food Service	$	297	$	205	69	%
Administrative and Support and Waste Management	114		10		9	%
Agriculture, Forestry, Fishing and Hunting	20		—		0	%
Arts, Entertainment, and Recreation	56		18		32	%
Construction	276		—		0	%
Educational Service	110		—		0	%
Finance and Insurance	149		—		0	%
Health Care and Social Assistance	655		11		2	%
Information	76		—		0	%
Management of Companies and Enterprises	6		—		0	%
Manufacturing	187		15		8	%
Mining, Quarrying, and Oil and Gas Extraction	51		—		0	%
Professional, Scientific, and Technical Services	133		—		0	%
Public Administration	1		—		0	%
Real Estate and Rental	568		20		4	%
Retail Trade - clothing, home, gasoline, health	104		—		0	%
Retail Trade - sporting, hobby, vending, e-commerce	31		—		0	%
Transportation - air, rail, truck, water, pipeline	233		—		0	%
Utilities	6		—		0	%
Wholesale Trade	139		—		0	%
Other	187		3		2	%
Total Commercial and Industrial	$	3,399	$	282	8	%

Commercial real estate:
Accommodation and Food Service	$	111	$	61	55	%
Arts, Entertainment, and Recreation	18		—		0	%
Health Care and Social Assistance	54		—		0	%
Mixed Use Property	476		11		2	%
Office	1,208		10		1	%
Retail Store	947		6		1	%
Shopping Center	891		13		1	%
Warehouse	761		1		0	%
Other	446		6		1	%
Total Commercial Real Estate	$	4,912	$	108	2	%

Multi-Family	7,256		188		3	%
Construction	342		15		4	%
Residential and Consumer	5,089		137		3	%
Total Loans	$	20,998	$	730	3	%