UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q



~~FORM 10-Q~~


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

		For the quarterly period ended ~~September 30, 2017~~March 31, 2020



¨☐			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: 001-31566

PROVIDENT FINANCIAL SERVICES, INC.

(Exact Name of Registrant as Specified in Its Charter)

Delaware

42-1547151

(State or Other Jurisdiction of Incorporation or Organization)

(I.R.S. Employer Identification No.)

239 Washington Street

Jersey City

New Jersey

07302

(Address of Principal Executive Offices)

(City)

(State)

(Zip Code)

(732) 590-9200

(Registrant’s Telephone Number, Including Area Code)

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

Title of each class

Trading Symbol

Symbol(s)

Name of each exchange on which registered

Common

PFS

New York Stock Exchange

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 filing requirements for the past 90 days. ~~YES~~ Yes ý NO ¨

Indicate by check mark whether the Registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding twelve months (or for such shorter period that the Registrant was required to submit and post such files). ~~YES~~ Yes ý 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 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

ý☒

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. ¨

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES ¨☐ NO ý

As of ~~November~~May 1, ~~2017~~2020 there were 83,209,293 shares issued ~~and 66,773,464 shares~~and 65,909,039 shares outstanding of the Registrant’s Common Stock, par value $0.01 per share, including ~~296,049~~200,089 shares held by the First Savings Bank Directors’ Deferred Fee Plan not otherwise considered outstanding under U.S. generally accepted accounting principles.

PROVIDENT FINANCIAL SERVICES, INC.

INDEX TO FORM 10-Q


Item Number			Page Number

PART I—FINANCIAL INFORMATION

1	Financial Statements:

	Consolidated Statements of Financial Condition as of March 31, 2020 (unaudited) and December 31, 2019	3

	Consolidated Statements of Income for the three months ended March 31, 2020 and 2019 (unaudited)	4

	Consolidated Statements of Comprehensive Income for the three months ended March 31, 2020 and 2019 (unaudited)	5

	Consolidated Statements of Changes in Stockholders’ Equity for the three months ended March 31, 2020 and 2019 (unaudited)	6

	Consolidated Statements of Cash Flows for the three months ended March 31, 2020 and 2019 (unaudited)	8

	Notes to Unaudited Consolidated Financial Statements	10

2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	38

3	Quantitative and Qualitative Disclosures About Market Risk	46

4	Controls and Procedures	48

PART II—OTHER INFORMATION

1	Legal Proceedings	48

1A.	Risk Factors	48

2	Unregistered Sales of Equity Securities and Use of Proceeds	49

3	Defaults Upon Senior Securities	49

4	Mine Safety Disclosures	49

5	Other Information	49

6	Exhibits	50

Signatures			51

Item Number Page Number

PART I—FINANCIAL INFORMATION

1.
Financial Statements:

Consolidated Statements of Financial Condition as of September 30, 2017 (unaudited) and December 31, 2016
3

Consolidated Statements of Income for the three and nine months ended September 30, 2017 and 2016 (unaudited)
4

Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2017 and 2016 (unaudited)
5

Consolidated Statements of Changes in Stockholders’ Equity for the nine months ended September 30, 2017 and 2016 (unaudited)
6

Consolidated Statements of Cash Flows for the nine months ended September 30, 2017 and 2016 (unaudited)
8

Notes to Unaudited Consolidated Financial Statements
10

2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
36

3.
Quantitative and Qualitative Disclosures About Market Risk
44

4.
Controls and Procedures
45

PART II—OTHER INFORMATION

1.
Legal Proceedings
46

1A.
Risk Factors
46

2.
Unregistered Sales of Equity Securities and Use of Proceeds
46

3. Defaults Upon Senior Securities
47

4.
Mine Safety Disclosures
47

5.
Other Information
47

6.
Exhibits
47

Signatures
48

PART I—FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS.

PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY

Consolidated Statements of Financial Condition

~~September 30, 2017~~March 31, 2020 (Unaudited) and December 31, ~~2016~~2019

(Dollars in Thousands)


	September 30, 2017			December 31, 2016				March 31, 2020		December 31, 2019
ASSETS							ASSETS
Cash and due from banks	$	97,298		$	92,508		Cash and due from banks	$	237,083	$	131,555
Short-term investments	51,485			51,789			Short-term investments	133,494		55,193
Total cash and cash equivalents	148,783			144,297			Total cash and cash equivalents	370,577		186,748
Securities available for sale, at fair value	1,028,305			1,040,386
Investment securities held to maturity (fair value of $490,425 at September 30, 2017 (unaudited) and $489,287 at December 31, 2016)	481,845			488,183
Available for sale debt securities, at fair value							Available for sale debt securities, at fair value	989,833		976,919
Held to maturity debt securities, net (fair value of $459,224 at March 31, 2020 (unaudited) and $467,966 at December 31, 2019)							Held to maturity debt securities, net (fair value of $459,224 at March 31, 2020 (unaudited) and $467,966 at December 31, 2019)	445,444		453,629
Equity securities, at fair value							Equity securities, at fair value	685		825
Federal Home Loan Bank stock	70,896			75,726			Federal Home Loan Bank stock	61,198		57,298
Loans	7,028,052			7,003,486			Loans	7,372,044		7,332,885
Less allowance for loan losses	60,276			61,883
Less allowance for credit losses							Less allowance for credit losses	75,143		55,525
Net loans	6,967,776			6,941,603			Net loans	7,296,901		7,277,360
Foreclosed assets, net	5,703			7,991			Foreclosed assets, net	4,219		2,715
Banking premises and equipment, net	78,567			84,092			Banking premises and equipment, net	54,350		55,210
Accrued interest receivable	27,398			27,082			Accrued interest receivable	27,799		29,031
Intangible assets	420,877			422,937			Intangible assets	436,278		437,019
Bank-owned life insurance	188,123			188,527			Bank-owned life insurance	195,459		195,533
Other assets	76,873			79,641			Other assets	202,143		136,291
Total assets	$	9,495,146		$	9,500,465		Total assets	$	10,084,886	$	9,808,578

LIABILITIES AND STOCKHOLDERS’ EQUITY							LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits:							Deposits:
Demand deposits	$	4,880,133		$	4,803,426		Demand deposits	$	5,523,150	$	5,384,868
Savings deposits	1,083,215			1,099,020			Savings deposits	990,844		983,714
Certificates of deposit of $100,000 or more	296,172			290,295			Certificates of deposit of $100,000 or more	406,122		438,551
Other time deposits	331,696			360,888			Other time deposits	290,644		295,476
Total deposits	6,591,216			6,553,629			Total deposits	7,210,760		7,102,609
Mortgage escrow deposits	25,186			24,452			Mortgage escrow deposits	28,470		26,804
Borrowed funds	1,525,560			1,612,745			Borrowed funds	1,213,777		1,125,146
Other liabilities	53,012			57,858			Other liabilities	219,290		140,179
Total liabilities	8,194,974			8,248,684			Total liabilities	8,672,297		8,394,738
Stockholders’ Equity:							Stockholders’ Equity:
Preferred stock, $0.01 par value, 50,000,000 shares authorized, none issued	—			—			Preferred stock, $0.01 par value, 50,000,000 shares authorized, none issued	—		—
Common stock, $0.01 par value, 200,000,000 shares authorized, 83,209,293 shares issued and 66,467,819 shares outstanding at September 30, 2017 and 66,082,283 outstanding at December 31, 2016	832			832
Common stock, $0.01 par value, 200,000,000 shares authorized, 83,209,293 shares issued and 65,770,728 shares outstanding at March 31, 2020 and 65,787,900 outstanding at December 31, 2019							Common stock, $0.01 par value, 200,000,000 shares authorized, 83,209,293 shares issued and 65,770,728 shares outstanding at March 31, 2020 and 65,787,900 outstanding at December 31, 2019	832		832
Additional paid-in capital	1,010,247			1,005,777			Additional paid-in capital	1,008,582		1,007,303
Retained earnings	586,575			550,768			Retained earnings	686,397		695,273
Accumulated other comprehensive loss	(708		)	(3,397		)
Accumulated other comprehensive income							Accumulated other comprehensive income	14,938		3,821
Treasury stock	(260,910		)	(264,221		)	Treasury stock	(274,044)		(268,504)
Unallocated common stock held by the Employee Stock Ownership Plan	(35,864		)	(37,978		)	Unallocated common stock held by the Employee Stock Ownership Plan	(24,116)		(24,885)
Common stock acquired by the Directors’ Deferred Fee Plan	(5,343		)	(5,846		)	Common stock acquired by the Directors’ Deferred Fee Plan	(3,666)		(3,833)
Deferred compensation – Directors’ Deferred Fee Plan	5,343			5,846			Deferred compensation – Directors’ Deferred Fee Plan	3,666		3,833
Total stockholders’ equity	1,300,172			1,251,781			Total stockholders’ equity	1,412,589		1,413,840
Total liabilities and stockholders’ equity	$	9,495,146		$	9,500,465		Total liabilities and stockholders’ equity	$	10,084,886	$	9,808,578

See accompanying notes to unaudited consolidated financial statements.

PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY

Consolidated Statements of Income

Three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2020 and ~~2016~~2019 (Unaudited)

(Dollars in Thousands, except per share data)


	Three months ended September 30,					Nine months ended September 30,					Three months ended March 31,
	2017		2016			2017		2016			2020		2019
Interest income:										Interest income:
Real estate secured loans	$	47,692	$	45,262		$	140,712	$	134,411	Real estate secured loans	$	54,441	$	55,006
Commercial loans	18,964		16,093			53,884		46,419		Commercial loans	18,672		20,510
Consumer loans	5,083		5,627			15,293		16,657		Consumer loans	4,172		4,783
Securities available for sale and Federal Home Loan Bank Stock	6,540		5,576			19,651		17,074
Investment securities held to maturity	3,272		3,349			9,812		10,011
Available for sale debt securities, equity securities and Federal Home Loan Bank Stock										Available for sale debt securities, equity securities and Federal Home Loan Bank Stock	7,069		8,409
Held to maturity debt securities										Held to maturity debt securities	2,940		3,162
Deposits, Federal funds sold and other short-term investments	343		138			898		252		Deposits, Federal funds sold and other short-term investments	875		541
Total interest income	81,894		76,045			240,250		224,824		Total interest income	88,169		92,411
Interest expense:										Interest expense:
Deposits	4,988		4,441			14,093		12,397		Deposits	10,958		10,494
Borrowed funds	6,694		6,633			19,855		20,477		Borrowed funds	5,190		6,910
Total interest expense	11,682		11,074			33,948		32,874		Total interest expense	16,148		17,404
Net interest income	70,212		64,971			206,302		191,950		Net interest income	72,021		75,007
Provision for loan losses	500		1,000			3,700		4,200
Net interest income after provision for loan losses	69,712		63,971			202,602		187,750
Provision for credit losses										Provision for credit losses	14,717		200
Net interest income after credit loss expense										Net interest income after credit loss expense	57,304		74,807
Non-interest income:										Non-interest income:
Fees	7,680		6,137			20,940		19,309		Fees	6,529		6,097
Wealth management income	4,592		4,262			13,314		13,084		Wealth management income	6,251		4,079
Bank-owned life insurance	1,353		1,382			5,291		4,083		Bank-owned life insurance	787		1,696
Net gain (loss) on securities transactions	36		(43		)	47		54
Net gain on securities transactions										Net gain on securities transactions	11		—
Other income	1,451		2,328			2,804		4,378		Other income	3,413		316
Total non-interest income	15,112		14,066			42,396		40,908		Total non-interest income	16,991		12,188
Non-interest expense:										Non-interest expense:
Compensation and employee benefits	27,328		26,725			81,086		78,496		Compensation and employee benefits	31,195		28,369
Net occupancy expense	6,105		6,227			19,255		18,729		Net occupancy expense	6,203		6,857
Data processing expense	3,314		3,328			10,302		9,845		Data processing expense	4,430		3,969
FDIC insurance	967		1,117			3,065		3,732		FDIC insurance	—		739
Amortization of intangibles	632		767			2,079		2,628		Amortization of intangibles	744		490
Advertising and promotion expense	907		787			2,709		2,567		Advertising and promotion expense	1,369		883
Provision for credit losses for off-balance sheet credit exposure										Provision for credit losses for off-balance sheet credit exposure	1,000		—
Other operating expenses	7,027		6,899			21,248		20,628		Other operating expenses	9,166		7,109
Total non-interest expense	46,280		45,850			139,744		136,625		Total non-interest expense	54,107		48,416
Income before income tax expense	38,544		32,187			105,254		92,033		Income before income tax expense	20,188		38,579
Income tax expense	11,969		9,281			30,788		26,798		Income tax expense	5,257		7,689
Net income	$	26,575	$	22,906		$	74,466	$	65,235	Net income	$	14,931	$	30,890
Basic earnings per share	$	0.41	$	0.36		$	1.16	$	1.03	Basic earnings per share	$	0.23	$	0.48
Weighted average basic shares outstanding	64,454,684		63,728,393			64,327,640		63,545,065		Weighted average basic shares outstanding	64,386,138		64,766,619
Diluted earnings per share	$	0.41	$	0.36		$	1.15	$	1.02	Diluted earnings per share	$	0.23	$	0.48
Weighted average diluted shares outstanding	64,645,278		63,934,886			64,519,710		63,727,723		Weighted average diluted shares outstanding	64,457,263		64,912,738

See accompanying notes to unaudited consolidated financial statements.

PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY

Consolidated Statements of Comprehensive Income

Three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2020 and ~~2016~~2019 (Unaudited)

(Dollars in Thousands)


	Three months ended March 31,
	2020		2019
Net income	$	14,931	$	30,890
Other comprehensive income (loss), net of tax:
Unrealized gains on available for sale debt securities:
Net unrealized gains arising during the period	16,746		7,578
Reclassification adjustment for gains included in net income	—		—
Total	16,746		7,578
Unrealized losses on derivatives	(5,713)		(314)
Amortization related to post-retirement obligations	84		(12)
Total other comprehensive income	11,117		7,252
Total comprehensive income	$	26,048	$	38,142

Three months ended September 30, Nine months ended September 30,
2017 2016 2017 2016
Net income $ 26,575
$ 22,906
$ 74,466
$ 65,235
Other comprehensive income, net of tax:
Unrealized gains and losses on securities available for sale:
Net unrealized gains (losses) arising during the period 479
(1,541 ) 2,478
8,533
Reclassification adjustment for gains included in net income —
26
—
(32 )
Total 479
(1,515 ) 2,478
8,501
Unrealized gains (losses) on derivatives 54
230
106
(361 )
Amortization related to post-retirement obligations 36
141
105
380
Total other comprehensive income (loss) 569
(1,144 ) 2,689
8,520
Total comprehensive income $ 27,144
$ 21,762
$ 77,155
$ 73,755

See accompanying notes to unaudited consolidated financial statements.

PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY

Consolidated Statements of Changes in Stockholders’ Equity

~~Nine~~For the three months ended ~~September 30, 2017 and 2016~~March 31, 2019 (Unaudited)

(Dollars in Thousands)


For the three months ended March 31, 2019	COMMON STOCK		ADDITIONAL PAID-IN CAPITAL		RETAINED EARNINGS		ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME		TREASURYSTOCK		UNALLOCATED ESOP SHARES		COMMON STOCK ACQUIRED BY DDFP		DEFERRED COMPENSATION DDFP		TOTAL STOCKHOLDERS’ EQUITY
Balance at December 31, 2018	$	832	$	1,021,533	$	651,099	$	(12,336)	$	(272,470)	$	(29,678)	$	(4,504)	$	4,504	$	1,358,980
Net income	—		—		30,890		—		—		—		—		—		30,890
Other comprehensive income, net of tax	—		—				7,252		—		—		—		—		7,252
Cash dividends paid	—		—		(28,964)		—		—		—		—		—		(28,964)
Effect of adopting Accounting Standards Update ("ASU") No. 2016-02	—		—		4,350		—		—		—		—		—		4,350
Distributions from Deferred directors fee plan ("DDFP")	—		42		—		—		—		—		167		(167)		42
Purchases of treasury stock	—		—		—		—		(180)		—		—		—		(180)
Purchase of employee restricted shares to fund statutory tax withholding	—				—		—		(1,914)		—		—		—		(1,914)
Shares issued dividend reinvestment plan	—		307		—		—		533		—		—		—		840
Stock option exercises	—		(11)		—		—		26		—		—		—		15
Allocation of ESOP shares	—		370		—		—		—		705		—		—		1,075
Allocation of Stock Award Plan ("SAP") shares	—		1,388		—		—		—		—		—		—		1,388

Allocation of stock options	—		42		—		—		—		—		—		—		42
Balance at March 31, 2019	$	832	$	1,023,671	$	657,375	$	(5,084)	$	(274,005)	$	(28,973)	$	(4,337)	$	4,337	$	1,373,816

COMMON
STOCK

ADDITIONAL
PAID-IN
CAPITAL

RETAINED
EARNINGS

ACCUMULATED
OTHER
COMPREHENSIVE
INCOME (LOSS)

TREASURY
STOCK

UNALLOCATED
ESOP
SHARES

COMMON
STOCK
ACQUIRED
BY DDFP

DEFERRED
COMPENSATION
DDFP

TOTAL
STOCKHOLDERS’
EQUITY
Balance at December 31, 2015 $ 832
$ 1,000,810
$ 507,713
$ (2,546 ) $ (269,014 ) $ (41,730 ) $ (6,517 ) $ 6,517
$ 1,196,065
Net income —
—
65,235
—
—
—
—
—
65,235
Other comprehensive income, net of tax —
—
—
8,520
—
—
—
—
8,520
Cash dividends declared —
—
(35,141 ) —
—
—
—
—
(35,141 )
Effect of adopting Accounting Standards Update ("ASU") No. 2016-09 —
(622 ) 622
—
—
—
—
—
—
Distributions from DDFP —
91
—
—
—
—
503
(503 ) 91
Purchases of treasury stock —
—
—
—
(1,557 ) —
—
—
(1,557 )
Purchase of employee restricted shares to fund statutory tax withholding —
—
—
—
(1,161 ) —
—
—
(1,161 )
Shares issued dividend reinvestment plan —
180
—
—
996
—
—
—
1,176
Stock option exercises —
(60 ) —
—
5,658
—
—
—
5,598
Allocation of ESOP shares —
325
—
—
—
2,016
—
—
2,341
Allocation of SAP shares —
2,982
—
—
—
—
—
—
2,982
Allocation of stock options —
131
—
—
—
—
—
—
131
Balance at September 30, 2016 $ 832
$ 1,003,837
$ 538,429
$ 5,974
$ (265,078 ) $ (39,714 ) $ (6,014 ) $ 6,014
$ 1,244,280

See accompanying notes to unaudited consolidated financial statements.

PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY

Consolidated Statements of Changes in Stockholders’ Equity

~~Nine~~For the three months ended ~~September 30, 2017 and 2016~~March 31, 2020 (Unaudited) ~~(Continued)~~

(Dollars in Thousands)


	COMMON STOCK		ADDITIONAL PAID-IN CAPITAL			RETAINED EARNINGS			ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME			TREASURY STOCK			UNALLOCATED ESOP SHARES			COMMON STOCK ACQUIRED BY DDFP			DEFERRED COMPENSATION DDFP				TOTAL STOCKHOLDERS’ EQUITY
Balance at December 31, 2016	$	832	$	1,005,777		$	550,768		$	(3,397	)	$	(264,221	)	$	(37,978	)	$	(5,846	)	$	5,846			$	1,251,781
For the three months ended March 31, 2020																												For the three months ended March 31, 2020	COMMON STOCK		ADDITIONAL PAID-IN CAPITAL		RETAINED EARNINGS		ACCUMULATED OTHER COMPREHENSIVE INCOME		TREASURY STOCK		UNALLOCATED ESOP SHARES		COMMON STOCK ACQUIRED BY DDFP		DEFERRED COMPENSATION DDFP		TOTAL STOCKHOLDERS’ EQUITY
Balance at December 31, 2019																												Balance at December 31, 2019	832		1,007,303		695,273		3,821		(268,504)		(24,885)		(3,833)		3,833		1,413,840
Net income	—		—			74,466			—			—			—			—			—				74,466			Net income	—		—		14,931		—		—		—		—		—		14,931
Other comprehensive income, net of tax	—		—			—			2,689			—			—			—			—				2,689			Other comprehensive income, net of tax	—		—		—		11,117		—		—		—		—		11,117
Cash dividends declared	—		—			(38,659		)	—			—			—			—			—				(38,659		)
Cash dividends paid																												Cash dividends paid	—		—		(15,496)		—		—		—		—		—		(15,496)
Effect of adopting ASU No. 2016-13 ("CECL")																												Effect of adopting ASU No. 2016-13 ("CECL")	—		—		(8,311)		—		—		—		—		—		(8,311)
Distributions from DDFP	—		172			—			—			—			—			503			(503		)		172			Distributions from DDFP	—		37		—		—		—		—		167		(167)		37
Purchases of treasury stock	—		—			—			—			(443		)	—			—			—				(443		)	Purchases of treasury stock	—		—		—		—		(4,985)		—		—		—		(4,985)
Purchase of employee restricted shares to fund statutory tax withholding	—					—			—			(726		)	—			—			—				(726		)	Purchase of employee restricted shares to fund statutory tax withholding	—		—		—		—		(956)		—		—		—		(956)
Shares issued dividend reinvestment plan	—		417			—			—			922			—			—			—				1,339			Shares issued dividend reinvestment plan	—		50		—		—		401		—		—		—		451
Stock option exercises	—		(1,024		)	—			—			3,558			—			—			—				2,534			Stock option exercises	—		—		—		—		—		—		—		—		—
Allocation of ESOP shares	—		1,053			—			—			—			2,114			—			—				3,167			Allocation of ESOP shares	—		152		—		—		—		769		—		—		921
Allocation of SAP shares	—		3,702			—			—			—			—			—			—				3,702			Allocation of SAP shares	—		993		—		—		—		—		—		—		993

Allocation of stock options	—		150			—			—			—			—			—			—				150			Allocation of stock options	—		47		—		—		—		—		—		—		47
Balance at September 30, 2017	$	832	$	1,010,247		$	586,575		$	(708	)	$	(260,910	)	$	(35,864	)	$	(5,343	)	$	5,343		��	$	1,300,172
Balance at March 31, 2020																												Balance at March 31, 2020	$	832	$	1,008,582	$	686,397	$	14,938	$	(274,044)	$	(24,116)	$	(3,666)	$	3,666	$	1,412,589

See accompanying notes to unaudited consolidated financial statements.

PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY

Consolidated Statements of Cash Flows

~~Nine~~Three months ended ~~September 30, 2017~~March 31, 2020 and ~~2016~~2019 (Unaudited)

(Dollars in Thousands)


	Three months ended March 31,
	2020		2019
Cash flows from operating activities:
Net income	$	14,931	$	30,890
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of intangibles	2,494		2,454
Provision for credit losses on loans and securities	14,717		200
Provision for credit loss for off-balance sheet credit exposure	1,000		—
Deferred tax (benefit) expense	(1,492)		3,184
Amortization of operating lease right-of-use assets	2,130		2,050

Income on Bank-owned life insurance	(787)		(1,696)
Net amortization of premiums and discounts on securities	1,913		1,756
Accretion of net deferred loan fees	(1,521)		(1,220)
Amortization of premiums on purchased loans, net	192		160
Net increase in loans originated for sale	(4,022)		(3,942)
Proceeds from sales of loans originated for sale	4,335		4,215
Proceeds from sales and paydowns of foreclosed assets	256		585
ESOP expense	921		1,075
Allocation of stock award shares	993		1,388
Allocation of stock options	47		42

Net gain on sale of loans	(313)		(273)
Net gain on securities transactions	(11)		—
Net gain on sale of premises and equipment	(641)		—
Net gain on sale of foreclosed assets	(29)		(57)
Decrease in accrued interest receivable	1,232		295
(Increase) decrease in other assets	(82,099)		4,042
Decrease (increase) in other liabilities	79,111		(13,780)
Net cash provided by operating activities	33,357		31,368
Cash flows from investing activities:
Proceeds from maturities, calls and paydowns of held to maturity debt securities	17,225		11,432
Purchases of held to maturity debt securities	(9,674)		(5,780)

Proceeds from maturities and paydowns of available for sale debt securities	64,466		40,258
Purchases of available for sale debt securities	(56,172)		(50,384)
Proceeds from redemption of Federal Home Loan Bank stock	28,549		31,536
Purchases of Federal Home Loan Bank stock	(32,449)		(31,357)

BOLI claim benefits received	1,985		—

Net (increase) decrease in loans	(39,897)		27,579

Proceeds from sales of premises and equipment	641		—
Purchases of premises and equipment	(1,664)		(593)
Net cash (used in) provided by investing activities	(26,990)		22,691
Cash flows from financing activities:
Net increase in deposits	108,151		73,334
Increase in mortgage escrow deposits	1,666		1,795
Cash dividends paid to stockholders	(15,496)		(28,964)
Shares issued dividend reinvestment plan	451		840
Purchase of treasury stock	(4,985)		(180)
Purchase of employee restricted shares to fund statutory tax withholding	(956)		(1,914)

Nine months ended September 30,
2017 2016
Cash flows from operating activities:
Net income $ 74,466
$ 65,235
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of intangibles 8,864
9,711
Provision for loan losses 3,700
4,200
Deferred tax expense 640
323
Income on Bank-owned life insurance (5,291 ) (4,083 )
Net amortization of premiums and discounts on securities 7,504
7,908
Accretion of net deferred loan fees (3,673 ) (2,500 )
Amortization of premiums on purchased loans, net 800
936
Net increase in loans originated for sale (18,386 ) (32,734 )
Proceeds from sales of loans originated for sale 19,149
34,709
Proceeds from sales and paydowns of foreclosed assets 4,883
3,717
ESOP expense 3,167
2,341
Allocation of stock award shares 3,702
2,982
Allocation of stock options 150
131
Net gain on sale of loans (763 ) (1,975 )
Net gain on securities transactions (47 ) (54 )
Net gain on sale of premises and equipment (8 ) (14 )
Net gain on sale of foreclosed assets (768 ) (652 )
(Increase) decrease in accrued interest receivable (316 ) 461
Increase in other assets (2,407 ) (17,108 )
(Decrease) increase in other liabilities (4,846 ) 10,942
Net cash provided by operating activities 90,520
84,476
Cash flows from investing activities:
Proceeds from maturities, calls and paydowns of investment securities held to maturity 42,382
49,245
Purchases of investment securities held to maturity (38,074 ) (54,059 )
Proceeds from sales of securities —
3,401
Proceeds from maturities, calls and paydowns of securities available for sale 160,436
146,958
Purchases of securities available for sale (149,647 ) (209,666 )
Proceeds from redemption of Federal Home Loan Bank stock 96,040
46,757
Purchases of Federal Home Loan Bank stock (91,210 ) (39,595 )
Death benefit proceeds from bank-owned life insurance 4,428
—
Purchases of loans —
(28,590 )
Net increase in loans (23,888 ) (325,838 )
Proceeds from sales of premises and equipment 8
14
Purchases of premises and equipment (1,690 ) (3,757 )
Net cash used in investing activities (1,215 ) (415,130 )
Cash flows from financing activities:
Net increase in deposits 37,587
603,511
Increase in mortgage escrow deposits 734
940
Cash dividends paid to stockholders (38,659 ) (35,141 )
Shares issued through the dividend reinvestment plan 1,339
1,176


								Three months ended March 31,
	Nine months ended September 30,							2020		2019
	2017			2016
Purchases of treasury stock	(443		)	(1,557		)
Purchase of employee restricted shares to fund statutory tax withholding	(726		)	(1,161		)
Stock options exercised	2,534			5,598			Stock options exercised	—		15
Proceeds from long-term borrowings	248,220			291,653			Proceeds from long-term borrowings	632,554		85,000
Payments on long-term borrowings	(345,387		)	(395,405		)	Payments on long-term borrowings	(300,159)		(213,360)
Net increase (decrease) in short-term borrowings	9,982			(81,512		)
Net cash (used in) provided by financing activities	(84,819		)	388,102
Net (decrease) increase in short-term borrowings							Net (decrease) increase in short-term borrowings	(243,764)		84,568
Net cash provided by financing activities							Net cash provided by financing activities	177,462		1,134
Net increase in cash and cash equivalents	4,486			57,448			Net increase in cash and cash equivalents	183,829		55,193
Cash and cash equivalents at beginning of period	144,297			102,226			Cash and cash equivalents at beginning of period	186,748		142,661
Cash and cash equivalents at end of period	$	148,783		$	159,674		Cash and cash equivalents at end of period	$	370,577	$	197,854
Cash paid during the period for:							Cash paid during the period for:
Interest on deposits and borrowings	$	34,127		$	33,088		Interest on deposits and borrowings	$	15,819	$	17,377
Income taxes	$	27,411		$	25,546		Income taxes	$	115	$	100
Non-cash investing activities:							Non-cash investing activities:
Initial recognition of operating lease right-of-use assets							Initial recognition of operating lease right-of-use assets	$	—	$	44,946
Initial recognition of operating lease liabilities							Initial recognition of operating lease liabilities	$	—	$	46,050
Transfer of loans receivable to foreclosed assets	$	2,195		$	3,081		Transfer of loans receivable to foreclosed assets	$	2,067	$	227

See accompanying notes to unaudited consolidated financial statements.

PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Note 1. Summary of Significant Accounting Policies

A. Basis of Financial Statement Presentation

The accompanying unaudited consolidated financial statements include the accounts of Provident Financial Services, Inc. and its wholly owned subsidiary, Provident Bank (the “Bank,” together with Provident Financial Services, Inc., the “Company”).

In preparing the interim unaudited consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the consolidated statements of financial condition and the consolidated statements of income for the periods presented. Actual results could differ from these estimates. The allowance for ~~loan~~credit losses ~~the valuation of securities available for sale~~ and the valuation of deferred tax assets are material estimates that are particularly susceptible to near-term change.

The interim unaudited consolidated financial statements reflect all normal and recurring adjustments, which are, in the opinion of management, considered necessary for a fair presentation of the financial condition and results of operations for the periods presented. The results of operations for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2020 are not necessarily indicative of the results of operations that may be expected for all of ~~2017.~~2020.

Certain information and note disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission. ~~Certain reclassifications have been made in the consolidated financial statements to conform with current year classifications.~~

These unaudited consolidated financial statements should be read in conjunction with the December 31, ~~2016~~2019 Annual Report to Stockholders on Form 10-K.

B. Earnings Per Share

The following is a reconciliation of the numerators and denominators of the basic and diluted earnings per share calculations for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2020 and ~~2016~~2019 (dollars in thousands, except per share amounts):

Three months ended September 30,
2017 2016

Net
Income

Weighted
Average
Common
Shares
Outstanding

Per
Share
Amount

Net
Income

Weighted
Average
Common
Shares
Outstanding

Per
Share
Amount

Net income $ 26,575
$ 22,906

Basic earnings per share:
Income available to common stockholders $ 26,575
64,454,684
$ 0.41
$ 22,906
63,728,393
$ 0.36

Dilutive shares 190,594
206,493

Diluted earnings per share:
Income available to common stockholders $ 26,575
64,645,278
$ 0.41
$ 22,906
63,934,886
$ 0.36


	Nine months ended September 30,											Three months ended March 31,
	2017					2016						2020								2019
	Net Income		Weighted Average Common Shares Outstanding	Per Share Amount		Net Income		Weighted Average Common Shares Outstanding	Per Share Amount			Net Income		Weighted Average Common Shares Outstanding	Per Share Amount		Net Income		Weighted Average Common Shares Outstanding	Per Share Amount
Net income	$	74,466				$	65,235				Net income	$	14,931				$	30,890
Basic earnings per share:											Basic earnings per share:
Income available to common stockholders	$	74,466	64,327,640	$	1.16	$	65,235	63,545,065	$	1.03	Income available to common stockholders	$	14,931	64,386,138	$	0.23	$	30,890	64,766,619	$	0.48
Dilutive shares			192,070					182,658			Dilutive shares			71,125					146,119
Diluted earnings per share:											Diluted earnings per share:
Income available to common stockholders	$	74,466	64,519,710	$	1.15	$	65,235	63,727,723	$	1.02	Income available to common stockholders	$	14,931	64,457,263	$	0.23	$	30,890	64,912,738	$	0.48

Anti-dilutive stock options and awards at ~~September 30, 2017~~March 31, 2020 and ~~2016,~~2019, totaling ~~405,958~~905,673 shares and ~~528,205~~688,655 shares, respectively, were excluded from the earnings per share calculations.

C. Loans Receivable and Allowance for Credit Losses

On January 1, 2020, the Company adopted ASU 2016-13, "Measurement 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 used the modified retrospective method for all financial assets measured at amortized cost and off-balance sheet credit exposures. Results for reporting periods beginning after January 1, 2020 are presented under CECL, while prior period amounts continue to be recorded with previously applicable GAAP. Further information regarding the impact of CECL can be found in Note 3. Investment Securities, Note 4. Loans Receivable and Note 8. Off-balance sheet credit exposures.

Note 2. Business Combinations

SB One Bancorp Acquisition

On March 11, 2020, the Company entered into a definitive merger agreement pursuant to which SB One Bancorp ("SB One") will merge with and into the Company, and SB One Bank, a wholly owned subsidiary of SB One, will merge with and into Provident Bank, a wholly owned subsidiary of the Company. The merger agreement has been unanimously approved by the boards of directors of both companies. The actual value of the Company’s common stock to be recorded as consideration in the Merger will be based on the closing price of the Company’s common stock at the time of the Merger completion date. Under the Merger Agreement, each share of SB One common stock will be exchanged for 1.357 shares of the Company's common stock plus cash in lieu of fractional shares. The merger is expected to close in the third quarter of 2020, subject to satisfaction of customary closing conditions, including receipt of required regulatory approvals and approval by the shareholders of SB One. At December 31, 2019, SB One had $2.0 billion in assets and operated 18 full-service banking offices in New Jersey and New York.

Acquisition of Tirschwell & Loewy, Inc.

On April 1, 2019, Beacon Trust Company ("Beacon") completed its acquisition of certain assets of Tirschwell & Loewy, Inc. ("T&L"), a New York City-based independent registered investment adviser. Beacon is a wholly owned subsidiary of Provident Bank. This acquisition expanded the Company’s wealth management business by $822.4 million of assets under management at the time of acquisition.

The T&L acquisition was accounted for under the acquisition method of accounting. The Company recorded goodwill of $8.2 million, a customer relationship intangible of $12.6 million and $800,000 of other identifiable intangibles related to the acquisition. In addition, the Company recorded a contingent consideration liability at its fair value of $6.6 million. The contingent consideration arrangement requires the Company to pay additional cash consideration to T&L's former stakeholders over a three-year period after the closing date of the acquisition if certain financial and business retention targets are met. The acquisition agreement limits the total additional payment to a maximum of $11.0 million, to be determined based on actual future results. The total cost of the T&L acquisition was $21.6 million, which included cash consideration of $15.0 million and contingent consideration with a fair value of $6.6 million. Tangible assets acquired were nominal, and no liabilities were assumed in the T&L acquisition. The goodwill recorded in the transaction is deductible for tax purposes.

In the fourth quarter of 2019, the Company recognized a $2.8 million increase in the estimated fair value of the contingent consideration liability. While performance of the acquired business has been adversely impacted in the first quarter of 2020 due to worsening economic conditions and declining asset valuations attributable to the COVID-19 pandemic, management has not identified a reduction in assets under management due to a declining customer base. Therefore, the $9.4 million fair value of the contingent liability was unchanged at March 31, 2020, from December 31, 2019, with maximum potential future payments totaling $11.0 million.

Note 2.3. Investment Securities

At ~~September 30, 2017,~~March 31, 2020, the Company had ~~$1.03 billion~~$989.8 million and ~~$481.8~~$445.4 million in available for sale debt securities and held to maturity ~~investment~~debt securities, respectively. Many factors, including lack of liquidity in the secondary market for certain securities, variations in pricing information, regulatory actions, changes in the business environment or any changes in the competitive marketplace could have an adverse effect on the Company’s investment ~~portfolio which could result in other-than-temporary impairment ("OTTI") in future periods.~~portfolio. The total number of available for sale and held to maturity ~~and available for sale~~debt securities in an unrealized loss position ~~as of September 30, 2017~~at March 31, 2020 totaled ~~253,~~41, compared with ~~419~~85 at December 31, ~~2016. All~~2019.

On January 1, 2020, the Company adopted CECL which replaces the incurred loss methodology with an expected loss methodology. The adoption of the new standard resulted in the Company recording a $70,000 increase to the allowance for credit losses on held to maturity debt securities with ~~unrealized~~a corresponding cumulative effect adjustment to decrease retained earnings by $52,000, net of income taxes. (See Adoption of CECL table below for additional detail.)

Management measures expected credit losses ~~at September 30, 2017 were analyzed for other-than-temporary impairment. Based upon this analysis,~~on held to maturity debt securities on a collective basis by security type. Management classifies the held-to-maturity debt securities portfolio into the following security types:

•Agency obligations;

•Mortgage-backed securities;

•State and municipal obligations; and

•Corporate obligations.

All of the agency obligations held by the Company ~~believes that as~~are issued by U.S. government entities and agencies. These securities are either explicitly or implicitly guaranteed by the U.S. government, are highly rated by major rating agencies and have a long history of ~~September 30, 2017, such~~no credit losses. The majority of the state and municipal, and corporate obligations carry no lower than A ratings. At March 31, 2020, the Company had one security rated with a triple-B by Moody’s Investors Service.

The Company adopted CECL using the prospective transition approach for debt securities ~~with unrealized losses do not represent impairments that are other-than-temporary.~~for which other-than-temporary impairment had been recognized prior to January 1, 2020. As a result, the amortized cost basis remains the same before and after the effective date of CECL.

~~Securities~~ Available for Sale Debt Securities

The following tables present the amortized cost, gross unrealized gains, gross unrealized losses and the fair value for ~~securities~~ available for sale debt securities at ~~September 30, 2017~~March 31, 2020 and December 31, ~~2016~~2019 (in thousands):


	March 31, 2020
	Amortized cost		Gross unrealized gains	Gross unrealized losses	Fair value



Mortgage-backed securities	$	926,561	34,130	(514)	960,177
State and municipal obligations	3,894		155	—	4,049
Corporate obligations	25,030		614	(37)	25,607

	$	955,485	34,899	(551)	989,833

September 30, 2017

Amortized
cost
Gross
unrealized
gains
Gross
unrealized
losses Fair
value
U.S. Treasury obligations $ 5,995
—
(1 ) 5,994
Agency obligations
28,031

15

(11 ) 28,035
Mortgage-backed securities
965,863

7,477

(4,928 ) 968,412
State and municipal obligations
3,695

112

—
3,807
Corporate obligations 21,049
420
(10 ) 21,459
Equity securities
397

201

—
598

$ 1,025,030

8,225

(4,950 ) 1,028,305


	December 31, 2019
	Amortized cost		Gross unrealized gains	Gross unrealized losses	Fair value



Mortgage-backed securities	$	936,196	12,367	(1,133)	947,430
State and municipal obligations	3,907		172	—	4,079
Corporate obligations	25,032		393	(15)	25,410

	$	965,135	12,932	(1,148)	976,919

December 31, 2016
Amortized
cost Gross
unrealized
gains Gross
unrealized
losses Fair
value
U.S. Treasury obligations $ 7,995
13
—
8,008
Agency obligations 57,123
90
(25 ) 57,188
Mortgage-backed securities 952,992
7,249
(8,380 ) 951,861
State and municipal obligations 3,727
19
(3 ) 3,743
Corporate obligations 19,013
35
(11 ) 19,037
Equity securities 397
152
—
549
$ 1,041,247
7,558
(8,419 ) 1,040,386

The amortized cost and fair value of ~~securities~~ available for sale debt securities at ~~September 30, 2017~~,March 31, 2020, by contractual maturity, are shown below (in thousands). Expected maturities may differ from contractual maturities due to prepayment or early call privileges of the issuer.


	September 30, 2017				March 31, 2020
	Amortized cost		Fair value		Amortized cost		Fair value
Due in one year or less	$	35,452	35,445	Due in one year or less	$	—	—
Due after one year through five years	2,423		2,471	Due after one year through five years	3,002		3,040
Due after five years through ten years	20,895		21,379	Due after five years through ten years	25,922		26,616
Due after ten years	—		—	Due after ten years	—		—
	$	58,770	59,295		$	28,924	29,656

Mortgage-backed securities totaling ~~$965.9~~$926.6 million at amortized cost and ~~$968.4~~$960.2 million at fair value are excluded from the table above as their expected lives are ~~likely~~anticipated to be shorter than the contractual maturity date due to principal prepayments. ~~Also excluded from the table above are equity securities of $397,000 at amortized cost and $598,000 at fair value.~~

For the three month periods ended March 31, 2020 and ~~nine months ended September 30, 2017,~~2019, no securities were sold or called from the ~~securities~~ available for sale ~~portfolio. For the three months ended September 30, 2016, proceeds from sales on~~debt securities available for sale totaled $1.2 million resulting in no gross gains and $45,000 of gross losses. Proceeds from the sale of securities available for sale, for the nine months ended September 30, 2016, totaled $3.4 million, resulting in gross gains of $95,000 and gross losses of $45,000. There were no calls of available for sale securities for the three and nine months ended September 30, 2016.portfolio.

~~The Company did not incur an OTTI charge on securities in the available for sale portfolio for the three and nine months ended~~ ~~September 30, 2017~~ ~~and~~ ~~2016~~.

The following tables present the fair ~~value~~values and gross unrealized losses for ~~securities~~ available for sale ~~with temporary impairment at~~ ~~September 30, 2017~~ ~~and December 31, 2016 (in thousands):~~

September 30, 2017 Unrealized Losses

Less than 12 months 12 months or longer Total

Fair
value

Gross
unrealized
losses

Fair
value

Gross
unrealized
losses

Fair
value

Gross
unrealized
losses
U.S. Treasury obligations $ 5,994
(1 ) —
—
5,994
(1 )
Agency obligations
16,008
(11 ) —
—
16,008
(11 )
Mortgage-backed securities
424,627
(3,956 ) 50,881
(972 ) 475,508
(4,928 )
Corporate obligations —
—
991
(10 ) 991
(10 )

$ 446,629
(3,968 ) 51,872
(982 ) 498,501
(4,950 )

December 31, 2016 Unrealized Losses

Less than 12 months 12 months or longer Total

Fair
value

Gross
unrealized
losses

Fair
value

Gross
unrealized
losses

Fair
value

Gross
unrealized
losses
Agency obligations $ 14,000
(25 ) —
—
14,000
(25 )
Mortgage-backed securities 553,629
(8,377 ) 65
(3 ) 553,694
(8,380 )
State and municipal obligations 661
(3 ) —
—
661
(3 )
Corporate obligations —
—
990
(11 ) 990
(11 )

$ 568,290
(8,405 ) 1,055
(14 ) 569,345
(8,419 )

The temporary loss position associated with securities available for sale was the result of changes in market interest rates relative to the coupon of the individual security and changes in credit spreads. The Company does not have the intent to sell securities in a temporary loss position at ~~September 30, 2017, nor is it more likely than not that the Company will be required to sell the securities before their prices recover.~~

~~The number of available for sale~~debt securities in an unrealized loss position at ~~September 30, 2017~~ ~~totaled~~ 82~~, compared with~~ 87 atMarch 31, 2020 and December 31, ~~2016. At~~ ~~September 30, 2017, there were two private label mortgage-backed~~2019 (in thousands):


	March 31, 2020
	Less than 12 months				12 months or longer			Total
	Fair value		Gross unrealized losses	Fair value	Gross unrealized losses	Fair value	Gross unrealized losses


Mortgage-backed securities	$	45,567	(510)	14	(4)	45,581	(514)

Corporate obligations	1,990		(37)	—	—	1,990	(37)
	$	47,557	(547)	14	(4)	47,571	(551)


	December 31, 2019
	Less than 12 months				12 months or longer			Total
	Fair value		Gross unrealized losses	Fair value	Gross unrealized losses	Fair value	Gross unrealized losses



Mortgage-backed securities	$	136,270	(629)	46,819	(504)	183,089	(1,133)

Corporate obligations	2,013		(15)	—	—	2,013	(15)
	$	138,283	(644)	46,819	(504)	185,102	(1,148)

The number of available for sale debt securities in an unrealized loss position

at March 31, 2020 totaled 14, compared with 50 at December 31, 2019. The decrease in the number of securities in an unrealized loss position at March 31, 2020 was due to lower current market interest rates compared to rates at December 31, 2019. At March 31, 2020, there was 1 private label mortgage-backed security in an unrealized loss position, with an amortized cost of ~~$50,000~~$18,000 and an unrealized loss of ~~$2,000. Neither of these private label mortgage-backed securities were below investment grade at September 30, 2017.~~$4,000.

The Company estimates the loss projections for each security by stressing the individual loans collateralizing the security and applying a range of expected default rates, loss severities, and prepayment speeds in conjunction with the underlying credit enhancement for each security. Based on specific assumptions about collateral and vintage, a range of possible cash flows was identified to determine whether OTTI existed during the nine months ended ~~September 30, 2017. The Company believes that~~ no ~~OTTI of the securities available for sale portfolio existed for the three and nine months ended September 30, 2017.~~

~~Investment Securities~~ Held to Maturity Debt Securities

The following tables present the amortized cost, gross unrealized gains, gross unrealized losses, allowance for credit losses and the estimated fair value for ~~investment securities~~ held to maturity debt securities at ~~September 30, 2017~~March 31, 2020 and December 31, ~~2016~~2019 (in thousands):


	March 31, 2020
	Amortized cost		Gross unrealized gains	Gross unrealized losses	Allowance for credit losses	Fair value
Agency obligations	$	7,417	15	—	—	7,432
Mortgage-backed securities	104		4	—	—	108
State and municipal obligations	428,691		13,876	(121)	(80)	442,366
Corporate obligations	9,319		45	(39)	(7)	9,318
Total held to maturity debt securities	$	445,531	13,940	(160)	(87)	459,224

September 30, 2017

Amortized
cost

Gross
unrealized
gains

Gross
unrealized
losses

Fair
value
Agency obligations
$ 4,307
—
(55 ) 4,252
Mortgage-backed securities
475
17
—
492
State and municipal obligations
467,113
10,407
(1,761 ) 475,759
Corporate obligations
9,950
6
(34 ) 9,922

$ 481,845
10,430
(1,850 ) 490,425


	December 31, 2016							December 31, 2019
	Amortized cost		Gross unrealized gains	Gross unrealized losses		Fair value		Amortized cost		Gross unrealized gains	Gross unrealized losses	Allowance for credit losses	Fair value
Agency obligations	$	4,306	2	(83	)	4,225	Agency obligations	$	6,599	11	(9)	—	6,601
Mortgage-backed securities	893		31	—		924	Mortgage-backed securities	118		4	—	—	122
State and municipal obligations	473,653		6,635	(5,436	)	474,852	State and municipal obligations	437,074		14,394	(115)	—	451,353
Corporate obligations	9,331		7	(52	)	9,286	Corporate obligations	9,838		58	(6)	—	9,890
	$	488,183	6,675	(5,571	)	489,287
Total held to maturity debt securities							Total held to maturity debt securities	$	453,629	14,467	(130)	—	467,966

The Company generally purchases securities for long-term investment purposes, and differences between amortized cost and fair values may fluctuate during the investment period. There were no sales of securities from the held to maturity debt securities portfolio for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2020 and ~~2016.~~2019. For the three ~~and nine~~ months ended ~~September 30, 2017,~~March 31, 2020, proceeds from calls on securities in the held to maturity debt securities portfolio totaled ~~$8.1~~$13.3 million ~~and $28.7 million, respectively,~~ with gross gains ~~totaling $39,000~~of $11,000 and ~~$50,000, respectively and~~0 gross ~~losses of $3,000 in both the three and nine month periods.~~losses. For the three ~~and nine~~ months ended ~~September 30, 2016,~~March 31, 2019, proceeds from calls of securities in the held to maturity debt securities portfolio totaled ~~$20.3~~$9.3 million ~~and $35.2 million, respectively,~~ with 0 gross gains ~~totaling $2,000 and $4,000, respectively~~ and no gross ~~losses recognized in either period.~~losses.

The gross amortized cost and gross fair value of investment securities in the held to maturity debt securities portfolio at ~~September 30, 2017~~March 31, 2020 by contractual maturity are shown below (in thousands). Expected maturities may differ from contractual maturities due to prepayment or early call privileges of the issuer.


	September 30, 2017				March 31, 2020
	Amortized cost		Fair value		Amortized cost		Fair value
Due in one year or less	$	14,723	14,755	Due in one year or less	$	9,461	9,477
Due after one year through five years	65,170		66,276	Due after one year through five years	115,043		117,204
Due after five years through ten years	254,191		259,908	Due after five years through ten years	240,321		248,418
Due after ten years	147,286		148,994	Due after ten years	80,602		84,104
	$	481,370	489,933		$	445,427	459,203

Mortgage-backed securities totaling ~~$475,000~~$104,000 at amortized cost and ~~$492,000~~$108,000 at fair value are excluded from the table above as their expected lives are ~~likely~~anticipated to be shorter than the contractual maturity date due to principal prepayments. Additionally, allowance for credit losses totaling $87,000 is excluded from the table above.

The following table illustrates the impact of the January 1, 2020 adoption of CECL on held to maturity debt securities (in thousands):


	January 1, 2020
	As reported under CECL		Prior to CECL	Impact of CECL adoption
Held to Maturity Debt Securities

Allowance for credit losses on corporate securities	$	6	—	6
Allowance for credit losses on municipal securities	64		—	64
Allowance for credit losses on held to maturity securities	$	70	—	70

For the three months ended March 31, 2020, the Company recorded a $17,000 provision for credit losses on held to maturity debt securities.

The following tables present the fair value and gross unrealized losses for ~~investment securities~~ held to maturity ~~with temporary impairment at~~ ~~September 30, 2017~~ ~~and~~ ~~December 31, 2016~~ ~~(in thousands):~~

September 30, 2017 Unrealized Losses
Less than 12 months 12 months or longer Total

Fair
value

Gross
unrealized
losses

Fair
value

Gross
unrealized
losses

Fair
value

Gross
unrealized
losses
Agency obligations
$ 3,853
(55 ) —
—
3,853
(55 )
State and municipal obligations
62,881
(938 ) 22,251
(823 ) 85,132
(1,761 )
Corporate obligations
6,646
(34 ) —
—
6,646
(34 )

$ 73,380
(1,027 ) 22,251
(823 ) 95,631
(1,850 )

December 31, 2016 Unrealized Losses
Less than 12 months 12 months or longer Total
Fair
value Gross
unrealized
losses Fair
value Gross
unrealized
losses Fair
value Gross
unrealized
losses
Agency obligations $ 3,525
(83 ) —
—
3,525
(83 )
State and municipal obligations 172,152
(5,132 ) 6,617
(304 ) 178,769
(5,436 )
Corporate obligations 4,697
(52 ) —
—
4,697
(52 )
$ 180,374
(5,267 ) 6,617
(304 ) 186,991
(5,571 )

~~Based upon the review of the held to maturity securities portfolio, the Company believes that as of~~ ~~September 30, 2017~~, securities with unrealized loss positions shown above do not represent impairments that are other-than-temporary. The review of the portfolio for OTTI considers the percentage and length of time the fair value of an investment is below book value, as well as general market conditions, changes in interest rates, credit risks, whether the Company has the intent to sell the securities and whether it is more likely than not that the Company would be required to sell the securities before their prices recover.

~~The number of held to maturity~~debt securities in an unrealized loss position at ~~September 30, 2017~~March 31, 2020 and December 31, 2019 (in thousands):


	March 31, 2020
	Less than 12 months				12 months or longer			Total
	Fair value		Gross unrealized losses	Fair value	Gross unrealized losses	Fair value	Gross unrealized losses

State and municipal obligations	$	10,143	(103)	407	(18)	10,550	(121)
Corporate obligations	3,516		(39)	—	—	3,516	(39)
	$	13,659	(142)	407	(18)	14,066	(160)


	December 31, 2019
	Less than 12 months				12 months or longer			Total
	Fair value		Gross unrealized losses	Fair value	Gross unrealized losses	Fair value	Gross unrealized losses
Agency obligations	$	3,601	(9)	—	—	3,601	(9)
State and municipal obligations	7,675		(42)	2,093	(73)	9,768	(115)
Corporate obligations	3,254		(6)	—	—	3,254	(6)
	$	14,530	(57)	2,093	(73)	16,623	(130)

The number of held to maturity debt securities in an unrealized loss position at March 31, 2020 totaled ~~171,~~27, compared with ~~332~~35 at December 31, ~~2016.~~2019. The decrease in the number of securities in an unrealized loss position at ~~September 30, 2017,~~March 31, 2020 was due to ~~a slight decrease in~~lower current market interest rates ~~from~~compared to rates at December 31, ~~2016~~2019.

Credit Quality Indicators. The following table provides the amortized cost of held to maturity debt securities by credit rating as of March 31, 2020 (in thousands):


	March 31, 2020
Total Portfolio	AAA		AA	A	BBB	Not Rated	Total
Agency obligations	$	7,417	—	—	—	—	7,417
Mortgage-backed securities	104		—	—	—	—	104
State and municipal obligations	46,868		326,291	54,414	1,118	—	428,691
Corporate obligations	—		3,121	5,423	750	25	9,319
	$	54,389	329,412	59,837	1,868	25	445,531

	December 31, 2019
Total Portfolio	AAA		AA	A	BBB	Not Rated	Total
Agency obligations	$	6,599	—	—	—	—	6,599
Mortgage-backed securities	118		—	—	—	—	118
State and municipal obligations	49,316		330,322	56,317	1,119	—	437,074
Corporate obligations	—		3,128	6,335	350	25	9,838
	$	56,033	333,450	62,652	1,469	25	453,629

Credit quality indicators are metrics that provide information regarding the relative credit risk of debt securities. At March 31, 2020, the held to maturity debt securities portfolio was comprised of 12% rated triple-A, 74% rated double-A, 13% rated single-A, and less than 1% either below a ~~tightening~~single-A rating or not rated by Moody’s Investors Service or Standard and Poor’s. Securities not explicitly rated were grouped where possible under the credit rating of ~~spreads in~~ the ~~municipal bond sector. All temporarily impaired investment~~issuer of the security.

At March 31, 2020, the allowance for credit losses on held to maturity debt securities ~~were investment grade at~~ ~~September 30, 2017~~.

was $87,000.

Note 3.4. Loans Receivable and Allowance for ~~Loan~~Credit Losses on Loans

On January 1, 2020, the Company adopted CECL, which replaces the incurred loss methodology with an expected loss methodology. The adoption of the new standard resulted in the Company recording a $7.9 million increase to the allowance for credit losses on loans with a corresponding cumulative effect adjustment to decrease retained earnings by $5.9 million, net of income taxes. (See Adoption of CECL table below for additional detail.)

Loans receivable at ~~September 30, 2017~~March 31, 2020 and December 31, ~~2016~~2019 are summarized as follows (in thousands):


	September 30, 2017			December 31, 2016			March 31, 2020		December 31, 2019
Mortgage loans:						Mortgage loans:
Residential	$	1,157,311		1,211,672		Residential	$	1,106,670	1,077,689
Commercial	2,022,576			1,978,569		Commercial	2,555,091		2,578,393
Multi-family	1,334,984			1,402,054		Multi-family	1,222,313		1,225,551
Construction	324,692			264,814		Construction	408,944		429,812
Total mortgage loans	4,839,563			4,857,109		Total mortgage loans	5,293,018		5,311,445
Commercial loans	1,708,842			1,630,444
Commercial loans:						Commercial loans:
Commercial owner occupied						Commercial owner occupied	935,669		853,269
Commercial non-owner occupied						Commercial non-owner occupied	719,780		732,277
Other commercial loans						Other commercial loans	48,220		49,213
Total commercial loans						Total commercial loans	1,703,669		1,634,759
Consumer loans	481,262			516,755		Consumer loans	379,597		391,360
Total gross loans	7,029,667			7,004,308		Total gross loans	7,376,284		7,337,564
Purchased credit-impaired ("PCI") loans	991			1,272
Purchased credit-deteriorated ("PCD") loans						Purchased credit-deteriorated ("PCD") loans	737		746
Premiums on purchased loans	4,229			4,968		Premiums on purchased loans	2,300		2,474
Unearned discounts	(36		)	(39	)	Unearned discounts	(26)		(26)
Net deferred fees	(6,799		)	(7,023	)	Net deferred fees	(7,251)		(7,873)
Total loans	$	7,028,052		7,003,486		Total loans	$	7,372,044	7,332,885

The following tables summarize the aging of loans receivable by portfolio segment and class of loans, excluding ~~PCI~~PCD loans (in thousands):


	March 31, 2020
	30-59 Days		60-89 Days	Non-accrual	Recorded Investment > 90 days accruing	Total Past Due	Current	Total Loans Receivable	Non-accrual loans with no related allowance
Mortgage loans:
Residential	$	6,240	4,075	6,145	—	16,460	1,090,210	1,106,670	1,522
Commercial	424		—	5,264	—	5,688	2,549,403	2,555,091	—
Multi-family	—		—	—	—	—	1,222,313	1,222,313	—
Construction	—		—	—	—	—	408,944	408,944	—
Total mortgage loans	6,664		4,075	11,409	—	22,148	5,270,870	5,293,018	1,522
Commercial loans	13,793		1	23,086	—	36,880	1,666,789	1,703,669	1,344
Consumer loans	1,707		661	844	—	3,212	376,385	379,597	664
Total gross loans	$	22,164	4,737	35,339	—	62,240	7,314,044	7,376,284	3,530


	September 30, 2017									December 31, 2019
	30-59 Days		60-89 Days	Non-accrual	Recorded Investment > 90 days accruing	Total Past Due	Current	Total Loans Receivable		30-59 Days		60-89 Days	Non-accrual	Recorded Investment > 90 days accruing	Total Past Due	Current	Total Loans Receivable	Non-accrual loans with no related allowance
Mortgage loans:									Mortgage loans:
Residential	$	5,973	3,525	8,820	—	18,318	1,138,993	1,157,311	Residential	$	5,905	2,579	8,543	—	17,027	1,060,662	1,077,689	2,989
Commercial	608		292	8,070	—	8,970	2,013,606	2,022,576	Commercial	—		—	5,270	—	5,270	2,573,123	2,578,393	—
Multi-family	—		—	—	—	—	1,334,984	1,334,984	Multi-family	—		—	—	—	—	1,225,551	1,225,551	—
Construction	—		—	—	—	—	324,692	324,692	Construction	—		—	—	—	—	429,812	429,812	—
Total mortgage loans	6,581		3,817	16,890	—	27,288	4,812,275	4,839,563	Total mortgage loans	5,905		2,579	13,813	—	22,297	5,289,148	5,311,445	2,989
Commercial loans	1,870		244	17,523	—	19,637	1,689,205	1,708,842	Commercial loans	2,383		95	25,160	—	27,638	1,607,121	1,634,759	3,238
Consumer loans	2,307		1,080	2,035	—	5,422	475,840	481,262	Consumer loans	1,276		337	1,221	—	2,834	388,526	391,360	569
Total gross loans	$	10,758	5,141	36,448	—	52,347	6,977,320	7,029,667	Total gross loans	$	9,564	3,011	40,194	—	52,769	7,284,795	7,337,564	6,796

December 31, 2016

30-59
Days

60-89
Days
Non-accrual Recorded
Investment
> 90 days
accruing Total Past
Due Current
Total Loans
Receivable
Mortgage loans:
Residential $ 5,891
6,563
12,021
—
24,475
1,187,197
1,211,672
Commercial —
80
7,493
—
7,573
1,970,996
1,978,569
Multi-family —
—
553
—
553
1,401,501
1,402,054
Construction —
—
2,517
—
2,517
262,297
264,814
Total mortgage loans 5,891
6,643
22,584
—
35,118
4,821,991
4,857,109
Commercial loans 1,656
357
16,787
—
18,800
1,611,644
1,630,444
Consumer loans 2,561
1,199
3,030
—
6,790
509,965
516,755
Total gross loans $ 10,108
8,199
42,401
—
60,708
6,943,600
7,004,308

Included in loans receivable are loans for which the accrual of interest income has been discontinued due to deterioration in the financial condition of the borrowers. The principal amounts of these non-accrual loans were ~~$36.4~~$35.3 million and ~~$42.4~~$40.2 million at ~~September 30, 2017~~March 31, 2020 and December 31, ~~2016,~~2019, respectively. Included in non-accrual loans were ~~$9.1~~$16.0 million and ~~$7.3~~$13.1 million of loans which were less than 90 days past due at ~~September 30, 2017~~March 31, 2020 and December 31, ~~2016,~~2019, respectively. There were no0 loans 90 days or greater past due and still accruing interest at ~~September 30, 2017~~March 31, 2020 or December 31, ~~2016.~~2019.

Management has elected not to measure an allowance for credit losses for accrued interest receivables related to its loan portfolio as its policy is to write-off uncollectible accrued interest receivable balances in a timely manner. Accrued interest is written off by reversing interest income during the quarter the loan is moved from an accrual to a non-accrual status.

The Company defines an impaired loan as a non-homogeneous loan greater than $1.0 million, for which, ~~it is probable,~~ based on current information, the Bank does not expect to collect all amounts due under the contractual terms of the loan ~~agreement will not be collected.~~agreement. Impaired loans also include all loans modified as troubled debt restructurings (“TDRs”). ~~A loan is deemed to be~~An allowance for impaired loans that have been modified in a TDR ~~when a loan modification resulting in a concession~~ is made in an effort to mitigate potential loss arising from a borrower’s financial difficulty. Smaller balance homogeneous loans, including residential mortgages and other consumer loans, are evaluated collectively for impairment and are excluded from the definition of impaired loans, unless modified as TDRs. The Company separately calculates the reserve for loan lossesmeasured based on ~~impaired loans. The Company may recognize impairment of a loan based upon: (1)~~ the present value of expected future cash flows discounted at the loan’s effective interest ~~rate; (2) if a loan is collateral dependent,~~rate, the ~~fair value of collateral;~~loan’s observable market price, or ~~(3)~~ the estimated fair value of the ~~loan. Additionally,~~collateral, less any selling costs, if ~~impaired loans have risk characteristics in common, those loans may be aggregated and historical statistics may be used as a means of measuring those impaired loans.~~

the loan is collateral-dependent. The Company uses third-party appraisals to determine the fair value of the underlying collateral in its analysis of ~~collateral dependent impaired~~collateral-dependent loans. A third-party appraisal is generally ordered as soon as a loan is designated as a ~~collateral dependent impaired~~collateral-dependent loan and is updated annually, or more frequently if required.

A financial asset is considered collateral-dependent when the debtor is experiencing financial difficulty and repayment is expected to be provided substantially through the sale or operation of the collateral. For all classes of loans deemed collateral-dependent, the Company estimates expected credit losses based on the collateral’s fair value less cost to sell. A specific allocation of the allowance for ~~loan~~credit losses is established for each ~~collateral dependent impaired~~collateral-dependent loan with a carrying balance greater than the collateral’s fair value, less estimated costs to sell. ~~Charge-offs are generally taken for~~In most cases, the ~~amount of~~Company records a partial charge-off to reduce the ~~specific allocation when operations associated with~~loan’s carrying value to the ~~respective property cease and it is determined that collection of amounts due will be derived primarily from the disposition of the collateral.~~collateral’s fair value less cost to sell. At each fiscal quarter end, if a loan is designated as ~~a collateral dependent impaired loan~~collateral-dependent and the third-party appraisal has not yet been received, an evaluation of all available collateral is made using the best information available at the time, including rent rolls, borrower financial statements and tax returns, prior appraisals, management’s knowledge of the market and collateral, and internally prepared collateral valuations based upon market assumptions regarding vacancy and capitalization rates, each as and where applicable. Once the appraisal is received and reviewed, the specific reserves are adjusted to reflect the appraised value. The Company believes there have been no significant time lapses ~~in the recognition of changes in collateral values~~ as a result of this process.

At ~~September 30, 2017,~~March 31, 2020, there were ~~145~~158 impaired loans totaling ~~$50.2~~$65.7 million. Included in this total were ~~126~~129 TDRs related to ~~122~~125 borrowers totaling ~~$31.7~~$39.1 million that were performing in accordance with their restructured terms and which continued to accrue interest at ~~September 30, 2017~~.March 31, 2020. At December 31, ~~2016,~~2019, there were ~~141~~158 impaired loans totaling ~~$52.0~~$70.6 million,. of which 147 loans totaling $48.3 million were TDRs. Included in this total were ~~114~~133 TDRs related to ~~110~~128 borrowers totaling ~~$29.9~~$42.7 million that were performing in accordance with their restructured terms and which continued to accrue interest at December 31, ~~2016.~~2019.

At March 31, 2020 and December 31, 2019, the Company had $15.9 million and $20.4 million of collateral-dependent impaired loans, respectively. The collateral-dependent impaired loans at March 31, 2020 consisted of $12.8 million in commercial loans, $3.0 million in residential real estate loans, and $174,000 in consumer loans. The collateral for these impaired loans was primarily real estate.

The activity in the allowance for credit losses by portfolio segment for the three months ended March 31, 2020 and 2019 was as follows (in thousands):


Three months ended March 31,	Mortgage loans		Commercial loans	Consumer loans	Total Portfolio Segments
2020
Balance at beginning of period	$	25,511	28,263	1,751	55,525
Retained earnings (due to initial CECL adoption)	14,188		(9,974)	3,706	7,920
Provision charged (credited) to operations	7,710		7,619	(629)	14,700
Recoveries of loans previously charged-off	93		313	123	529
Loans charged-off	(2)		(3,380)	(149)	(3,531)
Balance at end of period	$	47,500	22,841	4,802	75,143

2019
Balance at beginning of period	$	27,678	25,693	2,191	55,562
Provision (credited) charged to operations	(982)		1,282	(100)	200
Recoveries of loans previously charged-off	230		52	130	412
Loans charged-off	—		(676)	(145)	(821)
Balance at end of period	$	26,926	26,351	2,076	55,353

As a result of the January 1, 2020 adoption of CECL, the Company recorded a $7.9 million increase to the allowance for credit losses on loans. For the three months ended March 31, 2020, the Company recorded a $14.7 million provision for credit losses on loans. The increase in provision for credit losses for the quarter resulted primarily from the impact of reserve build related to the COVID-19 pandemic, with the largest increase in the commercial loans and commercial real estate portfolios.

The following table ~~summarizes~~illustrates the impact of the January 1, 2020 adoption of CECL on the loan portfolio:


	January 1, 2020
	As reported under CECL		Prior to CECL	Impact of CECL adoption
Loans
Residential	$	8,950	3,411	5,539
Commercial	17,118		12,885	4,233
Multi-family	9,519		3,370	6,149
Construction	4,152		5,885	(1,733)
Total mortgage loans	39,739		25,551	14,188
Commercial loans	18,254		28,228	(9,974)
Consumer loans	5,452		1,746	3,706

Allowance for credit losses on loans	$	63,445	55,525	7,920

The following tables summarize loans receivable by portfolio segment and impairment method ~~excluding PCI loans~~at March 31, 2020 and December 31, 2019 (in thousands):


	March 31, 2020
	Mortgage loans		Commercial loans	Consumer loans	Total Portfolio Segments
Individually evaluated for impairment	$	39,592	24,026	2,114	65,732
Collectively evaluated for impairment	5,253,426		1,679,643	377,483	7,310,552

Total gross loans	$	5,293,018	1,703,669	379,597	7,376,284

September 30, 2017

Mortgage
loans

Commercial
loans

Consumer
loans

Total Portfolio
Segments
Individually evaluated for impairment
$ 28,578
19,393
2,210
50,181
Collectively evaluated for impairment
4,810,985
1,689,449
479,052
6,979,486
Total gross loans
$ 4,839,563
1,708,842
481,262
7,029,667


	December 31, 2016						December 31, 2019
	Mortgage loans		Commercial loans	Consumer loans	Total Portfolio Segments		Mortgage loans		Commercial loans	Consumer loans	Total Portfolio Segments
Individually evaluated for impairment	$	29,551	20,255	2,213	52,019	Individually evaluated for impairment	$	39,910	28,357	2,374	70,641
Collectively evaluated for impairment	4,827,558		1,610,189	514,542	6,952,289	Collectively evaluated for impairment	5,271,535		1,606,402	388,986	7,266,923
Total gross loans	$	4,857,109	1,630,444	516,755	7,004,308	Total gross loans	$	5,311,445	1,634,759	391,360	7,337,564

The allowance for ~~loan~~credit losses is summarized by portfolio segment and impairment classification as follows (in thousands):


	March 31, 2020
	Mortgage loans		Commercial loans	Consumer loans	Total
Individually evaluated for impairment	$	1,590	4,073	36	5,699
Collectively evaluated for impairment	45,910		18,768	4,766	69,444
Total gross loans	$	47,500	22,841	4,802	75,143

September 30, 2017

Mortgage
loans

Commercial
loans

Consumer
loans

Total
Individually evaluated for impairment
$ 1,773
1,028
71
2,872
Collectively evaluated for impairment
24,724
30,423
2,257
57,404
Total gross loans
$ 26,497
31,451
2,328
60,276


	December 31, 2016						December 31, 2019
	Mortgage loans		Commercial loans	Consumer loans	Total		Mortgage loans		Commercial loans	Consumer loans	Total
Individually evaluated for impairment	$	1,986	268	80	2,334	Individually evaluated for impairment	$	1,580	3,462	25	5,067
Collectively evaluated for impairment	27,640		28,875	3,034	59,549	Collectively evaluated for impairment	23,931		24,801	1,726	50,458
Total gross loans	$	29,626	29,143	3,114	61,883	Total gross loans	$	25,511	28,263	1,751	55,525

Loan modifications to borrowers experiencing financial difficulties that are considered TDRs primarily 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 without a corresponding adjustment to the risk premium reflected in the interest rate, or a combination of these two methods. These modifications generally do not result in the forgiveness of principal or accrued interest. In addition, ~~the Company~~management attempts to obtain additional collateral or guarantor support when modifying such loans. If the borrower has demonstrated performance under the previous terms and our underwriting process shows the borrower has the capacity to continue to perform under the restructured terms, the loan will continue to accrue interest. Non-accruing restructured loans may be returned to accrual status when there has been a sustained period of repayment performance (generally six consecutive months of payments) and both principal and interest are deemed collectible.

The following tables present the number of loans modified as TDRs during the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2020 and ~~2016~~,2019, along with their balances immediately prior to the modification date and post-modification as of ~~September 30, 2017~~March 31, 2020 and ~~2016. There were no loans modified as TDRs during the three and nine months ended September 30, 2016.~~2019 (dollars in thousands):

For the three months ended

September 30, 2017
September 30, 2016
Troubled Debt Restructurings
Number of
Loans

Pre-Modification
Outstanding
Recorded
Investment

Post-Modification
Outstanding
Recorded Investment

Number of
Loans

Pre-Modification
Outstanding
Recorded Investment

Post-Modification
Outstanding
Recorded Investment

($ in thousands)
Mortgage loans:

Residential
2
$ 632
$ 470
—
$ —
$ —
Total mortgage loans
2
632
470
—
—
—
Total restructured loans
2
$ 632
$ 470
—
$ —
$ —


	For the nine months ended											For the three months ended
	September 30, 2017					September 30, 2016						March 31, 2020								March 31, 2019
Troubled Debt Restructurings	Number of Loans	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Number of Loans	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Troubled Debt Restructurings	Number of Loans	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Number of Loans	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
	($ in thousands)											($ in thousands)
Mortgage loans:											Mortgage loans:
Residential	7	$	3,436	$	3,202	—	$	—	$	—

Commercial											Commercial	—	$	—	—		1	$	14,010	14,010

Total mortgage loans	7	3,436		3,202		—	—		—		Total mortgage loans	—	—		—		1	14,010		14,010
Commercial loans	1	1,300		1,210		—	—		—		Commercial loans	2	746		731		4	2,013		2,013
Consumer loans	1	70		68		—	—		—

Total restructured loans	9	$	4,806	$	4,480	—	$	—	$	—	Total restructured loans	2	$	746	$	731	5	$	16,023	$	16,023

All TDRs are impaired loans, which are individually evaluated for ~~impairment, as previously discussed.~~impairment. During the three ~~and nine~~ months ended ~~September 30, 2017, $3.2 million and $4.4~~March 31, 2020 $2.7 million of charge-offs were recorded on ~~collateral dependent~~collateral-dependent impaired loans. ~~There were no charge-offs recorded on collateral dependent impaired loans for the same periods last year.~~ For the three ~~and nine~~ months ended ~~September 30, 2017,~~ March 31, 2020,

the allowance for loan losses associated with the TDRs presented in the preceding tables totaled $0$448,000 and ~~$120,000, respectively, and were~~was included in the allowance for loan losses for loans individually evaluated for impairment.

~~For the three and nine months ended September 30, 2017, the~~The TDRs presented in the preceding tables had a weighted average modified interest rate of approximately ~~4.36% and 4.02%, respectively,~~6.99% compared to a weighted average rate of ~~4.33% and 3.93%~~7.19% prior to modification, ~~respectively.~~for the three months ended March 31, 2020.

The following table presents loans modified as TDRs within the previous 12 months from March 31, 2020 and 2019, and for which there was a payment default (90 days or more past due) at the quarter ended March 31, 2020 and 2019.


	March 31, 2020				March 31, 2019
Troubled Debt Restructurings Subsequently Defaulted	Number of Loans	Outstanding Recorded Investment		Number of Loans	Outstanding Recorded Investment
	($ in thousands)




Commercial loans	—	$	—	3	$	540

Total restructured loans	—	$	—	3	$	540

There were no0 loans which had a payment ~~defaults~~default (90 days or more past due) for loans modified as TDRs within the 12 month ~~periods~~period ending ~~September 30, 2017and 2016.~~March 31, 2020. There were 3 payment defaults (90 days or more past due) to one borrower for loans modified as TDRs within the 12 month period endingMarch 31, 2019. For TDR’s that subsequently default, ~~are considered collateral dependent impaired~~the Company determines the amount of the allowance on that loan in accordance with the accounting policy for the allowance for credit losses on loans ~~and are~~individually evaluated for ~~impairment based on~~impairment.

As allowed by CECL, the ~~estimated fair value~~Company elected to maintain pools of loans accounted for under ASC 310-30. At December 31, 2019, purchased credit impaired (“PCI”) loans totaled $746,000. In accordance with the CECL standard, management did not reassess whether modifications of individually acquired financial assets accounted for in pools were TDRs as of the ~~underlying collateral less expected selling costs.~~

~~PCI~~date of adoption. All loans ~~are loans acquired at a discount primarily due to deteriorated credit quality. As part of the May 30, 2014 acquisition of Team Capital, $5.2 million of the loans acquired were determined~~considered to be PCI ~~loans. At the date of acquisition, PCI~~prior to January 1, 2020 were converted to purchased credit deteriorated ("PCD") loans ~~were accounted for at fair value, based upon the then present value of expected future cash flows, with no related allowance for loan losses. PCI~~on that date. PCD loans totaled ~~$1.0 million~~$737,000 at ~~September 30, 2017 and $1.3 million at December~~March 31, ~~2016.~~

~~The following table summarizes~~2020. Subsequent to January 1, 2020, should the ~~changes~~Company acquire loans that experience more-than-insignificant deterioration in ~~the accretable yield for PCI~~credit quality since origination, these loans ~~during the three and nine months ended September 30, 2017 and 2016 (in thousands):~~will be classified as PCD.

Three months ended September 30, Nine months ended September 30,
2017 2016 2017 2016
Beginning balance $ 158
328
200
676
Accretion (154 ) (225 ) (299 ) (1,065 )
Reclassification from non-accretable discount 99
209
202
701
Ending balance $ 103
312
103
312

~~The activity in the allowance for loan losses by portfolio segment for the three and nine months ended September 30, 2017 and~~ ~~2016~~ ~~was as follows (in thousands):~~

Three months ended September 30,
Mortgage
loans

Commercial
loans

Consumer
loans

Total Portfolio
Segments

Unallocated
Total
2017

Balance at beginning of period
$ 28,826
31,085
2,951
62,862
—
62,862
Provision charged (credited) to operations
(2,301 ) 3,446
(645 ) 500
—
500
Recoveries of loans previously charged-off
4
140
291
435
—
435
Loans charged-off
(32 ) (3,220 ) (269 ) (3,521 ) —
(3,521 )
Balance at end of period
$ 26,497
31,451
2,328
60,276
—
60,276

2016

Balance at beginning of period
$ 31,634
26,299
3,000
60,933
—
60,933
Provision charged (credited) to operations
(1,599 ) 2,378
221
1,000
—
1,000
Recoveries of loans previously charged-off
2
68
160
230
—
230
Loans charged-off
(383 ) (506 ) (186 ) (1,075 ) —
(1,075 )
Balance at end of period
$ 29,654
28,239
3,195
61,088
—
61,088

Nine months ended September 30, Mortgage
loans Commercial
loans Consumer
loans Total Portfolio
Segments Unallocated Total
2017
Balance at beginning of period $ 29,626
29,143
3,114
61,883
—
61,883
Provision charged (credited) to operations (2,724 ) 6,840
(416 ) 3,700
—
3,700
Recoveries of loans previously charged-off 65
671
692
1,428
—
1,428
Loans charged-off (470 ) (5,203 ) (1,062 ) (6,735 ) —
(6,735 )
Balance at end of period $ 26,497
31,451
2,328
60,276
—
60,276

2016
Balance at beginning of period $ 32,094
25,829
3,501
61,424
—
61,424
Provision charged (credited) to operations (2,294 ) 6,647
(153 ) 4,200
—
4,200
Recoveries of loans previously charged-off 575
351
697
1,623
—
1,623
Loans charged-off (721 ) (4,588 ) (850 ) (6,159 ) —
(6,159 )
Balance at end of period $ 29,654
28,239
3,195
61,088
—
61,088

The following table presents loans individually evaluated for impairment by class and loan category, excluding ~~PCI~~PCD loans (in thousands):


	March 31, 2020										December 31, 2019
	Unpaid Principal Balance		Recorded Investment	Related Allowance	Average Recorded Investment	Interest Income Recognized	Unpaid Principal Balance	Recorded Investment	Related Allowance	Average Recorded Investment	Interest Income Recognized
Loans with no related allowance
Mortgage loans:
Residential	$	12,644	10,187	—	10,257	118	13,478	10,739	—	10,910	533
Commercial	14,295		14,180	—	14,183	128	—	—	—	—	—
Multi-family	—		—	—	—	—	—	—	—	—	—
Construction	—		—	—	—	—	—	—	—	—	—
Total	26,939		24,367	—	24,440	246	13,478	10,739	—	10,910	533
Commercial loans	3,943		2,135	—	3,417	18	3,927	3,696	—	4,015	17
Consumer loans	1,661		1,128	—	1,139	17	2,086	1,517	—	1,491	86
Total impaired loans	$	32,543	27,630	—	28,996	281	19,491	15,952	—	16,416	636

Loans with an allowance recorded
Mortgage loans:
Residential	$	10,777	10,273	876	10,308	112	10,860	10,326	829	10,454	428
Commercial	4,828		4,828	694	4,832	14	18,845	18,845	751	18,862	569
Multi-family	182		124	20	124	—	—	—	—	—	—
Construction	—		—	—	—	—	—	—	—	—	—
Total	15,787		15,225	1,590	15,264	126	29,705	29,171	1,580	29,316	997
Commercial loans	24,763		21,891	4,073	24,152	104	27,762	24,661	3,462	27,527	444
Consumer loans	997		986	36	8,560	11	868	857	25	878	46
Total impaired loans	$	41,547	38,102	5,699	47,976	241	58,335	54,689	5,067	57,721	1,487

Total impaired loans
Mortgage loans:
Residential	$	23,421	20,460	876	20,565	230	24,338	21,065	829	21,364	961
Commercial	19,123		19,008	694	19,015	142	18,845	18,845	751	18,862	569
Multi-family	182		124	20	124	—	—	—	—	—	—

Total	42,726		39,592	1,590	39,704	372	43,183	39,910	1,580	40,226	1,530
Commercial loans	28,706		24,026	4,073	27,569	122	31,689	28,357	3,462	31,542	461
Consumer loans	2,658		2,114	36	9,699	28	2,954	2,374	25	2,369	132
Total impaired loans	$	74,090	65,732	5,699	76,972	522	77,826	70,641	5,067	74,137	2,123

September 30, 2017 December 31, 2016

Unpaid
Principal
Balance

Recorded
Investment

Related
Allowance

Average
Recorded
Investment

Interest
Income
Recognized

Unpaid
Principal
Balance

Recorded
Investment

Related
Allowance

Average
Recorded
Investment

Interest
Income
Recognized
Loans with no related allowance
Mortgage loans:
Residential $ 13,035
10,277
—
10,391
340
10,691
7,881
—
8,027
484
Commercial 4,600
4,472
—
4,496
—
1,556
1,556
—
1,586
40
Construction —
—
—
—
—
2,553
2,517
—
2,514
—
Total 17,635
14,749
—
14,887
340
14,800
11,954
—
12,127
524
Commercial loans 17,505
13,884
—
13,954
280
21,830
18,874
—
13,818
259
Consumer loans 1,606
1,067
—
1,186
51
1,493
981
—
1,026
59
Total impaired loans $ 36,746
29,700
—
30,027
671
38,123
31,809
—
26,971
842

Loans with an allowance recorded
Mortgage loans:
Residential $ 13,803
12,759
1,633
12,873
374
14,169
13,520
1,716
13,705
519
Commercial 1,071
1,070
140
1,083
40
4,138
4,077
270
4,111
55
Construction —
—
—
—
—
—
—
—
—
—
Total 14,874
13,829
1,773
13,956
414
18,307
17,597
1,986
17,816
574
Commercial loans 6,158
5,509
1,028
6,045
52
1,381
1,381
268
5,956
4
Consumer loans 1,154
1,143
71
1,170
47
1,242
1,232
80
1,259
66
Total impaired loans $ 22,186
20,481
2,872
21,171
513
20,930
20,210
2,334
25,031
644

Total impaired loans
Mortgage loans:
Residential $ 26,838
23,036
1,633
23,264
714
24,860
21,401
1,716
21,732
1,003
Commercial 5,671
5,542
140
5,579
40
5,694
5,633
270
5,697
95
Construction —
—
—
—
—
2,553
2,517
—
2,514
—
Total 32,509
28,578
1,773
28,843
754
33,107
29,551
1,986
29,943
1,098
Commercial loans 23,663
19,393
1,028
19,999
332
23,211
20,255
268
19,774
263
Consumer loans 2,760
2,210
71
2,356
98
2,735
2,213
80
2,285
125
Total impaired loans $ 58,932
50,181
2,872
51,198
1,184
59,053
52,019
2,334
52,002
1,486

Specific allocations of the allowance for ~~loan~~credit losses attributable to impaired loans totaled ~~$2.9~~$5.7 million at ~~September 30, 2017~~March 31, 2020 and ~~$2.3~~$5.1 million at December 31, ~~2016.~~2019. At ~~September 30, 2017~~March 31, 2020 and December 31, ~~2016,~~2019, impaired loans for which there was no related allowance for ~~loan~~credit losses totaled ~~$29.7~~$27.6 million and ~~$31.8~~$16.0 million, respectively. The average balance of impaired loans for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2020 and December 31, 2019 was ~~$51.2 million.~~$77.0 million and $74.1 million, respectively.

~~The Company~~Management utilizes an internal nine-point risk rating system to summarize its loan portfolio into categories with similar risk characteristics. Loans deemed to be “acceptable quality” are rated 1 through 4, with a rating of 1 established for loans with

minimal risk. Loans that are deemed to be of “questionable quality” are rated 5 (watch) or 6 (special mention). Loans with adverse classifications (substandard, doubtful or loss) are rated 7, 8 or 9, respectively. Commercial mortgage, commercial, multi-family and construction loans are rated individually, and each lending officer is responsible for risk rating loans in their portfolio. These

risk ratings are then reviewed by the department manager and/or the Chief Lending Officer and by the Credit Department. The risk ratings are also confirmed through periodic loan review examinations which are currently performed by an independent third-party. Reports by the independent third-party are presented directly to the Audit Committee of the Board of Directors.

~~Loans receivable~~In response to the COVID-19 pandemic and its adverse economic impact on both our commercial and retail borrowers, we implemented a short-term modification program to defer principal or principal and interest payments for up to 90 days to borrowers directly impacted by the pandemic and who were not more than 30 days past due as of December 31, 2019 all in accordance with the Coronavirus Aid, Relief, and Economic Security ("CARES") Act.As of April 28, 2020, deferred payment relief had been provided to 638 borrowers representing total principal loan balances of $889.0 million.

In addition, the Company participated in the Paycheck Protection Program (“PPP”) through the United States Department of the Treasury and Small Business Administration.As of April 28, 2020 the Company secured 820 PPP loans for its customers totaling$377.5 million.

The following table summarizes the Company's gross loans held for investment by year of origination and internally assigned credit ~~quality risk rating indicator, excluding PCI loans, are as follows (in thousands):~~grades:


	Total Portfolio as of March 31, 2020
	Residential		Commercial mortgage	Multi-family	Construction	Total mortgages	Commercial	Consumer	Total loans
Special mention	$	4,075	19,848	—	—	23,923	114,858	661	139,442
Substandard	9,050		12,722	124	6,181	28,077	51,689	1,032	80,798
Doubtful	—		—	—	—	—	732	—	732
Loss	—		—	—	—	—	—	—	—
Total classified and criticized	13,125		32,570	124	6,181	52,000	167,279	1,693	220,972
Pass/Watch	1,093,545		2,522,521	1,222,189	402,763	5,241,018	1,536,390	377,904	7,155,312
Total gross loans	$	1,106,670	2,555,091	1,222,313	408,944	5,293,018	1,703,669	379,597	7,376,284

2020
Special mention	$	—	—	—	—	—	—	—	—
Substandard	—		—	—	—	—	—	—	—
Doubtful	—		—		—	—	—	—	—
Loss	—		—	—	—	—	—	—	—
Total classified and criticized	—		—	—	—	—	—	—	—
Pass/Watch	67,775		99,722	34,785	2,005	204,287	59,721	8,587	272,595
Total gross loans	$	67,775	99,722	34,785	2,005	204,287	59,721	8,587	272,595

2019
Special mention	$	—	—	—	—	—	1,231	—	1,231
Substandard	—		—	—	—	—	228	—	228
Doubtful	—		—		—	—	—	—	—
Loss	—		—	—	—	—	—	—	—
Total classified and criticized	—		—	—	—	—	1,459	—	1,459
Pass/Watch	155,718		505,804	141,727	143,297	946,546	231,465	55,899	1,233,910
Total gross loans	$	155,718	505,804	141,727	143,297	946,546	232,924	55,899	1,235,369

2018
Special mention	$	—	—	—	—	—	4,656	—	4,656
Substandard	—		—	—	—	—	757	—	757


Doubtful										Doubtful	—		—		—	—	—	—	—
Loss										Loss	—		—	—	—	—	—	—	—
Total classified and criticized										Total classified and criticized	—		—	—	—	—	5,413	—	5,413
Pass/Watch										Pass/Watch	96,683		357,530	115,282	188,523	758,018	195,828	48,203	1,002,049
Total gross loans										Total gross loans	$	96,683	357,530	115,282	188,523	758,018	201,241	48,203	1,007,462

2017										2017
Special mention										Special mention	$	—	220	—	—	220	3,204	—	3,424
Substandard										Substandard	568		995	—	—	1,563	8,264	—	9,827
Doubtful										Doubtful	—		—		—	—	—	—	—
Loss										Loss	—		—	—	—	—	—	—	—
Total classified and criticized										Total classified and criticized	568		1,215	—	—	1,783	11,468	—	13,251
Pass/Watch										Pass/Watch	92,471		399,107	136,620	68,938	697,136	207,256	38,057	942,449
Total gross loans										Total gross loans	$	93,039	400,322	136,620	68,938	698,919	218,724	38,057	955,700

2016 and prior										2016 and prior
Special mention										Special mention	$	4,075	19,628	—	—	23,703	105,767	661	130,131
Substandard										Substandard	8,482		11,727	124	6,181	26,514	42,440	1,032	69,986
Doubtful										Doubtful	—		—		—	—	732	—	732
Loss										Loss	—		—	—	—	—	—	—	—
Total classified and criticized										Total classified and criticized	12,557		31,355	124	6,181	50,217	148,939	1,693	200,849
Pass/Watch										Pass/Watch	680,898		1,160,358	793,775	—	2,635,031	842,120	227,158	3,704,309
Total gross loans										Total gross loans	$	693,455	1,191,713	793,899	6,181	2,685,248	991,059	228,851	3,905,158

	At September 30, 2017										Total Portfolio as of December 31, 2019
	Residential		Commercial mortgage	Multi- family	Construction	Total mortgages	Commercial	Consumer	Total loans		Residential		Commercial mortgage	Multi-family	Construction	Total mortgages	Commercial	Consumer	Total loans
Special mention	$	3,525	19,437	16	—	22,978	26,156	1,080	50,214	Special mention	$	2,402	46,758	—	—	49,160	79,248	286	128,694
Substandard	8,820		25,633	—	—	34,453	30,361	2,034	66,848	Substandard	10,204		13,458	—	6,181	29,843	57,015	1,668	88,526
Doubtful	—		—	—	—	—	771	—	771	Doubtful	—		—	—	—	—	836	—	836
Loss	—		—	—	—	—	—	—	—	Loss	—		—	—	—	—	—	—	—
Total classified and criticized	12,345		45,070	16	—	57,431	57,288	3,114	117,833	Total classified and criticized	12,606		60,216	—	6,181	79,003	137,099	1,954	218,056
Pass/Watch	1,144,966		1,977,506	1,334,968	324,692	4,782,132	1,651,554	478,148	6,911,834	Pass/Watch	1,065,083		2,518,177	1,225,551	423,631	5,232,442	1,497,660	389,406	7,119,508
Total	$	1,157,311	2,022,576	1,334,984	324,692	4,839,563	1,708,842	481,262	7,029,667


	At December 31, 2016
	Residential		Commercial mortgage	Multi- family	Construction	Total mortgages	Commercial	Consumer	Total loans
Special mention	$	6,563	25,329	563	—	32,455	14,840	1,242	48,537
Substandard	12,021		23,011	553	2,517	38,102	47,255	2,940	88,297
Doubtful	—		—	—	—	—	—	—	—
Loss	—		—	—	—	—	—	—	—
Total classified and criticized	18,584		48,340	1,116	2,517	70,557	62,095	4,182	136,834
Pass/Watch	1,193,088		1,930,229	1,400,938	262,297	4,786,552	1,568,349	512,573	6,867,474
Total	$	1,211,672	1,978,569	1,402,054	264,814	4,857,109	1,630,444	516,755	7,004,308
Total gross loans										Total gross loans	$	1,077,689	2,578,393	1,225,551	429,812	5,311,445	1,634,759	391,360	7,337,564

Note 4.5. Deposits

Deposits at ~~September 30, 2017~~March 31, 2020 and December 31, ~~2016~~2019 are summarized as follows (in thousands):


	March 31, 2020		December 31, 2019
Savings	$	990,844	983,714
Money market	1,782,445		1,738,202
NOW	2,164,779		2,092,413
Non-interest bearing	1,575,926		1,554,253
Certificates of deposit	696,766		734,027
Total deposits	$	7,210,760	7,102,609

September 30, 2017 December 31, 2016
Savings $ 1,083,215
1,099,020
Money market 1,539,064
1,582,750
NOW 1,972,220
1,871,298
Non-interest bearing 1,368,849
1,349,378
Certificates of deposit 627,868
651,183
Total deposits $ 6,591,216
6,553,629

Note 5.6. Components of Net Periodic Benefit Cost

The Bank has a noncontributory defined benefit pension plan covering its full-time employees who had attained age 21 with at least one year of service as of April 1, 2003. The pension plan was frozen on April 1, 2003. All participants in the Plan are 100% vested. The pension plan’s assets are invested in investment funds and group annuity contracts currently managed by the Principal Financial Group and Allmerica Financial.

In addition to pension benefits, certain health care and life insurance benefits are currently made available to certain of the Bank’s retired employees. The costs of such benefits are accrued based on actuarial assumptions from the date of hire to the date the employee is fully eligible to receive the benefits. Effective January 1, 2003, eligibility for retiree health care benefits was frozen as to new entrants, and benefits were eliminated for employees with less than ten years of service as of December 31, 2002. Effective January 1, 2007, eligibility for retiree life insurance benefits was frozen as to new entrants and retiree life insurance benefits were eliminated for employees with less than ten years of service as of December 31, 2006.

Net periodic ~~(increase)~~(decrease) increase in benefit cost for pension benefits and other post-retirement benefits for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2020 and ~~2016~~2019 includes the following components (in thousands):


	Three months ended September 30,								Nine months ended September 30,									Three months ended March 31,
	Pension benefits					Other post- retirement benefits			Pension benefits					Other post- retirement benefits				Pension benefits				Other post-retirement benefits
	2017			2016		2017		2016	2017			2016		2017		2016		2020		2019	2020	2019
Service cost	$	—		—		26		37	$	—		—		78		112	Service cost	$	—	—	20	20
Interest cost	306			312		218		285	920			936		654		854	Interest cost	250		300	178	210
Expected return on plan assets	(637		)	(612	)	—		—	(1,913		)	(1,836	)	—		—	Expected return on plan assets	(737)		(641)	—	—
Amortization of prior service cost	—			—		—		—	—			—		—		—	Amortization of prior service cost	—		—	—	—
Amortization of the net loss	230			236		(169	)	—	690			708		(507	)	—
Net periodic (increase) benefit cost	$	(101	)	(64	)	75		322	$	(303	)	(192	)	225		966
Amortization of the net loss (gain)																	Amortization of the net loss (gain)	174		254	(62)	(207)
Net periodic (decrease) increase in benefit cost																	Net periodic (decrease) increase in benefit cost	$	(313)	(87)	136	23

In its consolidated financial statements for the year ended December 31, ~~2016,~~2019, the Company previously disclosed that it does not expect to contribute to the pension plan in ~~2017.~~2020. As of ~~September 30, 2017, no~~March 31, 2020, 0 contributions have been made to the pension plan.

The net periodic ~~(increase)~~(decrease) increase in benefit cost for pension benefits and other post-retirement benefits for the three ~~and nine~~ months ended ~~September 30, 2017 were~~March 31, 2020 was calculated using the ~~actual~~ January 1, ~~2017~~2020 pension and other post-retirement benefits actuarial valuations.

Note 6.7. Impact of Recent Accounting Pronouncements

Accounting Pronouncements Adopted in 2020

In ~~August 2017,~~May 2019, the ~~Financial Accounting Standards Board (“FASB”)~~FASB issued ~~Accounting Standards Update ("ASU") 2017-12, Derivatives~~ASU No. 2019-05, “Financial Instruments - Credit Losses (Topic 326); Targeted Transition Relief.” This ASU allows entities to irrevocably elect, upon adoption of ASU 2016-13, the fair value option on financial instruments that (1) were previously recorded at amortized cost and ~~Hedging: Targeted Improvements~~(2) are within the scope of ASC 326-20 if the instruments are eligible for the fair value option under ASC 825-10. The fair value option election does not apply to ~~Accounting for Hedging Activities (ASU 2017-12)~~held-to-maturity debt securities. Entities are required to make this election on an instrument-by-instrument basis. ASU 2019-05 had the same effective date as ASU 2016-13 (i.e., the first quarter of 2020). The ~~purpose~~adoption of this ~~updated~~ guidance is to better align a company’s financial reporting for hedging activities with the economic objectives of those activities. ASU 2017-12 is effective for public business entities for fiscal years beginning after December 15, 2018, with early adoption, including adoption in an interim period, permitted. ASU 2017-12 requires a modified retrospective transition method in which the Company will recognize the cumulative effect of the change on the opening balance of each affected component of equity in the statement of financial position as of the date of adoption. The Company is currently assessing thehad no impact ~~that the guidance will have~~ on the Company’s consolidated financial statements.

In ~~May 2017,~~April 2019, the ~~FASB~~Financial Accounting Standards Board ("FASB") issued ASU ~~2017-09, “Compensation-Stock Compensation (Topic 718): Scope~~No. 2019-04, "Codification Improvements to Topic 326, Financial Instruments-Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments" which clarifies and improves areas of ~~Modification Accounting”. This update provides~~ guidance about changes to terms or conditions of a share-based payment award which would require modification accounting. In particular, an entity is required to account for the effects of a modification if the fair value, vesting condition or the equity/liability classification of the modified award is not the same immediately before and after a changerelated to the ~~terms~~recently issued standards on credit losses, hedging, recognition and ~~conditions~~measurement. The most significant provisions of ~~the award.~~this ASU ~~2017-09 is effective on a prospective basis for fiscal years beginning after December 15, 2017, with early adoption permitted. The Company does not expect ASU 2017-09~~relate to ~~have a significant impact on the Company's consolidated~~how companies will estimate expected credit losses under Topic 326 by incorporating (1) expected recoveries of financial ~~statements.~~

In March 2017, the FASB issued ASU 2017-08, “Receivables - Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities.” This ASU shortens the amortization period for premiums on callable debt securities by requiring that premiums be amortized to the first (or earliest) call date insteadassets, including recoveries of as an adjustment to the yield over the contractual life. This change more closely aligns the accounting with the economics of a callable debt security and the amortization period with expectations that already are included in market pricing on callable debt securities. This ASU does not change the accounting for discounts on callable debt securities, which will continueamounts expected to be ~~amortized to the maturity date. This guidance includes only instruments~~written off and those previously written off, and (2) clarifying that ~~are held at a premium and have explicit call features. It does not include instruments that contain prepayment features, such as mortgage backed securities; nor does it include call~~contractual extensions or renewal options that are ~~contingent upon future events or in~~not unconditionally cancellable by the lender are considered when determining the contractual term over which ~~the timing or amount~~expected credit losses are measured. ASU No. 2019-04 is effective for reporting periods beginning January 1, 2020. The adoption of this guidance had no impact related to be paid is not fixed. The effective date for this ASU is fiscal years beginning after December 15, 2018, including interim periods within the reporting period, with early adoption permitted. Transition is on a

modified retrospective basis with an adjustment to retained earnings as of the beginning of the period of adoption. If early adopted in an interim period, adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. The Company is currently assessing the impact that the guidance will haveTopic 815, Derivatives and Hedging, and Topic 825, Financial Instruments on the Company’s consolidated financial statements. At January 1, 2020, a $1.3 million allowance was recorded related to extensions on construction loans and is reflected below in the ASU 2016-13 calculation.

In ~~March 2017,~~August 2018, the FASB issued ASU ~~2017-07, "Compensation~~No. 2018-13, “Disclosure Framework - ~~Retirement Benefits (Topic 715): Improving~~Changes to the ~~Presentation of Net Periodic Pension Cost~~Disclosure Requirements for Fair Value Measurement.” This ASU eliminates, adds and ~~Net Periodic Post-retirement Benefit Cost", which requires that companies disaggregate~~modifies certain disclosure requirements for fair value measurements. Among the ~~service cost component from other components of net benefit cost. This update calls for companies that offer post-retirement benefits~~changes, entities will no longer be required to ~~present the service cost, which is~~disclose the amount ~~an employer has to set aside each quarter or fiscal year to cover~~of and reasons for transfers between Level 1 and Level 2 of the ~~benefits, in the same line item with other current employee compensation costs. Other components of net benefit cost~~fair value hierarchy, but will be ~~presented in~~required to disclose the ~~income statement separately from the service cost component~~range and ~~outside the subtotal of income from operations, if one is presented.~~weighted average used to develop significant unobservable inputs for Level 3 fair value measurements. ASU ~~2017-07~~No. 2018-13 is effective for ~~fiscal years beginning after December 15, 2017, including~~ interim ~~periods within those fiscal years. The Company does not expect ASU 2017-07 to have a significant impact on the Company's consolidated financial statements.~~

In January 2017, the FASB issued ASU 2017-04, “Simplifying the Test for Goodwill Impairment.” The main objective of this ASU is to simplify the accounting for goodwill impairment by requiring that impairment charges be based upon the first step in the current two-step impairment test under Accounting Standards Codification (ASC) 350. Currently, if the fair value of aand annual reporting unit is lower than its carrying amount (Step 1), an entity calculates any impairment charge by comparing the implied fair value of goodwill with its carrying amount (Step 2). The implied fair value of goodwill is calculated by deducting the fair value of all assets and liabilities of the reporting unit from the reporting unit’s fair value as determined in Step 1. To determine the implied fair value of goodwill, entities estimate the fair value of any unrecognized intangible assets and any corporate-level assets or liabilities that were included in the determination of the carrying amount and fair value of the reporting unit in Step 1. Under ASU 2017-04, if a reporting unit’s carrying amount exceeds its fair value, an entity will record an impairment charge based on that difference. The impairment charge will be limited to the amount of goodwill allocated to that reporting unit. This standard eliminates the requirement to calculate a goodwill impairment charge using Step 2. ASU 2017-04 does not change the guidance on completing Step 1 of the goodwill impairment test. Under ASU 2017-04, an entity will still be able to perform the current optional qualitative goodwill impairment assessment before determining whether to proceed to Step 1. The standard will be applied prospectively and is effective for annual and interim impairment tests performed in periods beginning after December 15, ~~2019. Early~~2019; early adoption is ~~permitted for annual and interim goodwill impairment testing dates after January 1, 2017. The Company does not expect ASU 2017-04~~permitted. Entities are also allowed to ~~have a significant impact on the Company's consolidated financial statements.~~

~~In August 2016, the FASB issued ASU 2016-15, "Statement of Cash Flows (Topic 230): Classification of Certain Cash~~ ~~Receipts and Cash Payments," a new standard which addresses diversity in practice related to eight specific cash flow issues:~~ debt prepayment or extinguishment costs, settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rateelect early adoption of the borrowing, contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims, proceeds from the settlement of corporate-owned life insurance policies (including bank-owned life insurance policies), distributions received from equity method investees, beneficial interests in securitization transactionseliminated or modified disclosure requirements and ~~separately identifiable cash flows and application~~delay adoption of the ~~predominance principle. ASU 2016-15 is~~new disclosure requirements until their effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Entities will apply the standard’s provisions using a retrospective transition method to each period presented. If it is impracticable to apply the amendments retrospectively for somedate. The adoption of ~~the issues, the amendments for those issues would be applied prospectively as of the earliest date practicable. The Company is currently assessing the~~this guidance had no impact ~~that the guidance will have~~ on the Company’s consolidated financial statements.

In June 2016, the FASB issued ASU 2016-13, “Measurement of Credit Losses on Financial Instruments.” The main objective of this ASU is to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments by a reporting entity at each reporting date. The amendments in this ASU require financial assets measured at amortized cost to be presented at the net amount expected to be collected. The allowance for credit losses would represent a valuation account that would be deducted from the amortized cost basis of the financial asset(s) to present the net carrying value at the amount expected to be collected on the financial asset. The income statement would reflect the measurement of credit losses for newly recognized financial assets, as well as the expected increases or decreases of expected credit losses that have taken place during the period. The measurement of expected credit losses would be based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. An entity will be required to use judgment in determining the relevant information and estimation methods that are appropriate in its circumstances. Furthermore, ASU 2016-13 will necessitate establishing an allowance for expected credit losses on held to maturity debt securities. This also applies to off-balance sheet credit exposures, which includes loan commitments, unused lines of credit and other similar instruments. The amendments in ASU 2016-13 are effective for fiscal years, including interim periods, beginning after December 15, 2019. Early adoption of this ASU iswas permitted for fiscal years beginning after December 15, 2018. The ~~Company is currently evaluating the potential impact~~adoption of ASU 2016-13 on the consolidated financial statements. In that regard, the Company has formed a cross-functional working group, under the direction of the Chief Credit Officer, Chief Financial Officer and Chief Risk Officer. The working group is comprised of individuals from various functional areas including credit, risk management, finance and information technology, among others. The Company is currently developing an implementation plan

to include assessment of processes, portfolio segmentation, model development, system requirements and the identification of data and resource needs, among other things. Also, the Company is currently evaluating third-party vendor solutions to assist us in the application of the ASU 2016-13. The adoption of the ASU 2016-13 may result in an increase in the allowance for loan losses as a result ofinvolves changing from an "incurred loss" model, which encompasses allowances for current known and inherent losses within the portfolio, to an "expected loss" model (“CECL”), which encompasses allowances for losses expected to be incurred over the life of the portfolio. ~~Furthermore, ASU 2016-13 will necessitate establishing an~~The Company adopted CECL on January 1, 2020 using the modified retrospective method for all financial assets measured at amortized cost and off-balance sheet ("OBS") credit exposures. Results for reporting periods beginning after January 1, 2020 are presented under ASC 326 while prior period amounts continue to be recorded with previously applicable GAAP. The Company recorded a $7.9 million increase to the allowance for credit losses and a $3.2 million liability for off-balance sheet credit exposures, which resulted in an $8.3 million cumulative effect adjustment decrease, net of tax to retained earnings. With regard to regulatory capital, the Company has elected to utilize the five-year CECL transition, which gives the option to delay for two years the estimated impact of CECL on regulatory capital relative to regulatory capital determined under the prior incurred loss methodology, followed by a three-year transition period to phase out the aggregate amount of the capital benefit provided during the initial two-year delay.

Accounting Pronouncements Not Yet Adopted

ASU 2020-04, "Reference Rate Reform (Topic 848)" ("ASU 2020-04") provides optional expedients and exceptions for applying GAAP to loan and lease agreements, derivative contracts, and other transactions affected by the anticipated transition away from LIBOR toward new interest rate benchmarks. For transactions that are modified because of reference rate reform and that meet certain scope guidance (i) modifications of loan agreements should be accounted for by prospectively adjusting the effective interest rate and the modification will be considered "minor" so that any existing unamortized origination fees/costs would carry forward and continue to be amortized and (ii) modifications of lease agreements should be accounted for as a continuation of the existing agreement with no reassessments of the lease classification and the discount rate or re-measurements of lease payments that otherwise would be required for modifications not accounted for as separate contracts. ASU 2020-04 also provides numerous optional expedients for derivative accounting. ASU 2020-04 is effective March 12, 2020 through December 31, 2022. An entity may elect to apply ASU 2020-04 for contract modifications as of January 1, 2020, or prospectively from a date within an interim period that includes or is subsequent to March 12, 2020, up to the date that the financial statements are available to be issued. Once elected for a Topic or an Industry Subtopic within the Codification, the amendments in this ASU must be applied prospectively for all eligible contract modifications for that Topic or Industry Subtopic. The Company anticipates this ASU will simplify any modifications we execute between the selected start date (yet to be determined) and December 31, 2022 that are directly related to LIBOR transition by allowing prospective recognition of the continuation of the contract, rather than the extinguishment of the old contract resulting in writing off unamortized fees/costs. The Company is evaluating the impacts of this ASU and have not yet determined whether LIBOR transition and this ASU will have material effects on the Company's business operations and consolidated financial statements.

Note 8. Allowance for Credit Losses on Off-Balance Sheet Credit Exposures

On January 1, 2020, the Company adopted CECL, which replaces the incurred loss methodology with an expected loss methodology and applies to off-balance sheet credit exposures, including loan commitments and lines of credit. The adoption of this new standard resulted in the Company recording a $3.2 million increase to the allowance for credit losses on ~~debt securities. The Company is currently unable~~off-balance sheet credit exposures with a corresponding cumulative effect adjustment to ~~reasonably estimate~~decrease retained earnings $2.4 million, net of income taxes.

Management analyzes the ~~impact of adopting ASU 2016-13, it is expected that~~Company's exposure to credit losses for both on-balance sheet and off-balance sheet activity using a consistent methodology for the ~~impact of adoption will be significantly influenced by the composition, characteristics and quality of our loan and securities portfolios~~quantitative framework as well as the ~~prevailing economic conditions~~qualitative framework. For purposes of estimating the allowance for credit losses for off-balance sheet credit exposures, the exposure at default includes an estimated drawdown of unused credit based on historical credit utilization factors and ~~forecasts as~~current loss factors, resulting in a proportionate amount of expected credit losses.

The following table illustrates the impact of the January 1, 2020 adoption ~~date.~~of CECL on off-balance sheet credit exposures:

~~In February 2016,~~


	January 1, 2020
	As reported under CECL		Prior to CECL	Impact of CECL adoption
Liabilities
Allowance for credit losses on off-balance sheet credit exposure	$	3,206	—	3,206

For the FASB issued ASU 2016-02, "Leases (Topic 842).” This ASU requires all lessees to recognize 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. Lessor accounting remains largely unchanged under the new guidance. The guidance is effective for fiscal years beginning after December 15, 2018, including interim reporting periods within that reporting period, with early adoption permitted. A modified retrospective approach must be applied for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The Company is currently assessing the impact that the guidance will have on the Company's consolidated financial statements.

In January 2016, the FASB issued ASU 2016-01, "Financial Instruments - Overall: Recognition and Measurement of Financial Assets and Liabilities." This ASU addresses certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. This amendment supersedes the guidance to classify equity securities with readily determinable fair values into different categories, requires equity securities, except equity method investments, to be measured at fair value with changes in the fair value recognized through net income, and simplifies the impairment assessment of equity investments without readily determinable fair values. The amendment requires public business entities that are required to disclose the fair value of financial instruments measured at amortized cost on the balance sheet to measure that fair value using the exit price notion. The amendment requires an entity to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option. The amendment requires separate presentation of financial assets and financial liabilities by measurement category and form of financial asset on the balance sheet or in the accompanying notes to the financial statements. The amendment reduces diversity in current practice by clarifying that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available for sale securities in combination with the entity’s other deferred tax assets. This amendment is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Entities should apply the amendment by means of a cumulative-effect adjustment as of the beginning of the fiscal year of adoption, with the exception of the amendment related to equity securities without readily determinable fair values, which should be applied prospectively to equity investments that exist as of the date of adoption. The Company is currently evaluating the impact that the guidance will have on the Company's consolidated financial statements.

In May 2014, the FASB issued ASU 2014-09, "Revenue from Contracts with Customers (Topic 606)." The objective of this amendment is to clarify the principles for recognizing revenue and to develop a common revenue standard for U.S. GAAP and IFRS. This update affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets unless those contracts are in the scope of other standards. The ASU is effective for public business entities for financial statements issued for fiscal years beginning after December 15, 2017, and early adoption is permitted. Subsequently, the FASB issued the following standards related to ASU 2014-09: ASU 2016-08, “Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations;” ASU 2016-10, “Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing;” ASU 2016-11, “Revenue Recognition (Topic 605) and Derivatives and Hedging (Topic 815): Rescission of SEC Guidance Because of Accounting Standards Updates 2014-09 and 2014-16 Pursuant to Staff Announcements at thethree months ended March 3, 2016 EITF Meeting;” and ASU 2016-12, “Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients.” These amendments are intended to improve and clarify the implementation guidance of ASU 2014-09 and have the same effective date as the original standard. The Company's revenue is comprised of net interest income on interest earning assets and liabilities and non-interest income. The scope of guidance explicitly excludes net interest income as well as other revenues associated with financial assets and liabilities, including loans, leases, securities and derivatives. Accordingly, the majority of the Company's revenues will not be affected. The Company has formed a working group to guide implementation efforts including the identification of revenue within the scope of the guidance, as well as the evaluation of revenue contracts and the respective performance obligations within those contracts. While31, 2020, the Company ~~has not identified any material changes related to the timing or amount of revenue recognition, the Company will continue to evaluate disaggregation~~recorded a $1.0 million provision for significant categories of revenue in the scope of the guidance and the need for additional disclosures. The Company will adopt the standard in the first quarter of 2018 with a cumulative effect adjustment to opening retained earnings, if such adjustment is deemed to be significant.credit losses on off-balance sheet credit exposures.

Note 7.9. Fair Value Measurements

The Company utilizes fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. The determination of fair values of financial instruments often requires the use of estimates. Where quoted market values in an active market are not readily available, the Company utilizes various valuation techniques to estimate fair value.

Fair value is an estimate of 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. However, in many instances fair value estimates may not be substantiated by comparison to independent markets and may not be realized in an immediate sale of the financial instrument.

GAAP establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of fair value hierarchy are as follows:



Level 1:						Unadjusted quoted market prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;

Level 2:						Quoted prices in markets that are not active, or inputs that are observable either directly or indirectly, for substantially the full term of the asset or liability; and

Level 3:						Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity).

A financial instrument’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement.

The valuation techniques are based upon the unpaid principal balance only, and exclude any accrued interest or dividends at the measurement date. Interest income and expense and dividend income are recorded within the consolidated statements of income depending on the nature of the instrument using the effective interest method based on acquired discount or premium.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The valuation techniques described below were used to measure fair value of financial instruments in the table below on a recurring basis as of ~~September 30, 2017~~March 31, 2020 and December 31, ~~2016.~~2019.

~~Securities~~ Available for Sale Debt Securities, at Fair Value

For ~~securities~~ available for sale debt securities, fair value was estimated using a market approach. The majority of the Company’s securities are fixed income instruments that are not quoted on an exchange, but are traded in active markets. Prices for these instruments are obtained through third-party data service providers or dealer market participants with which the Company has historically transacted both purchases and sales of securities. Prices obtained from these sources include market quotations and matrix pricing. Matrix pricing, a Level 2 input, is a mathematical technique used principally to value certain securities to benchmark or to comparable securities. The Company evaluates the quality of Level 2 matrix pricing through comparison to similar assets with greater liquidity and evaluation of projected cash flows. 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 an adjustment in the prices obtained from the pricing service.

Equity Securities, at Fair Value

The Company ~~also may hold~~holds equity securities ~~and debt instruments issued by the U.S. government and U.S. government-sponsored agencies~~ that are traded in active markets with readily accessible quoted market prices that are considered Level 1 inputs.

Derivatives

The Company records all derivatives on the ~~statement~~statements of financial condition 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. The Company has interest rate derivatives resulting from a service provided to certain qualified borrowers in a loan related transaction and, therefore, are not used to manage interest rate risk in the Company’s assets or liabilities. As such, all changes in fair value of the Company’s derivatives are recognized directly in earnings.

The Company also uses interest rate swaps as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges, and which satisfy hedge accounting requirements, involve the receipt of variable amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without the exchange of the underlying notional amount. These derivatives were used to hedge the variable cash outflows associated with FHLBNY borrowings. The ~~effective portion of changes~~change in the fair value of these derivatives ~~are~~is recorded in accumulated other comprehensive income, and ~~are~~is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. ~~The ineffective portion of the change in fair value of these derivatives are recognized directly in earnings.~~

The fair value of the Company's derivatives ~~are~~is determined using discounted cash flow analysis using observable market-based inputs, which are considered Level 2 inputs.

Assets Measured at Fair Value on a Non-Recurring Basis

The valuation techniques described below were used to estimate fair value of financial instruments measured on a non-recurring basis as of ~~September 30, 2017~~March 31, 2020 and December 31, ~~2016.~~2019.

~~Collateral Dependent~~Collateral-Dependent Impaired Loans

For loans measured for impairment based on the fair value of the underlying collateral, fair value was estimated using a market approach. The Company measures the fair value of collateral underlying impaired loans primarily through obtaining independent appraisals that rely upon quoted market prices for similar assets in active markets. These appraisals include adjustments, on an individual case-by-case basis, to comparable assets based on the appraisers’ market knowledge and experience, as well as adjustments for estimated costs to sell between 5% and 10%. The Company classifies these loans as Level 3 within the fair value hierarchy.

Foreclosed Assets

Assets acquired through foreclosure or deed in lieu of foreclosure are carried at fair value, less estimated ~~selling~~ costs, which range between 5% and 10%. Fair value is generally based on independent appraisals that rely upon quoted market prices for similar assets in active markets. These appraisals include adjustments, on an individual case basis, to comparable assets based on the appraisers’ market knowledge and experience, and are classified as Level 3. 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~~credit losses. A reserve for foreclosed assets may be established to provide for possible write-downs and selling costs that occur subsequent to foreclosure. Foreclosed assets are carried net of the related reserve. Operating results from real estate owned, including rental income, operating expenses, and gains and losses realized from the sales of real estate owned, are recorded as incurred.

There were no changes to the valuation techniques for fair value measurements as of ~~September 30, 2017~~March 31, 2020 and December 31, ~~2016.~~2019.

The following tables present the assets and liabilities reported on the consolidated statements of financial condition at their fair values as of ~~September 30, 2017~~March 31, 2020 and December 31, ~~2016,~~2019, by level within the fair value hierarchy:


	Fair Value Measurements at Reporting Date Using:
(In thousands)	March 31, 2020		Quoted Prices in Active Markets for Identical Assets (Level 1)	Significant Other Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)
Measured on a recurring basis:
Available for sale debt securities:


Mortgage-backed securities	$	960,177	—	960,177	—
State and municipal obligations	4,049		—	4,049	—
Corporate obligations	25,607		—	25,607	—
Total available for sale debt securities	$	989,833	—	989,833	—
Equity securities	685		685	—	—
Derivative assets	111,608		—	111,608	—
	$	1,102,126	685	1,101,441	—

Derivative liabilities	$	120,176	—	120,176	—

Measured on a non-recurring basis:
Loans measured for impairment based on the fair value of the underlying collateral	$	15,895	—	—	15,895
Foreclosed assets	4,219		—	—	4,219
	$	20,114	—	—	20,114

Fair Value Measurements at Reporting Date Using:
(In thousands)
September 30, 2017
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)

Significant Other
Observable Inputs
(Level 2)

Significant
Unobservable
Inputs (Level 3)
Measured on a recurring basis:

Securities available for sale:

U.S. Treasury obligations $ 5,994
5,994
—
—
Agency obligations
28,035
28,035
—
—
Mortgage-backed securities
968,412
—
968,412
—
State and municipal obligations
3,807
—
3,807
—
Corporate obligations 21,459
—
21,459
—
Equity securities
598
598
—
—
Total securities available for sale
1,028,305
34,627
993,678
—
Derivative assets 8,035
—
8,035
—
$ 1,036,340
34,627
1,001,713
—

Derivative liabilities $ 7,595
—
7,595
—

Measured on a non-recurring basis:

Loans measured for impairment based on the fair value of the underlying collateral
$ 5,525
—
—
5,525
Foreclosed assets
5,703
—
—
5,703

$ 11,228
—
—
11,228


	Fair Value Measurements at Reporting Date Using:						Fair Value Measurements at Reporting Date Using:
(In thousands)	December 31, 2016		Quoted Prices in Active Markets for Identical Assets (Level 1)	Significant Other Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)	(In thousands)	December 31, 2019		Quoted Prices in Active Markets for Identical Assets (Level 1)	Significant Other Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)
Measured on a recurring basis:						Measured on a recurring basis:
Securities available for sale:
U.S. Treasury obligations	$	8,008	8,008	—	—
Agency obligations	57,188		57,188	—	—
Available for sale debt securities:						Available for sale debt securities:

Mortgage-backed securities	951,861		—	951,861	—	Mortgage-backed securities	$	947,430	—	947,430	—
State and municipal obligations	3,743		—	3,743	—	State and municipal obligations	4,079		—	4,079	—
Corporate obligations	19,037		—	19,037	—	Corporate obligations	25,410		—	25,410	—
Equity securities	549		549	—	—
Total securities available for sale	$	1,040,386	65,745	974,641	—
Total available for sale debt securities						Total available for sale debt securities	$	976,919	—	976,919	—
Equity Securities						Equity Securities	825		825	—	—
Derivative assets	7,441		—	7,441	—	Derivative assets	39,305		—	39,305	—
	$	1,047,827	65,745	982,082	—		$	1,017,049	825	1,016,224	—

Derivative liabilities	$	6,750	—	6,750	—	Derivative liabilities	$	39,356	—	39,356	—

Measured on a non-recurring basis:						Measured on a non-recurring basis:
Loans measured for impairment based on the fair value of the underlying collateral	$	11,001	—	—	11,001	Loans measured for impairment based on the fair value of the underlying collateral	$	20,403	—	—	20,403
Foreclosed assets	7,991		—	—	7,991	Foreclosed assets	2,715		—	—	2,715
	$	18,992	—	—	18,992		$	23,118	—	—	23,118

There were no transfers between Level 1, Level 2 and Level 3 during the three and ~~nine~~three months ended ~~September 30, 2017.~~

March 31, 2020.

Other Fair Value Disclosures

The Company is required to disclose estimated fair value of financial instruments, both assets and liabilities on and off the balance sheet, for which it is practicable to estimate fair value. The following is a description of valuation methodologies used for those assets and liabilities.

Cash and Cash Equivalents

For cash and due from banks, federal funds sold and short-term investments, the carrying amount approximates fair value. Included in cash and cash equivalents at March 31, 2020 and December 31, 2019 was $128.7 million and $77.0 million, respectively, representing cash collateral pledged to secure loan level swaps and reserves required by banking regulations.

~~Investment Securities~~ Held to Maturity Debt Securities, Net of Allowance for Credit Losses

For ~~investment securities~~ held to maturity debt securities, fair value was estimated using a market approach. The majority of the Company’s securities are fixed income instruments that are not quoted on an exchange, but are traded in active markets. Prices for these instruments are obtained through third party data service providers or dealer market participants with which the Company has historically transacted both purchases and sales of securities. Prices obtained from these sources include market quotations and matrix pricing. Matrix pricing, a Level 2 input, is a mathematical technique used principally to value certain securities to benchmark or comparable securities. The Company evaluates the quality of Level 2 matrix pricing through comparison to similar assets with greater liquidity and evaluation of projected cash flows. As the Company is responsible for the determination of fair value, it performs quarterly ~~analyses on~~analysis of 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. The Company also holds debt instruments issued by the U.S. government and U.S. government agencies that are traded in active markets with readily accessible quoted market prices that are considered Level 1 within the fair value hierarchy.

Federal Home Loan Bank of New York ("FHLBNY") Stock

The carrying value of FHLBNY stock was its cost. The fair value of FHLBNY stock is based on redemption at par value. The Company classifies the estimated fair value as Level 1 within the fair value hierarchy.

Loans

Fair values are estimated for portfolios of loans with similar financial characteristics. Loans are segregated by type such as commercial mortgage, residential mortgage, commercial, construction and consumer. Each loan category is further segmented into fixed and adjustable rate interest terms and into performing and non-performing categories. The fair value of performing loans was estimated using a combination of techniques, including a discounted cash flow model that utilizes a discount rate that reflects the Company’s current pricing for loans with similar characteristics and remaining maturity, adjusted by an amount for estimated credit losses inherent in the portfolio at the balance sheet date. The rates take into account the expected yield curve, as well as an adjustment for prepayment risk, when applicable. The Company classifies the estimated fair value of its loan portfolio as Level 3.

The fair value for significant non-performing loans was based on recent external appraisals of collateral securing such loans, adjusted for the timing of anticipated cash flows. The Company classifies the estimated fair value of its non-performing loan portfolio as Level 3.

Deposits

The fair value of deposits with no stated maturity, such as non-interest bearing demand deposits and savings deposits, was equal to the amount payable on demand and classified as Level 1. The estimated fair value of certificates of deposit was based on the discounted value of contractual cash flows. The discount rate was estimated using the Company’s current rates offered for deposits with similar remaining maturities. The Company classifies the estimated fair value of its certificates of deposit portfolio as Level 2.

Borrowed Funds

The fair value of borrowed funds was estimated by discounting future cash flows using rates available for debt with similar terms and maturities and is classified by the Company as Level 2 within the fair value hierarchy.

Commitments to Extend Credit and Letters of Credit

The fair value of commitments to extend credit and letters of credit was 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 fixed rate loan commitments, fair value also considers the difference between current levels of interest rates and the committed rates. The fair value estimates of commitments to extend credit and letters of credit are deemed immaterial.

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 significant portion of the Company’s financial instruments, fair value estimates are based on judgments regarding future expected loss experience, 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 and liabilities that are not considered financial assets or liabilities include goodwill and other intangibles, deferred tax assets and premises and equipment. 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.

The following tables present the Company’s financial instruments at their carrying and fair values as of ~~September 30, 2017~~March 31, 2020 and December 31, ~~2016.~~2019. Fair values are presented by level within the fair value hierarchy.


			Fair Value Measurements at March 31, 2020 Using:
(Dollars in thousands)	Carrying value		Fair value	Quoted Prices in Active Markets for Identical Assets (Level 1)	Significant Other Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)
Financial assets:
Cash and cash equivalents	$	370,577	370,577	370,577	—	—
Available for sale debt securities:


Mortgage-backed securities	960,177		960,177	—	960,177	—
State and municipal obligations	4,049		4,049	—	4,049	—
Corporate obligations	25,607		25,607	—	25,607	—
Total available for sale debt securities	$	989,833	989,833	—	989,833	—
Held to maturity debt securities, net of allowance for credit losses
Agency obligations	7,417		7,432	7,432	—	—
Mortgage-backed securities	104		108	—	108	—
State and municipal obligations	428,611		442,366	—	442,366	—
Corporate obligations	9,312		9,318	—	9,318	—
Total held to maturity debt securities, net of allowance for credit losses	$	445,444	459,224	7,432	451,792	—
FHLBNY stock	61,198		61,198	61,198	—	—
Equity Securities	685		685	685	—	—
Loans, net of allowance for credit losses	7,296,901		7,513,881	—	—	7,513,881
Derivative assets	111,608		111,608	—	111,608	—

Financial liabilities:
Deposits other than certificates of deposits	$	6,513,994	6,513,994	6,513,994	—	—
Certificates of deposit	696,766		696,151	—	696,151	—
Total deposits	$	7,210,760	7,210,145	6,513,994	696,151	—
Borrowings	1,213,777		1,223,866	—	1,223,866	—
Derivative liabilities	120,176		120,176	—	120,176	—

Fair Value Measurements at September 30, 2017 Using:
(Dollars in thousands)
Carrying
value

Fair
value

Quoted Prices in
Active Markets for
Identical Assets
(Level 1)

Significant Other
Observable Inputs
(Level 2)

Significant
Unobservable
Inputs (Level 3)
Financial assets:
Cash and cash equivalents $ 148,783
148,783
148,783
—
—
Securities available for sale:
U.S. Treasury obligations 5,994
5,994
5,994
—
—
Agency obligations 28,035
28,035
28,035
—
—
Mortgage-backed securities 968,412
968,412
—
968,412
—
State and municipal obligations 3,807
3,807
—
3,807
—
Corporate obligations 21,459
21,459
—
21,459
—
Equity securities 598
598
598
—
—
Total securities available for sale $ 1,028,305
1,028,305
34,627
993,678
—
Investment securities held to maturity:
Agency obligations 4,307
4,252
4,252
—
—
Mortgage-backed securities 475
492
—
492
—
State and municipal obligations 467,113
475,759
—
475,759
—
Corporate obligations 9,950
9,922
—
9,922
—
Total securities held to maturity $ 481,845
490,425
4,252
486,173
—
FHLBNY stock 70,896
70,896
70,896
—
—
Loans, net of allowance for loan losses 6,967,776
6,955,183
—
—
6,955,183
Derivative assets 8,035
8,035
—
8,035
—

Financial liabilities:
Deposits other than certificates of deposits $ 5,963,348
5,963,348
5,963,348
—
—
Certificates of deposit 627,868
628,523
—
628,523
—
Total deposits $ 6,591,216
6,591,871
5,963,348
628,523
—
Borrowings 1,525,560
1,530,444
—
1,530,444
—
Derivative liabilities 7,595
7,595
—
7,595
—


			Fair Value Measurements at December 31, 2019 Using:
(Dollars in thousands)	Carrying value		Fair value	Quoted Prices in Active Markets for Identical Assets (Level 1)	Significant Other Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)
Financial assets:
Cash and cash equivalents	$	186,748	186,748	186,748	—	—
Available for sale debt securities:


Mortgage-backed securities	947,430		947,430	—	947,430	—
State and municipal obligations	4,079		4,079	—	4,079	—
Corporate obligations	25,410		25,410	—	25,410	—
Total available for sale debt securities	$	976,919	976,919	—	976,919	—
Held to maturity debt securities:

Agency obligations	$	6,599	6,601	6,601	—	—
Mortgage-backed securities	118		122	—	122	—
State and municipal obligations	437,074		451,353	—	451,353	—
Corporate obligations	9,838		9,890	—	9,890	—
Total held to maturity debt securities	$	453,629	467,966	6,601	461,365	—
FHLBNY stock	57,298		57,298	57,298	—	—
Equity Securities	825		825	825	—	—
Loans, net of allowance for credit losses	7,277,360		7,296,744	—	—	7,296,744
Derivative assets	39,305		39,305	—	39,305	—

Financial liabilities:
Deposits other than certificates of deposits	$	6,368,582	6,368,582	6,368,582	—	—
Certificates of deposit	734,027		734,047	—	734,047	—
Total deposits	$	7,102,609	7,102,629	6,368,582	734,047	—
Borrowings	1,125,146		1,127,569	—	1,127,569	—
Derivative liabilities	39,356		39,356	—	39,356	—

Fair Value Measurements at December 31, 2016 Using:
(Dollars in thousands)
Carrying
value

Fair
value

Quoted Prices in
Active Markets for
Identical Assets
(Level 1)

Significant Other
Observable Inputs
(Level 2)

Significant
Unobservable
Inputs (Level 3)
Financial assets:
Cash and cash equivalents $ 144,297
144,297
144,297
—
—
Securities available for sale:
U.S. Treasury obligations 8,008
8,008
8,008
—
—
Agency obligations 57,188
57,188
57,188
—
—
Mortgage-backed securities 951,861
951,861
—
951,861
—
State and municipal obligations 3,743
3,743
—
3,743
—
Corporate obligations 19,037
19,037
—
19,037
—
Equity securities 549
549
549
—
—
Total securities available for sale $ 1,040,386
1,040,386
65,745
974,641
—
Investment securities held to maturity:
Agency obligations $ 4,306
4,225
4,225
—
—
Mortgage-backed securities 893
924
—
924
—
State and municipal obligations 473,653
474,852
—
474,852
—
Corporate obligations 9,331
9,286
—
9,286
—
Total securities held to maturity $ 488,183
489,287
4,225
485,062
—
FHLBNY stock 75,726
75,726
75,726
—
—
Loans, net of allowance for loan losses 6,941,603
6,924,440
—
—
6,924,440
Derivative assets 7,441
7,441
—
7,441
—

Financial liabilities:
Deposits other than certificates of deposits $ 5,902,446
5,902,446
5,902,446
—
—
Certificates of deposit 651,183
653,772
—
653,772
—
Total deposits $ 6,553,629
6,556,218
5,902,446
653,772
—
Borrowings 1,612,745
1,617,023
—
1,617,023
—
Derivative liabilities 6,750
6,750
—
6,750
—

Note 8.10. Other Comprehensive Income ~~(Loss)~~

The following table presents the components of other comprehensive income, ~~(loss),~~ both gross and net of tax, for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2020 and ~~2016~~2019 (in thousands):


	Three months ended March 31,
	2020						2019
	Before Tax		Tax Effect	After Tax	Before Tax	Tax Effect	After Tax
Components of Other Comprehensive Income:
Unrealized gains on available for sale debt securities:
Net unrealized gains arising during the period	$	22,563	(5,817)	16,746	10,417	(2,839)	7,578
Reclassification adjustment for gains included in net income	—		—	—	—	—	—
Total	22,563		(5,817)	16,746	10,417	(2,839)	7,578
Unrealized losses on derivatives (cash flow hedges)	(7,697)		1,984	(5,713)	(432)	118	(314)
Amortization related to post-retirement obligations	112		(28)	84	(16)	4	(12)
Total other comprehensive income	$	14,978	(3,861)	11,117	9,969	(2,717)	7,252

Three months ended September 30,
2017 2016

Before
Tax

Tax
Effect

After
Tax

Before
Tax

Tax
Effect

After
Tax
Components of Other Comprehensive Income:
Unrealized gains and losses on securities available for sale:
Net gains (losses) arising during the period $ 799
(320 ) 479
(2,575 ) 1,034
(1,541 )
Reclassification adjustment for gains included in net income —
—
—
43
(17 ) 26
Total 799
(320 ) 479
(2,532 ) 1,017
(1,515 )
Unrealized gains on derivatives (cash flow hedges) 90
(36 ) 54
384
(154 ) 230
Amortization related to post-retirement obligations 61
(25 ) 36
236
(95 ) 141
Total other comprehensive income (loss) $ 950
(381 ) 569
(1,912 ) 768
(1,144 )

Nine months ended September 30,
2017 2016
Before
Tax Tax
Effect After
Tax Before
Tax Tax
Effect After
Tax
Components of Other Comprehensive Income:
Unrealized gains and losses on securities available for sale:
Net gains arising during the period $ 4,136
(1,658 ) 2,478
14,260
(5,727 ) 8,533
Reclassification adjustment for gains included in net income —
—
—
(54 ) 22
(32 )
Total 4,136
(1,658 ) 2,478
14,206
(5,705 ) 8,501
Unrealized gains (losses) on derivatives (cash flow hedges) 177
(71 ) 106
(603 ) 242
(361 )
Amortization related to post-retirement obligations 183
(78 ) 105
635
(255 ) 380
Total other comprehensive income $ 4,496
(1,807 ) 2,689
14,238
(5,718 ) 8,520

The following tables present the changes in the components of accumulated other comprehensive income (loss), net of tax, for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2020 and ~~2016~~2019 (in thousands):


	Changes in Accumulated Other Comprehensive Income (Loss) by Component, net of tax for the three months ended March 31,
	2020								2019
	Unrealized Gains on Available for Sale Debt Securities		Post- Retirement Obligations	Unrealized (Losses) Gains on Derivatives (cash flow hedges)	Accumulated Other Comprehensive Income	Unrealized (Losses) Gains on Available for Sale Debt Securities	Post- Retirement Obligations	Unrealized Gains (Losses) on Derivatives (cash flow hedges)	Accumulated Other Comprehensive Loss
Balance at December 31,	$	8,746	(5,240)	315	3,821	(9,605)	(3,625)	894	(12,336)
Current - period other comprehensive income (loss)	16,746		84	(5,713)	11,117	7,578	(12)	(314)	7,252
Balance at March 31,	$	25,492	(5,156)	(5,398)	14,938	(2,027)	(3,637)	580	(5,084)

Changes in Accumulated Other Comprehensive Income (Loss) by Component, net of tax
for the three months ended September 30,
2017 2016

Unrealized
Gains on Securities
Available for
Sale
Post- Retirement
Obligations Unrealized gains on Derivatives (cash flow hedges) Accumulated
Other
Comprehensive
Income (Loss)
Unrealized
Gains on Securities
Available
for
Sale
Post- Retirement
Obligations Unrealized (losses) on Derivatives (cash flow hedges) Accumulated
Other
Comprehensive
Income (Loss)
Balance at
June 30, $ 1,489
(2,987 ) 221
(1,277 ) 13,967
(6,185 ) (664 ) 7,118
Current period other comprehensive income (loss) 479
36
54
569
(1,515 ) 141
230
(1,144 )
Balance at September 30, $ 1,968
(2,951 ) 275
(708 ) 12,452
(6,044 ) (434 ) 5,974

Changes in Accumulated Other Comprehensive Income (Loss) by Component, net of tax
for the nine months ended September 30,
2017 2016

Unrealized
Gains on Securities
Available for
Sale
Post- Retirement
Obligations Unrealized gains on Derivatives (cash flow hedges) Accumulated
Other
Comprehensive
Income (Loss)
Unrealized
Gains on Securities
Available
for
Sale
Post- Retirement
Obligations Unrealized (losses) on Derivatives (cash flow hedges) Accumulated
Other
Comprehensive
Income (Loss)
Balance at December 31, $ (510 ) (3,056 ) 169
(3,397 ) 3,951
(6,424 ) (73 ) (2,546 )
Current period other comprehensive income (loss) 2,478
105
106
2,689
8,501
380
(361 ) 8,520
Balance at September 30, $ 1,968
(2,951 ) 275
(708 ) 12,452
(6,044 ) (434 ) 5,974

The following tables summarize the reclassifications ~~out of~~from accumulated other comprehensive income (loss) to the consolidated statements of income for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2020 and ~~2016~~2019 (in thousands):


	Reclassifications From Accumulated Other Comprehensive Income ("AOCI")
	Amount reclassified from AOCI for the three months ended March 31,				Affected line item in the Consolidated Statement of Income
	2020		2019
Details of AOCI:










Post-retirement obligations:
Amortization of actuarial losses	$	112	47	Compensation and employee benefits (1)
	(28)		(13)	Income tax expense
Total reclassification	$	84	34	Net of tax

⁽¹⁾This item is included in the computation of net periodic benefit cost. See Note 6. Components of Net Periodic Benefit Cost.

Reclassifications From Accumulated Other Comprehensive
Income ("AOCI")
Amount reclassified from AOCI for the three months ended September 30, Affected line item in the Consolidated
Statement of Income
2017 2016
Details of AOCI:
Securities available for sale:
Realized net losses on the sale of securities available for sale $ —
(43 ) Net gain on securities transactions
—
17
Income tax expense
—
(26 ) Net of tax

Post-retirement obligations:
Amortization of actuarial losses 61
236

Compensation and employee benefits ⁽¹⁾
(25 ) (95 ) Income tax expense
36
141
Net of tax
Total reclassifications $ 36
115
Net of tax

Reclassifications From Accumulated Other Comprehensive
Income ("AOCI")
Amount reclassified from AOCI for the nine months ended September 30, Affected line item in the Consolidated
Statement of Income
2017 2016
Details of AOCI:
Securities available for sale:
Realized net gains on the sale of securities available for sale $ —
54
Net gain on securities transactions
—
(22 ) Income tax expense
—
32
Net of tax

Post-retirement obligations:
Amortization of actuarial losses 183
708

Compensation and employee benefits ⁽¹⁾
(78 ) (284 ) Income tax expense
105
424
Net of tax
Total reclassifications $ 105
456
Net of tax


⁽¹⁾	~~This item is included in the computation of net periodic benefit cost. See Note 5. Components of Net Periodic Benefit Cost.~~

Note 9.11. Derivative and Hedging Activities

The Company is exposed to certain 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.

Non-designated Hedges. Derivatives not designated in qualifying hedging relationships are not speculative and result from a service the Company provides to certain qualified commercial borrowers in loan related transactions and, therefore, are not used to manage interest rate risk in the Company’s assets or liabilities. The Company executes interest rate swaps with qualified commercial banking customers to facilitate their respective risk management strategies. Those interest rate swaps are simultaneously hedged by offsetting interest rate swaps that the Company executes with a ~~third party,~~third-party, such that the Company minimizes its net risk exposure resulting from such transactions. The interest rate swap agreement which the Company executes with the commercial borrower is collateralized by the borrower's commercial real estate financed by the Company. The collateral exceeds the maximum potential amount of future payments under the credit derivative. As the Company has not elected to apply hedge accounting and these interest rate swaps ~~associated with this program~~ do not meet the hedge accounting requirements, changes in the fair value of both the customer swaps and the offsetting swaps are recognized directly in earnings. At ~~September 30, 2017~~March 31, 2020 and December 31, ~~2016,~~2019, the Company had 46116 and 92 interest rate swaps, respectively, with an aggregate notional ~~amount~~amounts of ~~$698.5~~$1.97 billion and $1.61 billion, respectively.

The Company periodically enters into risk participation agreements ("RPAs") with the Company functioning as either the lead institution, or as a participant when another company is the lead institution on a commercial loan. These RPA's are entered into to manage the credit exposure on interest rate contracts associated with these loan participation agreements. Under the RPA's, the Company will either receive or make a payment if a borrower defaults on the related interest rate contract. At March 31, 2020 and December 31, 2019, the Company had 13 credit derivatives, with aggregate notional amounts of $106.8 million and ~~36 interest rate swaps with an aggregate notional amount of $582.2~~$106.0 million, respectively, ~~related to this program. The Company has credit derivatives resulting~~ from participations in interest rate swaps ~~provided to external lenders~~ as part of these loan participation ~~arrangements; therefore, they are not used to manage interest rate risk in~~arrangements. At March 31, 2020 and December 31, 2019, the ~~Company's assets or liabilities.~~fair value of these credit derivatives were $90,000 and $47,000, respectively.

Cash Flow Hedges of Interest Rate Risk.The Company’s objective in using interest rate derivatives is to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish this objective, the Company primarily uses interest rate swaps as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts 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.

~~The effective portion of changes~~Changes in the fair value of derivatives designated and that qualify as cash flow hedges of interest rate risk are recorded in accumulated other comprehensive income and are subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. During the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2020 and ~~2016,~~2019, such derivatives were used to hedge the variable cash outflows associated with Federal Home Loan Bank borrowings. The ineffective portion of the change in fair value of the derivatives is recognized directly in earnings. During the three and nine months ended September 30, 2017 and 2016, the Company did not record any hedge ineffectiveness.

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 ~~debt.~~borrowings. During the next twelve months, the Company estimates that ~~$52,400~~$2.1 million will be reclassified as an increase to interest expense. As of ~~September 30, 2017,~~March 31, 2020, the Company had ~~two~~ 9

outstanding interest rate derivatives with an aggregate notional amount of ~~$60.0~~$290.0 million that ~~was~~were designated as a cash flow hedge of interest rate risk.

The ~~table~~tables below presents the fair value of the Company’s derivative financial instruments as well as their classification on the Consolidated Statements of Financial Condition at ~~September 30, 2017~~March 31, 2020 and December 31, ~~2016~~2019 (in thousands):


	At March 31, 2020
	Asset Derivatives				Liability Derivatives
	Consolidated Statements of Financial Condition	Fair Value		Consolidated Statements of Financial Condition	Fair Value
Derivatives not designated as a hedging instrument:
Interest rate products	Other assets	$	118,787	Other liabilities	120,176
Credit contracts	Other assets	90		Other liabilities	—
Total derivatives not designated as a hedging instrument		$	118,877		120,176

Derivatives designated as a hedging instrument:
Interest rate products	Other assets	$	(7,269)	Other liabilities	—

Total derivatives designated as a hedging instrument		$	(7,269)		—

At September 30, 2017
Asset Derivatives Liability Derivatives
Consolidated Statements of Financial Condition
Fair
Value
Consolidated Statements of Financial Condition
Fair
Value
Derivatives not designated as a hedging instrument:
Interest rate products Other assets $ 7,575
Other liabilities $ 7,595
Credit contracts Other assets 2
Other liabilities —
Total derivatives not designated as a hedging instrument $ 7,577
$ 7,595

Derivatives designated as a a hedging instrument:
Interest rate products Other assets $ 458
Other liabilities $ —
Total derivatives designated as a hedging instrument $ 458
$ —


	At December 31, 2016							At December 31, 2019
	Asset Derivatives			Liability Derivatives				Asset Derivatives				Liability Derivatives
	Consolidated Statements of Financial Condition	Fair Value		Consolidated Statements of Financial Condition	Fair Value			Consolidated Statements of Financial Condition	Fair Value		Consolidated Statements of Financial Condition	Fair Value
Derivatives not designated as a hedging instrument:							Derivatives not designated as a hedging instrument:
Interest rate products	Other assets	$	7,156	Other liabilities	$	6,750	Interest rate products	Other assets	$	38,830	Other liabilities	39,356
Credit contracts	Other assets	3		Other liabilities	—		Credit contracts	Other assets	47		Other liabilities	—
Total derivatives not designated as a hedging instrument		$	7,159		$	6,750	Total derivatives not designated as a hedging instrument		$	38,877		39,356

Derivatives designated as a a hedging instrument:
Derivatives designated as a hedging instrument:							Derivatives designated as a hedging instrument:
Interest rate products	Other assets	$	282	Other liabilities	$	—	Interest rate products	Other assets	$	428	Other liabilities	—

Total derivatives designated as a hedging instrument		$	282		$	—	Total derivatives designated as a hedging instrument		$	428		—

The tables below present the effect of the Company’s derivative financial instruments on the Consolidated Statements of Income during the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2020 and ~~2016~~2019 (in thousands).


		Gain (loss) recognized in Income on derivatives for the three months ended								Gain (loss) recognized in income on derivatives for the three months ended
	Consolidated Statements of Income	September 30, 2017			September 30, 2016				Consolidated Statements of Income	March 31, 2020		March 31, 2019
Derivatives not designated as a hedging instrument:								Derivatives not designated as a hedging instrument:
Interest rate products	Other income (expense)	$	(36	)	$	(95	)	Interest rate products	Other income	$	(819)	(673)
Credit contracts	Other income (expense)	—			5			Credit contracts	Other income	(1)		(4)
Total		$	(36	)	$	(90	)	Total		$	(820)	(677)

Derivatives designated as a hedging instrument:								Derivatives designated as a hedging instrument:
Interest rate products	Other income (expense)	$	(59	)	$	(129	)	Interest rate products	Interest expense	$	106	162
Total		$	(59	)	$	(129	)	Total		$	106	162

Gain (loss) recognized in Income on derivatives for the nine months ended
Consolidated Statements of Income September 30, 2017 September 30, 2016
Derivatives not designated as a hedging instrument:
Interest rate products Other income (expense) $ (428 ) $ (1,060 )
Credit contracts Other income (expense) 1
103
Total $ (427 ) $ (957 )

Derivatives designated as a hedging instrument:
Interest rate products Other income (expense) $ (166 ) $ (366 )
Total $ (166 ) $ (366 )

The Company has agreements with certain of its ~~derivative~~dealer counterparties that contain a provision that if the Company defaults on any of its indebtedness, including default where repayment of the indebtedness has not been accelerated by the lender, then the Company could also be declared in default on its derivative obligations.

In addition, the Company has agreements with certain of its ~~derivative~~dealer counterparties that contain a provision that if the Company fails to maintain its status as a ~~well/~~well or adequately capitalized institution, then the counterparty could terminate the derivative positions and the Company would be required to settle its obligations under the agreements.

AsAt March 31, 2020, the Company had 4 dealer counterparties. The Company had a net liability position with respect to all 4 of ~~September 30, 2017,~~ the counterparties. The termination value ~~of derivatives in a~~for this net liability position, which includes accrued interest, was ~~$2.5 million.~~$127.7 million at March 31, 2020. The Company has minimum collateral posting thresholds with certain of its derivative counterparties, and has posted collateral of ~~$3.1~~$128.7 million against its obligations under these agreements. If the Company had breached any of these provisions at ~~September 30, 2017,~~March 31, 2020, it could have been required to settle its obligations under the agreements at the termination value.

Note 12. Revenue Recognition

The Company generates revenue from several business channels. The guidance in ASU 2014-09, Revenue from Contracts with Customers (Topic 606) does not apply to revenue associated with financial instruments, including interest income on loans and investments, which comprise the majority of the Company's revenue. For the three months ended March 31, 2020 and 2019, the out-of-scope revenue related to financial instruments was 84% and 88% of the Company's total revenue, respectively. Revenue-generating activities that are within the scope of Topic 606, are components of non-interest income. These revenue streams can generally be classified into wealth management revenue and banking service charges and other fees.

The following table presents non-interest income, segregated by revenue streams in-scope and out-of-scope of Topic 606, for the three months ended March 31, 2020 and 2019:


	Three months ended March 31,
(in-thousands)	2020		2019
Non-interest income
In-scope of Topic 606:
Wealth management fees	$	6,251	4,079
Banking service charges and other fees:
Service charges on deposit accounts	2,977		3,191
Debit card and ATM fees	1,210		1,307
Total banking service charges and other fees	4,187		4,498
Total in-scope non-interest income	10,438		8,577
Total out-of-scope non-interest income	6,553		3,611
Total non-interest income	$	16,991	12,188

Wealth management fee income represents fees earned from customers as consideration for asset management, investment advisory and trust services. The Company’s performance obligation is generally satisfied monthly and the resulting fees are recognized monthly. The fee is generally based upon the average market value of the assets under management ("AUM") for the month and the applicable fee rate. For customers acquired in the April 1, 2019, T&L transaction, the fee is based upon AUM at the end of the preceding quarter and the applicable fee rate. The monthly accrual of wealth management fees is recorded in other assets on the Company's Consolidated Statements of Financial Condition. Fees are received from the customer either on a quarterly or monthly basis. The Company does not earn performance-based incentives. To a lesser extent, optional services such as tax return preparation and estate settlement are also available to existing customers. The Company’s performance obligation for these transaction-based services are generally satisfied, and related revenue recognized, at either a point in time when the service is completed, or in the case of estate settlement, over a relatively short period of time, as each service component is completed.

Service charges on deposit accounts include overdraft service fees, account analysis fees and other deposit related fees. These fees are generally transaction-based, or time-based services. The Company's performance obligation for these services are generally satisfied, and revenue recognized, at the time the transaction is completed, or the service rendered. Fees for these services are generally received from the customer either at the time of transaction, or monthly. Debit card and ATM fees are

generally transaction-based. Debit card revenue is primarily comprised of interchange fees earned when a customer's Company card is processed through a card payment network. ATM fees are largely generated when a Company cardholder uses a non-Company ATM, or a non-Company cardholder uses a Company ATM. The Company's performance obligation for these services is satisfied when the service is rendered. Payment is generally received at time of transaction or monthly.

Out-of-scope non-interest income primarily consists of Bank-owned life insurance and net fees on loan level interest rate swaps, along with gains and losses on the sale of loans and foreclosed real estate, loan prepayment fees and loan servicing fees. None of these revenue streams are subject to the requirements of Topic 606.

Note 13. Leases

On January 1, 2019, the Company adopted ASU 2016-02, "Leases" (Topic 842) and all subsequent ASU's that modified Topic 842. For the Company, Topic 842 primarily affected the accounting treatment for operating lease agreements in which the Company is the lessee. The Company elected the modified retrospective transition option effective with the period of adoption, elected not to recast comparative periods presented when transitioning to the new leasing standard and adjustments, if required, are made at the beginning of the period through a cumulative-effect adjustment to opening retained earnings. The Company also elected practical expedients, which allowed the Company to forego a reassessment of (1) whether any expired or existing contracts are or contain leases, (2) the lease classification for any expired or existing leases, and (3) the initial direct costs for any existing leases. The adoption of the new standard resulted in the Company recording a right-of-use asset and an operating lease liability of $44.9 million and $46.1 million, respectively, based on the present value of the expected remaining lease payments at January 1, 2019.

Also, on January 1, 2019, the Company had $5.9 million of net deferred gains associated with several sale and leaseback transactions executed prior to the adoption of ASU 2016-02. In accordance with the guidance, these net deferred gains were adjusted, net of income tax, as a cumulative-effect adjustment to opening retained earnings.

All of the leases in which the Company is the lessee are classified as operating leases and are primarily comprised of real estate properties for branches and administrative offices with terms extending through 2040.

The following table represents the consolidated statements of financial condition classification of the Company’s right-of use-assets and lease liabilities at March 31, 2020 (in thousands):


	Classification	March 31, 2020		December 31, 2019
Lease Right-of-Use Assets:
Operating lease right-of-use assets	Other assets	$	40,110	$	41,754
Lease Liabilities:
Operating lease liabilities	Other liabilities	$	41,144	$	42,815

The calculated amount of the right-of-use assets and lease liabilities in the table above are impacted by the length of the lease term and the discount rate used to present value the minimum lease payments. The Company’s lease agreements often include one or more options to renew at the Company’s discretion. If at lease inception the Company considers the exercising of a renewal option to be reasonably certain, the Company will include the extended term in the calculation of the right-of-use asset and lease liability. Generally, the Company considers the first renewal option to be reasonably certain and includes it in the calculation of the right-of use asset and lease liability. Regarding the discount rate, Topic 842 requires the use of the rate implicit in the lease whenever this rate is readily determinable. As this rate is rarely determinable, the Company utilizes its incremental borrowing rate at lease inception based upon the term of the lease. For operating leases existing prior to January 1, 2019, the rate for the remaining lease term as of January 1, 2019 was applied.

At March 31, 2020, the weighted-average remaining lease term and the weighted-average discount rate for the Company's operating leases were 9.4 years and 3.48%, respectively.

The following table represents lease costs and other lease information for the Company's operating leases. The variable lease cost primarily represents variable payments such as common area maintenance and utilities (in thousands):


(in-thousands)	Three months ended March 31, 2020		Three months ended March 31, 2019
Lease Costs:
Operating lease cost	$	2,130	$	2,050

Variable lease cost	607		760

Total Lease Cost	$	2,737	$	2,810


Cash paid for amounts included in the measurement of lease liabilities:

Operating cash flows from operating leases	$	2,125	$	2,044

During the three months ended March 31, 2020, the Company did not enter into any new lease obligations.

Future minimum payments for operating leases with initial or remaining terms of one year or more as of March 31, 2020 were as follows:


(in-thousands)	Operating Leases
Twelve months ended:
Remainder of 2020	$	6,274
2021	6,085
2022	5,257
2023	4,747
2024	4,346
Thereafter	22,195
Total future minimum lease payments			48,904
Amounts representing interest	7,760
Present value of net future minimum lease payments			$	41,144



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

Forward-Looking Statements

Certain statements contained herein 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,” "project," "intend," “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 set forth in Item 1A of the Company's Annual Report on Form 10-K, oras supplemented by its Quarterly Reports on Form 10-Q, and those related to the economic environment, particularly in the market areas in which the Company operates, competitive products and pricing, fiscal and monetary policies of the U.S. Government, changes in accounting policies and practices that may be adopted by the regulatory agencies and the accounting standards setters, changes in government regulations affecting financial institutions, including regulatory fees and capital requirements, 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.

In addition, the COVID-19 pandemic is having an adverse impact on the Company, its customers and the communities it serves. Given its ongoing and dynamic nature, it is difficult to predict the full impact 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 coronavirus can be controlled and abated and when and how the economy may be reopened. As the result of the COVID-19 pandemic and the related adverse local and national economic consequences, we could be subject to any of the following risks, any of which could have a material, adverse effect on our business, financial condition, liquidity, and results of operations: the demand for our products and services may decline, making it difficult 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 could cause credit losses to increase; our allowance for credit losses may increase if borrowers experience financial difficulties, which will adversely affect our net income; the net worth and liquidity of loan guarantors may decline, impairing their ability to honor commitments to us; as the result of the decline in the Federal Reserve Board’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; our wealth management revenues may decline with continuing market turmoil; we may face the risk of a goodwill write-down due to a decline in our stock price; and our cyber security risks are increased as the result of an increase in the number of employees working remotely.

The Company cautions readers not to place undue reliance on any such forward-looking statements which speak only as of the date made. The Company ~~also~~ advises readers that the factors listed above could affect the ~~Company’s~~Company's financial performance and could cause the ~~Company’s~~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 have any obligation to update any forward-looking statements to reflect ~~any subsequent~~ events or circumstances after the date of this statement.

Acquisition

SB One Bancorp Acquisition

On March 11, 2020, the Company entered into a definitive merger agreement pursuant to which SB One Bancorp ("SB One") will merge with and into the Company, and SB One Bank, a wholly owned subsidiary of SB One, will merge with and into Provident Bank, a wholly owned subsidiary of the Company. The merger agreement has been unanimously approved by the boards of directors of both companies. The actual value of the Company’s common stock to be recorded as consideration in the Merger will be based on the closing price of Company’s common stock at the time of the Merger completion date. Under the Merger Agreement, each share of SB One common stock will be exchanged for 1.357 shares of the Company's common stock plus cash in lieu of fractional shares. The merger is expected to close in the third quarter of 2020, subject to satisfaction of customary closing conditions, including receipt of required regulatory approvals and approval by the shareholders of SB One. At December 31, 2019, SB One had $2.0 billion in assets and operated 18 full-service banking offices in New Jersey and New York.

Acquisition of Tirschwell & Loewy, Inc.

Critical Accounting Policies

The Company considers certain accounting policies to be critically important to the fair presentation of its financial condition and results of operations. These policies require management to make complex judgments on matters which by their nature have elements of uncertainty. The sensitivity of the Company’s consolidated financial statements to these critical accounting policies, and the assumptions and estimates applied, could have a significant impact on its financial condition and results of

operations. These assumptions, estimates and judgments made by management can be influenced by a number of factors, including the general economic environment. The Company has identified the following as critical accounting policies:

•Adequacy of the allowance for ~~loan losses~~credit losses; and

~~Goodwill valuation and analysis for impairment~~

~~Valuation of securities available for sale and impairment analysis~~

•Valuation of deferred tax assets

On January 1, 2020, the Company adopted ASU 2016-13, "Measurement 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. It also applies to off-balance sheet credit exposures, including loan commitments and lines of credit. The adoption of the new standard resulted in the Company recording a $7.9 million increase to the allowance for credit losses and a $3.2 million liability for off-balance sheet credit exposures. The adoption of the standard did not result in a change to the Company's results of operations upon adoption as it was recorded as an $8.3 million cumulative effect adjustment, net of income taxes, to retained earnings.

The calculation of the allowance for ~~loan~~credit losses is a critical accounting policy of the Company. CECL requires the use of projected macroeconomic factors. The Company's current forecast period is six quarters, with a four quarter reversion period to macroeconomic variables’ means. The Company's economic forecast is approved by the Company's Asset-Liability Committee. The allowance for ~~loan~~credit losses is a valuation account that reflects management’s evaluation of the ~~probable~~current expected credit losses in the loan portfolio. The Company maintains the allowance for ~~loan~~credit losses through provisions for ~~loan~~credit losses that are charged to income. Charge-offs against the allowance for ~~loan~~credit losses are taken on loans where management determines that the collection of loan principal is unlikely. Recoveries made on loans that have been charged-off are credited to the allowance for ~~loan~~credit losses.

~~Management's~~Management performs a quarterly evaluation of the adequacy of the allowance for ~~loan~~credit losses. The analysis of the allowance for credit losses ~~includes a review of all~~has two elements: loans ~~on which the collectability of principal may not be reasonably assured. For residential mortgage~~collectively evaluated for impairment and ~~consumer~~ loans this is determined primarily by delinquency status. For commercial real estate and commercial loans, an extensive review of financial performance, payment history and collateral values is conducted on a quarterly basis.

individually evaluated for impairment. As part of ~~the~~its evaluation of the adequacy of the allowance for ~~loan~~credit losses, each quarter ~~management~~Management prepares an analysis that ~~categorizes~~segments the entire loan portfolio by ~~certain risk characteristics such as~~ loan type ~~(residential mortgage, commercial mortgage, construction, commercial, etc.~~into groups of loans that share common attributes and risk characteristics. The allowance for credit losses collectively evaluated for impairment consists of a quantitative loss factor and a qualitative adjustment component. Management estimates the quantitative component by segmenting the loan portfolio and employing a discounted cash flow ("DCF") model framework to estimate the allowance for credit losses on the loan portfolio. The CECL estimate incorporates life-of-loan aspects through this DCF approach. For each segment, this approach compares each loan’s amortized cost to the present value of its contractual cash flows adjusted for projected credit losses, prepayments and ~~loan risk rating.~~

~~When assigning a risk rating~~curtailments to a loan, management utilizes a nine point internal risk rating system. Loans deemed to be “acceptable quality” are rated 1 through 4, with a rating of 1 established for loans with minimal risk. Loans deemed to be of “questionable

quality” are rated 5 (watch) or 6 (special mention). Loans with adverse classifications (substandard, doubtful or loss) are rated 7, 8 or 9, respectively. Commercial mortgage, commercial and construction loans are rated individually and each lending officer is responsible for risk rating loans in their portfolio. These risk ratings are then reviewed by the department manager and/or the Chief Lending Officer and the Credit Department. The risk ratings are also confirmed through periodic loan review examinations, which are currently performed by an independent third party, and periodically by the Credit Committee in the credit renewal or approval process. In addition, the Bank requires an annual review be performed for commercial and commercial real estate loans above certain dollar thresholds, depending on loan type, to help determine the appropriate ~~risk rating.~~

~~Management estimates the amount of loan losses~~reserve for ~~groups of loans by applying quantitative loss factors to loan segments at the risk rating level, and applying qualitative adjustments to each loan segment at the portfolio level.~~that loan. Quantitative loss factors ~~give consideration to historical loss experience by loan type based upon an appropriate look back period and adjusted for a loss emergence period. Quantitative loss factors are~~will be evaluated at least annually. Management completed its ~~annual~~initial development and evaluation of ~~the~~its quantitative loss factors ~~for the quarter ended September 30, 2017.~~at January 1, 2020. Qualitative adjustments give consideration to other qualitative ~~or environmental~~ factors such as trends in industry conditions, effects of changes in credit concentrations, changes in the Company’s loan review process, changes in the Company's loan policies and ~~levels of delinquencies, impaired loans, charge-offs, recoveries~~procedures, economic forecast uncertainty and ~~loan volumes, as well as national and local economic trends and conditions.~~model imprecision. Qualitative adjustments reflect risks in the loan portfolio not captured by the quantitative loss ~~factors and, as such, are evaluated from a risk level perspective relative to the risk levels present over the look back period.~~ factors. Qualitative adjustments are ~~evaluated~~recalibrated at least annually and evaluated quarterly. The reserves resulting from the application of both of these sets of loss factors are combined to arrive at the allowance for credit losses on loans collectively evaluated for impairment.

The allowance for credit losses on loans individually evaluated for impairment is based upon loans that have been identified through the Company’s normal loan ~~losses.~~review process. This process includes the review of delinquent and problem loans at the Company’s Delinquency, Credit, Credit Risk Management and Allowance Committees. Generally, the Company only evaluates loans individually for impairment if the loan is non-accrual, non-homogeneous and the balance is at least $1.0 million, or if the loan was modified in a troubled debt restructuring.

Management believes the primary risks inherent in the portfolio are a general decline in the economy, a decline in real estate market values, rising unemployment or a protracted period of elevated unemployment, increasing vacancy rates in commercial investment properties and possible increases in interest rates in the absence of economic improvement. Any one or a combination of these events may adversely affect borrowers’ ability to repay the loans, resulting in increased delinquencies, ~~loan~~credit losses and ~~future~~higher levels of provisions. Accordingly, the Company has provided for ~~loan~~current expected credit losses at the current expected level to address the current risk in its loan portfolio. Management considers it important to maintain the ratio of the allowance for ~~loan~~credit losses to total loans at an acceptable level given current and forecasted economic conditions, interest rates and the composition of the portfolio.

Although management believes that the Company has established and maintained the allowance for ~~loan~~credit losses at appropriate levels, additions may be necessary if future economic and other conditions differ substantially from the current operating ~~environment.~~environment and economic forecast. Management evaluates its estimates and assumptions on an ongoing basis giving consideration to forecasted economic factors, historical loss experience and other ~~factors, including the current economic environment, which management believes to be reasonable under the circumstances.~~factors. Such estimates and assumptions are

adjusted when facts and circumstances dictate. Illiquid credit markets, volatile securities markets, and declines in the housing and commercial real estate markets and the economy ~~generally have combined~~in general can combine to increase the uncertainty inherent in such estimates and assumptions. As future events and their effects cannot be determined with precision, actual results could differ significantly from these estimates. Changes in estimates resulting from continuing changes in the economic environment will be reflected in the financial statements in future periods. In addition, various regulatory agencies periodically review the adequacy of the Company’s allowance for ~~loan~~credit losses as an integral part of their examination process. Such agencies may require the Company to recognize additions to the allowance or additional write-downs based on their judgments about information available to them at the time of their examination. Although management uses the best information available, the level of the allowance for ~~loan~~credit losses remains an estimate that is subject to significant judgment and short-term change.

Additional critical accounting policies relate to judgments about other asset impairments, including goodwill, investment securities and deferred tax assets. Goodwill is evaluated for impairment on an annual basis, or more frequently if events or changes in circumstances indicate potential impairment between annual measurement dates.

Management qualitatively determines whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount before performing Step 1 of the goodwill impairment test. If an entity concludes that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, the entity would be required to perform Step 1 of the assessment and then, if needed, Step 2 to determine whether goodwill is impaired. However, if it is more likely than not that the fair value of the reporting unit is more than its carrying amount, the entity does not need to apply the two-step impairment test. For this analysis, the Reporting Unit is defined as the Bank, which includes all core and retail banking operations of the Company but excludes the assets, liabilities, equity, earnings and operations held exclusively at the Company level. The guidance provides certain factors an entity should consider in its qualitative assessment in determining whether it is more likely than not that a reporting unit’s fair value is less than its carrying amount. The factors include:

~~Macroeconomic conditions, such as deterioration in economic condition and limited access to capital.~~

~~Industry and market considerations, such as increased competition, regulatory developments and decline in market-dependent multiples.~~

~~Cost factors, such as increased labor costs, cost of materials and other operating costs.~~

~~Overall financial performance, such as declining cash flows and decline in revenue or earnings.~~

~~Other relevant entity-specific events, such as changes in management, strategy or customers, litigation and contemplation of bankruptcy.~~

~~Reporting unit events, such as selling or disposing a portion of a reporting unit and a change in composition of assets.~~

Management may, based upon its qualitative assessment, or at its option, perform the two-step process to evaluate the potential impairment of goodwill. If, based upon Step 1, the fair value of the Reporting Unit exceeds its carrying amount, goodwill of the Reporting Unit is considered not impaired. However, if the carrying amount of the Reporting Unit exceeds its fair value, an additional test must be performed. The second step test compares the implied fair value of the Reporting Unit’s goodwill with the carrying amount of that goodwill. An impairment loss would be recorded to the extent that the carrying amount of goodwill exceeds its implied fair value.

The Company completed its annual goodwill impairment test as of September 30, 2017. Based upon its qualitative assessment of goodwill, the Company concluded it is more likely than not that the fair value of the reporting unit exceeds its carrying amount, goodwill was not impaired and no further quantitative analysis (Step 1) was warranted.

The Company’s available for sale securities portfolio is carried at estimated fair value, with any unrealized gains or losses, net of taxes, reported as accumulated other comprehensive income or loss in Stockholders’ Equity. Estimated fair values are based on market quotations or matrix pricing as discussed in Note 7 to the consolidated financial statements. Securities which the Company has the positive intent and ability to hold to maturity are classified as held to maturity and carried at amortized cost. Management conducts a periodic review and evaluation of the securities portfolio to determine if any declines in the fair values of securities are other-than-temporary. In this evaluation, if such a decline were deemed other-than-temporary, management would measure the total credit-related component of the unrealized loss, and recognize that portion of the loss as a charge to current period earnings. The remaining portion of the unrealized loss would be recognized as an adjustment to accumulated other comprehensive income. The fair value of the securities portfolio is significantly affected by changes in interest rates. In general, as interest rates rise, the fair value of fixed-rate securities decreases and as interest rates fall, the fair value of fixed-rate securities increases. The Company determines if it has the intent to sell these securities or if it is more likely than not that the Company would be required to sell the securities before the anticipated recovery. If either exists, the entire decline in value is considered other-than-temporary and would be recognized as an expense in the current period. In its evaluations, the Company did not recognize an other-than-temporary impairment charge on securities for the three and nine months ended September 30, 2017 and 2016.

The determination of whether deferred tax assets will be realizable is predicated on the reversal of existing deferred tax liabilities ~~utilization against carryback years~~ and estimates of future taxable income. Such estimates are subject to management’s judgment. A valuation allowance is established when management is unable to conclude that it is more likely than not that it will realize deferred tax assets based on the nature and timing of these items. The Company did not require a valuation allowance at ~~September 30, 2017 and~~March 31, 2020 or December 31, ~~2016.~~2019.

COMPARISON OF FINANCIAL CONDITION AT ~~SEPTEMBER 30, 2017~~MARCH 31, 2020 AND DECEMBER 31, ~~2016~~2019

Total assets at ~~September 30, 2017 totaled $9.50~~March 31, 2020 were $10.08 billion, a ~~$5.3~~$276.3 million ~~decrease~~increase from December 31, ~~2016.~~2019. The ~~decline~~increase in total assets was primarily due to a ~~$23.2~~$183.8 million ~~decrease~~increase in ~~total investments,~~cash and cash equivalents, a ~~$5.5~~$65.9 million ~~decrease~~increase in ~~premises and equipment and~~other assets, a ~~$2.3 million decrease in foreclosed assets, partially offset by a $24.6~~$39.2 million increase in total ~~loans.~~loans and an $8.5 million increase in total investments. The increase in other assets was largely due to an increase in the valuation of the Company's derivative portfolio.

~~Total loans~~The Company’s loan portfolio increased ~~$24.6~~$39.2 million ~~or 0.4%,~~ to ~~$7.03~~$7.37 billion at ~~September 30, 2017,~~March 31, 2020, from ~~$7.00~~$7.33 billion at December 31, ~~2016.~~2019. For the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2020, loan originations, ~~including~~excluding advances on lines of credit, totaled ~~$2.56 billion.~~$354.9 million, compared with $293.9 million for the same period in 2019. During the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2020, the loan portfolio had net increases of ~~$78.1~~$68.9 million in commercial loans ~~$59.9~~and $29.0 million in ~~construction loans and $44.0 million in commercial~~residential mortgage loans, partially offset by net decreases of ~~$67.1~~$23.3 million in commercial mortgage loans, $20.9 million in construction loans, $11.8 million in consumer loans and $3.2 million in multi-family mortgage ~~loans, $54.4 million in residential mortgage loans and $35.5 million in consumer~~ loans. Commercial real estate, commercial and construction loans represented ~~76.7%~~79.8% of the loan portfolio at ~~September 30, 2017,~~March 31, 2020, compared to ~~75.3%~~80.0% at December 31, ~~2016.~~2019.

The Company participates in loans originated by other banks, including participations designated as Shared National Credits (“SNCs”). The Company’s gross commitments and outstanding balances as a participant in SNCs were ~~$311.3~~$219.5 million and ~~$214.1~~$115.9 million, respectively, at ~~September 30, 2017.~~March 31, 2020, compared to $213.2 million and $105.3 million, respectively, at December 31, 2019. No SNCs were 90 days or more delinquent at ~~September 30, 2017.~~March 31, 2020.

The Company had outstanding junior lien mortgages totaling ~~$209.2~~$140.5 million at ~~September 30, 2017.~~March 31, 2020. Of this total, 227 loans totaling ~~$1.3 million~~$182,000 were 90 days or more delinquent. These loans were allocated total loss reserves of ~~$238,000.~~$32,000.

The following table sets forth information regarding the Company’s non-performing assets as of ~~September 30, 2017~~March 31, 2020 and December 31, ~~2016~~2019 (in thousands):


	March 31, 2020		December 31, 2019
Mortgage loans:
Residential	$	6,145	8,543
Commercial	5,264		5,270


Total mortgage loans	11,409		13,813
Commercial loans	23,086		25,160
Consumer loans	844		1,221


Total non-performing loans	35,339		40,194
Foreclosed assets	4,219		2,715
Total non-performing assets	$	39,558	42,909

September 30, 2017
December 31, 2016
Mortgage loans:

Residential
$ 8,820
12,021
Commercial
8,070
7,493
Multi-family
—
553
Construction
—
2,517
Total mortgage loans
16,890
22,584
Commercial loans
17,523
16,787
Consumer loans
2,035
3,030
Total non-performing/non-accrual loans
36,448
42,401
Total non-performing/accruing loans - 90 days or more delinquent —
—
Total non-performing loans 36,448
42,401
Foreclosed assets
5,703
7,991
Total non-performing assets
$ 42,151
50,392

The following table sets forth information regarding the Company’s 60-89 day delinquent loans as of ~~September 30, 2017~~March 31, 2020 and December 31, ~~2016~~2019 (in thousands):


	September 30, 2017		December 31, 2016		March 31, 2020		December 31, 2019
Mortgage loans:				Mortgage loans:
Residential	$	3,525	6,563	Residential	$	4,075	2,579
Commercial	292		80

Total mortgage loans	3,817		6,643	Total mortgage loans	4,075		2,579
Commercial loans	244		357	Commercial loans	1		95
Consumer loans	1,080		1,199	Consumer loans	661		337
Total 60-89 day delinquent loans	$	5,141	8,199	Total 60-89 day delinquent loans	$	4,737	3,011

At ~~September 30, 2017,~~March 31, 2020, the allowance for ~~loan~~credit losses totaled ~~$60.3~~$75.1 million, or ~~0.86%~~1.02% of total loans, compared ~~with $61.9~~to $55.5 million, or ~~0.88%~~0.76% of total loans, prior to the adoption of CECL at December 31, 2019. Total non-performing loans were $35.3 million, or 0.48% of total loans at March 31, 2020, compared to $40.2 million, or 0.55% of total loans at December 31, ~~2016. Total non-performing loans were $36.4 million, or 0.52% of total loans at September 30, 2017, compared to $42.4 million, or 0.61% of total loans at December 31, 2016.~~2019. The ~~$6.0~~$4.9 million decrease in non-performing loans consisted of a ~~$3.2~~$2.4 million decrease in non-performing residential ~~mortgage~~ loans, a ~~$995,000~~$2.1 million decrease ~~in non-performing consumer loans and a $553,000 decrease in non-performing multi-family loans, partially offset by a $736,000 increase~~ in non-performing commercial loans and a ~~$577,000 increase~~$377,000 decrease in non-performing ~~commercial mortgage~~consumer loans. Non-performing loans do not include ~~$1.0 million~~$737,000 of purchased credit ~~impaired~~deteriorated ("~~PCI"~~PCD") loans acquired from Team ~~Capital.~~Capital Bank in 2014.

At ~~September 30, 2017~~March 31, 2020 and December 31, ~~2016,~~2019, the Company held ~~$5.7~~$4.2 million and ~~$8.0~~$2.7 million of foreclosed assets, respectively. During the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2020, there were 12two additions to foreclosed assets with aan aggregate carrying value of ~~$2.2~~$2.1 million, valuation charges of $353,000 and ~~23 properties~~one property sold with a carrying value of ~~$3.8 million.~~$227,000. Foreclosed assets at ~~September 30, 2017~~ c~~onsisted~~March 31, 2020 consisted of ~~$3.4~~$2.0 million of residential real estate, $500,000 of commercial real estate and ~~$2.3~~$1.8 million of ~~residential real estate.~~commercial vehicles.

Non-performing assets totaled ~~$42.2~~$39.6 million, or 0.39% of total assets at March 31, 2020, compared to $42.9 million, or 0.44% of total assets at ~~September 30, 2017, compared to $50.4 million, or 0.53% of total assets at~~ December 31, ~~2016.~~2019.

Cash and cash equivalents were $370.6 million at March 31, 2020, a $183.8 million increase from December 31, 2019 as a result of increases in cash collateral pledged to secure loan level swaps and short-term investments.

Total investments ~~decreased $23.2 million, or 1.4%, to $1.58~~were $1.50 billion at ~~September 30, 2017,~~March 31, 2020, an $8.5 million increase from ~~$1.60 billion at~~ December 31, ~~2016,~~2019. This increase was largely due to ~~principal~~purchases of mortgage-backed and municipal securities and an increase in unrealized gains on available for sale debt securities, partially offset by repayments onof mortgage-backed securities, and maturities and calls of certain municipal and agency ~~bonds, partially offset by purchases of mortgage-backed and municipal securities, along with an increase in unrealized gains on securities available for sale.~~bonds.

Total deposits increased ~~$37.6~~$108.2 million ~~or 0.6%,~~ during the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2020 to ~~$6.59 billion from $6.55 billion at December 31, 2016.~~$7.21 billion. Total core deposits, ~~which consist~~consisting of savings and demand ~~deposit accounts,~~deposits, increased ~~$60.9~~$145.4 million to ~~$5.96~~$6.51 billion at ~~September 30, 2017, from $5.90 billion at December~~March 31, ~~2016,~~2020, while total time deposits decreased ~~$23.3~~$37.3 million to ~~$627.9~~$696.8 million at ~~September 30, 2017, from $651.2 million at December~~March 31, ~~2016.~~2020. The increase in core deposits was ~~largely~~ attributable to a ~~$100.9~~$72.4 million increase in interest bearing demand deposits, ~~and~~ a ~~$19.5~~$44.2 million increase in money market deposits, a $21.7 million increase in non-interest bearing

demand deposits ~~partially offset by~~and a ~~$43.7~~$7.1 million increase in savings deposits. The decrease in time deposits was the result of a $23.1 million decrease in ~~money market~~retail time deposits and a ~~$15.8~~$14.2 million decrease in ~~savings~~brokered deposits. Core deposits represented ~~90.5%~~90.3% of total deposits at ~~September 30, 2017,~~March 31, 2020, compared to ~~90.1%~~89.7% at December 31, ~~2016.~~2019.

Borrowed funds ~~decreased $87.2~~increased $88.6 million ~~or 5.4%,~~ during the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2020, to ~~$1.53 billion, as wholesale funding was replaced by net inflows of deposits and capital formation~~$1.21 billion. The increase in borrowings for the ~~period.~~period was a function of asset funding requirements. Borrowed funds represented ~~16.1%~~12.0% of total assets at ~~September 30, 2017,~~March 31, 2020, a ~~decrease~~increase from ~~17.0%~~11.5% at December 31, ~~2016.~~2019.

Stockholders’ equity ~~increased $48.4~~decreased $1.3 million ~~or 3.9%,~~ during the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2020, to ~~$1.30~~$1.41 billion, primarily due to dividends paid to stockholders, the adoption of CECL on January 1, 2020 and the related charge to equity of $8.3 million, net of tax, to establish initial allowances against credit losses and off-balance sheet credit exposures under the new accounting standard and common stock repurchases, partially offset by net income earned for the period and an increase in unrealized gains on ~~securities~~ available for sale ~~partially offset by dividends paid to stockholders. Common~~debt securities. For the three months ended March 31, 2020, common stock repurchases totaled 286,816 shares at an average cost of $20.72, of which 48,038 shares, at an average cost of $19.89, were made in connection with withholding to cover income taxes on the vesting of stock-based ~~compensation for the nine months ended September 30, 2017 totaled 43,090 shares at an average cost of $27.13.~~compensation. At ~~September 30, 2017, 3.1~~March 31, 2020, 1.3 million shares remained eligible for repurchase under the current stock repurchase authorization.

Book value per share and tangible book value per share at ~~September 30, 2017~~March 31, 2020 were ~~$19.56~~$21.48 and ~~$13.23,~~$14.84, respectively, compared with ~~$18.94~~$21.49 and ~~$12.54,~~$14.85, respectively, at December 31, ~~2016.~~2019. Tangible book value per share is a non-GAAP financial measure.

The following table reconciles book value per share to tangible book value per share and the associated calculations (in thousands, except per share data):


	March 31, 2020			December 31, 2019
Total stockholders' equity	$	1,412,589	1,413,840
Less: Total intangible assets	436,278		437,019
Total tangible stockholders' equity	$	976,311	976,821

Shares outstanding at March 31, 2020 and December 31, 2019	65,770,728		65,787,900

Book value per share (total stockholders' equity/shares outstanding)	$	21.48	21.49
Tangible book value per share (total tangible stockholders' equity/shares outstanding)	$	14.84	14.85

September 30,
2017
December 31,
2016

Total stockholders' equity $ 1,300,172
$ 1,251,781
Less: Total intangible assets 420,877
422,937
Total tangible stockholders' equity $ 879,295
$ 828,844

Shares outstanding at September 30, 2017 and December 31, 2016 66,467,819
66,082,283

Book value per share (total stockholders' equity/shares outstanding)
$19.56

$18.94
Tangible book value per share (total tangible stockholders' equity/shares outstanding)
$13.23

$12.54

Liquidity and Capital Resources. Liquidity refers to the Company’s ability to generate adequate amounts of cash to meet financial obligations to its depositors, to fund loans and securities purchases, deposit outflows and operating expenses. Sources of funds include scheduled amortization of loans, loan prepayments, scheduled maturities of investments, cash flows from mortgage-backed securities and the ability to borrow funds from the FHLBNY and approved broker-dealers.

Cash flows from loan payments and maturing investment securities are generally fairly predictable sources of funds. Changes in interest rates, local economic conditions and the competitive marketplace can influence the repayment of loan principal, loan prepayments, prepayments on mortgage-backed securities and deposit flows.

In response to the COVID-19 pandemic, the Company has escalated the monitoring of deposit behavior, utilization of credit lines, and borrowing capacity with the FHLBNY and FRBNY, and is maximizing its collateral position with these funding sources.

The Federal Deposit Insurance Corporation and the other federal bank regulatory agencies issued a final rule that revised the 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, that ~~was~~were effective January 1, 2015. Among other things, the rule established a new common equity Tier 1 minimum capital requirement (4.5% of risk-weighted assets), adopted a uniform minimum leverage capital ratio at 4%, increased the minimum Tier 1 capital to risk-based assets requirement (from 4% to 6% of risk-weighted assets) and ~~assigns~~assigned a higher risk weight (150%) to exposures that are more than 90 days past due or are on ~~nonaccrual~~non-accrual status and to certain commercial real estate facilities that finance the acquisition, development or construction of real property. The rule also required unrealized gains and losses on certain “available-for-sale” securities holdings to be included for purposes of calculating regulatory capital unless a one-time opt-out was exercised. The Company exercised the option to exclude unrealized gains and losses from the calculation of regulatory capital. Additional constraints were also imposed on the inclusion in regulatory capital of mortgage-servicing assets, deferred tax assets and minority interests. The rule limits a banking organization’s capital distributions and certain discretionary bonus payments if the banking organization does not hold a “capital conservation buffer,” ~~which when fully phased-in will consist~~ of 2.5% ~~of common equity Tier 1 capital to risk-weighted assets~~ in addition to the amount necessary to meet its minimum risk-based capital requirements. ~~The~~

In the first quarter of 2020, U.S. federal regulatory authorities issued an interim final rule that provides banking organizations that adopt CECL during the 2020 calendar year with the option to delay for two years the estimated impact of CECL on regulatory capital ~~conservation buffer was effective~~as compared to regulatory capital determined under the prior incurred loss methodology, followed by a three-year transition period to phase out the aggregate amount of the capital benefit provided during the initial two-year delay (i.e., a five year transition in total). In connection with its adoption of CECL on January 1, ~~2016, with a 0.625% requirement in that year, and will continue~~2020, the Company has elected to ~~be phased in through January 1, 2019, when~~utilize the ~~full capital requirement will be effective. For 2017, the capital conservation buffer requirement is 1.25%.~~five-year CECL transition.

As of ~~September 30, 2017,~~March 31, 2020, the Bank and the Company exceeded all current minimum regulatory capital requirements as follows:


	September 30, 2017													March 31, 2020
	Required				Required with Capital Conservation Buffer				Actual					Required						Required with Capital Conservation Buffer						Actual
	Amount		Ratio		Amount		Ratio		Amount		Ratio			Amount		Ratio		Amount		Ratio		Amount		Ratio
	(Dollars in thousands)													(Dollars in thousands)
Bank:⁽¹⁾													Bank:⁽¹⁾
Tier 1 leverage capital	$	363,062	4.00	%	$	363,062	4.00	%	$	828,349	9.13	%	Tier 1 leverage capital	$	379,792	4.00	%	$	379,792	4.00	%	$	880,226	9.27	%
Common equity Tier 1 risk-based capital	326,026		4.50		416,588		5.75		828,349		11.43		Common equity Tier 1 risk-based capital	354,583		4.50		551,573		7.00		880,226		11.17
Tier 1 risk-based capital	434,701		6.00		525,264		7.25		828,349		11.43		Tier 1 risk-based capital	472,777		6.00		669,768		8.50		880,226		11.17
Total risk-based capital	579,601		8.00		670,164		9.25		888,777		12.27		Total risk-based capital	630,370		8.00		827,360		10.50		944,310		11.98

Company:													Company:
Tier 1 leverage capital	$	363,072	4.00	%	$	363,072	4.00	%	$	880,995	9.71	%	Tier 1 leverage capital	$	379,831	4.00	%	$	379,831	4.00	%	$	969,965	10.21	%
Common equity Tier 1 risk-based capital	326,037		4.50		416,603		5.75		880,995		12.16		Common equity Tier 1 risk-based capital	354,622		4.50		551,634		7.00		969,965		12.31
Tier 1 risk-based capital	434,716		6.00		525,282		7.25		880,995		12.16		Tier 1 risk-based capital	472,829		6.00		669,841		8.50		969,965		12.31
Total risk-based capital	579,622		8.00		670,187		9.25		941,271		12.99		Total risk-based capital	630,438		8.00		827,451		10.50		1,033,910		13.12

(1) Under the FDIC's prompt corrective action provisions, the Bank is considered well capitalized if it has: a leverage (Tier 1) capital ratio of at least 5.00%; a common equity Tier 1 risk-based capital ratio of 6.50%; a Tier 1 risk-based capital ratio of at least 8.00%; and a total risk-based capital ratio of at least 10.00%.

COMPARISON OF OPERATING RESULTS FOR THE THREE ~~AND NINE~~ MONTHS ENDED ~~SEPTEMBER 30, 2017~~MARCH 31, 2020 AND ~~2016~~2019

General. The Company reported net income of ~~$26.6~~$14.9 million, or ~~$0.41~~$0.23 per basic and diluted share for the three months ended ~~September 30, 2017,~~March 31, 2020, compared to net income of ~~$22.9~~$30.9 million, or ~~$0.36~~$0.48 per basic and diluted share for the three months ended September 30, 2016. For the nine months ended September 30, 2017, the Company reported net income of $74.5 million, or $1.16 per basic share and $1.15 per diluted share, compared to net income of $65.2 million, or $1.03 per basic share and $1.02 per diluted share, for the same period last year.March 31, 2019.

The ~~increases in the~~ Company’s earnings for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2020 were ~~driven~~adversely impacted by elevated provisions for credit losses primarily due to the adoption of CECL, the new accounting standard that requires the current recognition of allowances for losses expected to be incurred over the life of covered assets. These provisions were exacerbated by the ~~period-over-period growth in average loans outstanding, growth in both average non-interest bearing~~current weak economic forecast attributable to the COVID-19 pandemic. For the three months ended March 31, 2020, provisions for credit losses and ~~interest bearing core deposits, expansion~~off-balance sheet credit exposures totaled $15.7 million. Current quarter earnings were further impacted by $463,000 of costs related to the ~~net interest margin and an increase in non-interest income. The improvement in the net interest margin was largely the result~~Company's planned acquisition of ~~an increase in the yield on earning assets, combined with a relatively stable cost of funds.~~SB One Bancorp.

Net Interest Income. Total net interest income ~~increased $5.2~~decreased $3.0 million to ~~$70.2~~$72.0 million for the quarter ended ~~September 30, 2017,~~March 31, 2020, from ~~$65.0~~$75.0 million for the quarter ended ~~September 30, 2016. For~~March 31, 2019. Interest income for the ~~nine months~~quarter ended ~~September 30, 2017, total net interest income increased $14.4~~March 31, 2020 decreased $4.2 million ~~or 7.5%,~~ to ~~$206.3~~$88.2 million, from ~~$192.0~~$92.4 million for the same period in ~~2016.~~2019. Interest ~~income for the quarter ended September 30, 2017 increased $5.8~~expense decreased $1.3 million to $81.9 million, from $76.0 million for the same period in 2016. For the nine months ended September 30, 2017, interest income increased $15.4 million to $240.3 million, from $224.8 million for the nine months ended September 30, 2016. Interest expense increased $608,000, or 5.5%, to $11.7$16.1 million for the quarter ended ~~September 30, 2017,~~March 31, 2020, from ~~$11.1~~$17.4 million for the quarter ended ~~September 30, 2016. For~~March 31, 2019. The decline in net interest income for the ~~nine~~three months ended ~~September 30, 2017, interest expense increased $1.1 million to $33.9 million, from $32.9 million for~~March 31, 2020, compared with the ~~nine~~three months ended ~~September 30, 2016.~~March 31, 2019, was primarily due to period-over-period compression in the net interest margin resulting from a decline in the yields on interest-earning assets. This was tempered by growth in lower-costing average interest-bearing and non-interest bearing core deposits. Borrowing volume and rates were also lower, which further reduced the Company’s cost of funds.

The net interest margin ~~increased 17~~decreased 20 basis points to ~~3.22%~~3.20% for the quarter ended ~~September 30, 2017,~~March 31, 2020, compared ~~with 3.05%~~to 3.40% for the quarter ended ~~September 30, 2016.~~March 31, 2019. The weighted average yield on interest-earning assets ~~increased 18~~decreased 28 basis points to ~~3.75%~~3.92% for the quarter ended ~~September 30, 2017,~~March 31, 2020, compared with ~~3.57%~~4.20% for the quarter ended ~~September 30, 2016,~~March 31, 2019, while the weighted average cost of interest bearing liabilities ~~increased three~~decreased 9 basis points to ~~0.68%~~0.95% for the quarter ended ~~September 30, 2017,~~March 31, 2020, compared to 1.04% for the ~~third~~ quarter ~~of 2016.~~ended March 31, 2019. The average cost of interest bearing deposits for the quarter ended ~~September 30, 2017~~March 31, 2020 was ~~0.38%~~0.78%, ~~compared with 0.34% for~~unchanged from the ~~same period last year.~~first quarter of 2019. Average non-interest bearing demand deposits totaled ~~$1.36~~$1.50 billion for the quarter ended ~~September 30, 2017,~~March 31, 2020, compared ~~with $1.25~~to $1.44 billion ~~for the quarter ended September 30, 2016.~~at March 31, 2019. The average cost of borrowed funds for the quarter ended ~~September 30, 2017~~March 31, 2020 was ~~1.71%, compared with 1.70% for the same period last year.~~

For the nine months ended September 30, 2017, the net interest margin increased nine basis points to 3.19%, compared with 3.10% for the nine months ended September 30, 2016. The weighted average yield on interest earning assets increased nine basis points to 3.72% for the nine months ended September 30, 2017, compared with 3.63% for the nine months ended September 30, 2016, while the weighted average cost of interest bearing liabilities increased one basis point for the nine months ended September 30, 2017 to 0.67%1.80%, compared to the nine months ended September 30, 2016. The average cost of interest bearing deposits for the nine months ended September 30, 2017 was 0.36%, compared with 0.33% for the same period last year. Average non-interest bearing demand deposits totaled $1.34 billion for the nine months ended September 30, 2017, compared with $1.22 billion for the nine months ended September 30, 2016. The average cost of borrowings for the nine months ended September 30, 2017 was 1.67%, compared with 1.71%2.07% for the same period last year.

Interest income on loans secured by real estate ~~increased $2.4 million~~decreased $565,000 to ~~$47.7~~$54.4 million for the three months ended ~~September 30, 2017,~~March 31, 2020, from ~~$45.3~~$55.0 million for the three months ended ~~September 30, 2016.~~March 31, 2019. Commercial loan interest income ~~increased $2.9~~decreased $1.8 million to ~~$19.0~~$18.7 million for the three months ended ~~September 30, 2017,~~March 31, 2020, from ~~$16.1~~$20.5 million for the three months ended ~~September 30, 2016.~~March 31, 2019. Consumer loan interest income decreased ~~$544,000~~$611,000 to ~~$5.1~~$4.2 million for the three months ended ~~September 30, 2017, compared to~~March 31, 2020, from $4.8

million for the three months ended ~~September 30, 2016.~~March 31, 2019. For the three months ended ~~September 30, 2017,~~March 31, 2020, the average balance of total loans increased ~~$206.6~~$124.4 million to ~~$6.94~~$7.26 billion, compared to the same period in 2019. The average yield on total loans for the three months ended March 31, 2020 decreased 28 basis points to 4.23%, from ~~$6.73 billion~~4.51% for the same period in ~~2016. The average loan yield for the three months ended September 30, 2017 increased 15 basis points to 4.08%, from 3.93% for the same period in 2016.~~2019.

Interest income on loans secured by real estate increased $6.3 million to $140.7 million for the nine months ended September 30, 2017, from $134.4 million for the nine months ended September 30, 2016. Commercial loan interest income increased $7.5 million to $53.9 million for the nine months ended September 30, 2017, from $46.4 million for the nine months ended September 30, 2016. Consumer loan interest income decreased $1.4 million to $15.3 million for the nine months ended September 30, 2017, from $16.7 million for the nine months ended September 30, 2016. For the nine months ended September 30, 2017, the average balance of total loans increased $328.5 million to $6.94 billion, from $6.61 billion for the same period in 2016. The average loan yield for the nine months ended September 30, 2017 increased five basis point to 4.01%, from 3.96% for the same period in 2016.

~~Interest income on investment securities~~ held to maturity debt securities decreased ~~$77,000, or 2.3%,~~$222,000 to ~~$3.3~~$2.9 million for the quarter ended ~~September 30, 2017,~~March 31, 2020, compared to the same period last year. Average ~~investment securities~~ held to maturity ~~increased $8.1~~debt securities decreased $24.7 million to ~~$490.1~~$449.1 million for the quarter ended ~~September 30, 2017,~~March 31, 2020, from $482.0 million for the same period last year. Interest income on investment securities held to maturity decreased $199,000, or 2.0%, to $9.8 million for the nine months ended September 30, 2017, compared to the same period in 2016. Average investment securities held to maturity increased $12.4 million to $490.0 million for the nine months ended September 30, 2017, from $477.6$473.8 million for the same period last year.

Interest income on ~~securities~~ available for sale debt securities, equity securities and FHLBNY stock ~~increased $964,000, or 17.3%,~~decreased $1.3 million to ~~$6.5~~$7.1 million for the quarter ended ~~September 30, 2017,~~March 31, 2020, from ~~$5.6~~$8.4 million for the quarter ended ~~September 30, 2016.~~March 31, 2019. The average balance of ~~securities~~ available for sale debt securities, equity securities and FHLBNY stock ~~increased $18.7~~decreased $81.1 million to ~~$1.12~~$1.06 billion for the three months ended ~~September 30, 2017,~~March 31, 2020, compared to the same period in 2016. Interest income on securities available for sale and FHLBNY stock increased $2.6 million, or 15.1%, to $19.7 million for the nine months ended September 30, 2017, from $17.1 million for the same period last year. The average balance of securities available for sale and FHLBNY stock increased $51.8 million to $1.12 billion for the nine months ended September 30, 2017, from $1.07 billion for the same period in 2016.2019.

The average yield on total securities ~~increased~~decreased to ~~2.41%~~2.57% for the three months ended ~~September 30, 2017,~~March 31, 2020, compared with ~~2.14%~~2.87% for the same period in ~~2016. For the nine months ended September 30, 2017, the average yield on total securities was 2.53%, compared with 2.28% for the same period in 2016.~~2019.

Interest expense on deposit accounts increased ~~$547,000, or 12.3%,~~$464,000 to ~~$5.0~~$11.0 million for the quarter ended ~~September 30, 2017, from $4.4~~March 31, 2020, compared with $10.5 million for the quarter ended September 30, 2016. For the nine months ended September 30, 2017, interest expense on deposit accounts increased $1.7 million, or 13.7%, to $14.1 million, from $12.4 million for the same period last year.March 31, 2019. The average cost of interest bearing deposits ~~increased to 0.38%~~was 0.78% for the ~~third~~first quarter of ~~2017 and 0.36% for~~2020, unchanged from the ~~nine~~three months ended ~~September 30, 2017, from 0.34% and 0.33% for the three and nine months ended September 30, 2016.~~March 31, 2019. The average balance of interest bearing core deposits for the quarter ended ~~September 30, 2017~~March 31, 2020 increased ~~$78.0~~$242.1 million to $4.57 billion, from $4.49 billion for the same period in 2016. For the nine months ended September 30, 2017, average interest bearing core deposits increased $298.3 million, to $4.56 billion, from $4.26 billion for the same period in 2016.$4.89 billion. Average time deposit account balances decreased ~~$63.2~~$6.2 million, to ~~$639.9~~$771.2 million for the quarter ended ~~September 30, 2017,~~March 31, 2020, from ~~$703.0~~$777.4 million for the quarter ended ~~September 30, 2016. For the nine months ended September 30, 2017, average time deposit account balances decreased $87.9 million, to $658.2 million, from $746.1 million for the same period in 2016.~~March 31, 2019.

Interest expense on borrowed funds ~~increased $61,000, or 0.9%,~~decreased $1.7 million to ~~$6.7~~$5.2 million for the quarter ended ~~September 30, 2017,~~March 31, 2020, from ~~$6.6~~$6.9 million for the quarter ended September 30, 2016. For the nine months ended September 30, 2017, interest expense on borrowed funds decreased $622,000 to $19.9 million, from $20.5 million for the nine months ended September 30, 2016. The

~~average cost of borrowings increased to 1.71% for the three months ended September 30, 2017, from 1.70% for the three months ended September 30, 2016.~~March 31, 2019. The average cost of borrowings decreased to ~~1.67%~~1.80% for the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2020, from ~~1.71%~~2.07% for the ~~same period last year.~~three months ended March 31, 2019. Average borrowings ~~increased $3.2~~decreased $195.0 million ~~or 0.2%,~~ to ~~$1.55~~$1.16 billion for the quarter ended ~~September 30, 2017,~~March 31, 2020, from ~~$1.55~~$1.35 billion for the quarter ended ~~September 30, 2016. For the nine months ended September 30, 2017, average borrowings decreased $5.8 million to $1.59 billion, compared to $1.60 billion for the nine months ended September 30, 2016.~~March 31, 2019.

Provision for ~~Loan~~Credit Losses. Provisions for ~~loan~~credit losses are charged to operations in order to maintain the allowance for ~~loan~~credit losses at a level management considers necessary to absorb ~~probable~~projected credit losses ~~inherent~~that may arise over the expected term of each loan in the ~~loan~~ portfolio. In determining the level of the allowance for ~~loan~~credit losses, management ~~considers~~estimates the allowance balance using relevant available information from internal and external sources relating to past events, current conditions and ~~current loss experience, evaluations of real estate collateral, current economic conditions, volume~~reasonable and ~~type of lending, adverse situations that may affect a borrower’s ability to repay the loan and the levels of non-performing and other classified loans.~~supportable forecasts. The amount of the allowance is based on estimates, and the ultimate losses may vary from such estimates as more information becomes available or later events change. Management assesses the adequacy of the allowance for ~~loan~~credit losses on a quarterly basis and makes provisions for ~~loan~~credit losses, if necessary, in order to maintain the adequacy of the allowance.

The Company recorded provisions for ~~loan~~credit losses of ~~$500,000 and $3.7~~$14.7 million under CECL for the three ~~and nine~~ months ended ~~September 30, 2017, respectively.~~March 31, 2020. This compared with provisions for ~~loan~~credit losses of ~~$1.0 million and $4.2 million recorded~~$200,000 for the three ~~and nine~~ months ended ~~September 30, 2016, respectively.~~March 31, 2019 under the incurred loss model. For the three ~~and nine~~ months ended ~~September 30, 2017,~~March 31, 2020, the Company had net charge-offs of ~~$3.1~~$3.0 million, ~~and $5.3 million, respectively,~~ compared ~~with~~to net charge-offs of ~~$845,000 and $4.5 million, respectively,~~$409,000, for the same ~~periods~~period in ~~2016.~~2019. At ~~September 30, 2017,~~March 31, 2020, the Company’s allowance for ~~loan~~credit losses was ~~$60.3~~$75.1 million, or ~~0.86%~~1.02% of total loans, compared with ~~$61.9~~$55.5 million, or ~~0.88%~~0.76% of total loans at December 31, ~~2016.~~2019. The first quarter of 2020 included elevated provisions for credit losses primarily due to the current weak economic forecast attributable to the COVID-19 pandemic. In addition, a gross allowance for credit losses of $7.9 million and a related deferred tax asset were recorded against equity upon the January 1, 2020 adoption of CECL. Future credit loss provisions are subject to significant uncertainty given the undetermined nature of prospective changes in economic conditions, as the impact of COVID-19 unfolds. The effectiveness of medical advances, government programs, and the resulting impact on consumer behavior and employment conditions will have a material bearing on future credit conditions and reserve requirements.

Non-Interest ~~Income~~.Income. Non-interest income totaled ~~$15.1~~$17.0 million for the quarter ended ~~September 30, 2017,~~March 31, 2020, an increase of ~~$1.0~~$4.8 million, ~~or 7.4%,~~ compared to the same period in ~~2016. Fee~~2019. Other income increased ~~$1.5~~$3.1 million to ~~$7.7~~$3.4 million for the three months ended September 30, 2017, compared to the same period in 2016, largely due to a $1.3 million increase in commercial loan prepayment fee income and a $218,000 increase in debit card revenue, partially offset by a $56,000 decrease in income from non-deposit investment products. Also contributing to the increase in non-interest income, wealth management income increased $330,000 to $4.6 million for the three months ended September 30, 2017, compared to the same period in 2016, due to stronger market conditions which positively impacted fees earned from assets under management and an increase in tax preparation fees. Net gains on securities transactions increased $79,000 for the three months ended September 30, 2017, compared to the same period in 2016. Partially offsetting these increases in non-interest income, other income decreased $877,000 to $1.5 million for the three months ended September 30, 2017,March 31, 2020, compared to the quarter ended ~~September 30, 2016,~~March 31, 2019, primarily due to ~~an $853,000 decrease in net gains on the sale of loans and~~ a ~~$143,000 decrease in net gains on the sale of foreclosed real estate, partially offset by a $116,000~~$3.0 million increase in net fees on loan-level interest rate swap transactions.

~~For~~ Wealth management income increased $2.2 million to $6.3 million for the ~~nine~~three months ended ~~September 30, 2017, non-interest income totaled $42.4 million, an increase of $1.5 million, or 3.6%,~~March 31, 2020, compared to the same period in ~~2016.~~2019, primarily due to fees earned from assets under management acquired in the April 1, 2019 Tirschwell & Loewy ("T&L") transaction. Fee income increased ~~$1.6~~$432,000 to $6.5 million for the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2020, compared to the same period in ~~2016, primarily~~2019, largely due to a ~~$1.3 million~~$352,000 increase in commercial loan prepayment ~~fee income,~~fees and a ~~$259,000~~$150,000 increase in ~~deposit related fee income and a $139,000 increase in merchant fee income, partially offset by a $168,000 decrease in income~~revenue from sales of non-deposit investment ~~products and an $86,000 decrease in debit card revenue. Income~~products. Partially offsetting these increases, income from Bank-owned life insurance ~~increased $1.2 million~~("BOLI") decreased $909,000 to ~~$5.3 million~~$787,000 for the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2020, compared to the same period in ~~2016,~~2019, primarily due to a decrease in benefit claims and lower equity valuations.

Non-Interest Expense. For the ~~recognition~~three months ended March 31, 2020, non-interest expense totaled $54.1 million, an increase of ~~death benefit claims. Wealth management income~~$5.7 million, compared to the three months ended March 31, 2019. Compensation and benefits expense increased ~~$230,000~~$2.8 million to ~~$13.3~~$31.2 million for the ~~nine~~three months ended September 30, 2017, due to stronger market conditions which positively impacted fees earned from assets under management and an increase in tax preparation fees. Partially offsetting these increases in non-interest income, other income decreased $1.6 million to $2.8 million for the nine months ended September 30, 2017,March 31, 2020, compared to ~~$4.4~~$28.4 million for the same period in ~~2016, principally due to a $1.2 million decrease in net gains on loan sales and a $335,000 gain recognized on the sale of deposits resulting from a strategic branch divestiture in the prior year.~~

~~Non-Interest Expense.~~ For the three months ended September 30, 2017, non-interest expense totaled $46.3 million, an increase of $430,000, or 0.9%, compared to the three months ended September 30, 2016. Compensation and benefits expense increased $603,000 to $27.3 million for the three months ended September 30, 2017, compared to $26.7 million for the same period in 2016.2019. This increase was principally due to additional ~~salary~~compensation expense ~~related to annual merit increases, an increase in~~associated with the ~~accrual for incentive compensation~~T&L acquisition and an increase in ~~stock-based compensation, partially offset by a decrease in retirement benefit~~executive severance costs. Other operating expenses increased ~~$128,000~~$2.1 million to ~~$7.0~~$9.2 million for the three months ended ~~September 30, 2017,~~March 31, 2020, compared to the same period in ~~2016,~~2019, largely due to ~~an increase~~increases in consulting ~~costs, partially offset by decreases in loan collection~~and legal expenses, which included $463,000 related to the pending acquisition of SB One Bancorp, and a market valuation adjustment on foreclosed real estate. Credit loss expense ~~and debit card maintenance expense. Advertising and promotion expenses increased $120,000~~for off-balance sheet credit exposures related to ~~$907,000~~the adoption of CECL was $1.0 million for the three months ended ~~September 30, 2017, compared~~March 31, 2020. Data processing expense increased $461,000 to ~~the same period in 2016, largely due to the timing of the Company's advertising campaigns. Partially offsetting these increases in non-interest expense, amortization of intangibles decreased $135,000~~$4.4 million for the three months ended ~~September 30, 2017,~~March 31, 2020, primarily due to increases in software subscription service expense and online banking costs, while the amortization of intangibles increased $254,000 for the three months ended March 31, 2020, compared with the same period in ~~2016, as a result of scheduled reductions in amortization. Additionally,~~

~~net occupancy costs decreased $122,000, to $6.1 million for three months ended September 30, 2017, compared to the same period in 2016, largely due to a decrease in depreciation expense.~~

Non-interest expense totaled $139.7 million for the nine months ended September 30, 2017, an increase of $3.1 million, or 2.3%, compared to $136.6 million for the nine months ended September 30, 2016. Compensation and benefits expense increased $2.6 million to $81.1 million for the nine months ended September 30, 2017, compared to $78.5 million for the nine months ended September 30, 2016, primarily due to additional salary expense related to annual merit increases, an increase in the accrual for incentive compensation and an increase in stock-based compensation, partially offset by a decrease in retirement benefit costs. Net occupancy costs increased $526,000 to $19.3 million for the nine months ended September 30, 2017, compared to the same period in 2016, principally2019, mainly due to an increase in ~~snow removal costs, incurred earlier in~~ the year, combined with an increase in facilities maintenance costs. Data processing expense increased $457,000 to $10.3 million for the nine months ended September 30, 2017, compared to $9.8 million for the same period in 2016, primarily due to increases in telecommunication costs and software maintenance expense. In addition, other operating expenses increased $620,000 to $21.2 million for the nine months ended September 30, 2017, comparedamortization of customer relationship intangibles attributable to the ~~same period in 2016, largely due to increases in legal, consulting and debit card maintenance expenses, partially offset by a decrease in loan collection expense.~~acquisition of T&L. Partially offsetting these increases, ~~in non-interest expense,~~ FDIC insurance ~~expense~~ decreased ~~$667,000 to $3.1 million for the nine months ended September 30, 2017, compared to $3.7 million for the same period in 2016. This decrease was~~$739,000 due to the ~~FDIC's reduction~~receipt of the small bank assessment ~~rates for depository institutions with less than $10.0 billion in total assets that became effective~~credit for the fourth quarter ~~ended September 30, 2016. Additionally, amortization~~ of ~~intangibles~~2019. Also, net occupancy expense decreased ~~$549,000 for the nine months ended September 30, 2017, compared with the same period~~$654,000 largely due to a reduction in ~~2016, as a result of scheduled reductions in amortization.~~snow removal expense.

Income Tax Expense.For the three ~~and nine~~ months ended ~~September 30, 2017,~~March 31, 2020, the Company’s income tax expense was ~~$12.0~~$5.3 million, ~~and $30.8 million, respectively,~~ compared with ~~$9.3 million and $26.8~~$7.7 million, for the three ~~and nine~~ months ended ~~September 30, 2016, respectively.~~March 31, 2019. The Company’s effective tax ~~rates were 31.1% and 29.3%~~rate was 26.0% for the three ~~and nine~~ months ended ~~September 30, 2017, respectively,~~March 31, 2020, compared to ~~28.8% and 29.1%~~19.9% for the three ~~and nine~~ months ended ~~September 30, 2016, respectively, as~~March 31, 2019. The increase in the Company's effective tax rate for the three months ended March 31, 2020 was attributable to the effects of a ~~greater proportion~~technical bulletin published by the New Jersey Division of ~~income~~Taxation in the second quarter of 2019 that specifies the tax treatment of real estate investment trusts in connection with combined reporting for New Jersey corporate business tax purposes. In addition, the effective tax rate in the current ~~year periods~~quarter was ~~derived from taxable sources. The Company adopted ASU 2016-09, "Compensation - Stock Compensation (Topic 718)" in~~impacted by a discrete item related to the ~~third quarter~~vesting of ~~2016. Under this guidance, all excess tax benefits and tax deficiencies associated with share-based compensation are recognized as income tax~~stock awards at a market value below the fair value used for expense or benefit in the income statement. For the nine months ended September 30, 2017 and 2016, the application of this guidance resulted in decreases in income tax expense of $1.2 million and $158,000, respectively.recognition.



Item 3.			QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Qualitative Analysis. Interest rate risk is the exposure of a bank’s current and future earnings and capital arising from adverse movements in interest rates. The guidelines of the Company’s interest rate risk policy seek to limit the exposure to changes in interest rates that affect the underlying economic value of assets and liabilities, earnings and capital. To minimize interest rate risk, the Company generally sells all 20- and 30-year fixed-rate residential mortgage loans at origination. The Company retains residential fixed rate mortgages with terms of 15 years or less and biweekly payment residential mortgages with a term of 30 years or less. Commercial real estate loans generally have interest rates that reset in five years, and other commercial loans such as construction loans and commercial lines of credit reset with changes in the Prime rate, the Federal Funds rate or LIBOR. Investment securities purchases generally have maturities of five years or less, and mortgage-backed securities have weighted average lives between three and five years.

The Asset/Liability Committee meets on at least a monthly basis to review the impact of interest rate changes on net interest income, net interest margin, net income and the economic value of equity. The Asset/Liability Committee reviews a variety of strategies that project changes in asset or liability mix and the impact of those changes on projected net interest income and net income.

The Company’s strategy for liabilities has been to maintain a stable core-funding base by focusing on core deposit account acquisition and increasing products and services per household. The Company’s ability to retain maturing time deposit accounts is the result of its strategy to remain competitively priced within its marketplace. The Company’s pricing strategy may vary depending upon current funding needs and the ability of the Company to fund operations through alternative sources, primarily by accessing short-term lines of credit with the FHLBNY during periods of pricing dislocation.

Quantitative Analysis. Current and future sensitivity to changes in interest rates are measured through the use of balance sheet and income simulation models. The analysis captures changes in net interest income using flat rates as a base, a most likely rate forecast and rising and declining interest rate forecasts. Changes in net interest income and net income for the forecast period, generally twelve to twenty-four months, are measured and compared to policy limits for acceptable change. The Company periodically reviews historical deposit re-pricing activity and makes modifications to certain assumptions used in its income simulation model regarding the interest rate sensitivity of deposits without maturity dates. These modifications are made to more closely reflect the most likely results under the various interest rate change scenarios. Since it is inherently difficult to predict the

sensitivity of interest bearing deposits to changes in interest rates, the changes in net interest income due to changes in interest rates cannot be precisely predicted. There are a variety of reasons that may cause actual results to vary considerably from the predictions presented below which include, but are not limited to, the timing, magnitude, and frequency of changes in interest rates, interest rate spreads, prepayments, and actions taken in response to such changes.

Specific assumptions used in the simulation model include:

•Parallel yield curve shifts for market rates;

•Current asset and liability spreads to market interest rates are fixed;

•Traditional savings and interest-bearing demand accounts move at 10% of the rate ramp in either direction;

•Retail Money Market and Business Money Market accounts move at 25% and 75% of the rate ramp in either direction ~~respectively;~~respectively, subject to certain interest rate floors; and

•Higher-balance demand deposit tiers and promotional demand accounts move at 50% to 75% of the rate ramp in either direction, subject to certain interest rate floors.

The following table sets forth the results of a twelve-month net interest income projection model as of ~~September 30, 2017~~March 31, 2020 (dollars in thousands):


Change in Interest Rates in Basis Points (Rate Ramp)	Net Interest Income
	Dollar Amount		Dollar Change			Percent Change
Change in interest rates (basis points) - Rate Ramp								Change in interest rates (basis points) - Rate Ramp	Net Interest Income
											Dollar Amount		Dollar Change		Percent Change
-100	$	267,114	$	(13,416	)	(4.8	)%	-100	$	262,245	$	(8,214)	(3.0)	%
Static	280,530		—			—		Static	270,459		—		—	%
+100	279,080		(1,450		)	(0.5	)	+100	271,097		638		0.2	%
+200	277,373		(3,157		)	(1.1	)	+200	271,636		1,177		0.4	%
+300	276,840		(3,690		)	(1.3	)	+300	271,848		1,389		0.5	%

The preceding table indicates that, as of ~~September 30, 2017,~~March 31, 2020, in the event of a 300 basis point increase in interest rates, whereby rates ramp up evenly over a twelve-month period, net interest income would ~~decrease 1.3%~~increase 0.5%, or ~~$3.7~~$1.4 million. In the event of a 100 basis point decrease in interest rates, net interest income would decrease ~~4.8%~~3.0%, or ~~$13.4~~$8.2 million over the same period.

Another measure of interest rate sensitivity is to model changes in economic value of equity through the use of immediate and sustained interest rate shocks. The following table illustrates the result of the economic value of equity model as of ~~September 30, 2017~~March 31, 2020 (dollars in thousands):


	Present Value of Equity										Present Value of Equity as Percent of Present Value of Assets
Change in interest rates (basis points)	Dollar Amount		Dollar Change		Percent Change		Present Value Ratio		Percent Change
-100	$	1,302,785	$	(173,052)	(11.7)	%	13.0	%	(13.5)	%
Flat	1,475,837		—		—	%	15.0	%	—	%
+100	1,508,401		32,564		2.2	%	15.7	%	4.4	%
+200	1,518,524		42,687		2.9	%	16.2	%	7.6	%
+300	1,509,395		33,558		2.3	%	16.4	%	9.4	%

Present Value of Equity
Present Value of Equity
as Percent of Present
Value of Assets
Change in Interest
Rates (Basis Points)

Dollar
Amount

Dollar
Change

Percent
Change

Present
Value Ratio

Percent
Change
-100 $ 1,488,974
$ 74,351
5.3 % 15.3 % 4.2 %
Flat 1,414,623
—
—
14.7
—
+100 1,379,158
(35,465 ) (2.5 ) 14.4
(1.9 )
+200 1,332,652
(81,971 ) (5.8 ) 14.0
(4.5 )
+300 1,293,224
(121,399 ) (8.6 ) 13.7
(6.7 )

The preceding table indicates that as of ~~September 30, 2017,~~March 31, 2020, in the event of ~~an immediate and~~a sustained increase of 300 basis point, ~~increase in interest rates, the present value~~Present Value of ~~equity~~Equity is projected to ~~decrease 8.6%~~increase 2.3%, or ~~$121.4~~$33.6 million. ~~If rates were to decrease~~In the event of a sustained 100 basis points ~~the model forecasts a 5.3%~~decrease in rates, Present Value of Equity would decrease 11.7%, or ~~$74.4 million, increase in the present value of equity.~~$173.1 million.

Certain shortcomings are inherent in the methodologies used in the above interest rate risk measurements. Modeling changes in net interest income requires the use of certain assumptions regarding prepayment and deposit decay rates, which may or may not reflect the manner in which actual yields and costs respond to changes in market interest rates. While management believes such assumptions are reasonable, there can be no assurance that assumed prepayment rates and decay rates will approximate actual future loan prepayment and deposit withdrawal activity. Moreover, the net interest income table presented assumes that the composition of interest sensitive assets and liabilities existing at the beginning of a period remains constant over the period being measured and also assumes that a particular change in interest rates is reflected uniformly across the yield curve regardless of the duration to maturity or repricing of specific assets and liabilities. Accordingly, although the net interest income table provides an

indication of the Company’s interest rate risk exposure at a particular point in time, such measurement is not intended to and does not provide a precise forecast of the effect of changes in market interest rates on the Company’s net interest income and will differ from actual results.



Item 4.			CONTROLS AND PROCEDURES.

Under the supervision and with the participation of management, including the Principal Executive Officer and the Principal Financial Officer, the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) or 15d-15(e) under the Securities Exchange Act of 1934) were evaluated at the end of the period covered by this report. Based upon that evaluation, the Principal Executive Officer and the Principal Financial Officer concluded that, as of the end of the period covered by this report, the Company’s disclosure controls and procedures are effective. ~~There has been no change in the~~The Company’s internal control over financial reporting ~~during~~was modified due to the ~~period covered by this report that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.~~

January 1, 2020 adoption of CECL, while all other controls remained unchanged.

PART II—OTHER INFORMATION



Item 1.			Legal Proceedings

The Company is involved in various legal actions and claims arising in the normal course of business. In the opinion of management, these legal actions and claims are not expected to have a material adverse impact on the Company’s financial condition.



Item 1A.			Risk Factors

~~There have been no material changes to the~~The risk factors that were previously disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, ~~2016.~~2019, have been supplemented by the Company for the quarter ended March 31, 2020, as follows:

The economic impact of the COVID-19 outbreak has adversely affected, and is likely to continue to adversely affect, the Company's business and results of operations.

In December 2019, a coronavirus was reported in China, and, in March 2020, the World Health Organization declared COVID-19 a pandemic. On March 12, 2020 the President of the United States declared the COVID-19 outbreak in the United States a national emergency. The COVID-19 pandemic has caused significant economic dislocation in the United States as many state and local governments have ordered non-essential businesses to close and residents to shelter in place at home. This has resulted in an unprecedented slow-down in economic activity and a related increase in unemployment. Since the COVID-19 outbreak, more than 30 million people have filed claims for unemployment, and stock markets have declined in value and in particular bank stocks have significantly declined in value. In response to the COVID-19 outbreak, the Federal Reserve has reduced the benchmark fed funds rate to a target range of 0% to 0.25%, and the yields on 10 and 30-year treasury notes have declined to historic lows. Various state governments and federal agencies are requiring 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 relief from reporting loan classifications due to modifications related to the COVID-19 outbreak. Certain industries have been particularly hard-hit, including the travel and hospitality industry, the restaurant industry and the retail industry. Finally, the spread of the coronavirus has caused the Company to modify their business practices, including employee travel, employee work locations, and cancellation of physical participation in meetings, events and conferences. The Company has many employees working remotely, and may take further actions if required by government authorities that are in the best interests of its employees, customers and business partners.

Given the ongoing and dynamic nature of the circumstances, it is difficult to predict the full impact of the COVID-19 outbreak on the Company's business. The extent of such impact will depend on future developments, which are highly uncertain, including when the coronavirus can be controlled and abated and when and how the economy may be reopened. As the result of the COVID-19 pandemic and the related adverse local and national economic consequences, the Company could be subject to any of the following risks, any of which could have a material adverse effect on its respective business, financial condition, liquidity, and results of operations:

•demand for our products and services may decline, making it difficult 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 charge-offs and reduced loan repayments impacting cash flows and liquidity;

•collateral for loans, especially real estate, may decline in value, which could cause credit losses to increase;

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

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

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

•a material decrease in net income or a net loss over several quarters could result in a decrease in the rate of our quarterly cash dividend;

•the Company’s investment portfolio may suffer a substantial decrease in value;

•the Company’s wealth management revenues may decline with continuing market turmoil;

•the Company’s cyber security risks are increased as the result of an increase in the number of employees working remotely; and

•the Company's reliance on third party vendors for certain services and the unavailability of a critical service due to the COVID-19 outbreak could have an adverse effect on the Company.

These factors, among others, together or in combination with other events or occurrences not yet known or anticipated, could adversely affect the operations of the Company.

We may fail to realize the anticipated benefits of the proposed merger of SB One Bank into Provident Bank.

On March 11, 2020, we announced the proposed merger of SB One Bancorp with the Company, and the merger of SB One Bank, a wholly owned subsidiary of SB One Bancorp, with and into Provident Bank, the Company’s wholly owned subsidiary. The proposed merger remains subject to regulatory approvals, as well as approval by the stockholders of SB One Bancorp. We anticipate completing the merger in the third quarter of 2020. The success of the proposed merger will depend on, among other things, our ability to realize anticipated cost savings and to combine the businesses of SB One Bank and Provident Bank in a manner that does not materially disrupt the customer relationships of both banks. If we are unable to successfully achieve these objectives, the anticipated benefits of the proposed merger may not be realized fully or at all or may take longer to realize than expected.

The Company and SB One Bancorp have operated and, until completion of the merger, will continue to operate, independently. It is possible that the integration process related to the proposed merger may result in the loss of key personnel, the disruption of our business or inconsistencies in standards, controls, procedures and policies that may adversely impact our ability to maintain relationships with customers and employees or to achieve the anticipated benefits of the proposed merger.



Item 2.			Unregistered Sales of Equity Securities and Use of Proceeds.

ISSUER PURCHASES OF EQUITY SECURITIES


Period	(a) Total Number of Shares Purchased	(b) Average Price Paid per Share		(c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs ⁽¹⁾	(d) Maximum Number of Shares that May Yet Be Purchased under the Plans or Programs ⁽¹⁾
January 1, 2020 through January 31, 2020	40,178	$	22.79	40,178	1,554,553
February 1, 2020 through February 29, 2020	161,200	22.45		161,200	1,393,353
March 1, 2020 through March 31, 2020	85,438	16.39		85,438	1,307,915
Total	286,816	20.69		286,816

⁽¹⁾On December 20, 2012, the Company’s Board of Directors approved the purchase of up to 3,017,770 shares of its common stock under an eighth general repurchase program which commenced upon completion of the previous repurchase program. The repurchase program has no expiration date.

Period
(a) Total Number
of Shares
Purchased

(b) Average
Price Paid
per Share

(c) Total Number of
Shares Purchased
as Part of Publicly
Announced Plans
or Programs (1)

(d) Maximum Number
of Shares that May Yet
Be Purchased under
the Plans or Programs (1)(2)
July 1, 2017 through July 31, 2017 —
—
—
3,149,237
August 1, 2017 through August 31, 2017 711
$ 24.54
711
3,148,526
September 1, 2017 through September 30, 2017 —
—
—
3,148,526
Total 711
—
711


~~(1)~~	On October 24, 2007, the Company’s Board of Directors approved the purchase of up to 3,107,077 shares of its common stock under a seventh general repurchase program which commenced upon completion of the previous repurchase program. The repurchase program has no expiration date.


~~(2)~~	On December 20, 2012, the Company’s Board of Directors approved the purchase of up to 3,017,770 shares of its common stock under an eighth general repurchase program which will commence upon completion of the previous repurchase program. The repurchase program has no expiration date.



Item 3.			Defaults Upon Senior Securities.

Not Applicable



Item 4.			Mine Safety Disclosures

Not Applicable



Item 5.			Other Information.

None



Item 6.			Exhibits.

The following exhibits are filed herewith:



~~3.1~~2.1			Agreement and Plan of Merger, dated March 11, 2020, by and between Provident Financial Services, Inc. and SB One Bancorp.
3.1			Certificate of Incorporation of Provident Financial Services, Inc. (Filed as an exhibit to the Company’s Registration Statement on Form S-1, and any amendments thereto, with the Securities and Exchange Commission/Registration No. 333-98241.)

3.2			Amended and Restated Bylaws of Provident Financial Services, Inc. (Filed as an exhibit to the Company’s December 31, 2011 Annual Report to Stockholders on Form 10-K filed with the Securities and Exchange Commission on February 29, 2012/File No. 001-31566.)

4.1			Form of Common Stock Certificate of Provident Financial Services, Inc. (Filed as an exhibit to the Company’s Registration Statement on Form S-1, and any amendments thereto, with the Securities and Exchange Commission/Registration No. 333-98241.)


~~31.1~~























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

31.2			Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32			Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101			The following ~~materials~~financial statements from the Company’s Quarterly Report to Stockholders on Form 10-Q for the quarter ended ~~September 30, 2017,~~March 31, 2020, formatted in ~~XBRL (Extensible~~iXBRL (Inline Extensible Business Reporting Language): (i) the Consolidated Statements of Financial Condition, (ii) the Consolidated Statements of Operations, (iii) the Consolidated Statements of Comprehensive Income, (iv) the Consolidated Statements of Changes in Stockholder’s Equity, (v) the Consolidated Statements of Cash Flows and (vi) the Notes to Consolidated Financial Statements.


101.INS		XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

~~101.INS~~		~~XBRL Instance Document~~
101.SCH
~~101.SCH~~	XBRL Taxonomy Extension Schema Document

101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		XBRL Taxonomy Extension Labels Linkbase Document

101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

104		The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2020 has been formatted in iXBRL.

SIGNATURES

Pursuant to the requirements 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.

PROVIDENT FINANCIAL SERVICES, INC.

Date:

May 11, 2020

~~PROVIDENT FINANCIAL SERVICES, INC.~~

By:

~~Date:~~

~~November 9, 2017~~

~~By:~~

/s/ Christopher Martin

Christopher Martin

Chairman, President and Chief Executive Officer

~~(Principal~~ (Principal Executive Officer)

Date:

~~November 9, 2017~~May 11, 2020

By:

/s/ Thomas M. Lyons

Thomas M. Lyons

Senior Executive Vice President and Chief Financial Officer

~~(Principal~~ (Principal Financial Officer)

Date:

~~November 9, 2017~~May 11, 2020

By:

/s/ Frank S. Muzio

Frank S. Muzio

~~Senior~~Executive Vice President and Chief Accounting Officer

~~Exhibit Index~~



~~3.1~~	Certificate of Incorporation of Provident Financial Services, Inc. (Filed as an exhibit to the Company’s Registration Statement on Form S-1, and any amendments thereto, with the Securities and Exchange Commission/Registration No. 333-98241.)

~~3.2~~	Amended and Restated Bylaws of Provident Financial Services, Inc. (Filed as an exhibit to the Company’s December 31, 2011 Annual Report to Stockholders on Form 10-K filed with the Securities and Exchange Commission on February 29, 2012/File No. 001-31566.)

~~4.1~~	Form of Common Stock Certificate of Provident Financial Services, Inc. (Filed as an exhibit to the Company’s Registration Statement on Form S-1, and any amendments thereto, with the Securities and Exchange Commission/Registration No. 333-98241.)


~~31.1~~	~~Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.~~

~~31.2~~	~~Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.~~

32	~~Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.~~
~~101~~	The following materials from the Company’s Quarterly Report to Stockholders on Form 10-Q for the quarter ended September 30, 2017, formatted in XBRL (Extensible Business Reporting Language): (i) the Consolidated Statements of Financial Condition, (ii) the Consolidated Statements of Operations, (iii) the Consolidated Statements of Comprehensive Income, (iv) the Consolidated Statements of Changes in Stockholder’s Equity, (v) the Consolidated Statements of Cash Flows and (vi) the Notes to Consolidated Financial Statements.



~~101.INS~~	~~XBRL Instance Document~~

~~101.SCH~~	~~XBRL Taxonomy Extension Schema Document~~

~~101.CAL~~	~~XBRL Taxonomy Extension Calculation Linkbase Document~~

~~101.DEF~~	~~XBRL Taxonomy Extension Definition Linkbase Document~~

~~101.LAB~~	~~XBRL Taxonomy Extension Labels Linkbase Document~~

~~101.PRE~~	~~XBRL Taxonomy Extension Presentation Linkbase Document~~



	September 30, 2017 Unrealized Losses
	Less than 12 months				12 months or longer			Total
	Fair value		Gross unrealized losses		Fair value	Gross unrealized losses		Fair value	Gross unrealized losses
U.S. Treasury obligations	$	5,994	(1	)	—	—		5,994	(1	)
Agency obligations	16,008		(11	)	—	—		16,008	(11	)
Mortgage-backed securities	424,627		(3,956	)	50,881	(972	)	475,508	(4,928	)
Corporate obligations	—		—		991	(10	)	991	(10	)
	$	446,629	(3,968	)	51,872	(982	)	498,501	(4,950	)



	December 31, 2016 Unrealized Losses
	Less than 12 months				12 months or longer			Total
	Fair value		Gross unrealized losses		Fair value	Gross unrealized losses		Fair value	Gross unrealized losses
Agency obligations	$	14,000	(25	)	—	—		14,000	(25	)
Mortgage-backed securities	553,629		(8,377	)	65	(3	)	553,694	(8,380	)
State and municipal obligations	661		(3	)	—	—		661	(3	)
Corporate obligations	—		—		990	(11	)	990	(11	)
	$	568,290	(8,405	)	1,055	(14	)	569,345	(8,419	)



	September 30, 2017						December 31, 2016
	Unpaid Principal Balance		Recorded Investment	Related Allowance	Average Recorded Investment	Interest Income Recognized	Unpaid Principal Balance	Recorded Investment	Related Allowance	Average Recorded Investment	Interest Income Recognized
Loans with no related allowance
Mortgage loans:
Residential	$	13,035	10,277	—	10,391	340	10,691	7,881	—	8,027	484
Commercial	4,600		4,472	—	4,496	—	1,556	1,556	—	1,586	40
Construction	—		—	—	—	—	2,553	2,517	—	2,514	—
Total	17,635		14,749	—	14,887	340	14,800	11,954	—	12,127	524
Commercial loans	17,505		13,884	—	13,954	280	21,830	18,874	—	13,818	259
Consumer loans	1,606		1,067	—	1,186	51	1,493	981	—	1,026	59
Total impaired loans	$	36,746	29,700	—	30,027	671	38,123	31,809	—	26,971	842

Loans with an allowance recorded
Mortgage loans:
Residential	$	13,803	12,759	1,633	12,873	374	14,169	13,520	1,716	13,705	519
Commercial	1,071		1,070	140	1,083	40	4,138	4,077	270	4,111	55
Construction	—		—	—	—	—	—	—	—	—	—
Total	14,874		13,829	1,773	13,956	414	18,307	17,597	1,986	17,816	574
Commercial loans	6,158		5,509	1,028	6,045	52	1,381	1,381	268	5,956	4
Consumer loans	1,154		1,143	71	1,170	47	1,242	1,232	80	1,259	66
Total impaired loans	$	22,186	20,481	2,872	21,171	513	20,930	20,210	2,334	25,031	644

Total impaired loans
Mortgage loans:
Residential	$	26,838	23,036	1,633	23,264	714	24,860	21,401	1,716	21,732	1,003
Commercial	5,671		5,542	140	5,579	40	5,694	5,633	270	5,697	95
Construction	—		—	—	—	—	2,553	2,517	—	2,514	—
Total	32,509		28,578	1,773	28,843	754	33,107	29,551	1,986	29,943	1,098
Commercial loans	23,663		19,393	1,028	19,999	332	23,211	20,255	268	19,774	263
Consumer loans	2,760		2,210	71	2,356	98	2,735	2,213	80	2,285	125
Total impaired loans	$	58,932	50,181	2,872	51,198	1,184	59,053	52,019	2,334	52,002	1,486



			Fair Value Measurements at September 30, 2017 Using:
(Dollars in thousands)	Carrying value		Fair value	Quoted Prices in Active Markets for Identical Assets (Level 1)	Significant Other Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)
Financial assets:
Cash and cash equivalents	$	148,783	148,783	148,783	—	—
Securities available for sale:
U.S. Treasury obligations	5,994		5,994	5,994	—	—
Agency obligations	28,035		28,035	28,035	—	—
Mortgage-backed securities	968,412		968,412	—	968,412	—
State and municipal obligations	3,807		3,807	—	3,807	—
Corporate obligations	21,459		21,459	—	21,459	—
Equity securities	598		598	598	—	—
Total securities available for sale	$	1,028,305	1,028,305	34,627	993,678	—
Investment securities held to maturity:
Agency obligations	4,307		4,252	4,252	—	—
Mortgage-backed securities	475		492	—	492	—
State and municipal obligations	467,113		475,759	—	475,759	—
Corporate obligations	9,950		9,922	—	9,922	—
Total securities held to maturity	$	481,845	490,425	4,252	486,173	—
FHLBNY stock	70,896		70,896	70,896	—	—
Loans, net of allowance for loan losses	6,967,776		6,955,183	—	—	6,955,183
Derivative assets	8,035		8,035	—	8,035	—

Financial liabilities:
Deposits other than certificates of deposits	$	5,963,348	5,963,348	5,963,348	—	—
Certificates of deposit	627,868		628,523	—	628,523	—
Total deposits	$	6,591,216	6,591,871	5,963,348	628,523	—
Borrowings	1,525,560		1,530,444	—	1,530,444	—
Derivative liabilities	7,595		7,595	—	7,595	—



	Reclassifications From Accumulated Other Comprehensive Income ("AOCI")
	Amount reclassified from AOCI for the nine months ended September 30,					Affected line item in the Consolidated Statement of Income
	2017			2016		Affected line item in the Consolidated Statement of Income
Details of AOCI:
Securities available for sale:
Realized net gains on the sale of securities available for sale	$	—		54		Net gain on securities transactions
	—			(22	)	Income tax expense
	—			32		Net of tax

Post-retirement obligations:
Amortization of actuarial losses	183			708		Compensation and employee benefits ⁽¹⁾
	(78		)	(284	)	Income tax expense
	105			424		Net of tax
Total reclassifications	$	105		456		Net of tax



	September 30, 2017		December 31, 2016
Total stockholders' equity	$	1,300,172	$	1,251,781
Less: Total intangible assets	420,877		422,937
Total tangible stockholders' equity	$	879,295	$	828,844

Shares outstanding at September 30, 2017 and December 31, 2016	66,467,819		66,082,283

Book value per share (total stockholders' equity/shares outstanding)		$19.56		$18.94
Tangible book value per share (total tangible stockholders' equity/shares outstanding)		$13.23		$12.54



	Present Value of Equity							Present Value of Equity as Percent of Present Value of Assets
Change in Interest Rates (Basis Points)	Dollar Amount		Dollar Change			Percent Change		Present Value Ratio		Percent Change
-100	$	1,488,974	$	74,351		5.3	%	15.3	%	4.2	%
Flat	1,414,623		—			—		14.7		—
+100	1,379,158		(35,465		)	(2.5	)	14.4		(1.9	)
+200	1,332,652		(81,971		)	(5.8	)	14.0		(4.5	)
+300	1,293,224		(121,399		)	(8.6	)	13.7		(6.7	)



Period	(a) Total Number of Shares Purchased	(b) Average Price Paid per Share		(c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1)	(d) Maximum Number of Shares that May Yet Be Purchased under the Plans or Programs (1)(2)
July 1, 2017 through July 31, 2017	—	—		—	3,149,237
August 1, 2017 through August 31, 2017	711	$	24.54	711	3,148,526
September 1, 2017 through September 30, 2017	—	—		—	3,148,526
Total	711	—		711