
☒
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~~6/30/20



¨☐			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 1, 2017~~July 31, 2020 there were 83,209,293 shares issued and ~~66,773,464~~65,873,748 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 June 30, 2020 (unaudited) and December 31, 2019	3

	Consolidated Statements of Income for the three and six months ended June 30, 2020 and 2019 (unaudited)	4

	Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2020 and 2019 (unaudited)	5

	Consolidated Statements of Changes in Stockholders’ Equity for the three and six months ended June 30, 2020 and 2019 (unaudited)	6

	Consolidated Statements of Cash Flows for the six months ended June 30, 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	40

3	Quantitative and Qualitative Disclosures About Market Risk	49

4	Controls and Procedures	51

PART II—OTHER INFORMATION

1	Legal Proceedings	52

1A.	Risk Factors	52

2	Unregistered Sales of Equity Securities and Use of Proceeds	52

3	Defaults Upon Senior Securities	52

4	Mine Safety Disclosures	52

5	Other Information	52

6	Exhibits	52

Signatures			54

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

(Dollars in Thousands)


	September 30, 2017			December 31, 2016				June 30, 2020		December 31, 2019
ASSETS							ASSETS
Cash and due from banks	$	97,298		$	92,508		Cash and due from banks	$	318,141	$	131,555
Short-term investments	51,485			51,789			Short-term investments	135,622		55,193
Total cash and cash equivalents	148,783			144,297			Total cash and cash equivalents	453,763		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	948,614		976,919
Held to maturity debt securities, net (fair value of $460,587 at June 30, 2020 (unaudited) and $467,966 at December 31, 2019)							Held to maturity debt securities, net (fair value of $460,587 at June 30, 2020 (unaudited) and $467,966 at December 31, 2019)	439,303		453,629
Equity securities, at fair value							Equity securities, at fair value	806		825
Federal Home Loan Bank stock	70,896			75,726			Federal Home Loan Bank stock	57,880		57,298
Loans	7,028,052			7,003,486			Loans	7,766,391		7,332,885
Less allowance for loan losses	60,276			61,883
Less allowance for credit losses							Less allowance for credit losses	86,259		55,525
Net loans	6,967,776			6,941,603			Net loans	7,680,132		7,277,360
Foreclosed assets, net	5,703			7,991			Foreclosed assets, net	3,272		2,715
Banking premises and equipment, net	78,567			84,092			Banking premises and equipment, net	54,548		55,210
Accrued interest receivable	27,398			27,082			Accrued interest receivable	33,809		29,031
Intangible assets	420,877			422,937			Intangible assets	435,578		437,019
Bank-owned life insurance	188,123			188,527			Bank-owned life insurance	196,552		195,533
Other assets	76,873			79,641			Other assets	209,282		136,291
Total assets	$	9,495,146		$	9,500,465		Total assets	$	10,513,539	$	9,808,578

LIABILITIES AND STOCKHOLDERS’ EQUITY							LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits:							Deposits:
Demand deposits	$	4,880,133		$	4,803,426		Demand deposits	$	5,997,792	$	5,384,868
Savings deposits	1,083,215			1,099,020			Savings deposits	1,050,813		983,714
Certificates of deposit of $100,000 or more	296,172			290,295			Certificates of deposit of $100,000 or more	338,411		438,551
Other time deposits	331,696			360,888			Other time deposits	273,050		295,476
Total deposits	6,591,216			6,553,629			Total deposits	7,660,066		7,102,609
Mortgage escrow deposits	25,186			24,452			Mortgage escrow deposits	30,960		26,804
Borrowed funds	1,525,560			1,612,745			Borrowed funds	1,175,289		1,125,146
Other liabilities	53,012			57,858			Other liabilities	236,817		140,179
Total liabilities	8,194,974			8,248,684			Total liabilities	9,103,132		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 65,741,182 shares outstanding at June 30, 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 65,741,182 shares outstanding at June 30, 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	1,009,978		1,007,303
Retained earnings	586,575			550,768			Retained earnings	685,509		695,273
Accumulated other comprehensive loss	(708		)	(3,397		)
Accumulated other comprehensive income							Accumulated other comprehensive income	12,794		3,821
Treasury stock	(260,910		)	(264,221		)	Treasury stock	(275,359)		(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	(23,347)		(24,885)
Common stock acquired by the Directors’ Deferred Fee Plan	(5,343		)	(5,846		)	Common stock acquired by the Directors’ Deferred Fee Plan	(3,498)		(3,833)
Deferred compensation – Directors’ Deferred Fee Plan	5,343			5,846			Deferred compensation – Directors’ Deferred Fee Plan	3,498		3,833
Total stockholders’ equity	1,300,172			1,251,781			Total stockholders’ equity	1,410,407		1,413,840
Total liabilities and stockholders’ equity	$	9,495,146		$	9,500,465		Total liabilities and stockholders’ equity	$	10,513,539	$	9,808,578

See accompanying notes to unaudited consolidated financial statements.

PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY

Consolidated Statements of Income

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

(Dollars in Thousands, except per share data)


	Three months ended June 30,						Six months ended June 30,
	2020		2019		2020		2019
Interest income:
Real estate secured loans	$	49,297	$	55,643	$	103,738	$	110,649
Commercial loans	18,944		23,174		37,616		43,684
Consumer loans	3,547		4,785		7,719		9,568
Available for sale debt securities, equity securities and Federal Home Loan Bank Stock	6,279		8,257		13,348		16,666
Held to maturity debt securities	2,885		3,171		5,825		6,333
Deposits, Federal funds sold and other short-term investments	585		618		1,460		1,159
Total interest income	81,537		95,648		169,706		188,059
Interest expense:
Deposits	7,641		11,716		18,599		22,210
Borrowed funds	4,068		7,377		9,258		14,287
Total interest expense	11,709		19,093		27,857		36,497
Net interest income	69,828		76,555		141,849		151,562
Provision for credit losses	10,900		9,500		25,617		9,700
Net interest income after provision for credit losses	58,928		67,055		116,232		141,862
Non-interest income:
Fees	4,914		6,886		11,443		12,983
Wealth management income	5,977		6,243		12,228		10,322
Bank-owned life insurance	1,859		1,285		2,646		2,981
Net gains on securities transactions	44		29		55		29
Other income	1,571		1,391		4,984		1,707
Total non-interest income	14,365		15,834		31,356		28,022
Non-interest expense:
Compensation and employee benefits	29,200		28,990		60,395		57,359
Net occupancy expense	6,166		6,359		12,369		13,216
Data processing expense	4,983		4,364		9,413		8,333
FDIC insurance	768		428		768		1,167
Amortization of intangibles	711		844		1,455		1,334
Advertising and promotion expense	632		1,078		2,001		1,961
Credit loss expense for off-balance sheet credit exposures	5,289		—		6,289		—
Other operating expenses	7,518		7,631		16,684		14,740
Total non-interest expense	55,267		49,694		109,374		98,110
Income before income tax expense	18,026		33,195		38,214		71,774
Income tax expense	3,715		8,802		8,972		16,491
Net income	$	14,311	$	24,393	$	29,242	$	55,283
Basic earnings per share	$	0.22	$	0.38	$	0.45	$	0.85
Weighted average basic shares outstanding	64,315,547		64,886,149		64,350,790		64,826,714
Diluted earnings per share	$	0.22	$	0.38	$	0.45	$	0.85
Weighted average diluted shares outstanding	64,400,548		65,016,724		64,428,854		64,965,062

Three months ended September 30, Nine months ended September 30,
2017 2016 2017 2016
Interest income:
Real estate secured loans $ 47,692
$ 45,262
$ 140,712
$ 134,411
Commercial loans 18,964
16,093
53,884
46,419
Consumer loans 5,083
5,627
15,293
16,657
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
Deposits, Federal funds sold and other short-term investments 343
138
898
252
Total interest income 81,894
76,045
240,250
224,824
Interest expense:
Deposits 4,988
4,441
14,093
12,397
Borrowed funds 6,694
6,633
19,855
20,477
Total interest expense 11,682
11,074
33,948
32,874
Net interest income 70,212
64,971
206,302
191,950
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
Non-interest income:
Fees 7,680
6,137
20,940
19,309
Wealth management income 4,592
4,262
13,314
13,084
Bank-owned life insurance 1,353
1,382
5,291
4,083
Net gain (loss) on securities transactions 36
(43 ) 47
54
Other income 1,451
2,328
2,804
4,378
Total non-interest income 15,112
14,066
42,396
40,908
Non-interest expense:
Compensation and employee benefits 27,328
26,725
81,086
78,496
Net occupancy expense 6,105
6,227
19,255
18,729
Data processing expense 3,314
3,328
10,302
9,845
FDIC insurance 967
1,117
3,065
3,732
Amortization of intangibles 632
767
2,079
2,628
Advertising and promotion expense 907
787
2,709
2,567
Other operating expenses 7,027
6,899
21,248
20,628
Total non-interest expense 46,280
45,850
139,744
136,625
Income before income tax expense 38,544
32,187
105,254
92,033
Income tax expense 11,969
9,281
30,788
26,798
Net income $ 26,575
$ 22,906
$ 74,466
$ 65,235
Basic earnings per share $ 0.41
$ 0.36
$ 1.16
$ 1.03
Weighted average basic shares outstanding 64,454,684
63,728,393
64,327,640
63,545,065
Diluted earnings per share $ 0.41
$ 0.36
$ 1.15
$ 1.02
Weighted average diluted shares outstanding 64,645,278
63,934,886
64,519,710
63,727,723

See accompanying notes to unaudited consolidated financial statements.

PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY

Consolidated Statements of Comprehensive Income

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

(Dollars in Thousands)


	Three months ended June 30,						Six months ended June 30,
	2020		2019		2020		2019
Net income	$	14,311	$	24,393	$	29,242	$	55,283
Other comprehensive (loss) income, net of tax:
Unrealized gains and losses on available for sale debt securities:
Net unrealized (losses) gains arising during the period	(930)		9,662		15,816		17,240
Reclassification adjustment for gains included in net income	—		—		—		—
Total	(930)		9,662		15,816		17,240
Unrealized losses on derivatives	(1,284)		(636)		(6,997)		(950)
Amortization related to post-retirement obligations	70		34		154		22
Total other comprehensive (loss) income	(2,144)		9,060		8,973		16,312
Total comprehensive income	$	12,167	$	33,453	$	38,215	$	71,595

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 and six months ended ~~September~~June 30, ~~2017 and 2016~~2019 (Unaudited)

(Dollars in Thousands)


For the three months ended June 30, 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 March 31, 2019	$	832	$	1,023,671	$	657,375	$	(5,084)	$	(274,005)	$	(28,973)	$	(4,337)	$	4,337	$	1,373,816
Net income	—		—		24,393		—		—		—		—		—		24,393
Other comprehensive income, net of tax	—		—				9,060		—		—		—		—		9,060
Cash dividends paid	—		—		(15,353)		—		—		—		—		—		(15,353)

Distributions from DDFP	—		43		—		—		—		—		168		(168)		43
Purchases of treasury stock	—		—		—		—		(3,870)		—		—		—		(3,870)
Purchase of employee restricted shares to fund statutory tax withholding	—				—		—		(39)		—		—		—		(39)
Shares issued dividend reinvestment plan	—		122		—		—		341		—		—		—		463
Stock option exercises	—		(85)		—		—		209		—		—		—		124
Allocation of ESOP shares	—		339		—		—		—		705		—		—		1,044
Allocation of Stock Award Plan ("SAP") shares	—		1,719		—		—		—		—		—		—		1,719

Allocation of stock options	—		46		—		—		—		—		—		—		46
Balance at June 30, 2019	$	832	$	1,025,855	$	666,415	$	3,976	$	(277,364)	$	(28,268)	$	(4,169)	$	4,169	$	1,391,446

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


For the six months ended June 30, 2019	COMMONSTOCK		ADDITIONAL PAID-IN CAPITAL		RETAINEDEARNINGS		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	—		—		55,283		—		—		—		—		—		55,283
Other comprehensive income, net of tax	—		—		—		16,312		—		—		—		—		16,312
Cash dividends paid	—		—		(44,317)		—		—		—		—		—		(44,317)
Effect of adopting Accounting Standards Update ("ASU") No. 2016-02	—		—		4,350		—		—		—		—		—		4,350
Distributions from DDFP	—		85		—		—		—		—		335		(335)		85
Purchases of treasury stock	—		—		—		—		(4,050)		—		—		—		(4,050)
Purchase of employee restricted shares to fund statutory tax withholding	—		—		—		—		(1,953)		—		—		—		(1,953)
Shares issued dividend reinvestment plan	—		429		—		—		874		—		—		—		1,303
Stock option exercises	—		(96)		—		—		235		—		—		—		139
Allocation of ESOP shares	—		709		—		—		—		1,410		—		—		2,119
Allocation of SAP shares	—		3,107		—		—		—		—		—		—		3,107

Allocation of stock options	—		88		—		—		—		—		—		—		88
Balance at June 30, 2019	$	832	$	1,025,855	$	666,415	$	3,976	$	(277,364)	$	(28,268)	$	(4,169)	$	4,169	$	1,391,446

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 and six months ended ~~September~~June 30, ~~2017 and 2016~~2020 (Unaudited) ~~(Continued)~~

(Dollars in Thousands)


For the three months ended June 30, 2020	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 March 31, 2020	832		1,008,582		686,397		14,938		(274,044)		(24,116)		(3,666)		3,666		1,412,589
Net income	—		—		14,311		—		—		—		—		—		14,311
Other comprehensive loss, net of tax	—		—		—		(2,144)		—		—		—		—		(2,144)
Cash dividends paid	—		—		(15,199)		—		—		—		—		—		(15,199)

Distributions from DDFP	—		15		—		—		—		—		168		(168)		15
Purchases of treasury stock	—		—		—		—		(1,310)		—		—		—		(1,310)
Purchase of employee restricted shares to fund statutory tax withholding	—		—		—		—		(5)		—		—		—		(5)
Shares issued dividend reinvestment plan	—		—		—		—		—		—		—		—		—
Stock option exercises	—		—		—		—		—		—		—		—		—
Allocation of ESOP shares	—		(168)		—		—		—		769		—		—		601
Allocation of SAP shares	—		1,502		—		—		—		—		—		—		1,502

Allocation of stock options	—		47		—		—		—		—		—		—		47
Balance at June 30, 2020	$	832	$	1,009,978	$	685,509	$	12,794	$	(275,359)	$	(23,347)	$	(3,498)	$	3,498	$	1,410,407

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
Net income —
—
74,466
—
—
—
—
—
74,466
Other comprehensive income, net of tax —
—
—
2,689
—
—
—
—
2,689
Cash dividends declared —
—
(38,659 ) —
—
—
—
—
(38,659 )
Distributions from DDFP —
172
—
—
—
—
503
(503 ) 172
Purchases of treasury stock —
—
—
—
(443 ) —
—
—
(443 )
Purchase of employee restricted shares to fund statutory tax withholding —

—
—
(726 ) —
—
—
(726 )
Shares issued dividend reinvestment plan —
417
—
—
922
—
—
—
1,339
Stock option exercises —
(1,024 ) —
—
3,558
—
—
—
2,534
Allocation of ESOP shares —
1,053
—
—
—
2,114
—
—
3,167
Allocation of SAP shares —
3,702
—
—
—
—
—
—
3,702
Allocation of stock options —
150
—
—
—
—
—
—
150
Balance at September 30, 2017 $ 832
$ 1,010,247
$ 586,575
$ (708 ) $ (260,910 ) $ (35,864 ) $ (5,343 ) $ 5,343
�� $ 1,300,172


For the six months ended June 30, 2020	COMMONSTOCK		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	$	832	$	1,007,303	$	695,273	$	3,821	$	(268,504)	$	(24,885)	$	(3,833)	$	3,833	$	1,413,840
Net income	—		—		29,242		—		—		—		—		—		29,242
Other comprehensive income, net of tax	—		—		—		8,973		—		—		—		—		8,973
Cash dividends paid	—		—		(30,695)		—		—		—		—		—		(30,695)
Effect of adopting ASU No. 2016-13 ("CECL")	—		—		(8,311)		—		—		—		—		—		(8,311)
Distributions from DDFP	—		52		—		—		—		—		335		(335)		52
Purchases of treasury stock	—		—		—		—		(6,295)		—		—		—		(6,295)
Purchase of employee restricted shares to fund statutory tax withholding	—		—		—		—		(961)		—		—		—		(961)
Shares issued dividend reinvestment plan	—		50		—		—		401		—		—		—		451
Stock option exercises	—		—		—		—		—		—		—		—		—
Allocation of ESOP shares	—		(16)		—		—		—		1,538		—		—		1,522
Allocation of SAP shares	—		2,495		—		—		—		—		—		—		2,495

Allocation of stock options	—		94		—		—		—		—		—		—		94
Balance at June 30, 2020	$	832	$	1,009,978	$	685,509	$	12,794	$	(275,359)	$	(23,347)	$	(3,498)	$	3,498	$	1,410,407

See accompanying notes to unaudited consolidated financial statements.

PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY

Consolidated Statements of Cash Flows

~~Nine~~Six months ended ~~September~~June 30, ~~2017~~2020 and ~~2016~~2019 (Unaudited)

(Dollars in Thousands)


	Six months ended June 30,
	2020		2019
Cash flows from operating activities:
Net income	$	29,242	$	55,283
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of intangibles	4,910		5,226
Provision for credit losses on loans and securities	25,617		9,700
Provision for credit loss for off-balance sheet credit exposure	6,289		—
Deferred tax benefit	(7,531)		(1,206)
Amortization of operating lease right-of-use assets	4,262		4,176

Income on Bank-owned life insurance	(2,646)		(2,981)
Net amortization of premiums and discounts on securities	4,016		3,598
Accretion of net deferred loan fees	(3,709)		(2,493)
Amortization of premiums on purchased loans, net	475		328
Net increase in loans originated for sale	(6,382)		(10,002)
Proceeds from sales of loans originated for sale	6,938		10,642
Proceeds from sales and paydowns of foreclosed assets	1,843		803
ESOP expense	1,552		2,119
Allocation of stock award shares	2,495		3,107
Allocation of stock options	94		88

Net gain on sale of loans	(556)		(640)
Net gains on securities transactions	(55)		(29)
Net gain on sale of premises and equipment	(647)		—
Net gain on sale of foreclosed assets	(582)		(76)
Increase (decrease) in accrued interest receivable	(4,778)		287
Increase in other assets	(93,832)		(26,637)
Increase in other liabilities	96,638		20,597
Net cash provided by operating activities	63,653		71,890
Cash flows from investing activities:
Proceeds from maturities, calls and paydowns of held to maturity debt securities	30,713		14,291
Purchases of held to maturity debt securities	(17,523)		(12,017)

Proceeds from maturities and paydowns of available for sale debt securities	148,324		91,927
Purchases of available for sale debt securities	(101,619)		(108,684)
Proceeds from redemption of Federal Home Loan Bank stock	52,959		71,215
Purchases of Federal Home Loan Bank stock	(53,541)		(77,265)
Net cash paid in acquisition	—		(15,022)
BOLI claim benefits received	4,734		1,891

Net increase in loans	(432,788)		(41,832)

Proceeds from sales of premises and equipment	1,412		—
Purchases of premises and equipment	(3,565)		(1,358)
Net cash used in investing activities	(370,894)		(76,854)
Cash flows from financing activities:
Net increase in deposits	557,457		44,849
Increase in mortgage escrow deposits	4,156		4,055
Cash dividends paid to stockholders	(30,695)		(44,317)
Shares issued dividend reinvestment plan	451		1,303

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


								Six months ended June 30,
	Nine months ended September 30,							2020		2019
	2017			2016
Purchases of treasury stock	(443		)	(1,557		)
Purchase of treasury stock							Purchase of treasury stock	(6,295)		(4,050)
Purchase of employee restricted shares to fund statutory tax withholding	(726		)	(1,161		)	Purchase of employee restricted shares to fund statutory tax withholding	(961)		(1,953)
Stock options exercised	2,534			5,598			Stock options exercised	—		139
Proceeds from long-term borrowings	248,220			291,653			Proceeds from long-term borrowings	1,172,553		338,000
Payments on long-term borrowings	(345,387		)	(395,405		)	Payments on long-term borrowings	(860,214)		(406,000)
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	(262,196)		137,966
Net cash provided by financing activities							Net cash provided by financing activities	574,256		69,992
Net increase in cash and cash equivalents	4,486			57,448			Net increase in cash and cash equivalents	267,015		65,028
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	$	453,763	$	207,689
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	$	27,631	$	36,337
Income taxes	$	27,411		$	25,546		Income taxes	$	4,835	$	11,360
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	$	2,516	$	850
Acquisitions:							Acquisitions:
Non-cash assets acquired:							Non-cash assets acquired:

Goodwill and other intangible assets, net							Goodwill and other intangible assets, net	$	—	$	21,562
Other assets							Other assets	—		71
Total non-cash assets acquired							Total non-cash assets acquired	$	—	$	21,633

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~~six months ended ~~September~~June 30, ~~2017~~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~~six months ended ~~September~~June 30, ~~2017~~2020 and ~~2016~~2019 (dollars in thousands, except per share amounts):


	Three months ended June 30,
	2020								2019
	Net Income		Weighted Average Common Shares Outstanding	Per Share Amount		Net Income		Weighted Average Common Shares Outstanding	Per Share Amount
Net income	$	14,311				$	24,393
Basic earnings per share:
Income available to common stockholders	$	14,311	64,315,547	$	0.22	$	24,393	64,886,149	$	0.38
Dilutive shares			85,001					130,575
Diluted earnings per share:
Income available to common stockholders	$	14,311	64,400,548	$	0.22	$	24,393	65,016,724	$	0.38

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,											Six months ended June 30,
	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	$	29,242				$	55,283
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	$	29,242	64,350,790	$	0.45	$	55,283	64,826,714	$	0.85
Dilutive shares			192,070					182,658			Dilutive shares			78,064					138,348
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	$	29,242	64,428,854	$	0.45	$	55,283	64,965,062	$	0.85

Anti-dilutive stock options and awards at ~~September~~June 30, ~~2017~~2020 and ~~2016,~~2019, totaling ~~405,958~~1.2 million shares and ~~528,205~~715,290 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 replaced 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 reported 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

Effective as of the close of business on July 31, 2020, the Company completed its previously announced acquisition of SB One Bancorp ("SB One"), which was merged with and into the Company. In connection with the acquisition, SB One Bank, a wholly owned subsidiary of SB One, was merged with and into Provident Bank, a wholly owned subsidiary of the Company. At July 31, 2020, SB One had, on a consolidated basis, approximately $2.22 billion in total assets, which included $1.78 billion in total loans and $1.75 billion in total deposits, and operated 18 full-service banking offices in New Jersey and New York. Under the merger agreement, each share of SB One common stock will be exchanged for 1.357 shares, or approximately 12.8 million shares, of the Company's common stock plus cash in lieu of fractional shares. Consideration paid in the acquisition of SB One was approximately $180.8 million.

Merger-related expenses, which are recorded in other operating expenses on the Consolidated Statements of Income, totaled $683,000 and $1.1 million for the three and six months ended June 30, 2020, respectively, and primarily consist of professional and legal expenses.

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 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. Total cost of the 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 in the transaction were nominal. No liabilities were assumed in the 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 for both the three and six months ended June 30, 2020 due to worsening economic conditions and declining asset valuations attributable to the COVID-19 pandemic, asset valuations improved in the second quarter of 2020 and management has not identified a reduction in assets under management due to a declining customer base. As a result, the $9.4 million fair value of the contingent liability was unchanged at June 30, 2020, from December 31, 2019, with maximum potential future payments totaling $11.0 million.

Note 2.3. Investment Securities

At ~~September~~June 30, ~~2017,~~2020, the Company had ~~$1.03 billion~~$948.6 million and ~~$481.8~~$439.3 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~~at June 30, ~~2017~~2020 totaled ~~253,~~16, 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 Company did not record an allowance for credit losses on available for sale debt securities as this portfolio consisted primarily of debt securities explicitly or implicitly backed by the U.S. Government for which credit risk is deemed immaterial. The impact going forward will depend on the composition, characteristics, and credit quality of the securities portfolio as well as the economic conditions at future reporting periods. The Company recorded 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~~no credit losses. The majority of the state and municipal, and corporate obligations carry no lower than A ratings at June 30, ~~2017, such~~2020 and 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~~June 30, ~~2017~~2020 and December 31, ~~2016~~2019 (in thousands):


	June 30, 2020
	Amortized cost		Gross unrealized gains	Gross unrealized losses	Fair value



Mortgage-backed securities	$	884,608	32,709	(332)	916,985
State and municipal obligations	3,882		214	—	4,096
Corporate obligations	27,028		531	(26)	27,533

	$	915,518	33,454	(358)	948,614


								December 31, 2019
	September 30, 2017							Amortized cost		Gross unrealized gains	Gross unrealized losses	Fair value
	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	Mortgage-backed securities	$	936,196	12,367	(1,133)	947,430
State and municipal obligations	3,695		112	—		3,807	State and municipal obligations	3,907		172	—	4,079
Corporate obligations	21,049		420	(10	)	21,459	Corporate obligations	25,032		393	(15)	25,410
Equity securities	397		201	—		598
	$	1,025,030	8,225	(4,950	)	1,028,305
								$	965,135	12,932	(1,148)	976,919

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):


	June 30, 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	$	10,882	8,402	—	8,477	194	13,478	10,739	—	10,910	533
Commercial	14,010		14,010	—	14,010	258	—	—	—	—	—


Total	24,892		22,412	—	22,487	452	13,478	10,739	—	10,910	533
Commercial loans	9,755		7,649	—	8,113	66	3,927	3,696	—	4,015	17
Consumer loans	1,452		947	—	965	26	2,086	1,517	—	1,491	86
Total impaired loans	$	36,099	31,008	—	31,565	544	19,491	15,952	—	16,416	636

Loans with an allowance recorded
Mortgage loans:
Residential	$	11,482	10,959	888	11,036	231	10,860	10,326	829	10,454	428
Commercial	4,815		4,815	671	4,826	27	18,845	18,845	751	18,862	569


Total	16,297		15,774	1,559	15,862	258	29,705	29,171	1,580	29,316	997
Commercial loans	17,318		15,614	2,024	18,545	192	27,762	24,661	3,462	27,527	444
Consumer loans	669		658	42	665	14	868	857	25	878	46
Total impaired loans	$	34,284	32,046	3,625	35,072	464	58,335	54,689	5,067	57,721	1,487

Total impaired loans
Mortgage loans:
Residential	$	22,364	19,361	888	19,513	425	24,338	21,065	829	21,364	961
Commercial	18,825		18,825	671	18,836	285	18,845	18,845	751	18,862	569


Total	41,189		38,186	1,559	38,349	710	43,183	39,910	1,580	40,226	1,530
Commercial loans	27,073		23,263	2,024	26,658	258	31,689	28,357	3,462	31,542	461
Consumer loans	2,121		1,605	42	1,630	40	2,954	2,374	25	2,369	132
Total impaired loans	$	70,383	63,054	3,625	66,637	1,008	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~~$3.6 million at ~~September~~June 30, ~~2017~~2020 and ~~$2.3~~$5.1 million at December 31, ~~2016.~~2019. At ~~September~~June 30, ~~2017~~2020 and December 31, ~~2016,~~2019, impaired loans for which there was no related allowance for ~~loan~~credit losses totaled ~~$29.7~~$31.0 million and ~~$31.8~~$16.0 million, respectively. The average balance of impaired loans for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2020 and December 31, 2019 was ~~$51.2 million.~~$66.6 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, the Company implemented a short-term modification program to defer principal or principal and interest payments for up to 90 days to borrowers directly impacted by ~~credit quality risk rating indicator, excluding PCI~~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 July 31, 2020, the balance of loans with short-term COVID-19 related payment deferrals has been reduced from a peak level of $1.31 billion, or 16.8% of loans, to $404.1 million, or 5.2% of loans. Of the total original $1.31 billion of loans with payment deferrals, $49.7 million are still in the first 90-day deferral period, while $354.4 million have been, or are expected to be, granted a second 90-day deferral. $902.4 million of loans have completed their deferral period. As of August 3, 2020, $546.2 million of those loans have resumed regular contractual payments, and the majority of the remainder are also expected to resume payments. Of the $404.1 million of loans granted or expected to be granted a second 90-day deferral, $129.9 million are secured by hotels with a pre-COVID weighted average loan-to-value of 53%, $130.6 million are secured by retail properties with a pre-COVID weighted average loan-to-value of 66%, and $24.9 million are secured by restaurants with a pre-COVID weighted average loan-to-value of 59%. In accordance with the Coronavirus Aid Relief, and Economic Security Act (CARES Act), the Company has elected to not apply troubled debt restructuring classification to any COVID-19 related loan modifications that were performed after March 1, 2020 to borrowers who were current as of December 31, 2019. Accordingly, these modifications would not be classified as troubled debt restructurings (“TDRs”).

In addition, the Company participated in the Paycheck Protection Program (“PPP”) through the United States Department of the Treasury and Small Business Administration ("SBA").As of June 30, 2020, the Company secured 1,025 PPP loans for its customers totaling$400.3 million. The PPP loans are fully guaranteed by the Small Business Administration and may be eligible for forgiveness by the SBA to the extent that the proceeds are used to cover eligible payroll costs, interest costs, rent, and utility costs over a period of up to 24 weeks after the loan was made as ~~follows~~long as certain conditions are met regarding employee retention and compensation levels. PPP loans deemed eligible for forgiveness by the SBA will be repaid by the SBA to the Company. PPP loans are included in the commercial loan portfolio.

The following table summarizes the Company's gross loans held for investment by year of origination and internally assigned credit grades (in thousands):


	At June 30, 2020
Total portfolio	Residential ⁽¹⁾		Commercial mortgage		Multi-family		Construction		Total mortgages		Commercial		Consumer		Total loans
Special mention	$	50,250	49,227		101		872		100,450		155,365		1,868		257,683
Substandard	19,476		25,464		124		—		45,064		96,226		3,063		144,353
Doubtful	—		—		—		—		—		100		—		100
Loss	—		—		—		—		—		—		—		—
Total criticized and classified	69,726		74,691		225		872		145,514		251,691		4,931		402,136
Pass/Watch	1,055,681		2,601,735		1,275,363		284,108		5,216,887		1,804,522		356,722		7,378,131
Total	$	1,125,407	2,676,426		1,275,588		284,980		5,362,401		2,056,213		361,653		7,780,267

2020
Special mention	$	3,602	—		—		872		4,474		63		25		4,562
Substandard	165		—		—		—		165		—		—		165
Doubtful	—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—
Total criticized and classified	3,767		—		—		872		4,639		63		25		4,727
Pass/Watch	136,061		226,407		55,630		4,093		422,191		509,601		15,817		947,609
Total gross loans	$	139,828	226,407		55,630		4,965		426,830		509,664		15,842		952,336

2019
Special mention	$	5,767	$	12,434	$	—	$	—	$	18,201	$	6,922	$	295	$	25,418
Substandard	3,174		—		—		—		3,174		257		48		3,479
Doubtful	—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—


Total criticized and classified										Total criticized and classified	8,941		12,434	—	—	21,375	7,179	343	28,897
Pass/Watch										Pass/Watch	143,555		546,612	139,753	130,902	960,822	228,914	51,133	1,240,869
Total gross loans										Total gross loans	$	152,496	559,046	139,753	130,902	982,197	236,093	51,476	1,269,766

2018										2018
Special mention										Special mention	$	6,130	3,590	—	—	9,720	9,841	292	19,853
Substandard										Substandard	2,849		—	—	—	2,849	2,242	304	5,395
Doubtful										Doubtful	—		—	—	—	—	—	—	—
Loss										Loss	—		—	—	—	—	—	—	—
Total criticized and classified										Total criticized and classified	8,979		3,590	—	—	12,569	12,083	596	25,248
Pass/Watch										Pass/Watch	82,857		365,659	190,357	110,140	749,013	177,235	44,519	970,767
Total gross loans										Total gross loans	$	91,836	369,249	190,357	110,140	761,582	189,318	45,115	996,015

2017										2017
Special mention										Special mention	$	3,321	3,512	—	—	6,833	27,501	—	34,334
Substandard										Substandard	730		14,018	—	—	14,748	7,140	—	21,888
Doubtful										Doubtful	—		—	—	—	—	—	—	—
Loss										Loss	—		—	—	—	—	—	—	—
Total criticized and classified										Total criticized and classified	4,051		17,530	—	—	21,581	34,641	—	56,222
Pass/Watch										Pass/Watch	83,975		390,668	136,026	38,974	649,643	168,034	35,632	853,309
Total gross loans										Total gross loans	$	88,026	408,198	136,026	38,974	671,224	202,675	35,632	909,531

2016 and prior										2016 and prior
Special mention										Special mention	$	31,430	29,691	101	—	61,222	111,038	1,256	173,516
Substandard										Substandard	12,558		11,446	124	—	24,128	86,587	2,711	113,426
Doubtful										Doubtful	—		—	—	—	—	100	—	100
Loss										Loss	—		—	—	—	—	—	—	—
Total criticized and classified										Total criticized and classified	43,988		41,137	225	—	85,350	197,725	3,967	287,042
Pass/Watch										Pass/Watch	653,221		1,113,526	753,822	—	2,520,569	918,463	213,588	3,652,620
Total gross loans										Total gross loans	$	697,209	1,154,663	754,047	—	2,605,919	1,116,188	217,555	3,939,662

	At September 30, 2017										At December 31, 2019
	Residential		Commercial mortgage	Multi- family	Construction	Total mortgages	Commercial	Consumer	Total loans		Residential		Commercialmortgage	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 criticized and classified										Total criticized and classified	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	Total	$	1,077,689	2,578,393	1,225,551	429,812	5,311,445	1,634,759	391,360	7,337,564


	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


	September 30, 2017				June 30, 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	3,655		3,820
Due after five years through ten years	20,895		21,379	Due after five years through ten years	25,255		25,805
Due after ten years	—		—	Due after ten years	2,000		2,004
	$	58,770	59,295		$	30,910	31,629


	September 30, 2017				June 30, 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	$	12,941	13,018
Due after one year through five years	65,170		66,276	Due after one year through five years	118,220		121,910
Due after five years through ten years	254,191		259,908	Due after five years through ten years	232,672		245,565
Due after ten years	147,286		148,994	Due after ten years	75,468		80,089
	$	481,370	489,933		$	439,301	460,582



	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	)


	December 31, 2019 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	$	3,601	(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)



	Three months ended September 30,					Nine months ended September 30,
	2017		2016			2017		2016
Interest income:
Real estate secured loans	$	47,692	$	45,262		$	140,712	$	134,411
Commercial loans	18,964		16,093			53,884		46,419
Consumer loans	5,083		5,627			15,293		16,657
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
Deposits, Federal funds sold and other short-term investments	343		138			898		252
Total interest income	81,894		76,045			240,250		224,824
Interest expense:
Deposits	4,988		4,441			14,093		12,397
Borrowed funds	6,694		6,633			19,855		20,477
Total interest expense	11,682		11,074			33,948		32,874
Net interest income	70,212		64,971			206,302		191,950
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
Non-interest income:
Fees	7,680		6,137			20,940		19,309
Wealth management income	4,592		4,262			13,314		13,084
Bank-owned life insurance	1,353		1,382			5,291		4,083
Net gain (loss) on securities transactions	36		(43		)	47		54
Other income	1,451		2,328			2,804		4,378
Total non-interest income	15,112		14,066			42,396		40,908
Non-interest expense:
Compensation and employee benefits	27,328		26,725			81,086		78,496
Net occupancy expense	6,105		6,227			19,255		18,729
Data processing expense	3,314		3,328			10,302		9,845
FDIC insurance	967		1,117			3,065		3,732
Amortization of intangibles	632		767			2,079		2,628
Advertising and promotion expense	907		787			2,709		2,567
Other operating expenses	7,027		6,899			21,248		20,628
Total non-interest expense	46,280		45,850			139,744		136,625
Income before income tax expense	38,544		32,187			105,254		92,033
Income tax expense	11,969		9,281			30,788		26,798
Net income	$	26,575	$	22,906		$	74,466	$	65,235
Basic earnings per share	$	0.41	$	0.36		$	1.16	$	1.03
Weighted average basic shares outstanding	64,454,684		63,728,393			64,327,640		63,545,065
Diluted earnings per share	$	0.41	$	0.36		$	1.15	$	1.02
Weighted average diluted shares outstanding	64,645,278		63,934,886			64,519,710		63,727,723



	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


	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 debt securities	$	70	—	70


	June 30, 2020 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	$	999	(2)	—	—	999	(2)
State and municipal obligations	974		(1)	406	(18)	1,380	(19)

	$	1,973	(3)	406	(18)	2,379	(21)


	June 30, 2020
Total Portfolio	AAA		AA	A	BBB	Not Rated	Total
Agency obligations	$	6,840	—	—	—	—	6,840
Mortgage-backed securities	89		—	—	—	—	89
State and municipal obligations	46,815		317,252	57,145	1,116	1,838	424,166
Corporate obligations	—		2,611	5,259	400	25	8,295
	$	53,744	319,863	62,404	1,516	1,863	439,390

	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


	June 30, 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	$	4,895	4,670	6,806	—	16,371	1,109,036	1,125,407	1,606
Commercial	—		—	5,048	—	5,048	2,671,378	2,676,426	—
Multi-family	—		—	—	—	—	1,275,588	1,275,588	—
Construction	—		—	—	—	—	284,980	284,980	—
Total mortgage loans	4,895		4,670	11,854	—	21,419	5,340,982	5,362,401	1,606
Commercial loans	456		19	22,419	—	22,894	2,033,319	2,056,213	8,066
Consumer loans	1,338		590	1,194	—	3,122	358,531	361,653	9
Total gross loans	$	6,689	5,279	35,467	—	47,435	7,732,832	7,780,267	9,681



	September 30, 2017
	30-59 Days		60-89 Days	Non-accrual	Recorded Investment > 90 days accruing	Total Past Due	Current	Total Loans Receivable
Mortgage loans:
Residential	$	5,973	3,525	8,820	—	18,318	1,138,993	1,157,311
Commercial	608		292	8,070	—	8,970	2,013,606	2,022,576
Multi-family	—		—	—	—	—	1,334,984	1,334,984
Construction	—		—	—	—	—	324,692	324,692
Total mortgage loans	6,581		3,817	16,890	—	27,288	4,812,275	4,839,563
Commercial loans	1,870		244	17,523	—	19,637	1,689,205	1,708,842
Consumer loans	2,307		1,080	2,035	—	5,422	475,840	481,262
Total gross loans	$	10,758	5,141	36,448	—	52,347	6,977,320	7,029,667


Three months ended June 30,	Mortgage loans		Commercial loans	Consumer loans	Total
2020
Balance at beginning of period	$	47,500	22,841	4,802	75,143
Provision charged to operations	7,355		2,285	1,260	10,900
Recoveries of loans previously charged-off	16		605	103	724
Loans charged-off	—		(447)	(61)	(508)
Balance at end of period	$	54,871	25,284	6,104	86,259

2019
Balance at beginning of period	$	26,926	26,351	2,076	55,353
Provision charged to operations	262		9,175	63	9,500
Recoveries of loans previously charged-off	105		113	124	342
Loans charged-off	(13)		(2,090)	(282)	(2,385)
Balance at end of period	$	27,280	33,549	1,981	62,810


	June 30, 2020
	Mortgage loans		Commercial loans	Consumer loans	Total Portfolio Segments
Individually evaluated for impairment	$	38,186	23,263	1,605	63,054
Collectively evaluated for impairment	5,324,215		2,032,950	360,048	7,717,213
Total gross loans	$	5,362,401	2,056,213	361,653	7,780,267


	For the three months ended
	June 30, 2020								June 30, 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
	($ in thousands)
Mortgage loans:
Residential	1	$	342	$	283	2	$	749	$	718


Total mortgage loans	1	342		283		2	749		718
Commercial loans	2	736		714		4	1,490		1,480

Total restructured loans	3	$	1,078	$	997	6	$	2,239	$	2,198



~~FORM 10-Q~~



	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 six months ended
	September 30, 2017					September 30, 2016						June 30, 2020								June 30, 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	—	$	—	$	—	Residential	1	$	342	$	283	2	$	749	$	718
Commercial											Commercial	—	—		—		1	14,010		14,010

Total mortgage loans	7	3,436		3,202		—	—		—		Total mortgage loans	1	342		283		3	14,759		14,728
Commercial loans	1	1,300		1,210		—	—		—		Commercial loans	4	1,483		1,429		7	2,702		2,564
Consumer loans	1	70		68		—	—		—

Total restructured loans	9	$	4,806	$	4,480	—	$	—	$	—	Total restructured loans	5	$	1,825	$	1,712	10	$	17,461	$	17,292


	June 30, 2020				June 30, 2019
Troubled Debt Restructurings Subsequently Defaulted	Number of Loans	Outstanding Recorded Investment		Number of Loans	Outstanding Recorded Investment
	($ in thousands)




Commercial loans	—	$	—	2	$	642

Total restructured loans	—	$	—	2	$	642



	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


	June 30, 2020		December 31, 2019
Savings	$	1,050,813	983,714
Money market	1,832,747		1,738,202
NOW	2,222,712		2,092,413
Non-interest bearing	1,942,333		1,554,253
Certificates of deposit	611,461		734,027
Total deposits	$	7,660,066	7,102,609



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).


	Fair Value Measurements at Reporting Date Using:
	June 30, 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	$	916,985	—	916,985	—
State and municipal obligations	4,096		—	4,096	—
Corporate obligations	27,533		—	27,533	—
Total available for sale debt securities	$	948,614	—	948,614	—
Equity securities	806		806	—	—
Derivative assets	118,706		—	118,706	—
	$	1,068,126	806	1,067,320	—

Derivative liabilities	$	129,233	—	129,233	—

Measured on a non-recurring basis:
Loans measured for impairment based on the fair value of the underlying collateral	$	16,950	—	—	16,950
Foreclosed assets	3,272		—	—	3,272
	$	20,222	—	—	20,222



	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 June 30, 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	$	453,763	453,763	453,763	—	—
Available for sale debt securities:


Mortgage-backed securities	916,985		916,985	—	916,985	—
State and municipal obligations	4,096		4,096	—	4,096	—
Corporate obligations	27,533		27,533	—	27,533	—
Total available for sale debt securities	$	948,614	948,614	—	948,614	—
Held to maturity debt securities, net of allowance for credit losses:
Agency obligations	6,840		6,843	6,843	—	—
Mortgage-backed securities	89		92	—	92	—
State and municipal obligations	424,085		445,202	—	445,202	—
Corporate obligations	8,289		8,450	—	8,450	—
Total held to maturity debt securities, net of allowance for credit losses	$	439,303	460,587	6,843	453,744	—
FHLBNY stock	57,880		57,880	57,880	—	—
Equity Securities	806		806	806	—	—
Loans, net of allowance for credit losses	7,680,132		7,861,368	—	—	7,861,368
Derivative assets	118,706		118,706	—	118,706	—

Financial liabilities:
Deposits other than certificates of deposits	$	7,048,605	7,048,605	7,048,605	—	—
Certificates of deposit	611,461		611,200	—	611,200	—
Total deposits	$	7,660,066	7,659,805	7,048,605	611,200	—
Borrowings	1,175,289		1,186,863	—	1,186,863	—
Derivative liabilities	129,233		129,233	—	129,233	—


			Fair Value Measurements at September 30, 2017 Using:							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)	(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:							Financial assets:
Cash and cash equivalents	$	148,783	148,783	148,783	—	—	Cash and cash equivalents	$	186,748	186,748	186,748	—	—
Securities available for sale:
U.S. Treasury obligations	5,994		5,994	5,994	—	—
Available for sale debt securities:							Available for sale debt securities:

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

Agency obligations	28,035		28,035	28,035	—	—	Agency obligations	$	6,599	6,601	6,601	—	—
Mortgage-backed securities	968,412		968,412	—	968,412	—	Mortgage-backed securities	118		122	—	122	—
State and municipal obligations	3,807		3,807	—	3,807	—	State and municipal obligations	437,074		451,353	—	451,353	—
Corporate obligations	21,459		21,459	—	21,459	—	Corporate obligations	9,838		9,890	—	9,890	—
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	—
Total held to maturity debt securities							Total held to maturity debt securities	$	453,629	467,966	6,601	461,365	—
FHLBNY stock	70,896		70,896	70,896	—	—	FHLBNY stock	57,298		57,298	57,298	—	—
Loans, net of allowance for loan losses	6,967,776		6,955,183	—	—	6,955,183
Equity Securities							Equity Securities	825		825	825	—	—
Loans, net of allowance for credit losses							Loans, net of allowance for credit losses	7,277,360		7,296,744	—	—	7,296,744
Derivative assets	8,035		8,035	—	8,035	—	Derivative assets	39,305		39,305	—	39,305	—

Financial liabilities:							Financial liabilities:
Deposits other than certificates of deposits	$	5,963,348	5,963,348	5,963,348	—	—	Deposits other than certificates of deposits	$	6,368,582	6,368,582	6,368,582	—	—
Certificates of deposit	627,868		628,523	—	628,523	—	Certificates of deposit	734,027		734,047	—	734,047	—
Total deposits	$	6,591,216	6,591,871	5,963,348	628,523	—	Total deposits	$	7,102,609	7,102,629	6,368,582	734,047	—
Borrowings	1,525,560		1,530,444	—	1,530,444	—	Borrowings	1,125,146		1,127,569	—	1,127,569	—
Derivative liabilities	7,595		7,595	—	7,595	—	Derivative liabilities	39,356		39,356	—	39,356	—


	Changes in Accumulated Other Comprehensive Income (Loss) by Component, net of tax for the three months ended June 30,
	2020								2019
	Unrealized Gains (Losses) on Available for Sale Debt Securities		Post- Retirement Obligations	Unrealized Losses on Derivatives (cash flow hedges)	Accumulated Other Comprehensive Income (Loss)	Unrealized Gains (Losses) on Available for Sale Debt Securities	Post- Retirement Obligations	Unrealized Gains (Losses) on Derivatives (cash flow hedges)	Accumulated Other Comprehensive(Loss) Income
Balance at March 31,	$	25,492	(5,156)	(5,398)	14,938	(2,027)	(3,637)	580	(5,084)
Current - period other comprehensive (loss) income	(930)		70	(1,284)	(2,144)	9,662	34	(636)	9,060
Balance at June 30,	$	24,562	(5,086)	(6,682)	12,794	7,635	(3,603)	(56)	3,976


	Reclassifications From Accumulated Other Comprehensive Income ("AOCI")
	Amount reclassified from AOCI for the three months ended June 30,				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⁾
	(29)		(13)	Income tax expense
Total reclassification	$	83	34	Net of tax


								Reclassifications From Accumulated Other Comprehensive Income ("AOCI")
								Amount reclassified from AOCI for the six months ended June 30,				Affected line item in the Consolidated Statement of Income
								2020		2019
Details of AOCI:							Details of AOCI:

	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:							Post-retirement obligations:
Amortization of actuarial losses	61			236		Compensation and employee benefits ⁽¹⁾	Amortization of actuarial losses	$	224	94	Compensation and employee benefits ⁽¹⁾
	(25		)	(95	)	Income tax expense		(58)		(26)	Income tax expense
Total reclassification							Total reclassification	$	166	68	Net of tax
	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		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


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


	At June 30, 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	$	127,617	Other liabilities	129,233
Credit contracts	Other assets	88		Other liabilities	—
Total derivatives not designated as a hedging instrument		$	127,705		129,233

Derivatives designated as a hedging instrument:
Interest rate products	Other assets	$	(8,999)	Other liabilities	—

Total derivatives designated as a hedging instrument		$	(8,999)		—


		Gain (loss) recognized in income on derivatives for the three months ended
	Consolidated Statements of Income	June 30, 2020		June 30, 2019
Derivatives not designated as a hedging instrument:
Interest rate products	Other income	$	(229)	1,422
Credit contracts	Other income	—		19
Total		$	(229)	1,441

Derivatives designated as a hedging instrument:
Interest rate products	Interest expense	$	126	147
Total		$	126	147


	Three months ended June 30,				Six months ended June 30,
(in-thousands)	2020		2019	2020	2019
Non-interest income
In-scope of Topic 606:
Wealth management fees	$	5,977	6,243	12,228	10,322
Banking service charges and other fees:
Service charges on deposit accounts	2,071		3,278	5,047	6,467
Debit card and ATM fees	1,265		1,489	2,475	2,797
Total banking service charges and other fees	3,336		4,767	7,522	9,264
Total in-scope non-interest income	9,313		11,010	19,750	19,586
Total out-of-scope non-interest income	5,052		4,824	11,606	8,436
Total non-interest income	$	14,365	15,834	31,356	28,022


	Classification	June 30, 2020		December 31, 2019
Lease Right-of-Use Assets:
Operating lease right-of-use assets	Other assets	$	39,229	$	41,754
Lease Liabilities:
Operating lease liabilities	Other liabilities	$	40,221	$	42,815


	Three months ended June 30, 2020		Three months ended June 30, 2019
Lease Costs
Operating lease cost	$	2,132	$	2,126

Variable lease cost	724		597

Total lease cost	$	2,856	$	2,723