Loans Receivable and Allowance for Loan Losses | Loans Receivable and Allowance for Loan Losses Loans receivable at March 31, 2018 and December 31, 2017 are summarized as follows (in thousands): March 31, 2018 December 31, 2017 Mortgage loans: Residential $ 1,127,744 1,142,347 Commercial 2,185,107 2,171,056 Multi-family 1,423,834 1,403,885 Construction 370,999 392,580 Total mortgage loans 5,107,684 5,109,868 Commercial loans 1,725,780 1,745,138 Consumer loans 460,741 473,957 Total gross loans 7,294,205 7,328,963 Purchased credit-impaired ("PCI") loans 946 969 Premiums on purchased loans 3,848 4,029 Unearned discounts (35 ) (36 ) Net deferred fees (7,826 ) (8,207 ) Total loans $ 7,291,138 7,325,718 The following tables summarize the aging of loans receivable by portfolio segment and class of loans, excluding PCI loans (in thousands): March 31, 2018 30-59 Days 60-89 Days Non-accrual Recorded Total Past Due Current Total Loans Receivable Mortgage loans: Residential $ 5,711 6,694 8,343 — 20,748 1,106,996 1,127,744 Commercial 967 949 4,265 — 6,181 2,178,926 2,185,107 Multi-family — — — — — 1,423,834 1,423,834 Construction — — — — — 370,999 370,999 Total mortgage loans 6,678 7,643 12,608 — 26,929 5,080,755 5,107,684 Commercial loans 3,787 250 31,359 — 35,396 1,690,384 1,725,780 Consumer loans 2,208 647 1,971 — 4,826 455,915 460,741 Total gross loans $ 12,673 8,540 45,938 — 67,151 7,227,054 7,294,205 December 31, 2017 30-59 Days 60-89 Days Non-accrual Recorded Total Past Current Total Loans Receivable Mortgage loans: Residential $ 7,809 4,325 8,105 — 20,239 1,122,108 1,142,347 Commercial 1,486 — 7,090 — 8,576 2,162,480 2,171,056 Multi-family — — — — — 1,403,885 1,403,885 Construction — — — — — 392,580 392,580 Total mortgage loans 9,295 4,325 15,195 — 28,815 5,081,053 5,109,868 Commercial loans 551 406 17,243 — 18,200 1,726,938 1,745,138 Consumer loans 2,465 487 2,491 — 5,443 468,514 473,957 Total gross loans $ 12,311 5,218 34,929 — 52,458 7,276,505 7,328,963 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 $45.9 million and $34.9 million at March 31, 2018 and December 31, 2017 , respectively. Included in non-accrual loans were $24.8 million and $11.5 million of loans which were less than 90 days past due at March 31, 2018 and December 31, 2017 , respectively. There were no loans 90 days or greater past due and still accruing interest at March 31, 2018 or December 31, 2017 . 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, all amounts due under the contractual terms of the loan agreement will not be collected. Impaired loans also include all loans modified as troubled debt restructurings (“TDRs”). A loan is deemed to be 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 losses on impaired loans. The Company may recognize impairment of a loan based upon: (1) the present value of expected cash flows discounted at the effective interest rate; (2) if a loan is collateral dependent, the fair value of collateral; or (3) the fair value of the loan. Additionally, 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 Company uses third-party appraisals to determine the fair value of the underlying collateral in its analysis of collateral dependent impaired loans. A third-party appraisal is generally ordered as soon as a loan is designated as a collateral dependent impaired loan and is generally updated annually or more frequently, if required. A specific allocation of the allowance for loan losses is established for each collateral dependent impaired loan with a carrying balance greater than the collateral’s fair value, less estimated costs to sell. Charge-offs are generally taken for the amount of the specific allocation when operations associated with the respective property cease and it is determined that collection of amounts due will be derived primarily from the disposition of the collateral. At each quarter end, if a loan is designated as a collateral dependent impaired loan 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 March 31, 2018 , there were 150 impaired loans totaling $68.3 million . Included in this total were 127 TDRs related to 123 borrowers totaling $37.4 million that were performing in accordance with their restructured terms and which continued to accrue interest at March 31, 2018 . At December 31, 2017 , there were 149 impaired loans totaling $52.0 million . Included in this total were 125 TDRs to 121 borrowers totaling $31.7 million that were performing in accordance with their restructured terms and which continued to accrue interest at December 31, 2017 . The following table summarizes loans receivable by portfolio segment and impairment method, excluding PCI loans (in thousands): March 31, 2018 Mortgage loans Commercial loans Consumer loans Total Portfolio Segments Individually evaluated for impairment $ 24,927 41,028 2,316 68,271 Collectively evaluated for impairment 5,082,757 1,684,752 458,425 7,225,934 Total gross loans $ 5,107,684 1,725,780 460,741 7,294,205 December 31, 2017 Mortgage loans Commercial loans Consumer loans Total Portfolio Segments Individually evaluated for impairment $ 28,459 21,223 2,359 52,041 Collectively evaluated for impairment 5,081,409 1,723,915 471,598 7,276,922 Total gross loans $ 5,109,868 1,745,138 473,957 7,328,963 The allowance for loan losses is summarized by portfolio segment and impairment classification as follows (in thousands): March 31, 2018 Mortgage loans Commercial loans Consumer loans Total Individually evaluated for impairment $ 1,327 3,152 69 4,548 Collectively evaluated for impairment 26,674 29,174 2,125 57,973 Total gross loans $ 28,001 32,326 2,194 62,521 December 31, 2017 Mortgage loans Commercial loans Consumer loans Total Individually evaluated for impairment $ 1,486 1,134 70 2,690 Collectively evaluated for impairment 26,566 28,680 2,259 57,505 Total gross loans $ 28,052 29,814 2,329 60,195 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 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 table presents the number of loans modified as TDRs during the three months ended March 31, 2018 and 2017 , along with their balances immediately prior to the modification date and post-modification as of March 31, 2018 and 2017 . For the three months ended March 31, 2018 March 31, 2017 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 — $ — $ — 3 $ 1,002 $ 988 Total mortgage loans — — — 3 1,002 988 Commercial loans 5 8,127 6,626 1 292 284 Consumer loans — — — 2 240 234 Total restructured loans 5 $ 8,127 $ 6,626 6 $ 1,534 $ 1,506 All TDRs are impaired loans, which are individually evaluated for impairment, as previously discussed. During the three months ended March 31, 2018 , $3.0 million of charge-offs were recorded on collateral dependent impaired loans. There were no charge-offs recorded on collateral dependent impaired loans for the same period last year. The allowance for loan losses associated with the TDRs presented in the preceding table totaled $411,000 and $158,000 at March 31, 2018 and 2017 , respectively, and were included in the allowance for loan losses for loans individually evaluated for impairment. The TDRs presented in the preceding table had a weighted average modified interest rate of approximately 5.66% and 3.30% , respectively, compared to a weighted average rate of 5.17% and 3.61% prior to modification for the three months ended March 31, 2018 and 2017 , respectively. The following table presents loans modified as TDRs within the previous 12 months from March 31, 2018 and 2017 , and for which there was a payment default (90 days or more past due) at the quarter ended March 31, 2018 and 2017 . TDRs that subsequently default are considered collateral dependent impaired loans and are evaluated for impairment based on the estimated fair value of the underlying collateral less expected selling costs. March 31, 2018 March 31, 2017 Troubled Debt Restructurings - Subsequent Default Number of Loans Outstanding Recorded Investment Number of Loans Outstanding Recorded Investment ($ in thousands) Commercial loans 3 $ 428 1 $ 284 Total restructured loans 3 $ 428 1 $ 284 PCI loans are loans acquired at a discount primarily due to deteriorated credit quality. These loans are accounted for at fair value, based upon the present value of expected future cash flows, with no related allowance for loan losses. PCI loans totaled $946,000 at March 31, 2018 and $1.0 million at December 31, 2017 . The following table summarizes the changes in the accretable yield for PCI loans during the three months ended March 31, 2018 and 2017 (in thousands): Three months ended March 31, 2018 2017 Beginning balance $ 101 200 Accretion (20 ) (49 ) Reclassification from non-accretable discount 31 21 Ending balance $ 112 172 The activity in the allowance for loan losses by portfolio segment for the three months ended March 31, 2018 and 2017 was as follows (in thousands): Three months ended March 31, Mortgage loans Commercial loans Consumer loans Total 2018 Balance at beginning of period $ 28,052 29,814 2,329 60,195 Provision charged (credited) to operations (22 ) 5,390 32 5,400 Recoveries of loans previously charged-off 88 127 180 395 Loans charged-off (117 ) (3,005 ) (347 ) (3,469 ) Balance at end of period $ 28,001 32,326 2,194 62,521 2017 Balance at beginning of period $ 29,626 29,143 3,114 61,883 Provision charged (credited) to operations (130 ) 1,616 14 1,500 Recoveries of loans previously charged-off 53 458 176 687 Loans charged-off (231 ) (1,431 ) (253 ) (1,915 ) Balance at end of period $ 29,318 29,786 3,051 62,155 The following table presents loans individually evaluated for impairment by class and loan category, excluding PCI loans (in thousands): March 31, 2018 December 31, 2017 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 $ 13,519 10,701 — 10,733 135 13,239 10,477 — 10,552 479 Commercial 1,550 1,546 — 1,546 — 5,037 4,908 — 5,022 12 Total 15,069 12,247 — 12,279 135 18,276 15,385 — 15,574 491 Commercial loans 21,552 17,277 — 17,467 109 19,196 14,984 — 15,428 395 Consumer loans 1,559 1,016 — 1,040 18 1,582 1,041 — 1,150 69 Total impaired loans $ 38,180 30,540 — 30,786 262 39,054 31,410 — 32,152 955 Loans with an allowance recorded Mortgage loans: Residential $ 12,642 11,622 1,199 11,673 120 13,052 12,010 1,351 12,150 475 Commercial 1,058 1,058 128 1,073 13 1,064 1,064 135 1,076 54 Total 13,700 12,680 1,327 12,746 133 14,116 13,074 1,486 13,226 529 Commercial loans 26,236 23,751 3,152 26,022 89 7,097 6,239 1,134 7,318 208 Consumer loans 1,311 1,300 69 1,323 15 1,329 1,318 70 1,349 64 Total impaired loans $ 41,247 37,731 4,548 40,091 237 22,542 20,631 2,690 21,893 801 Total impaired loans Mortgage loans: Residential $ 26,161 22,323 1,199 22,406 255 26,291 22,487 1,351 22,702 954 Commercial 2,608 2,604 128 2,619 13 6,101 5,972 135 6,098 66 Total 28,769 24,927 1,327 25,025 268 32,392 28,459 1,486 28,800 1,020 Commercial loans 47,788 41,028 3,152 43,489 198 26,293 21,223 1,134 22,746 603 Consumer loans 2,870 2,316 69 2,363 33 2,911 2,359 70 2,499 133 Total impaired loans $ 79,427 68,271 4,548 70,877 499 61,596 52,041 2,690 54,045 1,756 Specific allocations of the allowance for loan losses attributable to impaired loans totaled $4.5 million at March 31, 2018 and $2.7 million at December 31, 2017 . At March 31, 2018 and December 31, 2017 , impaired loans for which there was no related allowance for loan losses totaled $30.5 million and $31.4 million , respectively. The average balance of impaired loans for the three months ended March 31, 2018 and December 31, 2017 was $70.9 million and $54.0 million , respectively. The Company 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 by credit quality risk rating indicator, excluding PCI loans, are as follows (in thousands): At March 31, 2018 Residential Commercial mortgage Multi- family Construction Total mortgages Commercial Consumer Total loans Special mention $ 6,694 16,334 351 — 23,379 14,204 648 38,231 Substandard 8,343 22,582 238 — 31,163 65,241 1,971 98,375 Doubtful — — — — — 428 — 428 Loss — — — — — — — — Total classified and criticized 15,037 38,916 589 — 54,542 79,873 2,619 137,034 Acceptable/Watch 1,112,707 2,146,191 1,423,245 370,999 5,053,142 1,645,907 458,122 7,157,171 Total $ 1,127,744 2,185,107 1,423,834 370,999 5,107,684 1,725,780 460,741 7,294,205 At December 31, 2017 Residential Commercial mortgage Multi- family Construction Total mortgages Commercial Consumer Total loans Special mention $ 4,325 19,172 15 — 23,512 20,738 486 44,736 Substandard 8,105 25,069 — — 33,174 29,734 2,491 65,399 Doubtful — — — — — 428 — 428 Loss — — — — — — — — Total classified and criticized 12,430 44,241 15 — 56,686 50,900 2,977 110,563 Acceptable/Watch 1,129,917 2,126,815 1,403,870 392,580 5,053,182 1,694,238 470,980 7,218,400 Total $ 1,142,347 2,171,056 1,403,885 392,580 5,109,868 1,745,138 473,957 7,328,963 |