Loans Receivable and Allowance for Credit Losses | Loans Receivable and Allowance for Credit Losses Loans receivable at March 31, 2022 and December 31, 2021 are summarized as follows (in thousands): March 31, 2022 December 31, 2021 Mortgage loans: Residential $ 1,194,613 1,202,638 Commercial 3,937,216 3,827,370 Multi-family 1,394,761 1,364,397 Construction 699,415 683,166 Total mortgage loans 7,226,005 7,077,571 Commercial loans 2,131,326 2,188,866 Consumer loans 316,589 327,442 Total gross loans 9,673,920 9,593,879 Premiums on purchased loans 1,482 1,451 Net deferred fees and unearned discounts (12,520) (13,706) Total loans $ 9,662,882 9,581,624 The following tables summarize the aging of loans receivable by portfolio segment and class of loans (in thousands): March 31, 2022 30-59 Days 60-89 Days Non-accrual Recorded Total Past Current Total Loans Non-accrual loans with no specific allowance Mortgage loans: Residential $ 2,385 1,354 5,396 — 9,135 1,185,478 1,194,613 5,396 Commercial 282 — 19,533 — 19,815 3,917,401 3,937,216 19,533 Multi-family 816 — 2,053 — 2,869 1,391,892 1,394,761 2,053 Construction 1,659 — 2,366 — 4,025 695,390 699,415 2,366 Total mortgage loans 5,142 1,354 29,348 — 35,844 7,190,161 7,226,005 29,348 Commercial loans 4,019 318 13,793 — 18,130 2,113,196 2,131,326 10,366 Consumer loans 571 90 1,171 — 1,832 314,757 316,589 1,171 Total gross loans $ 9,732 1,762 44,312 — 55,806 9,618,114 9,673,920 40,885 December 31, 2021 30-59 Days 60-89 Days Non-accrual Recorded Total Past Current Total Loans Receivable Non-accrual loans with no specific allowance Mortgage loans: Residential $ 7,229 1,131 6,072 — 14,432 1,188,206 1,202,638 6,072 Commercial 720 3,960 16,887 — 21,567 3,805,803 3,827,370 16,887 Multi-family — — 439 — 439 1,363,958 1,364,397 439 Construction — — 2,365 — 2,365 680,801 683,166 2,365 Total mortgage loans 7,949 5,091 25,763 — 38,803 7,038,768 7,077,571 25,763 Commercial loans 7,229 1,289 20,582 — 29,100 2,159,766 2,188,866 14,453 Consumer loans 649 228 1,682 — 2,559 324,883 327,442 1,682 Total gross loans $ 15,827 6,608 48,027 — 70,462 9,523,417 9,593,879 41,898 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 $44.3 million and $48.0 million at March 31, 2022 and December 31, 2021, respectively. Included in non-accrual loans were $20.3 million and $23.0 million of loans which were less than 90 days past due at March 31, 2022 and December 31, 2021, respectively. There were no loans 90 days or greater past due and still accruing interest at March 31, 2022 and December 31, 2021. Generally, accrued interest is written off by reversing interest income during the quarter the loan is moved from an accrual to a non-accrual status. The Company defines an impaired loan as a non-homogeneous loan greater than $1.0 million, for which, based on current information, it is not expected to collect all amounts due under the contractual terms of the loan agreement. Impaired loans also include all loans modified as troubled debt restructurings (“TDRs”). An allowance for collateral-dependent impaired loans that have been modified in a TDR is measured based on the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s observable market price, or the estimated fair value of the collateral, less any selling costs. The Company uses third-party appraisals to determine the fair value of the underlying collateral in its analysis of collateral-dependent loans. A third-party appraisal is generally ordered as soon as a loan is designated as a collateral-dependent loan and updated annually, or more frequently if required. A financial asset is considered collateral-dependent when the debtor is experiencing financial difficulty and repayment is expected to be provided substantially through the sale or operation of the collateral. For all classes of loans deemed collateral-dependent, the Company estimates expected credit losses based on the collateral’s fair value less any selling costs. A specific allocation of the allowance for credit losses is established for each collateral-dependent loan with a carrying balance greater than the collateral’s fair value, less estimated selling costs. In most cases, the Company records a partial charge-off to reduce the loan’s carrying value to the collateral’s fair value less estimated selling costs. At each fiscal quarter end, if a loan is designated as collateral-dependent and the third-party appraisal has not yet been received, an evaluation of all available collateral is made using the best information available at the time, including rent rolls, borrower financial statements and tax returns, prior appraisals, management’s knowledge of the market and collateral, and internally prepared collateral valuations based upon market assumptions regarding vacancy and capitalization rates, each as and where applicable. Once the appraisal is received and reviewed, the specific reserves are adjusted to reflect the appraised value and evaluated for charge offs. The Company believes there have been no significant time lapses resulting from this process. At March 31, 2022, there were 134 impaired loans totaling $48.3 million. Included in this total were 105 TDRs related to 102 borrowers totaling $20.3 million that were performing in accordance with their restructured terms and which continued to accrue interest at March 31, 2022. At December 31, 2021, there were 155 impaired loans totaling $52.3 million, of which 132 loans totaling $30.6 million were TDRs. Included in this total were 115 TDRs to 111 borrowers totaling $21.9 million that were performing in accordance with their restructured terms and which continued to accrue interest at December 31, 2021. At March 31, 2022 and December 31, 2021, the fair value of the assets securing collateral-dependent impaired loans totaled $16.2 million and $18.2 million, respectively. These collateral-dependent impaired loans at March 31, 2022 consisted of $14.4 million in commercial loans, $1.7 million in residential real estate loans, and $64,000 in consumer loans. The collateral for these impaired loans was primarily real estate. The activity in the allowance for credit losses by portfolio segment for the three months ended March 31, 2022 and 2021 was as follows (in thousands): Three months ended March 31, Mortgage loans Commercial loans Consumer loans Total 2022 Balance at beginning of period $ 52,104 26,343 2,293 80,740 Provision benefit to operations (1,995) (4,404) (1) (6,400) Recoveries of loans previously charged-off 10 1,860 166 2,036 Loans charged-off (23) — (78) (101) Balance at end of period $ 50,096 23,799 2,380 76,275 2021 Balance at beginning of period $ 68,307 27,084 6,075 101,466 Provision benefit to operations (13,467) (467) (1,066) (15,000) Recoveries of loans previously charged-off 276 528 303 1,107 Loans charged-off (918) (843) (221) (1,982) Balance at end of period $ 54,198 26,302 5,091 85,591 For the three months ended March 31, 2022, the Company recorded a $6.4 million provision benefit for credit losses on loans, compared to a $15.0 million provision benefit for the same period in 2021. The decrease in the period-over-period provision benefit was largely a function of the relative change in the economic outlook and the significant favorable impact of the post-pandemic recovery in the prior year period. The following tables summarize loans receivable by portfolio segment and impairment method (in thousands): March 31, 2022 Mortgage Commercial Consumer Total Portfolio Individually evaluated for impairment $ 37,976 9,147 1,200 48,323 Collectively evaluated for impairment 7,188,029 2,122,179 315,389 9,625,597 Total gross loans $ 7,226,005 2,131,326 316,589 9,673,920 December 31, 2021 Mortgage Commercial Consumer Total Portfolio Individually evaluated for impairment $ 34,610 16,420 1,224 52,254 Collectively evaluated for impairment 7,042,961 2,172,446 326,218 9,541,625 Total gross loans $ 7,077,571 2,188,866 327,442 9,593,879 The allowance for credit losses is summarized by portfolio segment and impairment classification as follows (in thousands): March 31, 2022 Mortgage Commercial loans Consumer loans Total Individually evaluated for impairment $ 840 1,145 49 2,034 Collectively evaluated for impairment 49,256 22,654 2,331 74,241 Total gross loans $ 50,096 23,799 2,380 76,275 December 31, 2021 Mortgage Commercial loans Consumer Total Individually evaluated for impairment $ 875 3,358 51 4,284 Collectively evaluated for impairment 51,229 22,985 2,242 76,456 Total gross loans $ 52,104 26,343 2,293 80,740 Loan modifications for 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, management attempts to obtain additional collateral or guarantor support when modifying such loans. If the borrower has demonstrated performance under the previous terms and our underwriting process shows the borrower has the capacity to continue to perform under the restructured terms, the loan will continue to accrue interest. Non-accruing restructured loans may be returned to accrual status when there has been a sustained period of repayment performance (generally six consecutive months of payments) and both principal and interest are deemed collectible. The following tables present the number of loans modified as TDRs during the three months ended March 31, 2022 and 2021, along with their balances immediately prior to the modification date and post-modification as of March 31, 2022 and 2021 (in thousands): For the three months ended March 31, 2022 March 31, 2021 Troubled Debt Restructurings Number of Pre-Modification Post-Modification Number of Pre-Modification Post-Modification Mortgage loans: Commercial loans — — — 3 1,361 1,359 Total restructured loans — $ — $ — 3 $ 1,361 $ 1,359 All TDRs are impaired loans, which are individually evaluated for impairment. During the three months ended March 31, 2022, no charge-offs were recorded on collateral-dependent impaired loans, while $1.5 million of charge-offs were recorded on collateral-dependent impaired loans during the three months ended March 31, 2021. For the three months ended March 31, 2022, there was no allowance for credit losses for loans associated with the TDRs presented in the preceding tables. There were no loans which had a payment default (90 days or more past due) for loans modified as TDRs within the 12 month periods ending March 31, 2022 and March 31, 2021. For TDRs that subsequently default, the Company determines the amount of the allowance for the respective loans in accordance with the accounting policy for the allowance for credit losses on loans individually evaluated for impairment. As allowed by CECL, loans acquired by the Company that experience more-than-insignificant deterioration in credit quality after origination, are classified as Purchased Credit Deteriorated ("PCD") loans. At March 31, 2022, the balance of PCD loans totaled $242.7 million with a related allowance for credit losses of $2.8 million. The balance of PCD loans at December 31, 2021 was $246.9 million with a related allowance for credit losses of $2.8 million. The following table presents loans individually evaluated for impairment by class and loan category (in thousands): March 31, 2022 December 31, 2021 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 $ 11,064 8,680 — 8,723 95 12,326 9,814 — 9,999 423 Commercial 18,381 17,648 — 17,723 14 15,310 14,685 — 15,064 63 Multi-family 1,614 1,614 — 1,620 — — — — — — Construction 1,656 1,588 — 1,588 — 1,656 1,588 — 1,643 30 Total 32,715 29,530 — 29,654 109 29,292 26,087 — 26,706 516 Commercial loans 5,670 3,645 — 3,680 4 9,845 7,254 — 7,714 33 Consumer loans 1,425 889 — 898 14 1,389 853 — 1,613 115 Total impaired loans $ 39,810 34,064 — 34,232 127 40,526 34,194 — 36,033 664 Loans with an allowance recorded Mortgage loans: Residential $ 7,925 7,584 824 7,617 72 7,994 7,652 858 7,742 278 Commercial 862 862 16 867 12 871 871 17 894 48 Total 8,787 8,446 840 8,484 84 8,865 8,523 875 8,636 326 Commercial loans 6,152 5,502 1,145 8,546 34 9,498 9,166 3,358 8,304 257 Consumer loans 331 311 49 313 3 391 371 51 379 18 Total impaired loans $ 15,270 14,259 2,034 17,343 121 18,754 18,060 4,284 17,319 601 Total impaired loans Mortgage loans: Residential $ 18,989 16,264 824 16,340 167 20,320 17,466 858 17,741 701 Commercial 19,243 18,510 16 18,590 26 16,181 15,556 17 15,958 111 Multi-family 1,614 1,614 — 1,620 — — — — — — Construction 1,656 1,588 — 1,588 — 1,656 1,588 — 1,643 30 Total 41,502 37,976 840 38,138 193 38,157 34,610 875 35,342 842 Commercial loans 11,822 9,147 1,145 12,226 38 19,343 16,420 3,358 16,018 290 Consumer loans 1,756 1,200 49 1,211 17 1,780 1,224 51 1,992 133 Total impaired loans $ 55,080 48,323 2,034 51,575 248 59,280 52,254 4,284 53,352 1,265 Specific allocations of the allowance for credit losses attributable to impaired loans totaled $2.0 million at March 31, 2022 and $4.3 million at December 31, 2021. At March 31, 2022 and December 31, 2021, impaired loans for which there was no related allowance for credit losses totaled $34.1 million and $34.2 million, respectively. The average balance of impaired loans for the three months ended March 31, 2022 and the twelve months ended December 31, 2021 was $51.6 million and $53.4 million, respectively. 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 reviewed periodically through loan review examinations which are currently performed by an independent third-party. Reports by the independent third-party are presented to the Audit Committee of the Board of Directors. The Company participated in the Paycheck Protection Program (“PPP”) through the United States Department of the Treasury and Small Business Administration ("SBA"). The PPP loans are fully guaranteed by the SBA 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 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. As of March 31, 2022, the Company secured 2,067 PPP loans for its customers totaling $682.0 million, which includes both the initial round and the second round of PPP. As of March 31, 2022, 1,994 PPP loans totaling $653.1 million were forgiven and repaid by the SBA. At March 31, 2022, PPP loans totaled $28.9 million, and 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 as of March 31, 2022 and December 31, 2021 (in thousands): Gross Loans Held for Investment by Year of Origination 2022 2021 2020 2019 2018 Prior to 2018 Revolving Loans Revolving loans to term loans Total Loans Residential Special mention $ — — — — — 1,354 — — 1,354 Substandard — — — — 280 7,718 — — 7,998 Doubtful — — — — — — — — — Loss — — — — — — — — — Total criticized and classified — — — — 280 9,072 — — 9,352 Pass/Watch 45,614 225,105 228,755 109,721 62,727 513,339 — — 1,185,261 Total residential $ 45,614 225,105 228,755 109,721 63,007 522,411 — — 1,194,613 Commercial Mortgage Special mention $ — — 838 28,703 49,024 13,930 — — 92,495 Substandard — — — — 7,330 22,648 774 — 30,752 Doubtful — — — — — — — — — Loss — — — — — — — — — Total criticized and classified — — 838 28,703 56,354 36,578 774 — 123,247 Pass/Watch 235,572 662,441 602,550 572,794 284,646 1,319,324 105,975 30,667 3,813,969 Total commercial mortgage $ 235,572 662,441 603,388 601,497 341,000 1,355,902 106,749 30,667 3,937,216 Multi-family Special mention $ — — — — — 1,683 — — 1,683 Substandard — — 439 — — 2,554 — — 2,993 Doubtful — — — — — — — — — Loss — — — — — — — — — Total criticized and classified — — 439 — — 4,237 — — 4,676 Pass/Watch 51,221 154,053 284,440 155,014 193,026 548,473 2,695 1,163 1,390,085 Total multi-family $ 51,221 154,053 284,879 155,014 193,026 552,710 2,695 1,163 1,394,761 Construction Special mention $ — — — 939 19,014 — — — 19,953 Substandard — — — 382 2,365 — — — 2,747 Doubtful — — — — — — — — — Loss — — — — — — — — — Gross Loans Held for Investment by Year of Origination 2022 2021 2020 2019 2018 Prior to 2018 Revolving Loans Revolving loans to term loans Total Loans Total criticized and classified — — — 1,321 21,379 — — — 22,700 Pass/Watch 15,848 224,941 167,494 218,541 41,172 2,404 6,315 676,715 Total construction $ 15,848 224,941 167,494 219,862 62,551 2,404 — 6,315 699,415 Total Mortgage Special mention $ — — 838 29,642 68,038 16,967 — — 115,485 Substandard — — 439 382 9,975 32,920 774 — 44,490 Doubtful — — — — — — — — — Loss — — — — — — — — — Total criticized and classified — — 1,277 30,024 78,013 49,887 774 — 159,975 Pass/Watch 348,255 1,266,540 1,283,239 1,056,070 581,571 2,383,540 108,670 38,145 7,066,030 Total Mortgage $ 348,255 1,266,540 1,284,516 1,086,094 659,584 2,433,427 109,444 38,145 7,226,005 Commercial Special mention $ — — 129 829 3,227 53,407 2,563 1,305 61,460 Substandard — — 2 9,257 5,683 77,111 20,600 913 113,566 Doubtful — — — — — — — — — Loss — — — — — — — — — Total criticized and classified — — 131 10,086 8,910 130,518 23,163 2,218 175,026 Pass/Watch 125,998 484,075 232,947 207,513 165,858 294,256 408,921 36,732 1,956,300 Total commercial $ 125,998 484,075 233,078 217,599 174,768 424,774 432,084 38,950 2,131,326 Consumer (1) Special mention $ — — — — — 2 — 88 90 Substandard — — — — 114 1,014 6 — 1,134 Doubtful — — — — — — — — — Loss — — — — — — — — — Total criticized and classified — — — — 114 1,016 6 88 1,224 Pass/Watch 7,666 23,475 3,559 19,820 19,832 105,679 119,412 15,922 315,365 Total consumer $ 7,666 23,475 3,559 19,820 19,946 106,695 119,418 16,010 316,589 Total Loans Special mention $ — — 967 30,471 71,265 70,376 2,563 1,393 177,035 Substandard — — 441 9,639 15,772 111,045 21,380 913 159,190 Doubtful — — — — — — — — — Loss — — — — — — — — — Total criticized and classified — — 1,408 40,110 87,037 181,421 23,943 2,306 336,225 Pass/Watch 481,919 1,774,090 1,519,745 1,283,403 767,261 2,783,475 637,003 90,799 9,337,695 Gross Loans Held for Investment by Year of Origination 2022 2021 2020 2019 2018 Prior to 2018 Revolving Loans Revolving loans to term loans Total Loans Total gross loans $ 481,919 1,774,090 1,521,153 1,323,513 854,298 2,964,896 660,946 93,105 9,673,920 (1) For consumer loans, the Company assigns internal credit grades based on the delinquency status of each loan. Gross Loans Held for Investment by Year of Origination 2021 2020 2019 2018 2017 Prior to 2017 Revolving Loans Revolving loans to term loans Total Loans Residential Special mention $ — — — — 697 434 — — 1,131 Substandard — — — 280 166 8,569 — — 9,015 Doubtful — — — — — — — — — Loss — — — — — — — — — Total criticized and classified — — — 280 863 9,003 — — 10,146 Pass/Watch 229,106 235,949 113,206 67,493 75,906 470,832 — — 1,192,492 Total residential $ 229,106 235,949 113,206 67,773 76,769 479,835 — — 1,202,638 Commercial Mortgage Special mention $ — 2,624 28,706 22,296 9,657 26,668 1,094 — 91,045 Substandard — — 18 34,260 7,352 34,356 799 — 76,785 Doubtful — — — — — — — — — Loss — — — — — — — — — Total criticized and classified — 2,624 28,724 56,556 17,009 61,024 1,893 — 167,830 Pass/Watch 655,105 600,030 589,578 298,665 430,947 952,746 101,618 30,851 3,659,540 Total commercial mortgage $ 655,105 602,654 618,302 355,221 447,956 1,013,770 103,511 30,851 3,827,370 Multi-family Special mention $ — — — — 3,053 271 — — 3,324 Substandard — 439 — — 945 — — 1,384 Doubtful — — — — — — — — — Loss — — — — — — — — — Total criticized and classified — 439 — — 3,053 1,216 — — 4,708 Pass/Watch 154,419 294,716 166,558 173,583 117,654 448,710 2,880 1,169 1,359,689 Total multi-family $ 154,419 295,155 166,558 173,583 120,707 449,926 2,880 1,169 1,364,397 Construction Special mention $ — 1,125 — — — — — — 1,125 Substandard — — — 2,365 — — — — 2,365 Doubtful — — — — — — — — — Loss — — — — — — — — — Total criticized and classified — 1,125 — 2,365 — — — — 3,490 Gross Loans Held for Investment by Year of Origination 2021 2020 2019 2018 2017 Prior to 2017 Revolving Loans Revolving loans to term loans Total Loans Pass/Watch 173,843 176,182 219,331 94,363 9,604 103 6,250 679,676 Total construction $ 173,843 177,307 219,331 96,728 9,604 103 — 6,250 683,166 Total Mortgage Special mention $ — 3,749 28,706 22,296 13,407 27,373 1,094 — 96,625 Substandard — 439 18 36,905 7,518 43,870 799 — 89,549 Doubtful — — — — — — — — — Loss — — — — — — — — — Total criticized and classified — 4,188 28,724 59,201 20,925 71,243 1,893 — 186,174 Pass/Watch 1,212,473 1,306,877 1,088,673 634,104 634,111 1,872,391 104,498 38,270 6,891,397 Total Mortgage $ 1,212,473 1,311,065 1,117,397 693,305 655,036 1,943,634 106,391 38,270 7,077,571 Commercial Special mention $ 1,232 2,662 2,816 3,263 24,418 40,561 8,389 2,155 85,496 Substandard — 736 5,517 5,860 5,747 64,807 13,622 1,821 98,110 Doubtful — — — — — — — — — Loss — — — — — — — — — Total criticized and classified 1,232 3,398 8,333 9,123 30,165 105,368 22,011 3,976 183,606 Pass/Watch 415,924 222,132 179,193 154,440 149,567 489,051 355,097 39,856 2,005,260 Total commercial $ 417,156 225,530 187,526 163,563 179,732 594,419 377,108 43,832 2,188,866 Consumer (1) Special mention $ — — — — — 109 25 94 228 Substandard — — — 116 2 1,514 6 — 1,638 Doubtful — — — — — — — — — Loss — — — — — — — — — Total criticized and classified — — — 116 2 1,623 31 94 1,866 Pass/Watch 25,140 4,503 24,272 21,046 15,804 99,106 119,347 16,358 325,576 Total consumer $ 25,140 4,503 24,272 21,162 15,806 100,729 119,378 16,452 327,442 Total Loans Special mention $ 1,232 6,411 31,522 25,559 37,825 68,043 9,508 2,249 182,349 Substandard — 1,175 5,535 42,881 13,267 110,191 14,427 1,821 189,297 Doubtful — — — — — — — — — Loss — — — — — — — — — Total criticized and classified 1,232 7,586 37,057 68,440 51,092 178,234 23,935 4,070 371,646 Pass/Watch 1,653,537 1,533,512 1,292,138 809,590 799,482 2,460,548 578,942 94,484 9,222,233 Gross Loans Held for Investment by Year of Origination 2021 2020 2019 2018 2017 Prior to 2017 Revolving Loans Revolving loans to term loans Total Loans Total gross loans $ 1,654,769 1,541,098 1,329,195 878,030 850,574 2,638,782 602,877 98,554 9,593,879 (1) For consumer loans, the Company assigns internal credit grades based on the delinquency status of each loan. |