Loans Receivable and Allowance for Credit Losses | Loans Receivable and Allowance for Credit Losses Loans receivable as of March 31, 2024 and December 31, 2023 are summarized as follows (in thousands): March 31, 2024 December 31, 2023 Mortgage loans: Commercial $ 4,353,799 4,512,411 Multi-family 1,825,888 1,812,500 Construction 711,417 653,246 Residential 1,152,185 1,164,956 Total mortgage loans 8,043,289 8,143,113 Commercial loans 2,514,550 2,442,406 Consumer loans 295,125 299,164 Total gross loans 10,852,964 10,884,683 Premiums on purchased loans 1,439 1,474 Net deferred fees (11,696) (12,456) Total loans $ 10,842,707 10,873,701 Accrued interest on loans totaled $51.0 million and $50.9 million as of March 31, 2024 and December 31, 2023, respectively, and is presented within total accrued interest receivable on the consolidated statements of financial condition. The following tables summarize the aging of loans receivable by portfolio segment and class of loans (in thousands): March 31, 2024 30-59 Days 60-89 Days Non-accrual Recorded Total Past Current Total Loans Non-accrual loans with no related allowance Mortgage loans: Commercial $ 5,052 1,148 5,938 — 12,138 4,341,661 4,353,799 5,938 Multi-family 12,069 — 2,355 — 14,424 1,811,464 1,825,888 2,355 Construction — — — — — 711,417 711,417 — Residential 3,568 804 1,647 — 6,019 1,146,166 1,152,185 1,647 Total mortgage loans 20,689 1,952 9,940 — 32,581 8,010,708 8,043,289 9,940 Commercial loans 4,493 332 36,892 — 41,717 2,472,833 2,514,550 25,989 Consumer loans 803 755 760 — 2,318 292,807 295,125 760 Total gross loans $ 25,985 3,039 47,592 — 76,616 10,776,348 10,852,964 36,689 December 31, 2023 30-59 Days 60-89 Days Non-accrual Recorded Total Past Current Total Loans Receivable Non-accrual loans with no related allowance Mortgage loans: Commercial $ 825 — 5,151 — 5,976 4,506,435 4,512,411 5,151 Multi-family 3,815 1,635 744 — 6,194 1,806,306 1,812,500 744 Construction — — 771 — 771 652,475 653,246 771 Residential 3,429 1,208 853 — 5,490 1,159,466 1,164,956 853 Total mortgage loans 8,069 2,843 7,519 — 18,431 8,124,682 8,143,113 7,519 Commercial loans 998 198 41,487 — 42,683 2,399,723 2,442,406 36,281 Consumer loans 875 275 633 — 1,783 297,381 299,164 633 Total gross loans $ 9,942 3,316 49,639 — 62,897 10,821,786 10,884,683 44,433 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 $47.6 million and $49.6 million as of March 31, 2024 and December 31, 2023, respectively. Included in non-accrual loans were $4.6 million and $23.2 million of loans which were less than 90 days past due as of March 31, 2024 and December 31, 2023, respectively. There were no loans 90 days or greater past due and still accruing interest as of March 31, 2024 and December 31, 2023. The activity in the allowance for credit losses by portfolio segment for the three months ended March 31, 2024 and 2023 was as follows (in thousands): Three months ended March 31, Mortgage loans Commercial loans Consumer loans Total 2024 Balance at beginning of period $ 73,407 31,475 2,318 107,200 Provision charge (benefit) to operations (7,580) 7,924 (144) 200 Recoveries of loans previously charged-off 63 687 145 895 Loans charged-off — (1,794) (72) (1,866) Balance at end of period $ 65,890 38,292 2,247 106,429 2023 Balance at beginning of period $ 58,218 27,413 2,392 88,023 Cumulative effect of adopting ASU 2022-02 (510) (43) (41) (594) Provision charge to operations 6,212 (308) 96 6,000 Recoveries of loans previously charged-off 3 168 85 256 Loans charged-off (728) (113) (86) (927) Balance at end of period $ 63,195 27,117 2,446 92,758 For the three months ended March 31, 2024, the Company recorded a $200,000 provision for credit losses on loans, compared to a $6.0 million provision for the same period in 2023. The decrease in the provision for credit losses was largely a function of the period-over-period improvement in the economic forecast within our CECL model. For the three months ended March 31, 2024, net charge-offs totaled $971,000. The following table summarizes the Company's gross charge-offs recorded during the three months ended March 31, 2024 by year of origination (in thousands): 2024 2023 2022 2021 2020 Prior to 2020 Total Loans Commercial loans $ — — — — 1,606 188 1,794 Consumer loans (1) 6 — — — — 1 7 Total gross loans $ 6 — — — 1,606 189 1,801 (1) During the three months ended March 31, 2024, charge-offs on consumer overdraft accounts totaled $65,000, which are not included in the table above. The Company defines a loan individually evaluated for impairment 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. As of March 31, 2024, there were 14 loans totaling $40.1 million, compared to 17 loans totaling $42.3 million as of December 31, 2023, that were individually evaluated for impairment. 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. 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. 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. As of March 31, 2024 and December 31, 2023, the Company had collateral-dependent loans with fair values of $20.9 million and $24.1 million secured by commercial real estate, respectively. Loan modifications to borrowers experiencing financial difficulty may include interest rate reductions, principal or interest forgiveness, forbearance, term extensions, and other actions intended to minimize economic loss and to avoid foreclosure or repossession of collateral. 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 illustrates the most common loan modifications by loan classes offered by the Company that are required to be disclosed pursuant to the requirements of ASU 2022-02: Loan Classes Modification types Commercial Term extension, interest rate reductions, payment delay, or combination thereof. These modifications extend the term of the loan, lower the payment amount, or otherwise delay payments during a defined period for the purpose of providing borrowers additional time to return to compliance with the original loan term. Residential Mortgage/ Home Equity Forbearance period greater than six months. These modifications require reduced or no payments during the forbearance period for the purpose of providing borrowers additional time to return to compliance with the original loan term, as well as term extension and rate adjustment. These modifications extend the term of the loan and provides for an adjustment to the interest rate, which reduces the monthly payment requirement. Direct Installment Term extension greater than three months. These modifications extend the term of the loan, which reduces the monthly payment requirement. In 2023, the Company adopted ASU 2022-02, “Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures” (“ASU 2022-02”), which eliminated the accounting guidance for troubled debt restructurings while enhancing disclosure requirements for certain loan refinancing and restructurings by creditors when a borrower is experiencing financial difficulty. This guidance was applied on a modified retrospective basis. Upon adoption of this guidance, the Company no longer establishes a specific reserve for loan modifications to borrowers experiencing financial difficulty. Instead, these loan modifications are included in their respective pool and a projected loss rate is applied to the current loan balance to arrive at the quantitative and qualitative baseline portion of the allowance for credit losses. As a result, the Company recorded a $594,000 reduction to the allowance for credit losses, which resulted in a $433,000 cumulative effect adjustment increase, net of tax, to retained earnings. The following table presents the amortized cost basis of loan modifications made to borrowers experiencing financial difficulty during the three months ended March 31, 2024 (in thousands): For the three months ended March 31, 2024 Term Extension Interest Rate Increase Interest Rate Reduction and Term Extension % of Total Class of Loans and Leases Commercial loans $ — 7,187 — 0.29 % Total gross loans $ — 7,187 — 0.07 % The following table presents the financial effect of loan modifications made to borrowers experiencing financial difficulty during the three months ended March 31, 2024 (in thousands): Weighted-Average Months of Term Extension Weighted-Average Rate Increase Commercial loans 0 2.00 % Total gross loans 0 2.00 % There were no loan modifications made to borrowers experiencing financial difficulty during the three months ended March 31, 2024, that subsequently defaulted. The following table presents the aging analysis of loan modifications made to borrowers experiencing financial difficulty during the three months ended March 31, 2024 (in thousands): Current 30-59 Days Past Due 60-89 Days Past Due 90 days or more Past Due Non- Accrual Total Commercial loans $ 7,187 — — — — 7,187 Total gross loans $ 7,187 — — — — 7,187 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. As of March 31, 2024, the balance of PCD loans totaled $160.6 million with a related allowance for credit losses of $1.6 million. The balance of PCD loans as of December 31, 2023 was $165.1 million with a related allowance for credit losses of $1.7 million. 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 following table summarizes the Company's gross loans held for investment by year of origination and internally assigned credit grades as of March 31, 2024 and December 31, 2023 (in thousands): Gross Loans Held for Investment by Year of Origination as of March 31, 2024 2024 2023 2022 2021 2020 Prior to 2020 Revolving Loans Revolving loans to term loans Total Loans Commercial Mortgage Special mention $ — — 10,807 3,027 27,854 10,185 — — 51,873 Substandard — — — — — 12,917 434 — 13,351 Doubtful — — — — — — — — — Loss — — — — — — — — — Total criticized and classified — — 10,807 3,027 27,854 23,102 434 — 65,224 Pass/Watch 82,138 467,001 871,658 714,153 440,477 1,614,950 85,869 12,329 4,288,575 Total Commercial Mortgage $ 82,138 467,001 882,465 717,180 468,331 1,638,052 86,303 12,329 4,353,799 Multi-family Special mention $ — — — 7,672 — — 7,672 Substandard — 1,630 — — — 726 — — 2,356 Doubtful — — — — — — — — — Loss — — — — — — — — — Gross Loans Held for Investment by Year of Origination as of March 31, 2024 2024 2023 2022 2021 2020 Prior to 2020 Revolving Loans Revolving loans to term loans Total Loans Total criticized and classified — 1,630 — — — 8,398 — — 10,028 Pass/Watch 38,438 268,370 171,591 237,488 290,644 802,436 5,299 1,594 1,815,860 Total Multi-Family $ 38,438 270,000 171,591 237,488 290,644 810,834 5,299 1,594 1,825,888 Construction Special mention $ — — — — — — — — — Substandard — — — — — — — — — Doubtful — — — — — — — — — Loss — — — — — — — — — Total criticized and classified — — — — — — — — — Pass/Watch 9,304 70,036 359,176 189,056 68,915 14,930 — 711,417 Total Construction $ 9,304 70,036 359,176 189,056 68,915 14,930 — — 711,417 Residential (1) Special mention $ — — — — — 804 — — 804 Substandard — — — — — 1,647 — — 1,647 Doubtful — — — — — — — — — Loss — — — — — — — — — Total criticized and classified — — — — — 2,451 — — 2,451 Pass/Watch 9,893 95,128 139,459 197,548 192,575 515,131 — — 1,149,734 Total Residential $ 9,893 95,128 139,459 197,548 192,575 517,582 — — 1,152,185 Total Mortgage Special mention $ — — 10,807 3,027 27,854 18,661 — — 60,349 Substandard — 1,630 — — — 15,290 434 — 17,354 Doubtful — — — — — — — — — Loss — — — — — — — — — Total criticized and classified — 1,630 10,807 3,027 27,854 33,951 434 — 77,703 Pass/Watch 139,773 900,535 1,541,884 1,338,245 992,611 2,947,447 91,168 13,923 7,965,586 Total Mortgage $ 139,773 902,165 1,552,691 1,341,272 1,020,465 2,981,398 91,602 13,923 8,043,289 Commercial Special mention $ — — 19,412 2,029 1,323 28,836 12,208 1,810 65,618 Substandard 440 183 16,153 20,520 11,123 13,125 19,402 496 81,442 Doubtful — — — — — — — — — Loss — — — — — — — — — Total criticized and classified 440 183 35,565 22,549 12,446 41,961 31,610 2,306 147,060 Pass/Watch 97,203 304,171 328,052 258,014 160,269 627,503 506,347 85,931 2,367,490 Total Commercial $ 97,643 304,354 363,617 280,563 172,715 669,464 537,957 88,237 2,514,550 Consumer (1) Special mention $ — — — — — 50 662 43 755 Substandard — — — — — 282 388 90 760 Doubtful — — — — — — — — — Gross Loans Held for Investment by Year of Origination as of March 31, 2024 2024 2023 2022 2021 2020 Prior to 2020 Revolving Loans Revolving loans to term loans Total Loans Loss — — — — — — — — — Total criticized and classified — — — — — 332 1,050 133 1,515 Pass/Watch 3,566 27,452 25,786 17,943 3,397 95,074 107,303 13,089 293,610 Total Consumer $ 3,566 27,452 25,786 17,943 3,397 95,406 108,353 13,222 295,125 Total Loans Special mention $ — — 30,219 5,056 29,177 47,547 12,870 1,853 126,722 Substandard 440 1,813 16,153 20,520 11,123 28,697 20,224 586 99,556 Doubtful — — — — — — — — — Loss — — — — — — — — — Total criticized and classified 440 1,813 46,372 25,576 40,300 76,244 33,094 2,439 226,278 Pass/Watch 240,542 1,232,158 1,895,722 1,614,202 1,156,277 3,670,024 704,818 112,943 10,626,686 Total Gross Loans $ 240,982 1,233,971 1,942,094 1,639,778 1,196,577 3,746,268 737,912 115,382 10,852,964 (1) For residential and 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 as of December 31, 2023 2023 2022 2021 2020 2019 Prior to 2019 Revolving Loans Revolving loans to term loans Total Loans Commercial Mortgage Special mention $ — 10,926 3,048 28,511 10,558 24,598 4,500 — 82,141 Substandard 482 — — — — 9,599 434 — 10,515 Doubtful — — — — — — — — — Loss — — — — — — — — — Total criticized and classified 482 10,926 3,048 28,511 10,558 34,197 4,934 — 92,656 Pass/Watch 628,709 883,149 677,464 470,257 470,971 1,166,205 90,760 32,240 4,419,755 Total Commercial Mortgage $ 629,191 894,075 680,512 498,768 481,529 1,200,402 95,694 32,240 4,512,411 Multi-family Special mention $ — — — — — 9,500 — — 9,500 Substandard 3,253 — — — — — — — 3,253 Doubtful — — — — — — — — — Loss — — — — — — — — — Total criticized and classified 3,253 — — — — 9,500 — — 12,753 Pass/Watch 340,842 172,244 184,136 271,878 230,456 592,470 6,115 1,606 1,799,747 Total Multi-Family $ 344,095 172,244 184,136 271,878 230,456 601,970 6,115 1,606 1,812,500 Construction Gross Loans Held for Investment by Year of Origination as of December 31, 2023 2023 2022 2021 2020 2019 Prior to 2019 Revolving Loans Revolving loans to term loans Total Loans Special mention $ — — — — — — — — — Substandard — — — — — 771 — — 771 Doubtful — — — — — — — — — Loss — — — — — — — — — Total criticized and classified — — — — — 771 — — 771 Pass/Watch 41,209 342,890 185,034 68,603 1,339 13,400 — — 652,475 Total Construction $ 41,209 342,890 185,034 68,603 1,339 14,171 — — 653,246 Residential (1) Special mention $ — — — — — 1,208 — — 1,208 Substandard — — — — — 1,285 — — 1,285 Doubtful — — — — — — — — — Loss — — — — — — — — — Total criticized and classified — — — — — 2,493 — — 2,493 Pass/Watch 96,259 141,683 200,111 195,964 89,654 438,792 — — 1,162,463 Total Residential $ 96,259 141,683 200,111 195,964 89,654 441,285 — — 1,164,956 Total Mortgage Special mention $ — 10,926 3,048 28,511 10,558 35,306 4,500 — 92,849 Substandard 3,735 — — — — 11,655 434 — 15,824 Doubtful — — — — — — — — — Loss — — — — — — — — — Total criticized and classified 3,735 10,926 3,048 28,511 10,558 46,961 4,934 — 108,673 Pass/Watch 1,107,019 1,539,966 1,246,745 1,006,702 792,420 2,210,867 96,875 33,846 8,034,440 Total Mortgage $ 1,110,754 1,550,892 1,249,793 1,035,213 802,978 2,257,828 101,809 33,846 8,143,113 Commercial Special mention $ 450 17,008 9,338 2,409 152 22,752 23,333 687 76,129 Substandard 686 — 20,262 9,235 2,034 11,313 10,736 508 54,774 Doubtful 7,011 — — — — — — — 7,011 Loss — — — — — — — — — Total criticized and classified 8,147 17,008 29,600 11,644 2,186 34,065 34,069 1,195 137,914 Pass/Watch 358,578 316,015 318,416 131,647 143,677 493,191 471,962 71,006 2,304,492 Total Commercial $ 366,725 333,023 348,016 143,291 145,863 527,256 506,031 72,201 2,442,406 Consumer (1) Special mention $ — — — — — 97 178 — 275 Substandard — — — — 9 146 389 90 634 Doubtful — — — — — — — — — Loss — — — — — — — — — Total criticized and classified — — — — 9 243 567 90 909 Gross Loans Held for Investment by Year of Origination as of December 31, 2023 2023 2022 2021 2020 2019 Prior to 2019 Revolving Loans Revolving loans to term loans Total Loans Pass/Watch 29,083 26,098 18,101 3,459 14,375 85,383 108,431 13,325 298,255 Total Consumer $ 29,083 26,098 18,101 3,459 14,384 85,626 108,998 13,415 299,164 Total Loans Special mention $ 450 27,934 12,386 30,920 10,710 58,155 28,011 687 169,253 Substandard 4,421 — 20,262 9,235 2,043 23,114 11,559 598 71,232 Doubtful 7,011 — — — — — — — 7,011 Loss — — — — — — — — — Total criticized and classified 11,882 27,934 32,648 40,155 12,753 81,269 39,570 1,285 247,496 Pass/Watch 1,494,680 1,882,079 1,583,262 1,141,808 950,472 2,789,441 677,268 118,177 10,637,187 Total Gross Loans $ 1,506,562 1,910,013 1,615,910 1,181,963 963,225 2,870,710 716,838 119,462 10,884,683 (1) For residential and consumer loans, the Company assigns internal credit grades based on the delinquency status of each loan. |