Loans Receivable | 7. LOANS RECEIVABLE The following table sets forth the composition of the Company’s loan portfolio at March 31, 2021 and June 30, 2020: March 31, June 30, 2021 2020 (In Thousands) Commercial loans: Multi-family mortgage $ 2,055,396 $ 2,059,568 Nonresidential mortgage 1,110,765 960,853 Commercial business (1) 183,181 138,788 Construction 95,533 20,961 Total commercial loans 3,444,875 3,180,170 One- to four-family residential mortgage 1,323,485 1,273,022 Consumer loans: Home equity loans 59,721 82,920 Other consumer 3,445 3,991 Total consumer loans 63,166 86,911 Total loans 4,831,526 4,540,103 Unaccreted yield adjustments (33,287 ) (41,706 ) Total loans receivable, net of yield adjustments $ 4,798,239 $ 4,498,397 (1) Includes Paycheck Protection Program (“PPP”) loans of $20.9 million and $69.0 million as of March 31, 2021 and June 30, 2020, respectively. Past Due Loans Past due status is based on the contractual payment terms of the loans. The following tables present the payment status of past due loans as of March 31, 2021 and June 30, 2020, by loan segment: March 31, 2021 Multi-Family Mortgage Non- Residential Mortgage Commercial Business Construction Residential Mortgage Home Equity Loans Other Consumer Total (In Thousands) Current $ 2,033,617 $ 1,065,795 $ 182,727 $ 95,533 $ 1,315,841 $ 59,637 $ 3,426 $ 4,756,576 Past due: 30-59 days 2,459 849 2 - 1,212 - 2 4,524 60-89 days 6,123 22,566 - - 1,072 5 15 29,781 90 days and over 13,197 21,555 452 - 5,360 79 2 40,645 Total past due 21,779 44,970 454 - 7,644 84 19 74,950 Total loans $ 2,055,396 $ 1,110,765 $ 183,181 $ 95,533 $ 1,323,485 $ 59,721 $ 3,445 $ 4,831,526 June 30, 2020 Multi-Family Mortgage Non- Residential Mortgage Commercial Business Construction Residential Mortgage Home Equity Loans Other Consumer Total (In Thousands) Current $ 2,059,568 $ 941,714 $ 138,439 $ 20,961 $ 1,264,267 $ 82,358 $ 3,981 $ 4,511,288 Past due: 30-59 days - - - - 3,211 169 - 3,380 60-89 days - 14,478 - - 1,038 13 5 15,534 90 days and over - 4,661 349 - 4,506 380 5 9,901 Total past due - 19,139 349 - 8,755 562 10 28,815 Total loans $ 2,059,568 $ 960,853 $ 138,788 $ 20,961 $ 1,273,022 $ 82,920 $ 3,991 $ 4,540,103 Nonperforming Loans Loans are generally placed on nonaccrual status when contractual payments become 90 or more days past due or when the Company does not expect to receive all principal and interest payments (“P&I”) owed substantially in accordance with the terms of the loan agreement, regardless of past due status. Loans that become 90 days past due, but are well secured and in the process of collection, may remain on accrual status. Nonaccrual loans are generally returned to accrual status when all payments due are brought current and we expect to receive all remaining P&I payments owed substantially in accordance with the terms of the loan agreement. Payments received in cash on nonaccrual loans, including both the principal and interest portions of those payments, are generally applied to reduce the carrying value of the loan. The Company did not recognize interest income on non-accrual loans during the three and nine months ended March 31, 2021 and March 31, 2020. The following tables present information relating to the Company’s nonperforming loans as of March 31, 2021 and June 30, 2020: March 31, 2021 Multi-Family Mortgage Non- Residential Mortgage Commercial Business Construction Residential Mortgage Home Equity Loans Other Consumer Total (In Thousands) Performing $ 2,039,302 $ 1,074,357 $ 182,510 $ 93,162 $ 1,307,728 $ 59,606 $ 3,443 $ 4,760,108 Nonperforming: 90 days and over past due accruing - - - - - - 2 2 Nonaccrual loans with allowance for credit losses - 10,683 277 - 4,188 - - 15,148 Nonaccrual loans with no allowance for credit losses 16,094 25,725 394 2,371 11,569 115 - 56,268 Total nonperforming 16,094 36,408 671 2,371 15,757 115 2 71,418 Total loans $ 2,055,396 $ 1,110,765 $ 183,181 $ 95,533 $ 1,323,485 $ 59,721 $ 3,445 $ 4,831,526 June 30, 2020 Multi-Family Mortgage Non- Residential Mortgage Commercial Business Construction Residential Mortgage Home Equity Loans Other Consumer Total (In Thousands) Performing $ 2,056,606 $ 936,917 $ 138,196 $ 20,961 $ 1,264,663 $ 82,078 $ 3,986 $ 4,503,407 Nonperforming: 90 days and over past due accruing - - - - - - 5 5 Nonaccrual 2,962 23,936 592 - 8,359 842 - 36,691 Total nonperforming 2,962 23,936 592 - 8,359 842 5 36,696 Total loans $ 2,059,568 $ 960,853 $ 138,788 $ 20,961 $ 1,273,022 $ 82,920 $ 3,991 $ 4,540,103 Troubled Debt Restructurings (“TDRs”) On a case-by-case basis, the Company may agree to modify the contractual terms of a loan to assist a borrower who may be experiencing financial difficulty, as well as to preserve the Company’s position in the loan. If the borrower is experiencing financial difficulties and a concession has been made at the time of such modification, the loan is classified as a TDR. At March 31, 2021, the Company had TDRs totaling $19.2 million. The allowance for credit losses associated with the TDRs presented in the tables below totaled $194,000 and $8,000 as of March 31, 2021 and June 30, 2020, respectively. As of March 31, 2021, there were no significant commitments to lend additional funds to borrowers whose loans had been restructured in a TDR. The following tables present total TDR loans at March 31, 2021 and June 30, 2020: March 31, 2021 Accrual Non-accrual Total # of Loans Amount # of Loans Amount # of Loans Amount (Dollars In Thousands) Commercial loans: Multi-family mortgage loans - $ - 1 $ 2,896 1 $ 2,896 Nonresidential mortgage 1 107 7 2,476 8 2,583 Commercial business 5 4,900 5 409 10 5,309 Construction - - 1 2,371 1 2,371 Total commercial loans 6 5,007 14 8,152 20 13,159 One- to four-family residential mortgage 16 2,261 17 3,122 33 5,383 Consumer loans: Home equity loans 9 606 1 24 10 630 Total 31 $ 7,874 32 $ 11,298 63 $ 19,172 June 30, 2020 Accrual Non-accrual Total # of Loans Amount # of Loans Amount # of Loans Amount (Dollars In Thousands) Commercial loans: Multi-family mortgage loans - $ - 1 $ 2,962 1 $ 2,962 Nonresidential mortgage 1 112 9 5,442 10 5,554 Commercial business 5 5,179 6 446 11 5,625 Total commercial loans 6 5,291 16 8,850 22 14,141 One- to four-family residential mortgage 14 2,407 20 3,811 34 6,218 Consumer loans: Home equity loans 12 715 2 448 14 1,163 Total 32 $ 8,413 38 $ 13,109 70 $ 21,522 The following tables present information regarding the restructuring of the Company’s troubled debts during the three and nine months ended March 31, 2021 and March 31, 2020: Three Months Ended March 31, 2021 Nine Months Ended March 31, 2021 # of Loans Pre-modification Recorded Investment Post-modification Recorded Investment # of Loans Pre-modification Recorded Investment Post-modification Recorded Investment (Dollars In Thousands) One- to four-family residential mortgage - $ - $ - 1 $ 309 $ 308 Home equity loans 1 24 24 1 24 24 Total 1 $ 24 $ 24 2 $ 333 $ 332 Three Months Ended March 31, 2020 Nine Months Ended March 31, 2020 # of Loans Pre-modification Recorded Investment Post-modification Recorded Investment # of Loans Pre-modification Recorded Investment Post-modification Recorded Investment (Dollars In Thousands) Multi-family mortgage 1 $ 3,062 $ 2,996 1 $ 3,062 $ 2,996 Nonresidential mortgage 1 521 517 1 521 517 Commercial business 1 2,482 2,494 5 4,349 4,415 One- to four-family residential mortgage - - - 3 1,046 982 Home equity loans - - - 1 82 81 Total 3 $ 6,065 $ 6,007 11 $ 9,060 $ 8,991 During the three and nine months ended March 31, 2021 and March 31 2020, there were no charge-offs related to TDRs. During the three and nine months ended March 31, 2021 there were no troubled debt restructuring defaults. During the three and nine months ended March 31, 2020, there was one troubled debt restructuring default totaling $514,000 Loan modifications generally involve a reduction in interest rates and/or extension of maturity dates and also may include step up interest rates in their modified terms which will impact their weighted average yield in the future. The home equity loan which qualified as a TDR during the three months ended March 31, 2021, capitalized prior past due amounts and modified the loan’s repayment terms. The residential mortgage loan which qualified as a TDR during the nine months ended March 31, 2021, capitalized prior past due amounts and modified the loan’s repayment terms. In March 2020, various regulatory agencies, including the Board of Governors of the Federal Reserve System (the “FRB”) and the Federal Deposit Insurance Corporation (the “FDIC”) , issued an interagency statement on loan modifications and reporting for financial institutions working with c ustomers affected by COVID-19. The interagency statement was effective immediately and impacted acco unting for loan modifications. The agencies confirmed with the staff of the FASB that short-term modifications made on a good faith basis in response to COVID-19 to borrowers who were current prior to any relief, are not to be consider ed TDRs. This includes short-term modifications such as payment deferrals, fee waivers, extension of repayment terms, or other delays in payment that are insignificant. Provisions of the CARES Act largely mirrored the provisions of the interagency statement, providing that modified loans were not to be considered TDRs if they were performing at December 31, 2019 and other consideration s set forth in the in teragency statements were met. Borrowers considered current are those that are less than 30 days past due at the time a modification program is implemented or at Decembe r 31, 2019. On December 27, 2020, the 2021 Consolidated Appropriations Act was signed into law. The $900 billion relief package includes legislation that extends certain relief provisions of the CARES Act that were set to expire on December 31, 2020. The CARES Act permitted financial institutions to suspend TDR assessment and reporting requirements under GAAP for loan modifications. This new legislation extends this relief to the earlier of 60 days after the national emergency declared by the President is terminated or January 1, 2022. As of March 31, 2021, the Company had 32 non-TDR modified loans totaling approximately $52.9 million. The following table sets forth the composition of these loans by loan segments as of March 31, 2021: March 31, 2021 # of Loans Balance % of Total Loans (Dollars In Thousands) Commercial loans: Multi-family mortgage loans 7 $ 29,880 0.62% Nonresidential mortgage 4 11,641 0.24% Commercial business 2 2,121 0.04% Total commercial loans 13 43,642 0.90% One- to four-family residential mortgage 17 7,788 0.16% Consumer loans: Home equity loans 2 1,513 0.03% Total 32 $ 52,943 1.10% Individually Analyzed Loans Effective July 1, 2020, individually analyzed loans include loans which do not share similar risk characteristics with other loans. TDR’s will generally be evaluated for individual impairment, however, after a period of sustained repayment performance which permits the credit to be returned to accrual status, a TDR would generally be removed from individual impairment analysis and returned to its corresponding pool. As of March 31, 2021, the carrying value of individually analyzed loans totaled $71.4 million, of which $51.4 million were considered collateral dependent. For collateral dependent loans where management has determined that foreclosure of the collateral is probable, or where the borrower is experiencing financial difficulty and repayment of the loan is to be provided substantially through the operation or sale of the collateral, the ACL is measured based on the difference between the fair value of the collateral, less costs to sell, and the amortized cost basis of the loan as of the measurement date. See Note 14 for additional disclosure regarding fair value of individually analyzed collateral dependent loans. The following table presents the carrying value of collateral dependent individually analyzed loans: March 31, 2021 Carrying Value Related Allowance (In Thousands) Commercial loans: Multi-family mortgage $ 13,197 $ - Nonresidential mortgage (1) 31,491 5,354 Commercial business (2) 189 - Construction - - Total commercial loans 44,877 5,354 One- to four-family residential mortgage (3) 6,458 190 Consumer loans: Home equity loans (3) 79 - Total $ 51,414 $ 5,544 (1) Secured by income-producing nonresidential property. (2) Secured by business assets. (3) Secured by one- to four-family residential properties. The following table presents, under previously applicable GAAP, loans individually evaluated for impairment by portfolio segment as of June 30, 2020: June 30, 2020 Multi-Family Mortgage Non- Residential Mortgage Commercial Business Construction Residential Mortgage Home Equity Loans Other Consumer Total (In Thousands) Carrying value of impaired loans: Non-impaired loans $ 2,056,606 $ 936,805 $ 132,999 $ 20,961 $ 1,262,256 $ 81,363 $ 3,991 $ 4,494,981 Impaired loans: Impaired loans with no allowance for impairment 2,962 22,516 5,622 - 10,659 1,557 - 43,316 Impaired loans with allowance for impairment: Recorded investment - 1,532 167 - 107 - - 1,806 Allowance for impairment - (41 ) (47 ) - (1 ) - - (89 ) Balance of impaired loans net of allowance for impairment - 1,491 120 - 106 - - 1,717 Total impaired loans, excluding allowance for impairment: 2,962 24,048 5,789 - 10,766 1,557 - 45,122 Total loans $ 2,059,568 $ 960,853 $ 138,788 $ 20,961 $ 1,273,022 $ 82,920 $ 3,991 $ 4,540,103 Unpaid principal balance of impaired loans: Total impaired loans $ 3,544 $ 25,898 $ 8,778 $ 73 $ 12,908 $ 1,950 $ - $ 53,151 Credit Quality Indicators The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. The Company analyzes loans individually to classify the loans as to credit risk. The Company uses the following definitions for risk ratings: Pass – Loans that are well protected by the current net worth and paying capacity of the obligor (or guarantors, if any) or by the fair value, less cost to acquire and sell, of any underlying collateral in a timely manner. Special Mention – Loans which do not currently expose the Company to a sufficient degree of risk to warrant an adverse classification but have some credit deficiencies or other potential weaknesses. Substandard – Loans which are inadequately protected by the paying capacity and net worth of the obligor or the collateral pledged, if any. Substandard assets include those characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected. Doubtful – Loans which have all of the weaknesses inherent in those classified as Substandard, with the added characteristic that the weaknesses present make collection or liquidation in full highly questionable and improbable, on the basis of currently existing facts, conditions and values. Loss – Loans which considered uncollectible or of so little value that their continuance as assets is not warranted. The following table presents the risk category of loans as of March 31, 2021 by loan segment and vintage year: Term Loans by Origination Year for Fiscal Years ended June 30, 2021 2020 2019 2018 2017 Prior Revolving Loans Total (In Thousands) Multi-family mortgage: Pass $ 212,906 $ 259,809 $ 381,989 $ 377,936 $ 356,269 $ 404,115 $ - $ 1,993,024 Special Mention - - 10,408 5,095 1,840 3,246 - 20,589 Substandard - - 16,723 2,896 13,197 8,967 - 41,783 Doubtful - - - - - - - - Total multi-family mortgage 212,906 259,809 409,120 385,927 371,306 416,328 - 2,055,396 Non-residential mortgage: Pass 77,508 77,604 57,255 65,443 262,070 485,535 6,212 1,031,627 Special Mention - - 23,520 4,156 9,815 4,540 - 42,031 Substandard 755 - - 4,934 19,569 11,849 - 37,107 Doubtful - - - - - - - - Total non-residential mortgage 78,263 77,604 80,775 74,533 291,454 501,924 6,212 1,110,765 Commercial business: Pass 39,735 28,742 4,511 15,954 6,489 13,175 64,402 173,008 Special Mention 1,218 1,534 265 2,337 961 14 411 6,740 Substandard 43 79 216 1,571 179 1,325 20 3,433 Doubtful - - - - - - - - Total commercial business 40,996 30,355 4,992 19,862 7,629 14,514 64,833 183,181 Construction loans: Pass 25,561 16,166 11,238 18,763 14,226 1,453 5,735 93,142 Special Mention - - - - - - - - Substandard - - - - - 2,391 - 2,391 Doubtful - - - - - - - - Total construction loans 25,561 16,166 11,238 18,763 14,226 3,844 5,735 95,533 Residential mortgage: Pass 326,309 144,050 83,745 84,259 137,357 525,530 - 1,301,250 Special Mention - - 1,238 - - 742 - 1,980 Substandard - 1,056 676 - 926 17,597 - 20,255 Doubtful - - - - - - - - Total residential mortgage 326,309 145,106 85,659 84,259 138,283 543,869 - 1,323,485 Home equity loans: Pass 626 3,123 5,784 3,123 2,557 17,287 26,160 58,660 Special Mention - - - - - 386 - 386 Substandard - - - - - 675 - 675 Doubtful - - - - - - - - Total home equity loans 626 3,123 5,784 3,123 2,557 18,348 26,160 59,721 Other consumer loans Pass 415 538 690 260 137 1,249 45 3,334 Special Mention - - - - - - 15 15 Substandard - - - - - - 1 1 Doubtful - - - - - - 95 95 Other consumer loans 415 538 690 260 137 1,249 156 3,445 Total loans $ 685,076 $ 532,701 $ 598,258 $ 586,727 $ 825,592 $ 1,500,076 $ 103,096 $ 4,831,526 The following table presents, under previously applicable GAAP, the risk category of loans as of June 30, 2020 by loan segment: June 30, 2020 Multi-Family Mortgage Non- Residential Mortgage Commercial Business Construction Residential Mortgage Home Equity Loans Other Consumer Total (In Thousands) Pass $ 2,055,520 $ 932,202 $ 132,818 $ 20,961 $ 1,258,246 $ 81,120 $ 3,979 $ 4,484,846 Special Mention 1,086 4,373 2,585 - 981 157 5 9,187 Substandard 2,962 24,278 3,385 - 13,795 1,643 6 46,069 Doubtful - - - - - - 1 1 Total loans $ 2,059,568 $ 960,853 $ 138,788 $ 20,961 $ 1,273,022 $ 82,920 $ 3,991 $ 4,540,103 Purchased Credit Deteriorated Loans Loans acquired in a business combination after July 1, 2020 are recorded in accordance with ASC Topic 326, after which acquired loans are separated into two types. PCD loans are acquired loans that, as of the acquisition date, have experienced a more-than-insignificant deterioration in credit quality since origination. Non-PCD loans are acquired loans that have experienced no or insignificant deterioration in credit quality since origination. To distinguish between the two types of acquired loans, the Company evaluates risk characteristics that have been determined to be indicators of deteriorated credit quality. The determining criteria may involve loan specific characteristics such as payment status, debt service coverage or other changes in creditworthiness since the loan was originated, while others are relevant to recent economic conditions, such as borrowers in industries impacted by the pandemic. As part of the acquisition of MSB, the Company purchased loans, for which there was, at acquisition, evidence of more than insignificant deterioration of credit quality since origination. The carrying amount of those loans is as follows: At July 10, 2020 (In Thousands) Purchase price of PCD loans at acquisition $ 69,415 Allowance for credit losses at acquisition (3,901 ) Non-credit discount at acquisition (167 ) Amortized cost of acquired PCD loans at acquisition $ 65,347 Residential Mortgage Loans in Foreclosure We may obtain physical possession of one- to four-family real estate collateralizing a residential mortgage loan via foreclosure or through an in-substance repossession. As of March 31, 2021, we held one single-family property in other real estate owned with an aggregate carrying value of $178,000 that was acquired through a foreclosure on a residential mortgage loan. As of that same date, we held 11 residential mortgage loans with aggregate carrying values totaling $2.1 million which were in the process of foreclosure. As of June 30, 2020, we held one single-family property in other real estate owned with an aggregate carrying value of $178,000 that was acquired through a foreclosure on a residential mortgage loan. As of that same date, we held nine residential mortgage loans with aggregate carrying values totaling $1.9 million which were in the process of foreclosure. The States of New Jersey and New York have issued executive orders and enacted legislation declaring moratoriums on removing individuals from a residential property as a result of an eviction or foreclosure proceeding. The New Jersey order will be in effect until two months after the Governor has declared an end to the COVID-19 health crisis. The New York law, which places a moratorium on evictions for tenants who have endured COVID-related hardship and on foreclosures, will be in effect until at least August 31, 2021. As a result, since March 28, 2020, the Company has temporarily suspended residential property foreclosure sales and evictions. On September 4, 2020, the Centers for Disease Control and Prevention (“CDC”) imposed a nationwide temporary federal moratorium on residential evictions due to nonpayment of rent, for qualified tenants. The national eviction moratorium took effect after the expiration of eviction protections established by the CARES Act and was scheduled to extend through December 31, 2020, but was extended legislatively through January 31, 2021. On March 29, 2021, the CDC announced its intent to extend the existing eviction moratorium order through June 30, 2021. |