Loans and Leases | Note 5. Loans and Leases The following table sets forth the composition of the loan portfolio at the dates indicated: March 31, 2020 December 31, 2019 (dollars in thousands) Amount Percent of Loans Held for Investment Amount Percent of Loans Held for Investment Loans and Leases Held for Investment: Mortgage Loans: Multi-family $ 31,271,073 74.04 % $ 31,158,672 74.46 % Commercial real estate 7,034,720 16.67 7,081,910 16.93 One-to-four 352,301 0.83 380,361 0.91 Acquisition, development, and construction 130,675 0.30 200,596 0.48 Total mortgage loans held for investment (1) 38,788,769 91.84 $ 38,821,539 92.78 Other Loans: Commercial and industrial 1,953,431 4.62 1,742,380 4.16 Lease financing, net of unearned income of $106,450 and $104,826, respectively 1,484,263 3.52 1,271,998 3.04 Total commercial and industrial loans (2) 3,437,694 8.14 3,014,378 7.20 Other 9,514 0.02 8,102 0.02 Total other loans held for investment (1) 3,447,208 8.16 3,022,480 7.22 Total loans and leases held for investment $ 42,235,977 100.00 % $ 41,844,019 100.00 % Net deferred loan origination costs 55,782 50,136 Allowance for loan and lease losses (162,244 ) (147,638 ) Total loans and leases held for investment, net $ 42,129,515 $ 41,746,517 (1) Excludes accrued interest receivable of $119.6 million and $116.9 million at March 31, 2020 and December 31, 2019, respectively, which (2) Includes specialty finance loans and leases of $3.0 billion and $2.6 billion, respectively, at March 31, 2020 and December 31, 2019, and other C&I loans of $432.8 million and $420.1 million, respectively, at March 31, 2020 and December 31, 2019. Loans Held for Investment The majority of the loans the Company originates for investment are multi-family loans, most of which are collateralized by non-luxury mixed-use To a lesser extent, the Company also originates ADC loans for investment. One-to-four ADC loans are primarily originated for multi-family and residential tract projects in New York City and on Long Island. C&I loans consist of asset-based loans, equipment loans and leases, and dealer floor-plan loans (together, specialty finance loans and leases) that generally are made to large corporate obligors, many of which are publicly traded, carry investment grade or near-investment grade ratings, and participate in stable industries nationwide; and other C&I loans that primarily are made to small and mid-size The repayment of multi-family and CRE loans generally depends on the income produced by the underlying properties which, in turn, depends on their successful operation and management. To mitigate the potential for credit losses, the Company underwrites its loans in accordance with credit standards it considers to be prudent, looking first at the consistency of the cash flows being produced by the underlying property. In addition, multi-family buildings, CRE properties, and ADC projects are inspected as a prerequisite to approval, and independent appraisers, whose appraisals are carefully reviewed by the Company’s in-house To further manage its credit risk, the Company’s lending policies limit the amount of credit granted to any one borrower and typically require conservative debt service coverage ratios and loan-to-value ADC loans typically involve a higher degree of credit risk than loans secured by improved or owner-occupied real estate. Accordingly, borrowers are required to provide a guarantee of repayment and completion, and loan proceeds are disbursed as construction progresses, as certified by in-house To minimize the risk involved in specialty finance lending and leasing, the Company participates in syndicated loans that are brought to it, and equipment loans and leases that are assigned to it, by a select group of nationally recognized sources who have long-term relationships with its experienced lending officers. Each of these credits is secured with a perfected first security interest in or outright ownership of the underlying collateral, and structured as senior debt or as a non-cancelable re-underwritten. To minimize the risks involved in other C&I lending, the Company underwrites such loans on the basis of the cash flows produced by the business; requires that such loans be collateralized by various business assets, including inventory, equipment, and accounts receivable, among others; and typically requires personal guarantees. However, the capacity of a borrower to repay such a C&I loan is substantially dependent on the degree to which the business is successful. In addition, the collateral underlying such loans may depreciate over time, may not be conducive to appraisal, or may fluctuate in value, based upon the results of operations of the business. Included in loans held for investment at March 31, 2020 and December 31, 2019, were mortgage loans of $38.1 million and $38.2 million, respectively, to officers, directors, and their related interests and parties. There were no loans to principal shareholders at that date. Asset Quality A loan generally is classified as a non-accrual non-accrual non-accrual non-performing non-accrual The following table presents information regarding the quality of the Company’s loans held for investment at March 31, 2020: (in thousands) Loans 30-89 Non-Accrual Loans 90 Days or More Total Past Due Current Loans Total Loans Multi-family $ 2,679 $ 4,242 $ — $ 6,921 $ 31,264,152 $ 31,271,073 Commercial real estate 97 16,101 — 16,198 7,018,522 7,034,720 One-to-four — 1,721 — 1,721 350,580 352,301 Acquisition, development, and construction — — — — 130,675 130,675 Commercial and industrial (1) (2) 38 27,060 — 27,098 3,410,596 3,437,694 Other 14 158 — 172 9,342 9,514 Total $ 2,828 $ 49,282 $ — $ 52,110 $ 42,183,867 $ 42,235,977 (1) Includes $22.9 million of taxi medallion-related loans that were 90 days or more past due. There were no taxi medallion-related loans that were 30 to 89 days past due. (2) Includes lease financing receivables, all of which were current. The following table presents information regarding the quality of the Company’s loans held for investment at December 31, 2019: (in thousands) Loans 30-89 Non-Accrual Loans 90 Days or More Total Past Due Current Loans Total Loans Multi-family $ 1,131 $ 5,407 $ — $ 6,538 $ 31,152,134 $ 31,158,672 Commercial real estate 2,545 14,830 — 17,375 7,064,535 7,081,910 One-to-four — 1,730 — 1,730 378,631 380,361 Acquisition, development, and construction — — — — 200,596 200,596 Commercial and industrial (1) (2) — 39,024 — 39,024 2,975,354 3,014,378 Other 44 252 — 296 7,806 8,102 Total $ 3,720 $ 61,243 $ — $ 64,963 $ 41,779,056 $ 41,844,019 (1) Includes $0 and $30.4 million of taxi medallion-related loans that were 30 to 89 days past due and 90 days or more past due, respectively. (2) Includes lease financing receivables, all of which were current. The following table summarizes the Company’s portfolio of loans held for investment by credit quality indicator at March 31, 2020: Mortgage Loans Other Loans (in thousands) Multi-Family Commercial One-to-Four Acquisition, Total Commercial (1) Other Total Other Credit Quality Indicator: Pass $ 31,051,107 $ 6,810,593 $ 348,953 $ 97,390 $ 38,308,043 $ 3,370,054 $ 9,356 $ 3,379,410 Special mention 181,529 156,623 1,627 33,285 373,064 22,228 — 22,228 Substandard 38,437 67,504 1,721 — 107,662 45,412 158 45,570 Doubtful — — — — — — — — Total $ 31,271,073 $ 7,034,720 $ 352,301 $ 130,675 $ 38,788,769 $ 3,437,694 $ 9,514 $ 3,447,208 (1) Includes lease financing receivables, all of which were classified as Pass. The following table summarizes the Company’s portfolio of loans held for investment by credit quality indicator at December 31, 2019: Mortgage Loans Other Loans (in thousands) Multi-Family Commercial One-to-Four Acquisition, Total Commercial (1) Other Total Other Credit Quality Indicator: Pass $ 30,903,657 $ 6,902,218 $ 377,883 $ 158,751 $ 38,342,509 $ 2,960,557 $ 7,850 $ 2,968,407 Special mention 239,664 104,648 748 41,456 386,516 1,588 — 1,588 Substandard 15,351 75,044 1,730 389 92,514 52,233 252 52,485 Doubtful — — — — — — — — Total $ 31,158,672 $ 7,081,910 $ 380,361 $ 200,596 $ 38,821,539 $ 3,014,378 $ 8,102 $ 3,022,480 (1) Includes lease financing receivables, all of which were classified as Pass. The preceding classifications are the most current ones available and generally have been updated within the last twelve months. In addition, they follow regulatory guidelines and can generally be described as follows: pass loans are of satisfactory quality; special mention loans have potential weaknesses that deserve management’s close attention; substandard loans are inadequately protected by the current net worth and paying capacity of the borrower or of the collateral pledged (these loans have a well-defined weakness and there is a possibility that the Company will sustain some loss); and doubtful loans, based on existing circumstances, have weaknesses that make collection or liquidation in full highly questionable and improbable. In addition, one-to-four The following table , (in thousands) Vintage Year Risk Rating Group 2020 2019 2018 2017 2016 Prior To 2016 Revolving Total Pass $ 1,810,786 $ 7,073,176 $ 7,192,253 $ 5,482,863 $ 4,316,731 $ 12,434,784 $ 25,270 $ 38,335,863 Special Mention — 8,190 37,739 59,749 145,622 121,180 790 373,270 Substandard — — 4,533 616 25,322 76,424 — 106,895 Total mortgage loans $ 1,810,786 $ 7,081,366 $ 7,234,525 $ 5,543,228 $ 4,487,675 $ 12,632,388 $ 26,060 $ 38,816,028 Pass 237,490 975,096 229,159 251,133 174,287 164,021 1,381,655 3,412,841 Special Mention — — — — — — 22,176 22,176 Substandard 1,095 9,050 4,638 17,041 4,200 4,536 154 40,714 Total other loans 238,585 984,146 233,797 268,174 178,487 168,557 1,403,985 3,475,731 Total $ 2,049,371 $ 8,065,512 $ 7,468,322 $ 5,811,402 $ 4,666,162 $ 12,800,945 $ 1,430,045 $ 42,291,759 When management determines that foreclosure is probable, expected credit losses are based on the fair value of the collateral adjusted for selling costs. When the borrower is experiencing financial difficulty at the reporting date and repayment is expected to be provided substantially through the operation or sale of the collateral, the collateral-dependent practical expedient has been elected and expected credit losses are based on the fair value of the collateral at the reporting date, adjusted for selling costs as appropriate. For CRE The following table summarizes the extent to which collateral secures the Company’s collateral-dependent loans held for investment by collateral type as of March 31, 2020: Collateral Type (in thousands) Real Property Other Multi-family $ 2,413 $ — Commercial real estate 29,885 — One-to-four 577 — Acquisition, development, and construction — — Commercial and industrial — 41,144 Other — 154 Total collateral-dependent loans held for investment $ 32,875 $ 41,298 Other collateral primarily consists of taxi medallions, cash, accounts receivable and inventory. There were no significant changes in the extent to which collateral secures the Company’s collateral-dependent financial assets during the three months ended March 31, 2020. Troubled Debt Restructurings The Company is required to account for certain loan modifications and restructurings as TDRs. In general, a modification or restructuring of a loan constitutes a TDR if the Company grants a concession to a borrower experiencing financial difficulty. A loan modified as a TDR generally is placed on non-accrual the In an effort to proactively manage delinquent loans, the Company has selectively extended to certain borrowers concessions such as rate reductions, extension of maturity dates, and forbearance agreements. As of March 31, 2020, loans on which concessions were made with respect to rate reductions and/or extension of maturity dates amounted to $25.4 million; loans on which forbearance agreements were reached amounted to $4.2 million. The CARES Act was enacted on March 27, 2020. Under the CARES Act, the Company made the election to deem that loan modifications do not result in TDRs if they are (1) related to the novel coronavirus disease (“COVID-19”); COVID-19 310-40. The following table presents information regarding the Company’s TDRs as of March 31, 2020 and December 31, 2019: March 31, 2020 December 31, 2019 (in thousands) Accruing Non-Accrual Total Accruing Non-Accrual Total Loan Category: Multi-family $ — $ 2,412 $ 2,412 $ — $ 3,577 $ 3,577 Commercial real estate — — — — — — One-to-four — 577 577 — 584 584 Acquisition, development, and construction — — — 389 — 389 Commercial and industrial (1) 865 25,621 26,486 865 35,084 35,949 Other — 154 154 — — — Total $ 865 $ 28,764 $ 29,629 $ 1,254 $ 39,245 $ 40,499 (1) Includes $21.4 million and $27.3 million of taxi medallion-related loans at March 31, 2020 and December 31, 2019, respectively The eligibility of a borrower for work-out The financial effects of the Company’s TDRs for the three months ended March 31, 2020 and 2019 are summarized as follows: For the Three Months Ended March 31, 2020 Weighted Average Interest Rate (dollars in thousands) Number of Loans Pre-Modification Post-Modification Pre-Modification Post- Charge-off Capitalized Interest Commercial and industrial and other 8 $ 1,920 $ 1,572 3.29 % 3.24 % $ 348 $ — For the Three Months Ended March 31, 2019 Weighted Average Interest Rate (dollars in thousands) Number of Loans Pre-Modification Post-Modification Pre-Modification Post- Charge-off Capitalized Interest Loan Category: Commercial and industrial 15 $ 4,194 $ 3,088 3.26 % 2.98 % $ 1,106 $ — At March 31, 2020, five C&I loans and one 1-4 s The Company does not consider a payment to be in default when the loan is in forbearance, or otherwise granted a delay of payment, when the agreement to forebear or allow a delay of payment is part of a modification. Subsequent to the modification, the loan is not considered to be in default until payment is contractually past due in accordance with the modified terms. However, the Company does consider a loan with multiple modifications or forbearance periods to be in default, and would also consider a loan to be in default if the borrower were in bankruptcy or if the loan were partially charged off subsequent to modification. Management takes into consideration all TDR modifications in determining the appropriate level of the allowance. |