The following table presents the loan categories for the period ended as indicated:

As a result of the Merger, the Company recorded $4.53 billion of loans held for investment on the Merger Date.

As of September 30, 2021, included in C&I loans was $134.1 million of SBA PPP loans. There was $313.4 million of SBA PPP loans at December 31, 2020. These loans carry a 100% guarantee from the SBA and have no allowance for credit losses allocated to them based on the nature of the guarantee. In June 2021, the Company sold $596.2 million of SBA PPP loans and recorded a gain of $20.7 million in Gain on sale of SBA loans in the consolidated statements of income.

The following tables present data regarding the allowance for credit losses activity for the periods indicated:

The following table presents the amortized cost basis of loans on non-accrual status as of the period indicated:

The Company did not recognize interest income on non-accrual loans during the three and nine-months ended September 30, 2021.

The following table presents the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment method, prior to the adoption of ASC 326, as of the dates indicated:

A loan is considered impaired when, based on then current information and events, it is probable that all contractual amounts due will not be collected in accordance with the terms of the loan. Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays or shortfalls generally are not classified as impaired. Management determines the significance of payment delays and shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record, and the amount of the shortfall in relation to the principal and interest owed.

The Bank considers TDRs and all non-accrual loans, except non-accrual one-to-four family loans in less than the Federal National Mortgage Association (“FNMA”) Limits, to be impaired. Non-accrual one-to-four family loans equal to or less than the FNMA Limits, as well as all consumer loans, are considered homogeneous loan pools and are not required to be evaluated individually for impairment unless considered a TDR.

Impairment is typically measured using the difference between the outstanding loan principal balance and either: 1) the likely realizable value of a note sale; 2) the fair value of the underlying collateral, net of likely disposal costs, if repayment is expected to come from liquidation of the collateral; or 3) the present value of estimated future cash flows (using the loan’s pre-modification rate for certain performing TDRs). If a TDR is substantially performing in accordance with its restructured terms, management will look to either the potential net liquidation proceeds of the underlying collateral or the present value of the expected cash flows from the debt service in measuring impairment (whichever is deemed most appropriate under the circumstances). If a TDR has re-defaulted, generally the likely realizable net proceeds from either a note sale or the liquidation of the collateral is considered when measuring impairment. Measured impairment is either charged off immediately or, in limited instances, recognized as an allocated reserve within the allowance for loan losses.

The following tables summarize impaired loans with no related allowance recorded and with related allowance recorded as of the periods indicated (by collateral type within the real estate loan segment):

(1)	The recorded investment excludes net deferred costs due to immateriality.

The following table presents information for impaired loans for the periods indicated:


	Three Months Ended				Nine Months Ended
	September 30, 2020				September 30, 2020
	Average		Interest		Average		Interest
	Recorded		Income		Recorded		Income
	Investment⁽¹⁾		Recognized⁽²⁾		Investment⁽¹⁾		Recognized⁽²⁾
With no related allowance recorded:
One-to-four family residential, including condominium and cooperative apartment	$	—	$	—	$	10	$	4
Multifamily residential and residential mixed-use		1,295		—		416		7
Commercial real estate and commercial mixed-use		1,525		—		2,688		54
Total with no related allowance recorded		2,820		—		3,114		65

With an allowance recorded:
C&I		10,232		—		7,500		153
Total	$	13,052	$	—	$	10,614	$	218

(1)	The recorded investment excludes net deferred costs due to immateriality.

(2)	Cash basis interest and interest income recognized on accrual basis approximate each other.

The following tables summarize the past due status of the Company’s investment in loans as of the dates indicated:


	September 30, 2021
					Loans 90
					Days or
	30 to 59		60 to 89		More Past Due
	Days		Days		and Still				Total				Total
(In thousands)	Past Due		Past Due		Accruing Interest		Non-accrual		Past Due		Current		Loans
Real estate:
One-to-four family residential, including condominium and cooperative apartment	$	3,135	$	1,245	$	5,021	$	4,938	$	14,339	$	669,326	$	683,665
Multifamily residential and residential mixed-use		10,251		2,738		—		859		13,848		3,454,414		3,468,262
CRE		8,360		1,069		1,004		4,122		14,555		3,799,882		3,814,437
ADC		17,700		—		—		—		17,700		267,679		285,379
Total real estate		39,446		5,052		6,025		9,919		60,442		8,191,301		8,251,743
C&I		10,962		2,455		257		23,727		37,401		975,014		1,012,415
Other		730		2		—		374		1,106		19,607		20,713
Total	$	51,138	$	7,509	$	6,282	$	34,020	$	98,949	$	9,185,922	$	9,284,871


	December 31, 2020
					Loans 90
					Days or
	30 to 59		60 to 89		More Past Due
	Days		Days		and Still				Total				Total
(In thousands)	Past Due		Past Due		Accruing Interest		Non-accrual		Past Due		Current		Loans
Real estate:
One-to-four family residential, including condominium and cooperative apartment	$	—	$	—	$	44	$	858	$	902	$	184,087	$	184,989
Multifamily residential and residential mixed-use		—		—		437		1,863		2,300		2,756,443		2,758,743
CRE		15,351		—		—		2,704		18,055		1,860,112		1,878,167
ADC		—		—		—		—		—		156,296		156,296
Total real estate		15,351		—		481		5,425		21,257		4,956,938		4,978,195
C&I		—		917		2,848		12,502		16,267		625,266		641,533
Other		8		1		—		1		10		2,306		2,316
Total	$	15,359	$	918	$	3,329	$	17,928	$	37,534	$	5,584,510	$	5,622,044

Accruing Loans 90 Days or More Past Due:

The Company continued accruing interest on loans with an outstanding balance of $6.3 million at September 30, 2021, and loans with an outstanding balance of $3.3 million at December 31, 2020, all of which were 90 days or more past due on their respective contractual maturity dates. These loans continued to make monthly payments consistent with their initial contractual amortization schedule exclusive of the balloon payments due at maturity. These loans were well secured and/or were expected to be refinanced, and, therefore, remained on accrual status and were deemed performing assets at the dates indicated above.

Collateral Dependent Loans:

At September 30, 2021, the Company had collateral dependent loans which were individually evaluated to determine expected credit losses.

Collateral dependent CRE loans totaled $53.2 million and had a related allowance for credit losses totaling $7.6 million at September 30, 2021. The loans were secured by real estate.

Collateral dependent multi-family residential and residential mixed-use loans totaled $8.5 million and had a related allowance for credit losses totaling $0.6 million at September 30, 2021. The loans were secured by real estate.

Collateral dependent C&I loans totaled $4.4 million and had a related allowance for credit losses totaling $0.7 million at September 30, 2021. The loans were secured by business assets.

TDRs

As of September 30, 2021, the Company had TDRs totaling $528 thousand. The Company has allocated $481 thousand of allowance for those loans at September 30, 2021, with no commitments to lend additional amounts.

During the nine months ended September 30, 2021, TDR modifications included reduction of outstanding principal, extensions of maturity dates, or favorable interest rates and loan terms than the prevailing market interest rates and loan terms.

During the three months ended September 30, 2021, the Company modified one CRE loan as a TDR, which subsequently paid off during the quarter.

The following table presents the loans by category modified as TDRs that occurred during the nine months ended September 30, 2021:


	Modifications During the Nine Months Ended September 30, 2021
			Pre-		Post-
			Modification		Modification
			Outstanding		Outstanding
	Number of		Recorded		Recorded
(Dollars in thousands)	Loans		Investment		Investment
One-to-four family residential and cooperative/condominium apartment	1	$	50	$	50
Commercial real estate ("CRE")	1		10,000		10,000
Commercial and industrial ("C&I")	1		456		488
Total	3	$	10,506	$	10,538

There were no TDR charge-offs during the three and nine months ended September 30, 2021. TDRs did not have a material impact to the allowance for credit losses. There were no TDRs that subsequently defaulted.

Loan payment deferrals due to COVID-19

Consistent with regulatory guidance to work with borrowers during the unprecedented situation caused by the COVID-19 pandemic and as outlined in the CARES Act, the Company established a formal payment deferral program in April 2020 for borrowers that have been adversely affected by the pandemic.

As of September 30, 2021, the Company had 17 loans, representing outstanding loan balances of $26.6 million, that were deferring full principal and interest (“P&I” deferrals).

The table below presents the P&I deferrals as of September 30, 2021:


	September 30, 2021
	Number
	of Loans	Balance⁽¹⁾		% of Portfolio
(Dollars in thousands)
One-to-four family residential and cooperative/condominium apartment	10	$	9,255	1.4	%
CRE	1		3,487	0.1
C&I	6		13,861	1.4
Total	17	$	26,603	0.3

(1)	Amount excludes net deferred costs due to immateriality.

Pursuant to guidance under Section 4013 of the CARES Act, a qualified loan modification, such as a payment deferral, is exempt from classification as a TDR as defined by GAAP. This applies if the loan was current as of December 31, 2019 and the modifications are related to arrangements that defer or delay the payment of principal or interest, or change the interest rate of the loan. This guidance was expected to expire on December 31, 2020. The 2021 Consolidated Appropriations Act, which was signed into law December of 2020, extended the exemption for TDR classification until the earlier of January 1, 2022 or the date that is 60 days after the date on which the national emergency concerning the COVID-19 outbreak is lifted.

Risk-ratings on COVID-19 loan deferrals are evaluated on an ongoing basis.

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 structure, loan documentation, public information, and current economic trends, among other factors. The Company analyzes loans individually by classifying them as to credit risk. This analysis includes all loans, such as multifamily residential, mixed-use residential (i.e., loans in which the aggregate rental income of the underlying collateral property is generated from both residential and commercial units, but 50% or more of such income is generated from the residential units), commercial real estate, mixed-use commercial real estate (i.e., loans in which the aggregate rental income of the underlying collateral property is generated from both residential and commercial units, but over 50% of such income is generated from the commercial units), ADC, C&I, as well as all one-to- four family residential and cooperative and condominium apartment loans. The Company uses the following definitions for risk ratings:

Special Mention. Loans classified as special mention have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the Bank’s credit position at some future date.

Substandard. Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected.

Doubtful. Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of then existing facts, conditions, and values, highly questionable and improbable. All real estate and C&I loans not classified as Special Mention, Substandard, or Doubtful were deemed pass loans at both September 30, 2021 and December 31, 2020.

For the three and nine months ended September 30, 2021, there were $11.9 million and $66.5 million of sales of criticized loans, respectively. For the three and nine months ended September 30, 2020, there were $3.0 million and $10.0 million of sales of criticized loans, respectively.

The following is a summary of the credit risk profile of loans by internally assigned grade as of the periods indicated, the years represent the year of origination for non-revolving loans:


	September 30, 2021
(In thousands)	2021		2020		2019		2018		2017		2016 and Prior		Revolving		Revolving-Term		Total
One-to-four family residential, and condominium/cooperative apartment:
Pass	$	104,830	$	93,315	$	86,214	$	79,981	$	84,075	$	143,807	$	52,483	$	11,162	$	655,867
Special mention		—		—		337		756		345		2,168		846		1,089		5,541
Substandard		—		1,461		2,048		862		2,206		14,691		—		966		22,234
Doubtful		—		—		—		23		—		—		—		—		23
Total one-to-four family residential, and condominium/cooperative apartment		104,830		94,776		88,599		81,622		86,626		160,666		53,329		13,217		683,665

Multifamily residential and residential mixed-use:
Pass		426,164		347,900		493,077		193,738		373,965		1,329,688		5,111		825		3,170,468
Special mention		—		12,550		14,551		—		11,842		22,378		—		—		61,321
Substandard		—		—		35,886		27,265		51,680		118,179		3,463		—		236,473
Doubtful		—		—		—		—		—		—		—		—		—
Total multifamily residential and residential mixed-use		426,164		360,450		543,514		221,003		437,487		1,470,245		8,574		825		3,468,262

CRE:
Pass		636,234		872,347		578,758		331,636		337,930		863,215		39,323		5,164		3,664,607
Special mention		5,354		2,384		—		4,191		11,109		15,416		—		—		38,454
Substandard		2,335		1,752		7,110		39,892		19,733		40,448		—		—		111,270
Doubtful		—		—		106		—		—		—		—		—		106
Total CRE		643,923		876,483		585,974		375,719		368,772		919,079		39,323		5,164		3,814,437

ADC:
Pass		101,947		69,546		62,414		24,587		8,120		807		2,686		600		270,707
Special mention		—		—		—		1,078		—		—		—		—		1,078
Substandard		—		—		—		13,500		—		94		—		—		13,594
Doubtful		—		—		—		—		—		—		—		—		—
Total ADC		101,947		69,546		62,414		39,165		8,120		901		2,686		600		285,379

C&I:
Pass		52,667		199,677		58,835		54,190		38,065		25,948		479,111		10,359		918,852
Special mention		—		1,690		265		2,260		611		61		1,685		1,368		7,940
Substandard		—		5,949		4,842		6,175		2,982		1,057		34,996		6,764		62,765
Doubtful		—		—		10,087		752		11,989		30		—		—		22,858
Total C&I		52,667		207,316		74,029		63,377		53,647		27,096		515,792		18,491		1,012,415

Total:
Pass		1,321,842		1,582,785		1,279,298		684,132		842,155		2,363,465		578,714		28,110		8,680,501
Special mention		5,354		16,624		15,153		8,285		23,907		40,023		2,531		2,457		114,334
Substandard		2,335		9,162		49,886		87,694		76,601		174,469		38,459		7,730		446,336
Doubtful		—		—		10,193		775		11,989		30		—		—		22,987
Total Loans	$	1,329,531	$	1,608,571	$	1,354,530	$	780,886	$	954,652	$	2,577,987	$	619,704	$	38,297	$	9,264,158


	December 31, 2020
			Special
(In thousands)	Pass		Mention		Substandard		Doubtful		Total
Real Estate:
One-to-four family residential and condominium/cooperative apartment	$	183,293	$	—	$	1,696	$	—	$	184,989
Multifamily residential and residential mixed-use		2,523,258		56,400		179,085		—		2,758,743
CRE		1,831,712		13,861		32,594		—		1,878,167
ADC		142,796		13,500		—		—		156,296
Total real estate		4,681,059		83,761		213,375		—		4,978,195
C&I		613,691		2,131		13,315		12,396		641,533
Total Real Estate and C&I	$	5,294,750	$	85,892	$	226,690	$	12,396	$	5,619,728

For other loans, the Company evaluates credit quality based on payment activity. Other loans that are 90 days or more past due are placed on non-accrual status, while all remaining other loans are classified and evaluated as performing. The following is a summary of the credit risk profile of other loans by internally assigned grade:


(In thousands)	September 30, 2021		December 31, 2020
Performing	$	20,339	$	2,315
Non-accrual		374		1
Total	$	20,713	$	2,316