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LOANS HELD FOR INVESTMENT, NET

9 Months Ended

Sep. 30, 2022

8.LOANS HELD FOR INVESTMENT, NET

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


(In thousands)	September 30, 2022		December 31, 2021
One-to-four family residential and cooperative/condominium apartment	$	722,081	$	669,282
Multifamily residential and residential mixed-use		3,968,244		3,356,346
Commercial real estate ("CRE")		4,264,519		3,945,948
Acquisition, development, and construction		241,019		322,628
Total real estate loans		9,195,863		8,294,204
Commercial and industrial ("C&I")		912,151		933,559
Other loans		8,927		16,898
Total		10,116,941		9,244,661
Allowance for credit losses		(81,935)		(83,853)
Loans held for investment, net	$	10,035,006	$	9,160,808

Included in C&I loans were Small Business Administration (“SBA”) Paycheck Protection Program (“PPP”) loans totaling $11.4 million and $66.0 million at September 30, 2022 and December 31, 2021, respectively. SBA PPP loans carry a 100% guarantee from the SBA.

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

At or for the Three Months Ended September 30, 2022

Real Estate Loans

One-to-Four

Family

Multifamily

Residential and

Residential

Cooperative/

and

Condominium

Residential

Total Real

Other

(In thousands)

Apartment

Mixed-Use

CRE

ADC

Estate

C&I

Loans

Total

Allowance for credit losses:

Beginning balance

4,514

7,003

26,247

3,788

41,552

37,588

286

79,426

Provision (credit) for credit losses

544

1,051

2,304

(169)

3,730

2,742

(32)

6,440

Charge-offs

—

(5,462)

(49)

(5,511)

Recoveries

—

1,580

—

1,580

Ending balance

5,058

8,054

28,551

3,619

45,282

36,448

205

81,935


	At or for the Three Months Ended September 30, 2021
	Real Estate Loans
	One-to-Four
	Family		Multifamily
	Residential and		Residential
	Cooperative/		and
	Condominium		Residential						Total Real				Other
(In thousands)	Apartment		Mixed-Use		CRE		ADC		Estate		C&I		Loans		Total
Allowance for credit losses:
Beginning balance	$	5,522	$	10,285	$	41,201	$	5,158	$	62,166	$	30,095	$	499	$	92,760
Provision (credit) for credit losses		583		(1,998)		(8,649)		(139)		(10,203)		1,943		946		(7,314)
Charge-offs		(1)		(58)		(2,952)		—		(3,011)		(497)		(768)		(4,276)
Recoveries		—		78		3		—		81		4		—		85
Ending balance	$	6,104	$	8,307	$	29,603	$	5,019	$	49,033	$	31,545	$	677	$	81,255

At or for the Nine Months Ended September 30, 2022

Real Estate Loans

One-to-Four

Family

Multifamily

Residential and

Residential

Cooperative/

and

Condominium

Residential

Total Real

Other

(In thousands)

Apartment

Mixed-Use

CRE

ADC

Estate

C&I

Loans

Total

Allowance for credit losses:

Beginning balance

5,932

7,816

29,166

4,857

47,771

35,331

751

83,853

(Credit) provision for credit losses

(874)

236

(669)

(1,238)

(2,545)

8,192

(495)

5,152

Charge-offs

—

(8,742)

(52)

(8,794)

Recoveries

—

1,667

1,724

Ending balance

5,058

8,054

28,551

3,619

45,282

36,448

205

81,935


	At or for the Nine Months Ended September 30, 2021
	Real Estate Loans
	One-to-Four
	Family		Multifamily
	Residential and		Residential
	Cooperative/		and
	Condominium		Residential						Total Real				Other
(In thousands)	Apartment		Mixed-Use		CRE		ADC		Estate		C&I		Loans		Total
Allowance for credit losses:
Beginning balance, prior to the adoption of CECL	$	644	$	17,016	$	9,059	$	1,993	$	28,712	$	12,737	$	12	$	41,461
Impact of adopting CECL as of January 1, 2021		1,048		(8,254)		4,849		381		(1,976)		(1,935)		(8)		(3,919)
Adjusted beginning balance as of January 1, 2021		1,692		8,762		13,908		2,374		26,736		10,802		4		37,542
PCD Day 1		2,220		3,292		23,124		117		28,753		23,374		157		52,284
Provision (credit) for credit losses		2,212		(3,361)		(4,068)		2,528		(2,689)		2,215		1,286		812
Charge-offs		(20)		(467)		(3,365)		—		(3,852)		(4,959)		(773)		(9,584)
Recoveries		—		81		4		—		85		113		3		201
Ending balance	$	6,104	$	8,307	$	29,603	$	5,019	$	49,033	$	31,545	$	677	$	81,255

The following tables present the amortized cost basis of loans on non-accrual status as of the periods indicated:


		September 30, 2022
		Non-accrual with		Non-accrual with
(In thousands)		No Allowance	Allowance			Reserve
One-to-four family residential and cooperative/condominium apartment	$	-	$	3,219	$	179
CRE		3,848		3,825		1,470
Acquisition, development, and construction		657		-		-
C&I		372		29,160		18,504
Total	$	4,877	$	36,204	$	20,153


		December 31, 2021
		Non-accrual with		Non-accrual with
(In thousands)		No Allowance	Allowance			Reserve
One-to-four family residential and cooperative/condominium apartment	$	-	$	7,623	$	1,278
CRE		1,301		3,752		797
C&I		348		26,918		16,973
Other		-		365		361
Total	$	1,649	$	38,658	$	19,409

The Company did not recognize interest income on non-accrual loans held for investment during the three and nine months ended September 30, 2022 and 2021.

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

September 30, 2022

Loans 90

Days or

Total

30 to 59

60 to 89

More Past Due

Past Due

Days

and Still

and

Total

(In thousands)

Past Due

Accruing Interest

Non-accrual

Current

Loans

Real estate:

One-to-four family residential, including condominium and cooperative apartment

496

141

—

3,219

3,856

718,225

722,081

Multifamily residential and residential mixed-use

4,713

—

4,713

3,963,531

3,968,244

CRE

10,127

7,680

—

7,673

25,480

4,239,039

4,264,519

Acquisition, development, and construction

—

657

240,362

241,019

Total real estate

15,336

7,821

—

11,549

34,706

9,161,157

9,195,863

C&I

3,973

1,769

2,781

29,532

38,055

874,096

912,151

Other

145

—

145

8,782

8,927

Total

19,454

9,590

2,781

41,081

72,906

10,044,035

10,116,941


	December 31, 2021
					Loans 90
					Days or				Total
	30 to 59		60 to 89		More Past Due				Past Due
	Days		Days		and Still				and				Total
(In thousands)	Past Due		Past Due		Accruing Interest		Non-accrual		Non-accrual		Current		Loans
Real estate:
One-to-four family residential, including condominium and cooperative apartment	$	3,294	$	877	$	1,945	$	7,623	$	13,739	$	655,543	$	669,282
Multifamily residential and residential mixed-use		30,983		3,339		—		—		34,322		3,322,024		3,356,346
CRE		23,108		887		—		5,053		29,048		3,916,900		3,945,948
Acquisition, development, and construction		—		—		—		—		—		322,628		322,628
Total real estate		57,385		5,103		1,945		12,676		77,109		8,217,095		8,294,204
C&I		3,753		7,040		1,056		27,266		39,115		894,444		933,559
Other		104		3		—		365		472		16,426		16,898
Total	$	61,242	$	12,146	$	3,001	$	40,307	$	116,696	$	9,127,965	$	9,244,661

Accruing Loans 90 Days or More Past Due:

The Company continued accruing interest on loans with an outstanding balance of $2.8 million at September 30, 2022, and loans with an outstanding balance of $3.0 million at December 31, 2021, all of which were 90 days or more past due. These loans were either well secured, awaiting a forbearance extension or formal payment deferral, or will likely be forgiven through the PPP or repurchased by the SBA, and, therefore, remained on accrual status and were deemed performing assets at the dates indicated above.

Collateral Dependent Loans:

The Company had collateral dependent loans which were individually evaluated to determine expected credit losses as of the dates indicated:



	September 30, 2022				December 31, 2021
	Real Estate		Associated Allowance		Real Estate		Associated Allowance
(In thousands)	Collateral Dependent		for Credit Losses		Collateral Dependent		for Credit Losses
CRE	$	6,732	$	1,432	$	3,837	$	600
Acquisition, development, and construction		657		-		-		-
C&I		818		-		348		-
Total	$	8,207	$	1,432	$	4,185	$	600

TDRs

As of September 30, 2022, the Company had TDRs totaling $21.2 million. The Company has allocated $10.7 million of allowance for those loans at September 30, 2022, with no commitments to lend additional amounts. As of December 31, 2021, the Company had TDRs totaling $942 thousand. The Company has allocated $483 thousand of allowance for those loans at December 31, 2021, with no commitments to lend additional amounts.

During the nine months ended September 30, 2022, TDR modifications included extensions of maturity dates, or favorable interest rates and loan terms than the prevailing market interest rates and loan terms.

The following table presents the loans by category modified as TDRs that occurred for the periods indicated:


	Modifications During the Nine Months Ended September 30, 2022
			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	2	$	762	$	762
CRE	1		991		991
Acquisition, development, and construction	1		13,500		13,500
C&I	4		20,272		20,272
Other	1		276		276
Total	9	$	35,801	$	35,801



	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
CRE	1		10,000		10,000
C&I	1		456		488
Total	3	$	10,506	$	10,538

There were no TDR charge-offs during the nine months ended September 30, 2022 and 2021. There were no TDRs that subsequently defaulted during the nine months ended September 30, 2022 and 2021.

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. 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.

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, 2022
(In thousands)	2022		2021		2020		2019		2018		2017 and Prior		Revolving		Revolving-Term		Total
One-to-four family residential, and condominium/cooperative apartment:
Pass	$	155,591	$	110,542	$	75,764	$	65,953	$	66,976	$	172,012	$	44,573	$	12,073	$	703,484
Special mention		—		—		—		—		739		2,845		579		731		4,894
Substandard		—		—		1,031		1,229		409		10,258		—		776		13,703
Doubtful		—		—				—		—		—		—		—		—
Total one-to-four family residential, and condominium/cooperative apartment		155,591		110,542		76,795		67,182		68,124		185,115		45,152		13,580		722,081

Multifamily residential and residential mixed-use:
Pass		1,208,492		585,735		326,154		393,385		125,893		1,138,782		12,340		—		3,790,781
Special mention		—		—		—		25,513		12,646		56,094		—		—		94,253
Substandard		—		—		12,356		7,030		20,396		43,428		—		—		83,210
Doubtful		—		—		—		—		—		—		—		—		—
Total multifamily residential and residential mixed-use		1,208,492		585,735		338,510		425,928		158,935		1,238,304		12,340		—		3,968,244

CRE:
Pass		732,046		874,785		780,530		495,212		307,616		914,404		53,018		5,857		4,163,468
Special mention		2,890		—		—		33,240		12,720		15,486		—		—		64,336
Substandard		—		151		3,735		7,998		10,600		14,231		—		—		36,715
Doubtful		—		—		—		—		—		—		—		—		—
Total CRE		734,936		874,936		784,265		536,450		330,936		944,121		53,018		5,857		4,264,519

Acquisition, development, and construction:
Pass		25,431		143,494		18,088		20,043		6,349		2,573		24,097		287		240,362
Special mention		—		—		—		—		—		—		—		—		—
Substandard		—		657		—		—		—		—		—		—		657
Doubtful		—		—		—		—		—		—		—		—		—
Total acquisition, development, and construction:		25,431		144,151		18,088		20,043		6,349		2,573		24,097		287		241,019

C&I:
Pass		76,688		49,878		64,244		40,383		39,283		34,835		513,193		11,457		829,961
Special mention		4,340		—		942		287		1,642		908		8,470		503		17,092
Substandard		4,916		401		7,420		3,635		1,014		4,849		12,635		10,394		45,264
Doubtful		—		412		—		8,332		752		10,338		—		—		19,834
Total C&I		85,944		50,691		72,606		52,637		42,691		50,930		534,298		22,354		912,151

Total:
Pass		2,198,248		1,764,434		1,264,780		1,014,976		546,117		2,262,606		647,221		29,674		9,728,056
Special mention		7,230		—		942		59,040		27,747		75,333		9,049		1,234		180,575
Substandard		4,916		1,209		24,542		19,892		32,419		72,766		12,635		11,170		179,549
Doubtful		—		412		—		8,332		752		10,338		—		—		19,834
Total Loans	$	2,210,394	$	1,766,055	$	1,290,264	$	1,102,240	$	607,035	$	2,421,043	$	668,905	$	42,078	$	10,108,014


	December 31, 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	$	129,679	$	86,028	$	80,195	$	75,354	$	77,829	$	129,276	$	49,878	$	12,537	$	640,776
Special mention		—		1,124		335		752		334		2,158		846		747		6,296
Substandard		—		1,944		2,038		597		2,202		14,512		—		894		22,187
Doubtful		—		—		—		23		—		—		—		—		23
Total one-to-four family residential, and condominium/cooperative apartment		129,679		89,096		82,568		76,726		80,365		145,946		50,724		14,178		669,282

Multifamily residential and residential mixed-use:
Pass		590,462		341,206		455,277		151,226		332,749		1,145,609		12,277		825		3,029,631
Special mention		—		11,040		14,486		—		11,817		26,252		—		—		63,595
Substandard		—		1,501		35,326		32,390		54,238		137,387		2,278		—		263,120
Doubtful		—		—		—		—		—		—		—		—		—
Total multifamily residential and residential mixed-use		590,462		353,747		505,089		183,616		398,804		1,309,248		14,555		825		3,356,346

CRE:
Pass		872,049		848,694		529,182		306,360		298,904		815,239		43,183		6,188		3,719,799
Special mention		6,003		1,024		39,305		18,983		11,039		17,438		—		—		93,792
Substandard		4,431		1,732		7,082		45,496		31,747		41,763		—		—		132,251
Doubtful		—		—		106		—		—		—		—		—		106
Total CRE		882,483		851,450		575,675		370,839		341,690		874,440		43,183		6,188		3,945,948

Acquisition, development, and construction:
Pass		142,123		76,259		56,885		23,456		6,809		774		1,066		588		307,960
Special mention		—		1,078		—		—		—		—		—		—		1,078
Substandard		—		90		—		13,500		—		—		—		—		13,590
Doubtful		—		—		—		—		—		—		—		—		—
Total acquisition, development, and construction:		142,123		77,427		56,885		36,956		6,809		774		1,066		588		322,628

C&I:
Pass		93,802		121,291		53,116		49,634		36,238		23,615		446,134		9,764		833,594
Special mention		—		1,625		239		2,191		585		52		3,225		1,286		9,203
Substandard		402		5,744		5,789		6,011		2,832		2,844		28,545		13,597		65,764
Doubtful		550		1,621		9,968		752		11,107		—		1,000		—		24,998
Total C&I		94,754		130,281		69,112		58,588		50,762		26,511		478,904		24,647		933,559

Total:
Pass		1,828,115		1,473,478		1,174,655		606,030		752,529		2,114,513		552,538		29,902		8,531,760
Special mention		6,003		15,891		54,365		21,926		23,775		45,900		4,071		2,033		173,964
Substandard		4,833		11,011		50,235		97,994		91,019		196,506		30,823		14,491		496,912
Doubtful		550		1,621		10,074		775		11,107		—		1,000		—		25,127
Total Loans	$	1,839,501	$	1,502,001	$	1,289,329	$	726,725	$	878,430	$	2,356,919	$	588,432	$	46,426	$	9,227,763

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, 2022		December 31, 2021
Performing	$	8,927	$	16,533
Non-accrual		—		365
Total	$	8,927	$	16,898