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LOANS HELD FOR INVESTMENT, NET

12 Months Ended

Dec. 31, 2023

5. LOANS HELD FOR INVESTMENT, NET

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


	December 31,
(In thousands)	2023		2022
One-to-four family residential and cooperative/condominium apartment	$	887,555	$	773,321
Multifamily residential and residential mixed-use		4,017,176		4,026,826
CRE		4,620,900		4,457,630
ADC		168,513		229,663
Total real estate loans		9,694,144		9,487,440
C&I		1,066,938		1,071,712
Other loans		5,755		7,679
Total		10,766,837		10,566,831
Fair value hedge basis point adjustments ⁽¹⁾		6,591		—
Total loans, net of fair value hedge basis point adjustments		10,773,428		10,566,831
Allowance for credit losses		(71,743)		(83,507)
Loans held for investment, net	$	10,701,685	$	10,483,324

(1)	At December 31, 2023, the loan portfolio included a fair value hedge basis point adjustment to the carrying amount of hedged one-to-four family residential mortgage loans, multifamily residential mortgage loans and CRE loans.

C&I loans included SBA PPP loans totaling $1.1 million and $5.8 million at December 31, 2023 and 2022, respectively. 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 operations.

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


	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
Ending balance as of December 31, 2020	$	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)
Beginning balance as of January 1, 2021		1,692		8,762		13,908		2,374		26,736		10,802		4		37,542
Day 1 acquired PCD loans		2,220		3,292		23,124		117		28,753		23,374		157		52,284
Provision for credit losses		1,975		(3,921)		(4,497)		2,366		(4,077)		6,016		1,364		3,303
Charge-offs		(20)		(391)		(3,406)		—		(3,817)		(4,984)		(777)		(9,578)
Recoveries		65		74		37		—		176		123		3		302
Ending balance as of December 31, 2021	$	5,932	$	7,816	$	29,166	$	4,857	$	47,771	$	35,331	$	751	$	83,853

Provision (credit) for credit losses		37		542		(1,891)		(3,134)		(4,446)		11,786		(430)		6,910
Charge-offs		—		—		—		—		—		(11,401)		(53)		(11,454)
Recoveries		—		2		54		—		56		4,137		5		4,198
Ending balance as of December 31, 2022	$	5,969	$	8,360	$	27,329	$	1,723	$	43,381	$	39,853	$	273	$	83,507

Provision (credit) for credit losses		858		(1,121)		(721)		266		(718)		3,464		129		2,875
Charge-offs		(14)		(2)		—		—		(16)		(15,364)		(300)		(15,680)
Recoveries		—		—		—		—		—		1,024		17		1,041
Ending balance as of December 31, 2023	$	6,813	$	7,237	$	26,608	$	1,989	$	42,647	$	28,977	$	119	$	71,743

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


	December 31, 2023
	Non-accrual with			Non-accrual with
(In thousands)	No Allowance		Allowance			Reserve
One-to-four family residential and cooperative/condominium apartment	$	—	$	3,248	$	133
CRE		2,298		8,229		832
ADC		—		657		305
C&I		1,482		13,185		12,932
Total	$	3,780	$	25,319	$	14,202


	December 31, 2022
	Non-accrual with			Non-accrual with
(In thousands)	No Allowance		Allowance			Reserve
One-to-four family residential and cooperative/condominium apartment	$	—	$	3,203	$	181
CRE		4,915		3,417		1,424
ADC		657		—		—
C&I		503		21,443		20,685
Other		—		99		99
Total	$	6,075	$	28,162	$	22,389

The Company did not recognize interest income on non-accrual loans held for investment during the years ended December 31, 2023 or 2022.

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

December 31, 2023

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

4,071

—

3,248

7,392

880,163

887,555

Multifamily residential and residential mixed-use

—

4,017,176

CRE

3,160

208

—

10,527

13,895

4,607,005

4,620,900

ADC

430

—

657

1,087

167,426

168,513

Total real estate

7,661

281

—

14,432

22,374

9,671,770

9,694,144

C&I

4,316

1,009

—

14,667

19,992

1,046,946

1,066,938

Other

—

5,755

Total

11,977

1,290

—

29,099

42,366

10,724,471

10,766,837


	December 31, 2022
					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	$	686	$	—	$	—	$	3,203	$	3,889	$	769,432	$	773,321
Multifamily residential and residential mixed-use		4,817		—		—		—		4,817		4,022,009		4,026,826
CRE		14,189		—		—		8,332		22,521		4,435,109		4,457,630
ADC		—		—		—		657		657		229,006		229,663
Total real estate		19,692		—		—		12,192		31,884		9,455,556		9,487,440
C&I		3,561		741		—		21,946		26,248		1,045,464		1,071,712
Other		264		1		—		99		364		7,315		7,679
Total	$	23,517	$	742	$	—	$	34,237	$	58,496	$	10,508,335	$	10,566,831

Accruing Loans 90 Days or More Past Due:

At December 31, 2023 and 2022, there were no accruing loans 90 days or more past due.

Collateral Dependent Loans:

The Company had collateral dependent loans which were individually evaluated to determine expected credit losses as follows:


	Year Ended December 31,
	2023				2022
	Real Estate		Associated Allowance		Real Estate		Associated Allowance
(In thousands)	Collateral Dependent		for Credit Losses		Collateral Dependent		for Credit Losses
CRE	$	8,903	$	621	$	7,391	$	1,297
ADC		657		305		657		—
C&I		1,444		—		949		—
Total	$	11,004	$	926	$	8,997	$	1,297

Related Party Loans

Certain directors, executive officers, and their related parties, including their immediate families and companies in which they are principal owners, were loan customers of the Bank during 2023.

The following table sets forth selected information about related party loans:


	Year Ended
(In thousands)	December 31, 2023
Beginning balance	$	4,956
New loans		531
Repayments		(565)
Balance at end of period	$	4,922

Loan Restructurings

The Company adopted ASU No. 2022-02 on January 1, 2023, which eliminates the recognition and measurement of a TDR. Due to the removal of the TDR designation, the Company applies the loan refinancing and restructuring guidance to determine whether a modification or other forms of restructuring result in a new loan or a continuation of an existing loan. Loan modifications to borrowers experiencing financial difficulty that result in a direct change in the timing or amount of contractual cash flows include conditions where there is principal forgiveness, interest rate reductions, other-than-insignificant payment delays, term extensions, and/or a combinations of these modifications. The disclosures related to loan restructuring are only for modifications that directly affect cash flows.

The following table shows the amortized cost basis as of December 31, 2023 of the loans modified to borrowers experiencing financial difficulty, disaggregated by loan category and type of concession granted:


	For the Year Ended December 31, 2023
					Term		Significant				% of
			Significant		Extension and		Payment Delay				Total Class
	Term		Payment		Significant		and Interest				of Financing
(Dollars in thousands)	Extension		Delay		Payment Delay		Rate Reduction		Total		Receivable
One-to-four family residential and cooperative/condominium apartment	$	—	$	2,856	$	92	$	—	$	2,948	0.3	%
Multifamily residential and residential mixed-use		—		—		—		—		—	0.0
CRE		—		24,706		—		—		24,706	0.5
ADC		—		—		—		—		—	0.0
C&I		1,789		12,020		520		298		14,627	1.4
Other		—		—		—		—		—	0.0
Total	$	1,789	$	39,582	$	612	$	298	$	42,281	0.4	%

The following table describes the financial effect of the modifications made to borrowers experiencing financial difficulty:


	For the Year Ended December 31, 2023
					Weighted Average
	Weighted Average		Weighted Average		Payment Delay
	Interest Rate		Months of		or Principal
(Dollars in thousands)	Reductions		Term Extensions		Forgiveness
One-to-four family residential and cooperative/condominium apartment	—	%		189	$	76
Multifamily residential and residential mixed-use	—			—		—
CRE	—			—		988
ADC	—			—		—
C&I	4.27			13		2,406
Other	—			—		—
Total	4.27	%		202	$	3,470

The Bank monitors the performance of loans modified to borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts. The following table describes the performance of loans that have been modified during the year ended December 31, 2023.


	December 31, 2023
			30-59		60-89		90+
(Dollars in thousands)	Current		Days Past Due		Days Past Due		Days Past Due		Non-Accrual		Total
One-to-four family residential and cooperative/condominium apartment	$	2,856	$	—	$	—	$	—	$	92	$	2,948
Multifamily residential and residential mixed-use		—		—		—		—				—
CRE		24,706		—		—		—		—		24,706
ADC		—		—		—		—		—		—
C&I		12,496		—		—		—		2,131		14,627
Other		—		—		—		—		—		—
Total	$	40,058	$	—	$	—	$	—	$	2,223	$	42,281

There were no loans made to borrowers experiencing financial difficulty that were modified during the year ended December 31, 2023, that subsequently defaulted. For the purposes of this disclosure, a payment default is defined as 90 or more days past due and still accruing. Non-accrual loans that are modified to borrowers experiencing financial difficulty remain on non-accrual status until the borrower has demonstrated performance under the modified terms.

Prior to our adoption of ASU 2022-02, as of December 31, 2022, the Company had TDRs totaling $22.1 million. The Company had allocated $9.1 million of allowance for those loans at December 31, 2022, with no commitments to lend additional amounts. As of December 31, 2021, the Company had TDRs totaling $942 thousand. The Company had allocated $483 thousand of allowance for those loans at December 31, 2021, with no commitments to lend additional amounts.

During the year ended December 31, 2022, 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 year ended December 31, 2022, the Company modified one CRE loan as a TDR, and one Acquisition, Development, and Construction loan, which subsequently paid off during the year. During the year ended December 31, 2021, the Company modified one CRE loan as a TDR, which subsequently paid off during the year.

The following table presents the loans by category modified as TDRs that occurred during the year ended December 31, 2022:


	Modifications During the Year Ended December 31,
	2022					2021
			Pre-		Post-			Pre-		Post-
			Modification		Modification			Modification		Modification
			Outstanding		Outstanding			Outstanding		Outstanding
	Number		Recorded		Recorded	Number		Recorded		Recorded
(Dollars in thousands)	of Loans		Investment		Investment	of Loans		Investment		Investment
One-to-four family residential and cooperative/condominium apartment	2	$	762	$	762	2	$	467	$	467
CRE	1		991		991	1		10,000		10,000
ADC	1		13,500		13,500	—		—		—
C&I	7		21,934		21,938	1		456		488
Other	1		276		276	—		—		—
Total	12	$	37,463	$	37,467	4	$	10,923	$	10,955

There were no TDR charge-offs during the years ended December 31, 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:


	December 31, 2023
(In thousands)	2023		2022		2021		2020		2019		2018 and Prior		Revolving		Revolving-Term		Total
One-to-four family residential, and condominium/cooperative apartment:
Pass	$	170,601	$	213,479	$	102,684	$	69,524	$	62,356	$	213,131	$	31,205	$	12,493	$	875,473
Special mention		—		—		—		—		—		33		159		776		968
Substandard		—		—		—		1,005		337		8,711		—		1,061		11,114
Doubtful		—		—		—		—		—		—		—		—		—
Total one-to-four family residential, and condominium/cooperative apartment		170,601		213,479		102,684		70,529		62,693		221,875		31,364		14,330		887,555
YTD Gross Charge-Offs		—		—		—		—		—		—		—		14		14

Multifamily residential and residential mixed-use:
Pass		256,822		1,340,197		578,352		283,633		384,937		981,820		4,841		4,325		3,834,927
Special mention		—		—		9,334		3,880		3,886		64,273		—		—		81,373
Substandard		—		—		—		28,799		5,089		66,988		—		—		100,876
Doubtful		—		—		—		—		—		—		—		—		—
Total multifamily residential and residential mixed-use		256,822		1,340,197		587,686		316,312		393,912		1,113,081		4,841		4,325		4,017,176
YTD Gross Charge-Offs		—		—		—		—		—		2		—		—		2

CRE:
Pass		417,973		990,748		817,171		566,427		484,930		1,025,160		24,839		11,538		4,338,786
Special mention		—		28,770		19,872		88,040		10,484		5,754		—		17,862		170,782
Substandard		—		—		151		61,424		7,289		42,468		—		—		111,332
Doubtful		—		—		—		—		—		—		—		—		—
Total CRE		417,973		1,019,518		837,194		715,891		502,703		1,073,382		24,839		29,400		4,620,900
YTD Gross Charge-Offs		—		—		—		—		—		—		—		—		—

ADC:
Pass		16,735		17,534		59,202		9,900		2,665		437		22,444		225		129,142
Special mention		—		11,500		14,961		—		12,253		—		—		—		38,714
Substandard		—		—		—		—		—		—		—		657		657
Doubtful		—		—		—		—		—		—		—		—		—
Total ADC		16,735		29,034		74,163		9,900		14,918		437		22,444		882		168,513
YTD Gross Charge-Offs		—		—		—		—		—		—		—		—		—

C&I:
Pass		60,771		138,145		24,865		25,371		25,142		37,019		620,799		31,467		963,579
Special mention		481		12,912		1,199		905		1,204		159		21,108		7,444		45,412
Substandard		—		1,857		2,045		5,577		1,768		11,936		15,567		18,449		57,199
Doubtful		—		—		—		—		—		748		—		—		748
Total C&I		61,252		152,914		28,109		31,853		28,114		49,862		657,474		57,360		1,066,938
YTD Gross Charge-Offs		—		—		77		38		4,166		2,229		5,464		3,390		15,364

Total:
Pass		922,902		2,700,103		1,582,274		954,855		960,030		2,257,567		704,128		60,048		10,141,907
Special mention		481		53,182		45,366		92,825		27,827		70,219		21,267		26,082		337,249
Substandard		—		1,857		2,196		96,805		14,483		130,103		15,567		20,167		281,178
Doubtful		—		—		—		—		—		748		—		—		748
Total Loans	$	923,383	$	2,755,142	$	1,629,836	$	1,144,485	$	1,002,340	$	2,458,637	$	740,962	$	106,297	$	10,761,082
YTD Gross Charge-Offs	$	—	$	—	$	77	$	38	$	4,166	$	2,231	$	5,464	$	3,404	$	15,380


	December 31, 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	$	225,031	$	108,185	$	72,732	$	65,515	$	66,038	$	164,338	$	41,172	$	12,563	$	755,574
Special mention		—		—		—		—		735		1,175		579		726		3,215
Substandard		—		—		1,026		1,227		407		10,779		—		1,093		14,532
Doubtful		—		—		—		—		—		—		—		—		—
Total one-to-four family residential, and condominium/cooperative apartment		225,031		108,185		73,758		66,742		67,180		176,292		41,751		14,382		773,321
YTD Gross Charge-Offs		—		—		—		—		—		—		—		—		—

Multifamily residential and residential mixed-use:
Pass		1,386,549		582,393		316,424		395,933		127,074		1,107,281		12,584		—		3,928,238
Special mention		—		—		—		11,183		—		14,168		—		—		25,351
Substandard		—		—		12,294		7,001		20,311		33,631		—		—		73,237
Doubtful		—		—		—		—		—		—		—		—		—
Total multifamily residential and residential mixed-use		1,386,549		582,393		328,718		414,117		147,385		1,155,080		12,584		—		4,026,826
YTD Gross Charge-Offs		—		—		—		—		—		—		—		—		—

CRE:
Pass		1,021,622		854,240		753,552		510,332		308,265		868,099		34,362		24,767		4,375,239
Special mention		2,864		—		19,655		4,653		14,372		15,478		—		—		57,022
Substandard		—		151		4,550		7,947		1,131		11,590		—		—		25,369
Doubtful		—		—		—		—		—		—		—		—		—
Total CRE		1,024,486		854,391		777,757		522,932		323,768		895,167		34,362		24,767		4,457,630
YTD Gross Charge-Offs		—		—		—		—		—		—		—		—		—

ADC:
Pass		36,877		152,543		11,242		15,943		—		2,087		10,033		281		229,006
Special mention		—		—		—		—		—		—		—		—		—
Substandard		—		657		—		—		—		—		—		—		657
Doubtful		—		—		—		—		—		—		—		—		—
Total ADC		36,877		153,200		11,242		15,943		—		2,087		10,033		281		229,663
YTD Gross Charge-Offs		—		—		—		—		—		—		—		—		—

C&I:
Pass		175,347		36,511		42,103		37,030		20,628		33,343		628,560		22,239		995,761
Special mention		3,770		—		894		1,529		1,521		843		9,062		478		18,097
Substandard		5,242		1,244		5,364		2,968		970		10,232		11,290		9,412		46,722
Doubtful		—		—		—		8,332		752		2,048		—		—		11,132
Total C&I		184,359		37,755		48,361		49,859		23,871		46,466		648,912		32,129		1,071,712
YTD Gross Charge-Offs		—		477		4,720		2,088		—		2,414		1,460		242		11,401

Total:
Pass		2,845,426		1,733,872		1,196,053		1,024,753		522,005		2,175,148		726,711		59,850		10,283,818
Special mention		6,634		—		20,549		17,365		16,628		31,664		9,641		1,204		103,685
Substandard		5,242		2,052		23,234		19,143		22,819		66,232		11,290		10,505		160,517
Doubtful		—		—		—		8,332		752		2,048		—		—		11,132
Total Loans	$	2,857,302	$	1,735,924	$	1,239,836	$	1,069,593	$	562,204	$	2,275,092	$	747,642	$	71,559	$	10,559,152
YTD Gross Charge-Offs	$	—	$	477	$	4,720	$	2,088	$	—	$	2,414	$	1,460	$	242	$	11,401

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:


	Year Ended December 31,
(In thousands)	2023		2022
Performing	$	5,755	$	7,580
Non-accrual		—		99
Total	$	5,755	$	7,679