(1)

Includes $151.9 million of SBA PPP loans at December 31, 2020.

The majority of our loan portfolio is invested in multi-family residential, commercial real estate and commercial business and other loans, which totaled 83.4% and 84.8% of our gross loans at December 31, 2020 and 2019, respectively. Our concentration in these types of loans increases the overall level of credit risk inherent in our loan portfolio. The greater risk associated with these types of loans could require us to increase our provision for loan losses and to maintain an ACL as a percentage of total loans in excess of the allowance currently maintained. At December 31, 2020, we were servicing $62.0 million of loans for others.

Loans secured by multi-family residential property and commercial real estate generally involve a greater degree of risk than residential mortgage loans and generally carry larger loan balances. The increased credit risk is the result of several factors, including the concentration of principal in a smaller number of loans and borrowers, the effects of general economic conditions on income producing properties and the increased difficulty in evaluating and monitoring these types of loans. Furthermore, the repayments of loans secured by these types of properties are typically dependent upon the successful operation of the related property, which is usually owned by a legal entity with the property being the entity’s only asset. If the cash flow from the property is reduced, the borrower’s ability to repay the loan may be impaired. If the borrower defaults, our only remedy may be to foreclose on the property, for which the market value may be less than the balance due on the related mortgage loan.

Loans secured by commercial business and other loans involve a greater degree of risk for the same reasons as for multi-family residential and commercial real estate loans with the added risk that many of the loans are not secured by improved properties.

To minimize the risks involved in the origination of multi-family residential, commercial real estate and commercial business and other loans, the Company adheres to defined underwriting standards, which include reviewing the expected net operating income generated by the real estate collateral securing the loan, the age and condition of the collateral, the financial resources and income level of the borrower and the borrower’s experience in owning or managing similar properties. We typically require debt service coverage of at least 125% of the monthly loan payment. We generally originate these loans up to a maximum of 75% of the appraised value or the purchase price of the property, whichever is less. Any loan with a final loan-to-value ratio in excess of 75% must be approved by the Bank Board of Directors or the Loan Committee as an exception to policy. We generally rely on the income generated by the property as the primary means by which the loan is repaid. However, personal guarantees may be obtained for additional security from these

borrowers. Additionally, for commercial business and other loans which are not secured by improved properties, the Bank will secure these loans with business assets, including accounts receivables, inventory and real estate and generally require personal guarantees.

The following tables show loans modified and classified as TDR during the periods indicated:


	For the year ended
	December 31, 2020
(Dollars in thousands)	Number	Balance		Modification description

Commercial real estate	1	$	7,583	Loan received a below market interest rate and had an amortization extension
One-to-four family - mixed-use property	1		270	Loan received a below market interest rate.
Total	2	$	7,853


	For the year ended
	December 31, 2019
(Dollars in thousands)	Number	Balance		Modification description
Commercial business and other	3	$	951	Loan amortization extension.
Total	3	$	951


	For the year ended
	December 31, 2018
(Dollars in thousands)	Number	Balance		Modification description

Commercial business and other	1	$	1,620	Loan amortization extension.
Total	1	$	1,620

The recorded investment of the loans modified and classified as TDR, presented in the tables above, were unchanged as there was no principal forgiven in these modifications. There were seven loans that were acquired as TDR in the acquisition totaling $3.5 million.

The following table shows our recorded investment for loans classified as TDR at amortized cost that are performing according to their restructured terms at the periods indicated:


	December 31, 2020
	Number	Amortized
(Dollars in thousands)	of contracts	Cost
Multi-family residential	6	$	1,700
Commercial real estate	1		7,702
One-to-four family - mixed-use property	5		1,731
One-to-four family - residential	3		507
Taxi medallion	2		440
Commercial business and other	8		3,831
Total performing	25	$	15,911


	December 31, 2019
	Number	Recorded
(Dollars in thousands)	of contracts	investment
Multi-family residential	7	$	1,873
One-to-four family - mixed-use property	4		1,481
One-to-four family - residential	3		531
Taxi medallion	7		1,668
Commercial business and other	3		941
Total performing	24	$	6,494

The following table shows our recorded investment for loans classified as TDR at amortized cost that are not performing according to their restructured terms at the periods indicated:


	December 31, 2020
	Number	Amortized
(Dollars in thousands)	of contracts	Cost
Taxi medallion	11	$	1,922
Commercial business and other	1		279
Total troubled debt restructurings that subsequently defaulted	12	$	2,201


	December 31, 2019
	Number	Recorded
(Dollars in thousands)	of contracts	investment
Taxi medallion	4	$	1,065
Commercial business and other	1		279
Total TDR's that subsequently defaulted	5	$	1,344

During the year ended December 31, 2020 and 2019, there were no defaults of TDR loans within 12 months of their modification date.

The following table shows our non-accrual loans at amortized cost with no related allowance and interest income recognized for loans ninety days or more past due and still accruing for period shown below:


	At or for the year December 31, 2020
(In thousands)		Non-accrual amortized cost beginning of the reporting period		Non-accrual amortized cost ending of the reporting period		Non-accrual with no related allowance		Interest income recognized		Loans ninety days or more past due and still accruing:
Multi-family residential	$	2,723	$	2,576	$	2,576	$	—	$	201
Commercial real estate		2,714		1,766		1,766		—		2,547
One-to-four family - mixed-use property ⁽¹⁾		1,704		1,706		1,706		—		—
One-to-four family - residential		9,992		5,313		5,313		—		—
Small Business Administration		1,169		1,168		1,168		—		—
Taxi medallion⁽¹⁾		2,318		2,758		2,758		—		—
Commercial business and other⁽¹⁾		7,406		5,660		1,593		58		—
Total	$	28,026	$	20,947	$	16,880	$	58	$	2,748

(1)Included in the above analysis are non-accrual performing TDR one-to-four family – mixed-use property totaling $0.3 million, non-accrual performing TDR taxi medallion loans totaling $0.4 million December 31, 2020 and non-accrual performing TDR commercial business loans totaling $2.2 million at December 31, 2020.

The following table shows our non-performing loans at the periods indicated:


	At December 31,
(In thousands)	2019
Loans ninety days or more past due and still accruing:
Multi-family residential	$	445
Total		445
Non-accrual mortgage loans:
Multi-family residential		2,296
Commercial real estate		367
One-to-four family mixed-use property		274
One-to-four family residential		5,139
Total		8,076
Non-accrual non-mortgage loans:
Small Business Administration		1,151
Taxi medallion⁽¹⁾		1,641
Commercial business and other ⁽¹⁾		1,945
Total		4,737
Total non-accrual loans		12,813
Total non-performing loans	$	13,258

(1)Not included in the above analysis are non-accrual performing TDR taxi medallions loans totaling $1.7 million and non-accrual performing TDR commercial business loans totaling $0.9 million.

The following is a summary of interest foregone on non-accrual loans and loans classified as TDR for the years ended December 31:


	2020		2019		2018

	(In thousands)
Interest income that would have been recognized had the loans performed in accordance with their original terms	$	1,845	$	1,546	$	1,604
Less: Interest income included in the results of operations		412		418		623
Total foregone interest	$	1,433	$	1,128	$	981

The following tables shows the aging of the amortized cost basis in past-due loans at the period indicated by class of loans at December 31, 2020:


					Greater
	30 - 59 Days		60 - 89 Days		than		Total Past
(in thousands)	Past Due		Past Due		90 Days		Due		Current		Total Loans
Multi-family residential	$	7,582	$	3,186	$	2,777	$	13,545	$	2,522,432	$	2,535,977
Commercial real estate		17,903		5,123		4,313		27,339		1,731,045		1,758,384
One-to-four family ― mixed-use property		5,673		1,132		1,433		8,238		598,647		606,885
One-to-four family ― residential		3,087		805		5,313		9,205		243,486		252,691
Co-operative apartments		—		—		—		—		—		—
Construction		750		—		—		750		82,411		83,161
Small Business Administration		1,823		—		1,168		2,991		162,579		165,570
Taxi medallion		—		—		2,318		2,318		279		2,597
Commercial business and other		129		1,273		1,593		2,995		1,296,414		1,299,409
Total	$	36,947	$	11,519	$	18,915	$	67,381	$	6,637,293	$	6,704,674

The following table shows by delinquency an analysis of our recorded investment in loans at December 31, 2019:


					Greater
	30 - 59 Days		60 - 89 Days		than		Total Past
(in thousands)	Past Due		Past Due		90 Days		Due		Current		Total Loans
Multi-family residential	$	4,042	$	1,563	$	2,741	$	8,346	$	2,230,245	$	2,238,591
Commercial real estate		—		4,941		367		5,308		1,576,700		1,582,008
One-to-four family - mixed-use property		1,117		496		274		1,887		590,584		592,471
One-to-four family - residential		720		1,022		5,139		6,881		181,335		188,216
Co-operative apartments		—		—		—		—		8,663		8,663
Construction loans		—		—		—		—		67,754		67,754
Small Business Administration		—		—		1,151		1,151		13,294		14,445
Taxi medallion		—		—		1,065		1,065		2,244		3,309
Commercial business and other		2,340		5		1,945		4,290		1,057,188		1,061,478
Total	$	8,219	$	8,027	$	12,682	$	28,928	$	5,728,007	$	5,756,935

The following tables show the activity in the allowance for loan losses for the periods indicated:


	For the year ended December 31, 2020
					One-to-four
					family -		One-to-four										Commercial
	Multi-family		Commercial		mixed-use		family -		Co-operative		Construction		Small Business		Taxi		business and
(in thousands)	residential		real estate		property		residential		apartments		loans		Administration		medallion		other		Total
Allowance for credit losses:
Beginning balance	$	5,391	$	4,429	$	1,817	$	756	$	—	$	441	$	363	$	—	$	8,554	$	21,751
Impact of CECL Adoption		(650)		1,170		(55)		(160)		—		(279)		1,180		—		(827)		379
Impact of Day 1 PCD - Empire Acquisition		444		587		183		158		—		20		278		124		2,305		4,099
Charge-off's		—		—		(3)		—		—		—		(178)		(1,075)		(2,749)		(4,005)
Recoveries		38		—		138		12		—		—		70		—		108		366
Provision (benefit)		1,334		2,141		(94)		103		—		315		538		951		17,275		22,563
Ending balance	$	6,557	$	8,327	$	1,986	$	869	$	—	$	497	$	2,251	$	—	$	24,666	$	45,153


	For the year ended December 31, 2019
					One-to-four
					family -		One-to-four										Commercial
	Multi-family		Commercial		mixed-use		family -		Co-operative		Construction		Small Business		Taxi		business and
(in thousands)	residential		real estate		property		residential		apartments		loans		Administration		medallion		other		Total
Allowance for credit losses:
Beginning balance	$	5,676	$	4,315	$	1,867	$	749	$	—	$	329	$	418	$	—	$	7,591	$	20,945
Charge-off's		(190)		—		(89)		(113)		—		—		—		—		(2,386)		(2,778)
Recoveries		44		37		197		13		—		—		60		134		288		773
Provision (benefit)		(139)		77		(158)		107		—		112		(115)		(134)		3,061		2,811
Ending balance	$	5,391	$	4,429	$	1,817	$	756	$	—	$	441	$	363	$	—	$	8,554	$	21,751


	For the year ended December 31, 2018
					One-to-four
					family -		One-to-four										Commercial
	Multi-family		Commercial		mixed-use		family -		Co-operative		Construction		Small Business		Taxi		business and
(in thousands)	residential		real estate		property		residential		apartments		loans		Administration		medallion		other		Total
Allowance for credit losses:
Beginning balance	$	5,823	$	4,643	$	2,545	$	1,082	$	—	$	68	$	669	$	—	$	5,521	$	20,351
Charge-off's		(99)		—		(3)		(1)		—		—		(392)		(393)		(44)		(932)
Recoveries		6		—		136		569		—		—		51		143		46		951
Provision (benefit)		(54)		(328)		(811)		(901)		—		261		90		250		2,068		575
Ending balance	$	5,676	$	4,315	$	1,867	$	749	$	—	$	329	$	418	$	—	$	7,591	$	20,945

In accordance with our policy and the current regulatory guidelines, we designate loans as “Special Mention,” which are considered “Criticized Loans,” and “Substandard,” “Doubtful,” or “Loss,” which are considered “Classified Loans”. If a loan does not fall within one of the previous mentioned categories and management believes weakness is evident then we designate the loan as “Watch”, all other loans would be considered “Pass.” Loans that are non-accrual are designated as Substandard, Doubtful or Loss. These loan designations are updated quarterly. We designate a loan as Substandard when a well-defined weakness is identified that may jeopardize the orderly liquidation of the debt. We designate a loan Doubtful when it displays the inherent weakness of a Substandard loan with the added provision that collection of the debt in full, on the basis of existing facts, is highly improbable. We designate a loan as Loss if it is deemed the debtor is incapable of repayment. The Company does not hold any loans designated as Loss, as loans that are designated as Loss are charged to the Allowance for Credit Losses. We designate a loan as Special Mention if the asset does not warrant classification within one of the other classifications, but does contain a potential weakness that deserves closer attention. Loans that are in forbearance pursuant to the CARES Act generally continued to be reported in the same category as they were reported immediately prior to modification.

The following table summarizes the risk category of mortgage and non-mortgage loans by loan portfolio segments and class of loans by year of origination:



	For the year ended
														Revolving Loans,		Lines of Credit
														Amortized Cost		converted to
(In thousands)		2020		2019		2018		2017		2016		Prior		Basis		term loans		Total
1-4 Family Residential
Pass	$	32,266	$	37,149	$	38,063	$	21,293	$	13,229	$	65,916	$	10,793	$	15,974	$	234,683
Watch		486		720		—		3,302		446		2,599		635		2,397		10,585
Special Mention		—		—		—		—		—		1,338		—		383		1,721
Substandard		—		—		—		—		960		3,183		—		1,559		5,702
Total 1-4 Family Residential	$	32,752	$	37,869	$	38,063	$	24,595	$	14,635	$	73,036	$	11,428	$	20,313	$	252,691
1-4 Family Mixed-Use
Pass	$	36,491	$	72,920	$	77,037	$	58,404	$	53,518	$	282,169	$	—	$	—	$	580,539
Watch		816		—		4,077		6,107		882		9,617		—		—		21,499
Special Mention		—		—		—		368		722		1,433		—		—		2,523
Substandard		—		—		809		—		—		1,515		—		—		2,324
Total 1-4 Family Mixed Use	$	37,307	$	72,920	$	81,923	$	64,879	$	55,122	$	294,734	$	—	$	—	$	606,885
Commercial Real Estate
Pass	$	173,089	$	263,007	$	266,949	$	191,532	$	220,560	$	499,186	$	—	$	—	$	1,614,323
Watch		938		1,359		15,557		15,687		29,445		62,587		—		—		125,573
Special Mention		—		—		—		2,547		2,576		1,350		—		—		6,473
Substandard		—		9,436		—		—		—		2,579		—		—		12,015
Total Commercial Real Estate	$	174,027	$	273,802	$	282,506	$	209,766	$	252,581	$	565,702	$	—	$	—	$	1,758,384
Construction
Pass	$	16,768	$	16,793	$	28,984	$	5,253	$	—	$	590	$	—	$	—	$	68,388
Watch		—		1,115		9,572		750		—		—		—		—		11,437
Special Mention		—		—		761		2,575		—		—		—		—		3,336
Total Construction	$	16,768	$	17,908	$	39,317	$	8,578	$	—	$	590	$	—	$	—	$	83,161
Multifamily
Pass	$	245,551	$	343,887	$	479,644	$	376,275	$	282,185	$	769,712	$	4,572	$	—	$	2,501,826
Watch		1,126		4,906		982		931		3,457		14,806		798		—		27,006
Special Mention		—		699		—		2,536		464		668		—		—		4,367
Substandard		—		—		1,997		—		—		580		201		—		2,778
Total Multifamily	$	246,677	$	349,492	$	482,623	$	379,742	$	286,106	$	785,766	$	5,571	$	—	$	2,535,977
Commercial Business - Secured by RE
Pass	$	110,649	$	43,909	$	54,016	$	36,010	$	50,230	$	86,662	$	—	$	—	$	381,476
Watch		24,539		51,466		17,390		1,320		962		16,192		—		—		111,869
Special Mention		—		613		—		—		—		—		—		—		613
Substandard		—		—		—		—		—		4,220		—		—		4,220
Total Commercial Business - Secured by RE	$	135,188	$	95,988	$	71,406	$	37,330	$	51,192	$	107,074	$	—	$	—	$	498,178
Commercial Business
Pass	$	97,071	$	118,501	$	104,304	$	51,627	$	17,340	$	66,398	$	250,633	$	—	$	705,874
Watch		250		22,490		19,202		20,591		39		26		11,564		—		74,162
Special Mention		—		—		2,411		93		—		—		246		—		2,750
Substandard		4,897		594		17		6,441		2,285		1,647		1,161		—		17,042
Doubtful		—		—		—		—		—		—		1,273		—		1,273
Total Commercial Business	$	102,218	$	141,585	$	125,934	$	78,752	$	19,664	$	68,071	$	264,877	$	—	$	801,101
Small Business Administration
Pass	$	151,449	$	1,453	$	4,194	$	1,327	$	1,882	$	1,523	$	—	$	—	$	161,828
Watch		—		—		—		1,948		570		—		—		—		2,518
Special Mention		—		—		—		—		—		50		—		—		50
Substandard		—		—		—		1,168		6		—		—		—		1,174
Total Small Business Administration	$	151,449	$	1,453	$	4,194	$	4,443	$	2,458	$	1,573	$	—	$	—	$	165,570
Taxi Medallions
Substandard	$	—	$	—	$	—	$	279	$	—	$	2,318	$	—	$	—	$	2,597
Total Taxi Medallions	$	—	$	—	$	—	$	279	$	—	$	2,318	$	—	$	—	$	2,597
Other
Pass	$	—	$	—	$	—	$	—	$	—	$	37	$	93	$	—	$	130
Total Other	$	—	$	—	$	—	$	—	$	—	$	37	$	93	$	—	$	130

Total Loans	$	896,386	$	991,017	$	1,125,966	$	808,364	$	681,758	$	1,898,901	$	281,969	$	20,313	$	6,704,674

The following table sets forth the recorded investment in loans designated as Criticized or Classified at December 31, 2019:


(In thousands)	Special Mention		Substandard		Doubtful		Loss		Total
Multi-family residential	$	1,563	$	2,743	$	—	$	—	$	4,306
Commercial real estate		5,525		367		—		—		5,892
One-to-four family - mixed-use property		1,585		453		—		—		2,038
One-to-four family - residential		1,095		5,787		—		—		6,882
Small Business Administration ⁽¹⁾		55		85		—		—		140
Taxi medallion		—		3,309		—		—		3,309
Commercial business and other		3,924		11,289		266		—		15,479
Total loans	$	13,747	$	24,033	$	266	$	—	$	38,046

(1)	Balance reported net of SBA Guaranteed portion.

The following table presents types of collateral-dependent loans by class of loans as of December 31, 2020:



	Collateral Type
(In thousands)		Real Estate		Business Assets
Multi-family residential	$	2,576	$	—
Commercial real estate		2,994		—
One-to-four family - mixed-use property		1,706		—
One-to-four family - residential		5,313		—
Small Business Administration		—		1,168
Commercial business and other		—		3,482
Taxi Medallion		—		2,758
Total	$	12,589	$	7,408

Off-Balance Sheet Credit Losses

Also included within scope of the CECL standard are off-balance sheet loan commitments, which includes the unfunded portion of committed lines of credit and commitments “in-process”. Commitments “in‐process” reflect loans not in the Company’s books but rather negotiated loan / line of credit terms and rates that the Company has offered to customers and is committed to honoring. In reference to “in‐process” credits, the Company defines an unfunded commitment as a credit that has been offered to and accepted by a borrower, which has not closed and by which the obligation is not unconditionally cancellable.

The Company estimates expected credit losses over the contractual period in which the company is exposed to credit risk through a contractual obligation to extend credit, unless that obligation is unconditionally cancellable by the Company. The allowance for credit losses on losses on off-balance sheet exposures is adjusted as a provision for credit loss expense. The Company uses similar assumptions and risk factors that are developed for collectively evaluated financing receivables. This estimates includes consideration of the likelihood that funding will occur and an estimate of expected credit losses on commitments to be funded over its estimated life.

At December 31, 2020, allowance for off-balance-sheet credit losses is $1.8 million, which is included the “Other liabilities” on the Consolidated Statements of Financial Condition. During the year ended December 31, 2020, the Company has $1.2 million in credit loss expense for off-balance-sheet items, which is included in the “Other operating expense” on the Consolidated Statements of Income.

PCD Financial Assets

The Company acquired purchased financial assets with credit deterioration during the acquisition of Empire. The following table shows a reconciliation between the purchase price of the financial assets and the par value of the assets.


(Dollars in thousands)	Amount
Purchase price⁽¹⁾	$	297,807
Allowance for Credit Losses at Acquisition Date		(4,099)
Noncredit Discount		(7,616)
Total consideration paid	$	286,092

(1)	Purchase price includes $1.7 million of charge-offs by ENB prior to acquisition.