Loans are reported at their outstanding principal balance net of any unearned income, charge-offs, deferred loan fees and costs on originated loans and unamortized premiums or discounts on purchased loans. Loan fees and certain loan origination costs are deferred. Net loan origination costs and premiums or discounts on loans purchased are amortized into interest income over the contractual life of the loans using the level-yield method. Prepayment penalties received on loans which pay in full prior to their scheduled maturity are included in interest income in the period they are collected.

Interest on loans is recognized on the accrual basis. Accrued interest receivable totaled $38.0 million and $41.5 million at September 30, 2021 and December 31, 2020, respectively, and was reported in “Interest and dividends receivable” on the Consolidated Statements of Financial Condition. The accrual of income on loans is generally discontinued when certain factors, such as contractual delinquency of 90 days or more, indicate reasonable doubt as to the timely collectability of such income. Uncollected interest previously recognized on non-accrual loans is reversed from interest income at the time the loan is placed on non-accrual status. A non-accrual loan can be returned to accrual status when contractual delinquency returns to less than 90 days delinquent. Payments received on non-accrual loans that do not bring the loan to less than 90 days delinquent are recorded on a cash basis. Payments can also be applied first as a reduction of principal until all principal is recovered and then subsequently to interest, if in management’s opinion, it is evident that recovery of all principal due is likely to occur.

The Allowance for credit losses (“ACL”) is an estimate that is deducted from the amortized cost basis of the financial asset to present the net carrying value at the amount expected to be collected on the financial assets. Loans are charged off against that ACL when management believes that a loan balance is uncollectable based on quarterly analysis of credit risk.

The amount of the ACL is based upon a loss rate model that considers multiple factors which reflects management’s assessment of the credit quality of the loan portfolio. Management estimates the allowance balance using relevant information, from internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts. The factors are both quantitative and qualitative in nature including, but not limited to, historical losses, economic conditions, trends in delinquencies, value and adequacy of underlying collateral, volume and portfolio mix, and internal loan processes.

During the three months ended September 30, 2021, the Company recorded a benefit for credit losses on loans totaling $6.9 million compared to a provision for credit losses on loans of $2.5 million for the three months ending September 30, 2020. The Company recorded a benefit for credit losses on loans totaling $5.6 million for the nine months ended September 30, 2021 compared to a provision of $19.2 million for the nine months ended September 30, 2020. The benefit recorded during the three months ended September 30, 2021 was driven by the improving economic outlook. During the three months ended September 30, 2021, the Company made no changes to the reasonable and supportable forecast period or the reversion period from what was used for the June 30, 2021 ACL. The ACL - loans totaled $36.4 million at September 30, 2021 compared to $45.2 million at December 31, 2020. At September 30, 2021, the ACL - loans represented 0.55% of gross loans and 179.9% of non-performing loans. At December 31, 2020, the ACL - loans represented 0.67% of gross loans and 214.3% of non-performing loans.

Pursuant to the CARES Act and later modified by Consolidated Appropriations Act, certain loan modifications are not classified as TDR, if the related loans were not more than 30 days past due as of December 31, 2019. The Company has elected that loans temporarily modified for borrowers directly impacted by COVID-19 are not considered TDR, assuming the above criteria is met. As such, these loans are considered current and continue to accrue interest at its original contractual terms until the completion of the deferred period. Once the deferred period is over, the borrower will resume making payment and normal delinquency-based non-accrual policies will apply.

The Company may restructure loans that are not directly impacted by COVID-19 to enable a borrower experiencing financial difficulties to continue making payments when it is deemed to be in the Company’s best long-term interest. This restructure may include reducing the interest rate or amount of the monthly payment for a specified period of time, after which the interest rate and repayment terms revert to the original terms of the loan. We classify these loans as TDR.

The Company believes that restructuring these loans in this manner will allow certain borrowers to become and remain current on their loans. All loans classified as TDR are individually evaluated, however TDR loans which have been current for six consecutive months at the time they are restructured as TDR remain on accrual status and are not included as part of non-performing loans. Loans which were delinquent at the time they are restructured as a TDR are placed on non-accrual status and reported as non-accrual performing TDR loans until they have made timely payments for six consecutive months. These restructurings have not included a reduction of principal balance.

The allocation of a portion of the ACL for a performing TDR loan is based upon the present value of the future expected cash flows discounted at the loan’s original effective rate, or for a non-performing TDR loan which is collateral dependent, the fair value of the collateral. At September 30, 2021, there were no commitments to lend additional funds to borrowers whose loans were modified to a TDR. The modification of loans to a TDR did not have a significant effect on our operating results, nor did it require a significant allocation of the ACL.

During the nine months ended September 30, 2021 there was one commercial business TDR loan totaling $0.3 million that defaulted within 12 months of its modification date. During the nine months ended September 30, 2020, there were no TDR loans that defaulted within 12 months of their modification date. During the three months ended September 30, 2021 and 2020, there were no TDR loans that defaulted within 12 months of their modification date.

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

(1)

These loans continue to pay as agreed, however the Company records interest received on a cash basis.

(2)

These loans were completely charged off during the three months ended March 31, 2021.

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


	September 30, 2021			December 31, 2020
	Number	Amortized		Number	Amortized
(Dollars in thousands)	of contracts	Cost		of contracts	Cost
Taxi medallion ⁽¹⁾	—	$	—	11	$	1,922
Commercial business and other	—		—	1		279
Total troubled debt restructurings that subsequently defaulted	—	$	—	12	$	2,201

(1)

These loans were completely charged off during the three months ended March 31, 2021. Subsequently, recoveries totaling $1.5 million have been recorded as of September 30, 2021.

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 nine months ended September 30, 2021
(In thousands)		Non-Accrual Amortized Cost Beginning of Reporting Period		Non-Accrual Amortized Cost Ending of Reporting Period		Non-Accrual with no related Allowance		Interest Income Recognized		Loans ninety days or more past due and still accruing:
Multi-family residential	$	2,576	$	4,461	$	4,461	$	19	$	—
Commercial real estate		1,766		640		640		—		—
One-to-four family - mixed-use property ⁽¹⁾		1,706		2,510		2,510		4		—
One-to-four family - residential		5,313		7,509		7,509		1		—
Construction		—		—		—		—		873
Small Business Administration		1,168		991		991		—		—
Taxi medallion⁽²⁾		2,758		—		—		—		—
Commercial business and other⁽¹⁾		5,660		2,500		875		63		1,052
Total	$	20,947	$	18,611	$	16,986	$	87	$	1,925

(1) Included in the above analysis are non-accrual performing TDR one-to-four family – mixed-use property totaling $0.3 million at September 30, 2021.

(2) Taxi medallion loans were completely charged off during the three months ended March 31, 2021.


	At or for the twelve months ended December 31, 2020
(In thousands)		Non-Accrual Amortized Cost Beginning of Reporting Period		Non-Accrual Amortized Cost Ending of 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 and non-accrual performing TDR commercial business loans totaling $2.2 million at December 31, 2020.

The following is a summary of interest foregone on non-accrual loans and loans classified as TDR for the periods indicated:


	For the three months ended				For the nine months ended
	September 30,				September 30,
	2021		2020		2021		2020

	(In thousands)
Interest income that would have been recognized had the loans performed in accordance with their original terms	$	415	$	491	$	1,330	$	1,296
Less: Interest income included in the results of operations		156		78		480		240
Total foregone interest	$	259	$	413	$	850	$	1,056

The following tables show the aging of the amortized cost basis in past-due loans at the period indicated by class of loans:


	September 30, 2021
					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	$	16,453	$	—	$	4,461	$	20,914	$	2,480,107	$	2,501,021
Commercial real estate		1,119		838		640		2,597		1,745,136		1,747,733
One-to-four family - mixed-use property		1,657		172		2,246		4,075		578,268		582,343
One-to-four family - residential		372		504		7,509		8,385		280,858		289,243
Construction		—		—		873		873		70,495		71,368
Small Business Administration		2,085		—		2,043		4,128		141,506		145,634
Taxi medallion		—		—		—		—		—		—
Commercial business and other		458		—		1,960		2,418		1,290,594		1,293,012
Total	$	22,144	$	1,514	$	19,732	$	43,390	$	6,586,964	$	6,630,354


	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
Construction loans		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 tables show the activity in the ACL on loans for the three month periods indicated:


	September 30, 2021
					One-to-four
					family -		One-to-four								Commercial
	Multi-family		Commercial		mixed-use		family -		Construction		Small Business		Taxi		business and
(In thousands)	residential		real estate		property		residential		loans		Administration		medallion		other		Total
Allowance for credit losses:
Beginning balance	$	6,559	$	5,868	$	1,492	$	716	$	185	$	2,302	$	—	$	25,548	$	42,670
Charge-offs		—		—		—		—		—		—		—		(1,019)		(1,019)
Recoveries		—		—		123		147		—		8		1,235		125		1,638
Benefit		(161)		(112)		(169)		(232)		(17)		(646)		(1,235)		(4,354)		(6,926)
Ending balance	$	6,398	$	5,756	$	1,446	$	631	$	168	$	1,664	$	—	$	20,300	$	36,363


	September 30, 2020
					One-to-four
					family -		One-to-four								Commercial
	Multi-family		Commercial		mixed-use		family -		Construction		Small Business		Taxi		business and
(In thousands)	residential		real estate		property		residential		loans		Administration		medallion		other		Total
Allowance for credit losses:
Beginning balance	$	8,935	$	6,971	$	2,826	$	1,161	$	183	$	1,386	$	—	$	15,248	$	36,710
Charge-offs		—		—		—		—		—		—		(951)		(13)		(964)
Recoveries		14		—		60		2		—		47		—		4		127
Provision (benefit)		(1,553)		1,576		(1,208)		(483)		35		450		951		2,702		2,470
Ending balance	$	7,396	$	8,547	$	1,678	$	680	$	218	$	1,883	$	—	$	17,941	$	38,343

The following tables show the activity in the ACL on loans for the nine month periods indicated:


	September 30, 2021
					One-to-four
					family -		One-to-four				Small				Commercial
	Multi-family		Commercial		mixed-use		family -		Construction		Business		Taxi		business and
(In thousands)	residential		real estate		property		residential		loans		Administration		medallion		other		Total

Allowance for credit losses:
Beginning balance	$	6,557	$	8,327	$	1,986	$	869	$	497	$	2,251	$	—	$	24,666	$	45,153
Charge-off's		(43)		(64)		(32)		—		—		—		(2,758)		(2,230)		(5,127)
Recoveries		10		—		133		154		—		27		1,457		198		1,979
Provision (benefit)		(126)		(2,507)		(641)		(392)		(329)		(614)		1,301		(2,334)		(5,642)
Ending balance	$	6,398	$	5,756	$	1,446	$	631	$	168	$	1,664	$	—	$	20,300	$	36,363


	September 30, 2020
					One-to-four
					family -		One-to-four				Small				Commercial
	Multi-family		Commercial		mixed-use		family -		Construction		Business		Taxi		business and
(In thousands)	residential		real estate		property		residential		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
Charge-off's		—		—		(3)		—		—		(178)		(951)		(2,121)		(3,253)
Recoveries		27		—		138		10		—		67		—		18		260
Provision (benefit)		2,628		2,948		(219)		74		56		451		951		12,317		19,206
Ending balance	$	7,396	$	8,547	$	1,678	$	680	$	218	$	1,883	$	—	$	17,941	$	38,343

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 at September 30, 2021:



														Revolving Loans,		Lines of Credit
														Amortized Cost		converted to
(In thousands)		2021		2020		2019		2018		2017		Prior		Basis		term loans		Total
1-4 Family Residential
Pass	$	53,687	$	31,937	$	35,424	$	32,594	$	21,016	$	73,993	$	10,907	$	15,953	$	275,511
Watch		—		—		725		—		2,216		1,229		146		847		5,163
Special Mention		—		—		—		278		—		350		—		337		965
Substandard		—		—		—		1,841		1,117		3,845		—		801		7,604
Total 1-4 Family Residential	$	53,687	$	31,937	$	36,149	$	34,713	$	24,349	$	79,417	$	11,053	$	17,938	$	289,243
1-4 Family Mixed-Use
Pass	$	32,110	$	35,677	$	70,360	$	73,236	$	52,100	$	298,763	$	—	$	—	$	562,246
Watch		—		—		—		2,834		6,131		7,088		—		—		16,053
Special Mention		—		—		—		—		—		1,279		—		—		1,279
Substandard		—		—		—		506		760		1,499		—		—		2,765
Total 1-4 Family Mixed Use	$	32,110	$	35,677	$	70,360	$	76,576	$	58,991	$	308,629	$	—	$	—	$	582,343
Commercial Real Estate
Pass	$	131,648	$	167,334	$	254,288	$	247,434	$	184,502	$	660,127	$	—	$	—	$	1,645,333
Watch		4,191		932		4,472		12,499		2,643		67,755		—		—		92,492
Special Mention		—		—		—		—		—		1,632		—		—		1,632
Substandard		—		—		7,572		—		—		704		—		—		8,276
Total Commercial Real Estate	$	135,839	$	168,266	$	266,332	$	259,933	$	187,145	$	730,218	$	—	$	—	$	1,747,733
Construction
Pass	$	3,477	$	25,417	$	14,798	$	1,993	$	—	$	—	$	4,233	$	—	$	49,918
Watch		—		—		2,115		9,125		5,880		—		—		—		17,120
Special Mention		—		—		—		857		2,600		—		—		—		3,457
Substandard		—		—		—		873		—		—		—		—		873
Total Construction	$	3,477	$	25,417	$	16,913	$	12,848	$	8,480	$	—	$	4,233	$	—	$	71,368
Multifamily
Pass	$	218,819	$	237,600	$	334,594	$	430,396	$	352,582	$	884,680	$	5,300	$	—	$	2,463,971
Watch		—		2,885		3,707		13,649		—		9,987		398		—		30,626
Special Mention		—		973		—		—		—		—		—		—		973
Substandard		—		—		1,176		2,549		984		742		—		—		5,451
Total Multifamily	$	218,819	$	241,458	$	339,477	$	446,594	$	353,566	$	895,409	$	5,698	$	—	$	2,501,021
Commercial Business - Secured by RE
Pass	$	131,864	$	92,989	$	38,483	$	45,725	$	27,927	$	96,840	$	—	$	—	$	433,828
Watch		—		23,346		51,319		18,546		12,064		46,477		—		—		151,752
Special Mention		—		—		598		—		—		—		—		—		598
Substandard		—		—		—		—		—		3,639		—		—		3,639
Total Commercial Business - Secured by RE	$	131,864	$	116,335	$	90,400	$	64,271	$	39,991	$	146,956	$	—	$	—	$	589,817
Commercial Business
Pass	$	86,496	$	68,366	$	84,638	$	73,370	$	28,721	$	52,443	$	190,737	$	—	$	584,771
Watch		17		1,676		22,545		18,947		32,250		37		12,697		—		88,169
Special Mention		—		—		—		2,433		34		—		13,128		—		15,595
Substandard		—		4,897		31		315		5,253		1,458		1,490		—		13,444
Doubtful		—		—		—		—		—		—		1,085		—		1,085
Total Commercial Business	$	86,513	$	74,939	$	107,214	$	95,065	$	66,258	$	53,938	$	219,137	$	—	$	703,064
Small Business Administration
Pass	$	104,557	$	28,148	$	1,273	$	1,545	$	640	$	2,875	$	—	$	—	$	139,038
Watch		—		—		59		2,583		2,076		833		—		—		5,551
Special Mention		—		—		—		—		—		48		—		—		48
Substandard		—		—		—		—		991		6		—		—		997
Total Small Business Administration	$	104,557	$	28,148	$	1,332	$	4,128	$	3,707	$	3,762	$	—	$	—	$	145,634
Other
Pass	$	—	$	—	$	—	$	—	$	—	$	52	$	79	$	—	$	131
Total Other	$	—	$	—	$	—	$	—	$	—	$	52	$	79	$	—	$	131

Total Loans	$	766,866	$	722,177	$	928,177	$	994,128	$	742,487	$	2,218,381	$	240,200	$	17,938	$	6,630,354

Included within net loans as of September 30, 2021 and December 31, 2020 were $9.3 million and $5.9 million, respectively, of consumer mortgage loans secured by residential real estate properties for which formal foreclosure proceedings were in process according to local requirements of the applicable jurisdiction.

A loan is considered collateral dependent when the borrower is experiencing financial difficulties and repayment is expected to be substantially provided by the operation or sale of the collateral. The following table presents types of collateral-dependent loans by class of loans as of the periods indicated:


	Collateral Type
	September 30, 2021				December 31, 2020
(In thousands)		Real Estate		Business Assets		Real Estate		Business Assets
Multi-family residential	$	4,461	$	—	$	2,576	$	—
Commercial real estate		1,166		—		2,994		—
One-to-four family - mixed-use property		2,510		—		1,706		—
One-to-four family - residential		7,509		—		5,313		—
Small Business Administration		—		991		—		1,168
Commercial business and other		—		1,974		—		3,482
Taxi Medallion		—		—		—		2,758
Total	$	15,646	$	2,965	$	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.

Commitments to extend credit (principally real estate mortgage loans) and lines of credit (principally home equity lines of credit and business lines of credit) totaled $445.9 million and $474.0 million at September 30, 2021 and December 31, 2020, respectively.

The following table presents the activity in the allowance for off balance sheet credit losses for the three and nine months ended September 30, 2021 and 2020.


	For the three months ended				For the nine months ended
	September 30,				September 30,
	2021		2020		2021		2020

	(In thousands)
Balance at beginning of period	$	1,570	$	1,264	$	1,815	$	—
Off-Balance Sheet - CECL Adoption		—		—		—		553
Off-Balance Sheet- Provision (Benefit)		(259)		295		(504)		1,006
Allowance for Off-Balance Sheet - Credit losses ⁽¹⁾	$	1,311	$	1,559	$	1,311	$	1,559

(1)

Included in “Other liabilities” on the Consolidated Statements of Financial Condition.