(1)

Includes $77.4 million, and $151.9 million of SBA Payment Protection Program (“SBA PPP”) loans at December 31, 2021, and 2020, respectively.

The majority of our loan portfolio is invested in multi-family residential, commercial real estate and commercial business and other loans, which totaled 84.9% and 83.4% of our gross loans at December 31, 2021 and 2020, 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 allowance and provision for credit losses and to maintain an ACL as a percentage of total loans in excess of the allowance currently maintained. In addition to our loan portfolio, at December 31, 2021, we were servicing $34.1 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’s 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, 2021
(Dollars in thousands)	Number	Balance		Modification description

Commercial business and other	3	$	702	Loan amortization extension.
Total	3	$	702


	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

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. In 2020, there were seven loans that were acquired as TDR in the Empire 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, 2021
	Number	Amortized
(Dollars in thousands)	of contracts	Cost
Multi-family residential	6	$	1,690
Commercial real estate	1		7,572
One-to-four family - mixed-use property	5		1,636
One-to-four family - residential	3		483
Commercial business and other	5		1,381
Total performing	20	$	12,762


	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

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. The Company did not have any loans classified as TDR at amortized cost that was not performing according to their restructured terms at December 31, 2021.


	December 31, 2020
	Number	Recorded
(Dollars in thousands)	of contracts	investment
Taxi medallion	11	$	1,922
Commercial business and other	1		279
Total TDR's that subsequently defaulted	12	$	2,201

During the years ended December 31, 2021, 2020 and 2019 there were no defaults of TDR loans within 12 months of their modification date.

The following tables show 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 periods shown below:


	At or for the year December 31, 2021
(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	$	2,576	$	2,652	$	2,652	$	19	$	—
Commercial real estate		1,766		640		640		—		—
One-to-four family - mixed-use property ⁽¹⁾		1,706		1,582		1,582		6		—
One-to-four family - residential				7,482		7,482		1		—
Small Business Administration		1,168		952		952		—		—
Taxi medallion⁽²⁾		2,758		—		—		—		—
Commercial business and other⁽¹⁾		5,660		1,945		305		78		—
Total	$	20,947	$	15,253	$	13,613	$	104	$	—

(1)Included in the above analysis are non-accrual performing TDR one-to-four family – mixed-use property totaling $0.3 million at December 31, 2021. Commercial business and other contains a non-accrual performing TDR totaling less than $0.1 million at December 31, 2021.

(2)Taxi Medallion loans were completely charged off during the year ended December 31, 2021.


	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 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 years ended December 31:


	2021		2020		2019

	(In thousands)
Interest income that would have been recognized had the loans performed in accordance with their original terms	$	1,691	$	1,845	$	1,546
Less: Interest income included in the results of operations		620		412		418
Total foregone interest	$	1,071	$	1,433	$	1,128

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, 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	$	3,652	$	4,193	$	2,652	$	10,497	$	2,508,730	$	2,519,227
Commercial real estate		5,743		—		640		6,383		1,770,992		1,777,375
One-to-four family ― mixed-use property		2,319		—		1,321		3,640		571,296		574,936
One-to-four family ― residential		163		224		7,482		7,870		261,626		269,496
Co-operative apartments		—		—		—		—		8,316		8,316
Construction		—		—		—		—		59,473		59,473
Small Business Administration		—		—		952		952		90,884		91,836
Commercial business and other		101		40		1,386		1,527		1,335,919		1,337,446
Total	$	11,978	$	4,457	$	14,433	$	30,869	$	6,607,236	$	6,638,105

The following table shows by delinquency an analysis of our recorded investment in 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		235,435		244,640
Co-operative apartments		—		—		—		—		8,051		8,051
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 tables show the activity in the allowance for credit losses for the periods indicated:


	For the year ended December 31, 2021
					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	$	6,557	$	8,327	$	1,986	$	869	$	—	$	497	$	2,251	$	—	$	24,666	$	45,153
Charge-off's		(43)		(64)		(33)		—		—		—		—		(2,758)		(2,236)		(5,134)
Recoveries		10		—		133		157		—		—		34		1,457		224		2,015
Provision (benefit)		1,661		(1,105)		(331)		(242)		—		(311)		(1,076)		1,301		(4,796)		(4,899)
Ending balance	$	8,185	$	7,158	$	1,755	$	784	$	—	$	186	$	1,209	$	—	$	17,858	$	37,135


	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

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 contains a potential weakness that deserves closer attention. Loans that are in forbearance pursuant to the CARES Act or CAA 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)		2021		2020		2019		2018		2017		Prior		Basis		term loans		Total
1-4 Family Residential
Pass	$	8,917	$	30,674	$	48,238	$	32,105	$	24,550	$	94,407	$	11,141	$	15,798	$	265,830
Watch		300		—		727		—		1,249		1,129		—		562		3,967
Special Mention		—		—		—		—		—		130		—		224		354
Substandard		—		—		—		1,841		1,119		3,935		—		766		7,661
Total 1-4 Family Residential	$	9,217	$	30,674	$	48,965	$	33,946	$	26,918	$	99,601	$	11,141	$	17,350	$	277,812
1-4 Family Mixed-Use
Pass	$	45,767	$	35,397	$	68,349	$	74,057	$	56,310	$	286,040	$	—	$	—	$	565,920
Watch		—		—		—		—		680		5,371		—		—		6,051
Special Mention		—		—		—		—		—		1,130		—		—		1,130
Substandard		—		—		—		523		—		1,312		—		—		1,835
Total 1-4 Family Mixed Use	$	45,767	$	35,397	$	68,349	$	74,580	$	56,990	$	293,853	$	—	$	—	$	574,936
Commercial Real Estate
Pass	$	188,980	$	161,570	$	252,976	$	259,257	$	180,992	$	632,138	$	—	$	—	$	1,675,913
Watch		4,197		3,632		9,659		9,630		2,446		70,051		—		—		99,615
Special Mention		—		—		—		—		—		794		—		—		794
Substandard		—		—		—		—		—		1,053		—		—		1,053
Total Commercial Real Estate	$	193,177	$	165,202	$	262,635	$	268,887	$	183,438	$	704,036	$	—	$	—	$	1,777,375
Construction
Pass	$	5,022	$	11,515	$	14,800	$	1,993	$	—	$	—	$	15,857	$	—	$	49,187
Watch		—		—		—		4,033		4,524		—		—		—		8,557
Special Mention		—		—		—		856		—		—		—		—		856
Substandard		—		—		—		873		—		—		—		—		873
Total Construction	$	5,022	$	11,515	$	14,800	$	7,755	$	4,524	$	—	$	15,857	$	—	$	59,473
Multi-family
Pass	$	314,345	$	236,768	$	330,360	$	426,016	$	347,616	$	823,451	$	5,864	$	—	$	2,484,420
Watch		1,119		1,136		3,708		12,180		1,154		7,702		—		—		26,999
Special Mention		—		969		—		797		—		3,021		—		—		4,787
Substandard		—		—		—		2,128		—		742		151		—		3,021
Total Multi-family	$	315,464	$	238,873	$	334,068	$	441,121	$	348,770	$	834,916	$	6,015	$	—	$	2,519,227
Commercial Business - Secured by RE
Pass	$	176,376	$	92,336	$	38,215	$	45,348	$	22,644	$	92,725	$	—	$	—	$	467,644
Watch		—		22,878		51,300		18,685		12,146		46,279		—		—		151,288
Special Mention		—		—		591		—		—		—		—		—		591
Substandard		—		—		—		—		—		3,609		—		—		3,609
Total Commercial Business - Secured by RE	$	176,376	$	115,214	$	90,106	$	64,033	$	34,790	$	142,613	$	—	$	—	$	623,132
Commercial Business
Pass	$	127,543	$	50,439	$	68,031	$	67,520	$	26,589	$	37,016	$	217,110	$	—	$	594,248
Watch		1,596		1,668		22,531		21,344		31,819		15		11,199		—		90,172
Special Mention		18		1,382		—		2,423		40		—		13,534		—		17,397
Substandard		—		4,897		31		308		4,743		400		890		—		11,269
Doubtful		—		—		—		—		—		—		1,081		—		1,081
Total Commercial Business	$	129,157	$	58,386	$	90,593	$	91,595	$	63,191	$	37,431	$	243,814	$	—	$	714,167
Small Business Administration
Pass	$	63,695	$	17,034	$	729	$	1,529	$	627	$	1,693	$	—	$	—	$	85,307
Watch		—		—		57		2,578		2,065		824		—		—		5,524
Special Mention		—		—		—		—		—		48		—		—		48
Substandard		—		—		—		—		952		5		—		—		957
Total Small Business Administration	$	63,695	$	17,034	$	786	$	4,107	$	3,644	$	2,570	$	—	$	—	$	91,836
Other
Pass	$	—	$	—	$	—	$	—	$	—	$	51	$	96	$	—	$	147
Total Other	$	—	$	—	$	—	$	—	$	—	$	51	$	96	$	—	$	147
Total Loans
Total Pass	$	930,645	$	635,733	$	821,698	$	907,825	$	659,328	$	1,967,521	$	250,068	$	15,798	$	6,188,616
Total Watch		7,212		29,314		87,982		68,450		56,083		131,371		11,199		562		392,173
Total Special Mention		18		2,351		591		4,076		40		5,123		13,534		224		25,957
Total Substandard		—		4,897		31		5,673		6,814		11,056		1,041		766		30,278
Total Doubtful		—		—		—		—		—		—		1,081		—		1,081
Total Loans	$	937,875	$	672,295	$	910,302	$	986,024	$	722,265	$	2,115,071	$	276,923	$	17,350	$	6,638,105

The following table presents types of collateral-dependent loans by class of loan:



	Collateral Type
	December 31, 2021				December 31, 2020
(In thousands)		Real Estate		Business Assets		Real Estate		Business Assets
Multi-family residential	$	2,652	$	—	$	2,576	$	—
Commercial real estate		1,158		—		2,994		—
One-to-four family - mixed-use property		1,582		—		1,706		—
One-to-four family - residential		7,482		—		5,313		—
Small Business Administration		—		952		—		1,168
Commercial business and other		—		1,427		—		3,482
Taxi Medallion		—		—		—		2,758
Total	$	12,874	$	2,379	$	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 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, 2021 and 2020, allowance for off-balance-sheet credit losses was $1.2 million and $1.8 million, respectively, which is included the “Other liabilities” on the Consolidated Statements of Financial Condition. During the year ended December 31, 2021, and 2020 the Company has ($0.6) million and $1.3 million, respectively, in credit loss (benefit) expense for off-balance-sheet items, which is included in the “Other operating expenses” on the Consolidated Statements of Income.

The following table presents the activity in the allowance for off balance sheet credit losses:


	For the year ended December 31,
(In thousands)		2021		2020
Balance at beginning of period	$	1,815		—
Off-Balance Sheet - CECL Adoption		—		553
Off-Balance Sheet- Provision (benefit)		(606)		1,262
Allowance for Off-Balance Sheet - Credit losses (1)	$	1,209	$	1,815

(1)

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