8.	LOANS RECEIVABLE AND CREDIT QUALITY

Loans are reported at the principal amount outstanding, net of unearned fees or costs and the allowance for loan losses. Interest income on loans is recorded using the level yield method. Under this method, discount accretion and premium amortization are included in interest income. Loan origination fees and certain direct loan origination costs are deferred and amortized as yield adjustments over the contractual loan terms.

Credit Quality Indicators:

On a quarterly basis, 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 documentation, public information, and current economic trends, among other factors. The Company analyzes loans individually by classifying them as to credit risk. This analysis includes all loans, such as multifamily residential, mixed use residential (i.e., loans in which the aggregate rental income of the underlying collateral property is generated from both residential and commercial units, but the majority of such income is generated from the residential units), mixed use commercial real estate (i.e., loans in which the aggregate rental income of the underlying collateral property is generated from both residential and commercial units, but the majority of such income is generated from the commercial units), and commercial real estate loans, as well as one-to four family residential and cooperative and condominium apartment loans. Prior to April 1, 2016, the analysis of one-to-four family residential and cooperative and condominium apartment loans included only loans with balances in excess of the Fannie Mae (“FNMA”) conforming loan limits for high-cost areas such as the Bank’s primary lending area (“FNMA Limits”) that were deemed to meet the definition of impaired. 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 Bank had no loans classified as doubtful as of June 30, 2016 or December 31, 2015. All real estate loans not classified as Special Mention or Substandard were deemed pass loans at both June 30, 2016 and December 31, 2015.

The following is a summary of the credit risk profile of real estate loans (including deferred costs) by internally assigned grade as of the dates indicated:

Balance at June 30, 2016
Grade	One- to Four- Family Residential, Including Condominium and Cooperative Apartment		Multifamily Residential and Residential Mixed Use		Commercial Mixed Use Real Estate		Commercial Real Estate		Total Real Estate Loans
Pass	$	72,366	$	4,205,375	$	385,432	$	510,971	$	5,174,144
Special Mention		935		5,068		2,146		1,230		9,379
Substandard		2,151		8,967		5,534		6,606		23,258
Doubtful		-		-		-		-		-
Total	$	75,452	$	4,219,410	$	393,112	$	518,807	$	5,206,781

Balance at December 31, 2015
Grade	One- to Four-Family Residential, Including Condominium and Cooperative Apartment		Multifamily Residential and Residential Mixed Use		Commercial Mixed Use Real Estate		Commercial Real Estate		Total Real Estate Loans
Not Graded(1)	$	7,698	$	-	$	-	$	-	$	7,698
Pass		61,256		3,743,298		370,110		473,242		4,647,906
Special Mention		945		9,759		1,622		4,857		17,183
Substandard		2,196		6,850		5,543		7,810		22,399
Doubtful		-		-		-		-		-
Total	$	72,095	$	3,759,907	$	377,275	$	485,909	$	4,695,186

⁽¹⁾ Amount comprised of fully performing one- to four-family residential and condominium and cooperative unit loans with balances equal to or less than the FNMA Limits.

For consumer loans, the Company evaluates credit quality based on payment activity. Consumer loans that are 90 days or more past due are placed on non-accrual status, while all remaining consumer loans are classified and evaluated as performing.

The following is a summary of the credit risk profile of consumer loans by internally assigned grade:

Grade	Balance at June 30, 2016		Balance at December 31, 2015
Performing	$	2,332	$	1,586
Non-accrual		4		4
Total	$	2,336	$	1,590

The following is a breakdown of the past due status of the Company's investment in loans (excluding accrued interest and loans held for sale) as of the dates indicated:

At June 30, 2016
	30 to 59 Days Past Due		60 to 89 Days Past Due		Loans 90 Days or More Past Due and Still Accruing Interest		Non- accrual ⁽¹⁾		Total Past Due		Current		Total Loans
Real Estate:
One- to four-family residential, including condominium and cooperative apartment	$	-	$	154	$	-	$	487	$	641	$	74,811	$	75,452
Multifamily residential and residential mixed use		85		-		4,344		3,784		8,213		4,211,197		4,219,410
Commercial mixed use real estate		116		-		190		54		360		392,752		393,112
Commercial real estate		180		-		-		-		180		518,627		518,807
Total real estate	$	381	$	154	$	4,534	$	4,325	$	9,394	$	5,197,387	$	5,206,781
Consumer	$	-	$	-	$	-	$	4	$	-	$	2,332	$	2,336

⁽¹⁾Includes all loans on non-accrual status regardless of the number of days such loans were delinquent as of June 30, 2016.

At December 31, 2015
	30 to 59 Days Past Due		60 to 89 Days Past Due		Loans 90 Days or More Past Due and Still Accruing Interest		Non- accrual ⁽¹⁾		Total Past Due		Current		Total Loans
Real Estate:
One- to four-family residential, including condominium and cooperative apartment	$	127	$	-	$	625	$	1,113	$	1,865	$	70,230	$	72,095
Multifamily residential and residential mixed use		2,235		-		2,514		287		5,036		3,754,871		3,759,907
Commercial mixed use real estate		-		406		406		-		812		376,463		377,275
Commercial real estate		200		-		987		207		1,394		484,515		485,909
Total real estate	$	2,562	$	406	$	4,532	$	1,607	$	9,107	$	4,686,079	$	4,695,186
Consumer	$	1	$	1	$	-	$	4	$	6	$	1,584	$	1,590

⁽¹⁾Includes all loans on non-accrual status regardless of the number of days such loans were delinquent as of December 31, 2015.

Accruing Loans 90 Days or More Past Due

The Bank continued accruing interest on eight real estate loans with an aggregate outstanding balance of $4,534 at June 30, 2016, and twelve real estate loans with an aggregate outstanding balance of $4,532 at December 31, 2015, all of which were 90 days or more past due on their respective contractual maturity dates. These loans continued to make monthly payments consistent with their initial contractual amortization schedule exclusive of the balloon payments due at maturity. These loans were well secured and were expected to be refinanced, and, therefore, remained on accrual status and were deemed performing assets at the dates indicated above.

Troubled Debt Restructurings ("TDRs")

The following table summarizes outstanding TDRs by underlying collateral type as of the dates indicated:

	As of June 30, 2016				As of December 31, 2015
	No. of Loans		Balance		No. of Loans		Balance
One- to four-family residential, including condominium and cooperative apartment		1	$	32		2	$	598
Multifamily residential and residential mixed use		4		1,057		3		696
Commercial mixed use real estate		1		4,304		1		4,344
Commercial real estate		1		3,396		2		3,635
Total real estate		7	$	8,789		8	$	9,273

The following table summarizes outstanding TDRs by accrual status as of the dates indicated:

	As of June 30, 2016				As of December 31, 2015
	No. of Loans		Balance		No. of Loans		Balance
Outstanding principal balance at period end		7	$	8,789		8	$	9,273
TDRs on accrual status at period end		7		8,789		7		9,066
TDRs on non-accrual status at period end		-		-		1		207

Accrual status for TDRs is determined separately for each TDR in accordance with the Bank’s policies for determining accrual or non-accrual status. At the time an agreement is entered into between the Bank and the borrower that results in the Bank's determination that a TDR has been created, the loan can be on either accrual or non-accrual status. If a loan is on non-accrual status at the time it is restructured, it continues to be classified as non-accrual until the borrower has demonstrated compliance with the modified loan terms for a period of at least six months. Conversely, if at the time of restructuring the loan is performing (and accruing), it will remain accruing throughout its restructured period, unless the loan subsequently meets any of the criteria for non-accrual status under the Bank’s policy and agency regulations.

The Company has not restructured troubled consumer loans, as its consumer loan portfolio has not experienced any problem issues warranting restructuring. Therefore, all TDRs were collateralized by real estate at both June 30, 2016 and December 31, 2015.

The Company modified one one- to four-family residential loan in a manner that met the criteria of a TDR during the three-month and six-month periods ended June 30, 2016. There were no loans modified in a manner that met the criteria of a TDR during the three-month period and six-month periods ended June 30, 2015.

The Bank's allowance for loan losses at June 30, 2016 and December 31, 2015 did not reflect any allocated reserve associated with TDRs.

As of June 30, 2016 and December 31, 2015, the Bank had no loan commitments to borrowers with outstanding TDRs.

A TDR is considered to be in payment default once it is 90 days contractually past due under the modified terms. All TDRs are considered impaired loans and are evaluated individually for measurable impairment, if any.

There were no TDRs which defaulted within twelve months following the modification during the three-month and six-month periods ended June 30, 2016 or 2015 (thus no impact to the allowance for loan losses during those periods).

Impaired Loans

A loan is considered impaired when, based on then current information and events, it is probable that all contractual amounts due will not be collected in accordance with the terms of the loan. Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays or shortfalls generally are not classified as impaired. Management determines the significance of payment delays and shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record, and the amount of the shortfall in relation to the principal and interest owed.

The Bank considers TDRs and non-accrual multifamily residential and commercial real estate loans, along with non-accrual one- to four-family loans in excess of the FNMA Limits, to be impaired. Non-accrual one-to four-family loans equal to or less than the FNMA Limits, as well as all consumer loans, are considered homogeneous loan pools and are not required to be evaluated individually for impairment unless considered a TDR.

Impairment is typically measured using the difference between the outstanding loan principal balance and either: 1) the likely realizable value of a note sale; 2) the fair value of the underlying collateral, net of likely disposal costs, if repayment is expected to come from liquidation of the collateral; or 3) the present value of estimated future cash flows (using the loan’s pre-modification rate for some of the performing TDRs). If a TDR is substantially performing in accordance with its restructured terms, management will look to either the potential net liquidation proceeds of the underlying collateral or the present value of the expected cash flows from the debt service in measuring impairment (whichever is deemed most appropriate under the circumstances). If a TDR has re-defaulted, generally the likely realizable net proceeds from either a note sale or the liquidation of the collateral is considered when measuring impairment. Measured impairment is either charged off immediately or, in limited instances, recognized as an allocated reserve within the allowance for loan losses.

Please refer to Note 9 for tabular information related to impaired loans.