Loans and Allowance for Loan Losses

3 Months Ended

Mar. 31, 2020

Loans and Allowance for Loan Losses [Abstract]

Loans and Allowance for Loan Losses

(5) Loans and Allowance for Loan Losses

	March 31, 2020
(dollars in thousands)	New York and other states*		Florida		Total
Commercial:
Commercial real estate	$	158,630		17,579		176,209
Other		19,221		375		19,596
Real estate mortgage - 1 to 4 family:
First mortgages		2,558,048		982,078		3,540,126
Home equity loans		68,628		18,367		86,995
Home equity lines of credit		217,101		48,652		265,753
Installment		8,386		2,327		10,713
Total loans, net	$	3,030,014		1,069,378		4,099,392
Less: Allowance for loan losses						46,155
Net loans					$	4,053,237

	December 31, 2019
(dollars in thousands)	New York and other states*		Florida		Total
Commercial:
Commercial real estate	$	162,186		17,752		179,938
Other		19,326		235		19,561
Real estate mortgage - 1 to 4 family:
First mortgages		2,541,440		953,995		3,495,435
Home equity loans		69,791		18,548		88,339
Home equity lines of credit		221,487		46,435		267,922
Installment		8,706		2,295		11,001
Total loans, net	$	3,022,936		1,039,260		4,062,196
Less: Allowance for loan losses						44,317
Net loans					$	4,017,879

* Includes New York, New Jersey, Vermont and Massachusetts.

At March 31, 2020 and December 31, 2019, the Company had approximately $27.6 million and $28.5 million of real estate construction loans, respectively.  Of the $27.6 million in real estate construction loans at March 31, 2020, approximately $9.5 million are secured by first mortgages to residential borrowers while approximately $18.1 million were to commercial borrowers for residential construction projects.  Of the $28.5 million in real estate construction loans at December 31, 2019, approximately $10.7 million are secured by first mortgages to residential borrowers while approximately $17.8 million were to commercial borrowers for residential construction projects.  The vast majority of construction loans are in the Company’s New York market.

The Company lends in the geographic territory of its branch locations in New York, Florida, Massachusetts, New Jersey and Vermont. Although the loan portfolio is diversified, a portion of its debtors’ ability to repay depends significantly on the economic conditions prevailing in the respective geographic territory.

The following tables present the recorded investment in non-accrual loans by loan class:

	March 31, 2020
(dollars in thousands)	New York and other states*		Florida		Total
Loans in non-accrual status:
Commercial:
Commercial real estate	$	517		-		517
Other		113		-		113
Real estate mortgage - 1 to 4 family:
First mortgages		15,741		1,258		16,999
Home equity loans		139		48		187
Home equity lines of credit		2,690		186		2,876
Installment		24		-		24
Total non-accrual loans		19,224		1,492		20,716
Restructured real estate mortgages - 1 to 4 family		27		-		27
Total nonperforming loans	$	19,251		1,492		20,743

	December 31, 2019
(dollars in thousands)	New York and other states*		Florida		Total
Loans in non-accrual status:
Commercial:
Commercial real estate	$	733		-		733
Other		83		-		83
Real estate mortgage - 1 to 4 family:
First mortgages		15,385		1,468		16,853
Home equity loans		218		48		266
Home equity lines of credit		2,804		98		2,902
Installment		3		-		3
Total non-accrual loans		19,226		1,614		20,840
Restructured real estate mortgages - 1 to 4 family		29		-		29
Total nonperforming loans	$	19,255		1,614		20,869

* Includes New York, New Jersey, Vermont and Massachusetts.

The Company transfers loans to other real estate owned, at fair value less cost to sell, in the period the Company obtains physical possession of the property (through legal title or through a deed in lieu).  As of March 31, 2020 and December 31, 2019, other real estate owned included $877  thousand and $1.2 million of residential foreclosed properties, respectively.  In addition, non-accrual residential mortgage loans that are in the process of foreclosure had a recorded investment of $9.2 million and $8.7 million, respectively, as of March 31, 2020 and December 31, 2019.

The following tables present the aging of the recorded investment in past due loans by loan class and by region as of March 31, 2020 and December 31, 2019:

	March 31, 2020
New York and other states*:
(dollars in thousands)	30-59 Days Past Due		60-89 Days Past Due		90 + Days Past Due		Total 30+ days Past Due		Current		Total Loans
Commercial:
Commercial real estate	$	211		-		332		543		158,087		158,630
Other		-		-		113		113		19,108		19,221
Real estate mortgage - 1 to 4 family:
First mortgages		3,410		2,129		11,114		16,653		2,541,395		2,558,048
Home equity loans		205		122		80		407		68,221		68,628
Home equity lines of credit		729		85		871		1,685		215,416		217,101
Installment		17		9		24		50		8,336		8,386
Total	$	4,572		2,345		12,534		19,451		3,010,563		3,030,014

Florida:
(dollars in thousands)	30-59 Days Past Due		60-89 Days Past Due		90 + Days Past Due		Total 30+ days Past Due		Current		Total Loans
Commercial:
Commercial real estate	$	-		-		-		-		17,579		17,579
Other		-		-		-		-		375		375
Real estate mortgage - 1 to 4 family:
First mortgages		629		385		500		1,514		980,564		982,078
Home equity loans		62		-		-		62		18,305		18,367
Home equity lines of credit		99		-		140		239		48,413		48,652
Installment		16		-		-		16		2,311		2,327
Total	$	806		385		640		1,831		1,067,547		1,069,378

Total:
(dollars in thousands)	30-59 Days Past Due		60-89 Days Past Due		90 + Days Past Due		Total 30+ days Past Due		Current		Total Loans
Commercial:
Commercial real estate	$	211		-		332		543		175,666		176,209
Other		-		-		113		113		19,483		19,596
Real estate mortgage - 1 to 4 family:
First mortgages		4,039		2,514		11,614		18,167		3,521,959		3,540,126
Home equity loans		267		122		80		469		86,526		86,995
Home equity lines of credit		828		85		1,011		1,924		263,829		265,753
Installment		33		9		24		66		10,647		10,713
Total	$	5,378		2,730		13,174		21,282		4,078,110		4,099,392

* Includes New York, New Jersey, Vermont and Massachusetts.

	December 31, 2019
New York and other states*:
(dollars in thousands)	30-59 Days Past Due		60-89 Days Past Due		90 + Days Past Due		Total 30+ days Past Due		Current		Total Loans
Commercial:
Commercial real estate	$	141		-		617		758		161,428		162,186
Other		80		-		33		113		19,213		19,326
Real estate mortgage - 1 to 4 family:
First mortgages		3,444		292		11,328		15,064		2,526,376		2,541,440
Home equity loans		183		7		133		323		69,468		69,791
Home equity lines of credit		232		149		1,141		1,522		219,965		221,487
Installment		37		8		3		48		8,658		8,706
Total	$	4,117		456		13,255		17,828		3,005,108		3,022,936

Florida:
(dollars in thousands)	30-59 Days Past Due		60-89 Days Past Due		90 + Days Past Due		Total 30+ days Past Due		Current		Total Loans
Commercial:
Commercial real estate	$	-		-		-		-		17,752		17,752
Other		-		-		-		-		235		235
Real estate mortgage - 1 to 4 family:
First mortgages		542		-		617		1,159		952,836		953,995
Home equity loans		63		-		-		63		18,485		18,548
Home equity lines of credit		80		-		50		130		46,305		46,435
Installment		-		-		-		-		2,295		2,295
Total	$	685		-		667		1,352		1,037,908		1,039,260

Total:
(dollars in thousands)	30-59 Days Past Due		60-89 Days Past Due		90 + Days Past Due		Total 30+ days Past Due		Current		Total Loans
Commercial:
Commercial real estate	$	141		-		617		758		179,180		179,938
Other		80		-		33		113		19,448		19,561
Real estate mortgage - 1 to 4 family:
First mortgages		3,986		292		11,945		16,223		3,479,212		3,495,435
Home equity loans		246		7		133		386		87,953		88,339
Home equity lines of credit		312		149		1,191		1,652		266,270		267,922
Installment		37		8		3		48		10,953		11,001
Total	$	4,802		456		13,922		19,180		4,043,016		4,062,196

* Includes New York, New Jersey, Vermont and Massachusetts.

At March 31, 2020 and December 31, 2019, there were no loans that were 90 days past due and still accruing interest.  As a result, non-accrual loans include all loans 90 days or more past due as well as certain loans less than 90 days past due that were placed on non-accrual status for reasons other than delinquent status.  There are no commitments to extend further credit on non-accrual or restructured loans.

Activity in the allowance for loan losses by portfolio segment is summarized as follows:

	For the three months ended March 31, 2020
(dollars in thousands)	Commercial			Real Estate Mortgage- 1 to 4 Family		Installment		Total
Balance at beginning of period	$	3,999			39,748		570		44,317
Loans charged off:
New York and other states*		3			191		7		201
Florida		-			-		19		19
Total loan chargeoffs		3			191		26		220
Recoveries of loans previously charged off:
New York and other states*		2			51		3		56
Florida		-			2		-		2
Total recoveries		2			53		3		58
Net loans charged off		1			138		23		162
Provision (credit) for loan losses		(38	)		2,033		5		2,000
Balance at end of period	$	3,960			41,643		552		46,155

	For the three months ended March 31, 2019
(dollars in thousands)	Commercial			Real Estate Mortgage- 1 to 4 Family		Installment		Total
Balance at beginning of period	$	4,048			39,772		946		44,766
Loans charged off:
New York and other states*		7			392		29		428
Florida		-			29		31		60
Total loan chargeoffs		7			421		60		488
Recoveries of loans previously charged off:
New York and other states*		3			74		6		83
Florida		-			10		-		10
Total recoveries		3			84		6		93
Net loans charged off		4			337		54		395
Provision (credit) for loan losses		(310	)		550		60		300
Balance at end of period	$	3,734			39,985		952		44,671

* Includes New York, New Jersey, Vermont and Massachusetts.

The Company has identified non-accrual commercial and commercial real estate loans, as well as all loans restructured under a troubled debt restructuring (“TDR”), as impaired loans.  A loan is considered impaired when it is probable that the borrower will be unable to repay the loan according to the original contractual terms of the loan agreement or the loan is restructured as a TDR.

The following tables present the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment method as of March 31, 2020 and December 31, 2019:

	March 31, 2020
(dollars in thousands)	Commercial Loans		1-to-4 Family Residential Real Estate		Installment Loans		Total
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	-		-		-		-
Collectively evaluated for impairment		3,960		41,643		552		46,155
Total ending allowance balance	$	3,960		41,643		552		46,155
Loans:
Individually evaluated for impairment	$	1,115		19,172		-		20,287
Collectively evaluated for impairment		194,690		3,873,702		10,713		4,079,105
Total ending loans balance	$	195,805		3,892,874		10,713		4,099,392

	December 31, 2019
(dollars in thousands)	Commercial Loans		1-to-4 Family Residential Real Estate		Installment Loans		Total
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	-		-		-		-
Collectively evaluated for impairment		3,999		39,748		570		44,317
Total ending allowance balance	$	3,999		39,748		570		44,317
Loans:
Individually evaluated for impairment	$	1,437		19,539		-		20,976
Collectively evaluated for impairment		198,062		3,832,157		11,001		4,041,220
Total ending loans balance	$	199,499		3,851,696		11,001		4,062,196

A loan for which the terms have been modified, and for which the borrower is experiencing financial difficulties, is considered a TDR and is classified as impaired.  TDR’s at March 31, 2020 and December 31, 2019 are measured at the present value of estimated future cash flows using the loan’s effective rate at inception or the fair value of the underlying collateral if the loan is considered collateral dependent.

The following tables present impaired loans by loan class as of March 31, 2020 and December 31, 2019:

	March 31, 2020
New York and other states*:
(dollars in thousands)	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment
Commercial:
Commercial real estate	$	866	$	1,006		-		1,245
Other		145		145		-		91
Real estate mortgage - 1 to 4 family:
First mortgages		13,872		14,249		-		14,095
Home equity loans		232		252		-		237
Home equity lines of credit		2,209		2,349		-		2,286
Total	$	17,324		18,001		-		17,954

Florida:
(dollars in thousands)	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment
Commercial:
Commercial real estate	$	104		104		-		106
Other		-		-		-		-
Real estate mortgage - 1 to 4 family:
First mortgages		2,615		2,615		-		2,405
Home equity loans		-		-		-		30
Home equity lines of credit		244		244		-		247
Total	$	2,963		2,963		-		2,788

Total:
(dollars in thousands)	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment
Commercial:
Commercial real estate	$	970		1,110		-		1,352
Other		145		145		-		91
Real estate mortgage - 1 to 4 family:
First mortgages		16,487		16,864		-		16,500
Home equity loans		232		252		-		267
Home equity lines of credit		2,453		2,593		-		2,533
Total	$	20,287		20,964		-		20,743

* Includes New York, New Jersey, Vermont and Massachusetts.

	December 31, 2019
New York and other states*:
(dollars in thousands)	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment
Commercial:
Commercial real estate	$	1,217		1,359		-		1,385
Other		115		115		-		38
Real estate mortgage - 1 to 4 family:
First mortgages		14,414		14,714		-		14,358
Home equity loans		235		255		-		241
Home equity lines of credit		2,160		2,300		-		2,274
Total	$	18,141		18,743		-		18,296

Florida:
(dollars in thousands)	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment
Commercial:
Commercial real estate	$	105		105		-		82
Other		-		-		-		26
Real estate mortgage - 1 to 4 family:
First mortgages		2,486		2,486		-		2,259
Home equity loans		-		-		-		51
Home equity lines of credit		244		244		-		249
Total	$	2,835		2,835		-		2,667

Total:
(dollars in thousands)	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment
Commercial:
Commercial real estate	$	1,322		1,464		-		1,467
Other		115		115		-		64
Real estate mortgage - 1 to 4 family:
First mortgages		16,900		17,200		-		16,617
Home equity loans		235		255		-		292
Home equity lines of credit		2,404		2,544		-		2,523
Total	$	20,976		21,578		-		20,963

* Includes New York, New Jersey, Vermont and Massachusetts.

The Company has not committed to lend additional amounts to customers with outstanding loans that are classified as impaired.  Interest income recognized on impaired loans was not material during the three months ended March 31, 2020 and 2019.

As of March 31, 2020 and December 31, 2019 impaired loans included approximately $10.7 million and $10.9 million of loans in accruing status that were identified as TDR’s in accordance with regulatory guidance related to Chapter 7 bankruptcy loans.

Management evaluates impairment on impaired loans on a quarterly basis. If, during this evaluation, impairment of the loan is identified, a chargeoff is taken at that time.  As a result, as of  March 31, 2020 and December 31, 2019, based upon management’s evaluation and due to the sufficiency of chargeoffs taken, none of the allowance for loan losses has been allocated to a specific impaired loan(s).

The following table presents, by class, loans that were modified as TDR’s:

	Three months ended 3/31/2020						Three months ended 3/31/2019
New York and other states*:	Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
(dollars in thousands)
Commercial:
Commercial real estate		-	$	-		-		-	$	-		-
Real estate mortgage - 1 to 4 family:
First mortgages		1	$	167		167		4	$	656		656
Home equity loans		-		-		-		-		-		-
Home equity lines of credit		1		70		70		-		-		-
Total		2	$	237	$	237		4	$	656	$	656

Florida: (dollars in thousands)	Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Commercial:
Commercial real estate		-	$	-		-		-	$	-		-
Real estate mortgage - 1 to 4 family:
First mortgages		1	$	147		147		-	$	-		-
Home equity loans		-		-		-		-		-		-
Home equity lines of credit		-		-		-		-		-		-
Total		1	$	147		147		-	$	-		-

* Includes New York, New Jersey, Vermont and Massachusetts.

The addition of these TDR’s did not have a significant impact on the allowance for loan losses.

In situations where the Bank considers a loan modification, management determines whether the borrower is experiencing financial difficulty by performing an evaluation of the probability that the borrower will be in payment default on any of its debt in the foreseeable future without the modification.  This evaluation is performed under the Company’s underwriting policy.

Generally, the modification of the terms of loans was the result of the borrower filing for bankruptcy protection. Chapter 13 bankruptcies generally include the deferral of all past due amounts for a period of generally 60 months in accordance with the bankruptcy court order. In the case of Chapter 7 bankruptcies, as previously noted, even though there is no modification of terms, the borrowers’ debt to the Company was discharged and they did not reaffirm the debt.

A loan is considered to be in payment default once it is 90 days contractually past due under the modified terms. In situations involving a borrower filing for Chapter 13 bankruptcy protection, however, a loan is considered to be in payment default once it is 30 days contractually past due, consistent with the treatment by the bankruptcy court.

There were no TDR’s that defaulted during the three months ended March 31, 2020 and 2019 which had been modified within the last twelve months:

The Company categorizes commercial 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. On at least an annual basis, the Company’s loan grading process analyzes non-homogeneous loans, such as commercial and commercial real estate loans, individually by grading the loans based on credit risk.  The loan grades assigned to all loan types are tested by the Company’s internal loan review department in accordance with the Company’s internal loan review policy.

The Company uses the following definitions for classified loans:

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 Company’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 classified as such have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected.

Doubtful: Loans classified as doubtful have all the weaknesses inherent in those loans classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. All doubtful loans are considered impaired.

Loans not meeting the criteria above that are analyzed individually as part of the above described process are considered to be “pass” rated loans.

As of  March 31, 2020 and December 31, 2019, and based on the most recent analysis performed, the risk category of loans by class of loans is as follows:

	March 31, 2020
New York and other states*:
(dollars in thousands)	Pass		Classified		Total
Commercial:
Commercial real estate	$	153,910		4,720		158,630
Other		18,721		500		19,221
	$	172,631		5,220		177,851

Florida:
(dollars in thousands)	Pass		Classified		Total
Commercial:
Commercial real estate	$	17,579		-		17,579
Other		375		-		375
	$	17,954		-		17,954

Total:
(dollars in thousands)	Pass		Classified		Total
Commercial:
Commercial real estate	$	171,489		4,720		176,209
Other		19,096		500		19,596
	$	190,585		5,220		195,805

* Includes New York, New Jersey and Massachusetts.

	December 31, 2019
New York and other states*:
(dollars in thousands)	Pass		Classified		Total
Commercial:
Commercial real estate	$	157,280		4,906		162,186
Other		18,384		942		19,326
	$	175,664		5,848		181,512

Florida:
(dollars in thousands)	Pass		Classified		Total
Commercial:
Commercial real estate	$	17,752		-		17,752
Other		235		-		235
	$	17,987		-		17,987

Total:
(dollars in thousands)	Pass		Classified		Total
Commercial:
Commercial real estate	$	175,032		4,906		179,938
Other		18,619		942		19,561
	$	193,651		5,848		199,499

* Includes New York, New Jersey and Massachusetts.

Included in classified loans in the above tables are impaired loans of $874 thousand and $816  thousand at March 31, 2020 and December 31, 2019, respectively.

For homogeneous loan pools, such as residential mortgages, home equity lines of credit, and installment loans, the Company uses payment status to identify the credit risk in these loan portfolios. Payment status is reviewed on a daily basis by the Bank’s collection area and on a monthly basis with respect to determining the adequacy of the allowance for loan losses. The payment status of these homogeneous pools as of  March 31, 2020 and December 31, 2019 is included in the aging of the recorded investment of the past due loans table. In addition, the total nonperforming portion of these homogeneous loan pools as of March 31, 2020 and December 31, 2019 is presented in the non-accrual loans table.

As more fully discussed in Note 12 – Risks and Uncertainties, the Company experienced requests for loan deferrals of principal and interest due to the business disruption caused by Coronavirus Disease 2019 (“COVID-19”), which are excluded from evaluation of TDR classification and will continue to be reported as current during the payment deferral period.