Note 4 - Loans

9 Months Ended

Sep. 30, 2015

Receivables [Abstract]

Loans, Notes, Trade and Other Receivables Disclosure [Text Block]

4 – LOANS

The following tables set forth by class of loans as of September 30, 2015 and December 31, 2014 the amount of loans individually and collectively evaluated for impairment and the portion of the allowance for loan losses allocable to such loans. Construction and land development loans are included with commercial mortgages in the following tables and small business credit scored loans are included with commercial and industrial loans.

	September 30, 2015
	Loans						Allowance for Loan Losses
	Individually Evaluated for Impairment		Collectively Evaluated for Impairment		Ending Balance		Individually Evaluated for Impairment		Collectively Evaluated for Impairment		Ending Balance
	(in thousands)
Commercial and industrial	$	71	$	85,269	$	85,340	$	57	$	848	$	905
Commercial mortgages:
Multifamily		1,883		554,235		556,118		-		6,815		6,815
Other		-		296,452		296,452		-		2,863		2,863
Owner-occupied		602		101,199		101,801		-		949		949
Residential mortgages:
Closed end		3,716		968,807		972,523		389		12,538		12,927
Revolving home equity		572		84,234		84,806		-		968		968
Consumer and other		-		5,849		5,849		-		93		93
	$	6,844	$	2,096,045	$	2,102,889	$	446	$	25,074	$	25,520
	December 31, 2014
Commercial and industrial	$	16	$	77,124	$	77,140	$	-	$	838	$	838
Commercial mortgages:
Multifamily		303		528,790		529,093		-		7,207		7,207
Other		-		222,537		222,537		-		2,340		2,340
Owner-occupied		630		106,715		107,345		-		1,023		1,023
Residential mortgages:
Closed end		1,083		778,911		779,994		60		10,539		10,599
Revolving home equity		376		82,733		83,109		-		1,121		1,121
Consumer and other		-		5,601		5,601		-		93		93
	$	2,408	$	1,802,411	$	1,804,819	$	60	$	23,161	$	23,221

The following tables present the activity in the allowance for loan losses for the nine and three months ended September 30, 2015.

	Balance at 1/1/15		Chargeoffs		Recoveries		Provision for Loan Losses (Credit)			Balance at 9/30/15
	(in thousands)
Commercial and industrial	$	838	$	-	$	6	$	61		$	905
Commercial mortgages:
Multifamily		7,207		88		-		(304	)		6,815
Other		2,340		-		2		521			2,863
Owner-occupied		1,023		-		-		(74	)		949
Residential mortgages:
Closed end		10,599		-		9		2,319			12,927
Revolving home equity		1,121		-		5		(158	)		968
Consumer and other		93		37		-		37			93
	$	23,221	$	125	$	22	$	2,402		$	25,520

	Balance at 7/1/15		Chargeoffs		Recoveries		Provision for Loan Losses (Credit)			Balance at 9/30/15
Commercial and industrial	$	986	$	-	$	-	$	(81	)	$	905
Commercial mortgages:
Multifamily		7,030		21		-		(194	)		6,815
Other		2,263		-		1		599			2,863
Owner-occupied		1,007		-		-		(58	)		949
Residential mortgages:
Closed end		12,114		-		-		813			12,927
Revolving home equity		1,021		-		5		(58	)		968
Consumer and other		70		5		-		28			93
	$	24,491	$	26	$	6	$	1,049		$	25,520

The following tables present the activity in the allowance for loan losses for the nine and three months ended September 30, 2014.

	Balance at 1/1/14		Chargeoffs		Recoveries		Provision for Loan Losses (Credit)			Balance at 9/30/14
	(in thousands)
Commercial and industrial	$	808	$	96	$	-	$	125		$	837
Commercial mortgages:
Multifamily		7,348		-		-		(405	)		6,943
Other		1,501		-		-		572			2,073
Owner-occupied		1,191		400		-		223			1,014
Residential mortgages:
Closed end		8,607		121		2		1,552			10,040
Revolving home equity		1,240		173		3		117			1,187
Consumer and other		153		7		9		(40	)		115
	$	20,848	$	797	$	14	$	2,144		$	22,209

	Balance at 7/1/14		Chargeoffs		Recoveries		Provision for Loan Losses (Credit)			Balance at 9/30/14
Commercial and industrial	$	761	$	96	$	-	$	172		$	837
Commercial mortgages:
Multifamily		6,920		-		-		23			6,943
Other		1,802		-		-		271			2,073
Owner-occupied		1,148		-		-		(134	)		1,014
Residential mortgages:
Closed end		9,180		-		-		860			10,040
Revolving home equity		1,207		59		3		36			1,187
Consumer and other		122		-		-		(7	)		115
	$	21,140	$	155	$	3	$	1,221		$	22,209

For individually impaired loans, the following tables set forth by class of loans at September 30, 2015 and December 31, 2014 the recorded investment, unpaid principal balance and related allowance. The tables also set forth the average recorded investment of individually impaired loans and interest income recognized while the loans were impaired during the nine and three months ended September 30, 2015 and 2014. The recorded investment is the unpaid principal balance of the loans less any interest payments applied to principal and any direct chargeoffs plus or minus net deferred loan costs and fees. Any principal and interest payments received on nonaccrual impaired loans are applied to the recorded investment in the loans. The Bank recognizes interest income on other impaired loans using the accrual method of accounting.

							Nine Months Ended				Three Months Ended
	September 30, 2015						September 30, 2015				September 30, 2015
			Unpaid				Average		Interest		Average		Interest
	Recorded		Principal		Related		Recorded		Income		Recorded		Income
	Investment		Balance		Allowance		Investment		Recognized		Investment		Recognized
	(in thousands)
With no related allowance recorded:
Commercial mortgages:
Multifamily	$	1,883	$	1,885	$	-	$	1,889	$	-	$	1,883	$	-
Owner-occupied		602		658		-		617		-		606		-
Residential mortgages:
Closed end		348		442		-		365		-		351		-
Revolving home equity		572		571		-		574		4		572		4
With an allowance recorded:
Commercial and industrial		71		71		57		81		1		74		1
Residential mortgages - closed end		3,368		3,373		389		3,424		63		3,373		42
Total:
Commercial and industrial		71		71		57		81		1		74		1
Commercial mortgages:
Multifamily		1,883		1,885		-		1,889		-		1,883		-
Owner-occupied		602		658		-		617		-		606		-
Residential mortgages:
Closed end		3,716		3,815		389		3,789		63		3,724		42
Revolving home equity		572		571		-		574		4		572		4
	$	6,844	$	7,000	$	446	$	6,950	$	68	$	6,859	$	47

							Nine Months Ended				Three Months Ended
	December 31, 2014						September 30, 2014				September 30, 2014
With no related allowance recorded:
Commercial and industrial	$	16	$	16	$	-	$	27	$	1	$	23	$	-
Commercial mortgages:
Multifamily		303		368		-		-		-		-		-
Other		-		-		-		38		2		38		1
Owner-occupied		630		663		-		399		-		394		-
Residential mortgages:
Closed end		216		270		-		890		-		883		-
Revolving home equity		376		372		-		280		-		280		-
With an allowance recorded:
Commercial mortgages:
Multifamily		-		-		-		327		-		310		-
Owner-occupied		-		-		-		244		-		241		-
Residential mortgages - closed end		867		893		60		898		18		884		7
Total:
Commercial and industrial		16		16		-		27		1		23		-
Commercial mortgages:
Multifamily		303		368		-		327		-		310		-
Other		-		-		-		38		2		38		1
Owner-occupied		630		663		-		643		-		635		-
Residential mortgages:
Closed end		1,083		1,163		60		1,788		18		1,767		7
Revolving home equity		376		372		-		280		-		280		-
	$	2,408	$	2,582	$	60	$	3,103	$	21	$	3,053	$	8

Aging of Loans. The following tables present the aging of the recorded investment in loans by class of loans.

	September 30, 2015
					Past Due				Total Past
					90 Days or				Due Loans &
	30-59 Days		60-89 Days		More and		Nonaccrual		Nonaccrual				Total
	Past Due		Past Due		Still Accruing		Loans		Loans		Current		Loans
	(in thousands)
Commercial and industrial	$	6	$	-	$	-	$	65	$	71	$	85,269	$	85,340
Commercial mortgages:
Multifamily		-		-		-		1,883		1,883		554,235		556,118
Other		-		-		-		-		-		296,452		296,452
Owner-occupied		-		-		-		602		602		101,199		101,801
Residential mortgages:
Closed end		996		152		-		348		1,496		971,027		972,523
Revolving home equity		-		-		-		328		328		84,478		84,806
Consumer and other		-		-		-		-		-		5,849		5,849
	$	1,002	$	152	$	-	$	3,226	$	4,380	$	2,098,509	$	2,102,889
	December 31, 2014
Commercial and industrial	$	-	$	-	$	-	$	-	$	-	$	77,140	$	77,140
Commercial mortgages:
Multifamily		954		-		-		303		1,257		527,836		529,093
Other		-		-		-		-		-		222,537		222,537
Owner-occupied		-		-		-		630		630		106,715		107,345
Residential mortgages:
Closed end		1,059		-		-		395		1,454		778,540		779,994
Revolving home equity		74		99		-		376		549		82,560		83,109
Consumer and other		-		-		-		-		-		5,601		5,601
	$	2,087	$	99	$	-	$	1,704	$	3,890	$	1,800,929	$	1,804,819

Nonaccrual loans at September 30, 2015 include a first lien residential mortgage in the amount of $32,000 that is in the process of foreclosure. There were no loans in the process of foreclosure at December 31, 2014. The Bank did not hold any foreclosed residential real estate property at September 30, 2015 or December 31, 2014.

Troubled Debt Restructurings. A restructuring constitutes a troubled debt restructuring when it includes a concession by the Bank and the borrower is experiencing financial difficulty. In order to determine whether a borrower is experiencing financial difficulty, an evaluation is performed as to the probability that the borrower will be in payment default on any of its debt in the foreseeable future without the modification. The Bank performs the evaluation under its internal underwriting policy.

During the nine months ended September 30, 2015, the Bank modified two loans to a single borrower in a troubled debt restructuring. The loans were a first lien residential mortgage with a pre and post-modification outstanding recorded investment of $2.7 million and a junior lien residential mortgage with a pre and post-modification outstanding recorded investment of $245,000. The restructuring reduced the interest rate on each loan from 5.25% to 4.00%, which is lower than the current market rate for new debt with similar risk. The restructuring resulted in a charge to the provision for loan losses of $332,000 during the second quarter of 2015.

During the nine months ended September 30, 2014, the Bank did not modify any loans in troubled debt restructurings.

At September 30, 2015 and December 31, 2014, the Bank had an allowance for loan losses of $392,000 and $60,000, respectively, allocated to specific troubled debt restructurings. The Bank had no commitments to lend additional amounts to loans that were classified as troubled debt restructurings.

There were no troubled debt restructurings for which there was a payment default during the nine months ended September 30, 2015 that were modified during the twelve-month period prior to default. There were two troubled debt restructurings for which there were payment defaults during the nine months ended September 30, 2014 that were modified during the twelve-month period prior to default. The restructured loans were owner-occupied commercial mortgage loans with an aggregate outstanding recorded investment of $636,000 at September 30, 2014 and a specifically allocated allowance for loan losses of $40,000. A loan is considered to be in payment default once it is 90 days contractually past due under the modified terms.

Risk Characteristics. Credit risk within the Bank’s loan portfolio primarily stems from factors such as borrower size, geographic concentration, industry concentration, real estate values, local and national economic conditions and environmental impairment of properties securing mortgage loans. The Bank’s commercial loans, including those secured by mortgages, are primarily made to small and medium-sized businesses. Such loans sometimes involve a higher degree of risk than those to larger companies because such businesses may have shorter operating histories, higher debt-to-equity ratios and may lack sophistication in internal record keeping and financial and operational controls. In addition, most of the Bank’s loans are made to businesses and consumers on Long Island and in the boroughs of New York City, and a large percentage of these loans are mortgage loans secured by properties located in those areas. The primary source of repayment for multifamily loans is cash flows from the underlying properties, a substantial portion of which are rent stabilized or rent controlled. Such cash flows are dependent on the strength of the local economy.

Credit Quality Indicators. The Corporation categorizes loans into risk categories based on relevant information about the borrower’s ability to service their debt including, but not limited to, current financial information for the borrower and any guarantors, payment experience, credit underwriting documentation, public records and current economic trends.

Commercial and industrial loans, including small business credit scored loans, and commercial mortgage loans, including construction and land development loans, are risk rated utilizing a ten point rating system. Residential mortgages, home equity lines and other consumer loans are risk rated utilizing a three point rating system. The ten and three point risk rating systems are described hereinafter.

Internally Assigned  Risk Rating
1 – 2	Cash flow is of high quality and stable. Borrower has very good liquidity and ready access to traditional sources of credit. This category also includes loans to borrowers secured by cash and/or marketable securities within approved margin requirements.
3 – 4	Cash flow quality is strong, but shows some variability. Borrower has good liquidity and asset quality. Borrower has access to traditional sources of credit with minimal restrictions.
5 – 6	Cash flow quality is acceptable but shows some variability. Liquidity varies with operating cycle and assets provide an adequate margin of protection. Borrower has access to traditional sources of credit, but generally on a secured basis.
7	Watch - Cash flow has a high degree of variability and subject to economic downturns. Liquidity is strained and the ability of the borrower to access traditional sources of credit is diminished.
8	Special Mention - The borrower has potential weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or in the Bank’s credit position at some future date. Special mention assets are not adversely classified and do not expose the Bank to risk sufficient to warrant adverse classification.
9	Substandard - Loans are inadequately protected by the current sound worth and paying capacity of the borrower or 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.
10	Doubtful - Loans have all the inherent weaknesses of those classified 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.

Risk ratings on commercial and industrial loans and commercial mortgages are initially assigned by the lending officer together with any necessary approval authority. The ratings are periodically reviewed and evaluated based upon borrower contact, credit department review or independent loan review.

The Bank's loan risk rating and review policy establishes requirements for the annual review of commercial real estate and commercial and industrial loans. The requirements include details of the scope of coverage and selection process based on loan-type and risk rating. Among other requirements, at least 60% of the recorded investment of commercial real estate loans as of December 31 of the prior year must be reviewed annually. The frequency of the review of other loans is determined by the Bank’s ongoing assessments of the borrower’s condition.

Residential mortgage loans, revolving home equity lines and other consumer loans are risk rated utilizing a three point rating system. In most cases, the borrower’s credit score dictates the risk rating. However, regardless of credit score, loans that are on management’s watch list or have been criticized or classified by management are assigned a risk rating of 3. A credit score is a tool used in the Bank’s loan approval process, and a minimum score of 680 is generally required for new loans. Credit scores for each borrower are updated at least annually. The risk ratings along with their definitions are as follows:

Internally Assigned Risk Rating
1	Credit score is equal to or greater than 680.
2	Credit score is 635 to 679.
3	Credit score is below 635 or, regardless of credit score, the loan has been classified, criticized or placed on watch.

The following tables present the recorded investment in commercial and industrial loans and commercial real estate loans by class of loans and risk rating. Loans shown as Pass are all loans other than those risk rated Watch, Special Mention, Substandard or Doubtful.

	September 30, 2015
	Internally Assigned Risk Rating
					Special
	Pass		Watch		Mention		Substandard		Doubtful		Total
	(in thousands)
Commercial and industrial	$	83,963	$	1,106	$	200	$	71	$	-	$	85,340
Commercial mortgages:
Multifamily		549,353		-		4,882		1,883		-		556,118
Other		293,949		900		-		1,603		-		296,452
Owner-occupied		97,295		3,904		-		602		-		101,801
	$	1,024,560	$	5,910	$	5,082	$	4,159	$	-	$	1,039,711
	December 31, 2014
Commercial and industrial	$	76,884	$	65	$	-	$	191	$	-	$	77,140
Commercial mortgages:
Multifamily		519,274		7,610		1,906		303		-		529,093
Other		219,997		900		-		1,640		-		222,537
Owner-occupied		106,443		-		-		902		-		107,345
	$	922,598	$	8,575	$	1,906	$	3,036	$	-	$	936,115

The following tables present the recorded investment in residential mortgages, home equity lines, and other consumer loans by class of loans and risk rating. Loans shown as Pass are all loans other than those risk rated Watch, Special Mention, Substandard or Doubtful.

	September 30, 2015
	Internally Assigned Risk Rating
					Special
	Pass		Watch		Mention		Substandard		Doubtful		Total
	(in thousands)
Residential mortgages:
Closed end	$	967,773	$	1,034	$	-	$	3,716	$	-	$	972,523
Revolving home equity		84,135		-		99		572		-		84,806
Consumer and other		5,643		-		-		-		-		5,643
	$	1,057,551	$	1,034	$	99	$	4,288	$	-	$	1,062,972
	December 31, 2014
Residential mortgages:
Closed end	$	777,846	$	1,066	$	-	$	1,082	$	-	$	779,994
Revolving home equity		82,730		99		-		280		-		83,109
Consumer and other		5,122		-		-		-		-		5,122
	$	865,698	$	1,165	$	-	$	1,362	$	-	$	868,225

Deposit account overdrafts were $206,000 and $479,000 at September 30, 2015 and December 31, 2014, respectively. Overdrafts are not assigned a risk-rating and are therefore excluded from consumer loans in the tables above.