The following table sets forth, at the dates indicated, the composition of the loan and lease portfolio held for investment, at their amortized cost, which includes the outstanding principal balance adjusted for any unamortized premiums, discounts, deferred fees and costs:


	December 31, 2022						December 31, 2021
(dollars in millions)	Amount			Percent of Loans Held for Investment			Amount			Percent of Loans Held for Investment
Loans and Leases Held for Investment:
Mortgage Loans:
Multi-family	$	38,130			55.3	%	$	34,628			75.7	%
Commercial real estate		8,526			12.4			6,701			14.7
One-to-four family first mortgage		5,821			8.4			160			0.3
Acquisition, development, and construction		1,996			2.8			209			0.5
Total mortgage loans held for investment (1)		54,473			78.9			41,698			91.2
Other Loans:
Commercial and industrial		10,597			15.4			2,238			3.2
Lease financing, net of unearned income of $85 and $95 respectively		1,679			2.4			1,796			3.9
Total commercial and industrial loans (2)		12,276			17.8			4,034			7.2
Other		2,252			3.3			6			0.0
Total other loans held for investment		14,528			21.1			4,040			7.2
Total loans and leases held for investment (1)	$	69,001			100.0	%	$	45,738			100.0	%
Allowance for credit losses on loans and leases		(393	)					(199	)
Total loans and leases held for investment, net	$	68,608					$	45,539
Loans held for sale, at fair value		1,115						—
Total loans and leases, net	$	69,723					$	45,539

(1)

Excludes accrued interest receivable of $292 million and $199 million at December 31, 2022 and December 31, 2021, respectively, which is included in other assets in the Consolidated Statements of Condition.

(2)

Includes specialty finance loans and leases of $4.4 billion and $3.5 billion, respectively, at December 31, 2022 and December 31, 2021.

The majority of the loans the Company originates for investment are multi-family loans, most of which are collateralized by non-luxury apartment buildings in New York City with rent-regulated units and below-market rents. In addition, the Company originates CRE loans, most of which are collateralized by income-producing properties such as office buildings, retail centers, mixed-use buildings, and multi-tenanted light industrial properties that are located in New York City and on Long Island.

To a lesser extent, the Company also originates ADC loans for investment. One-to-four family loans held for investment were originated through the Company’s former mortgage banking operation and primarily consisted of jumbo prime adjustable rate mortgages made to borrowers with a solid credit history.

ADC loans are primarily originated for multi-family and residential tract projects in New York City and on Long Island. C&I loans consist of asset-based loans, equipment loans and leases, and dealer floor-plan loans (together, specialty finance loans and leases) that generally are made to large corporate obligors, many of which are publicly traded, carry investment grade or near-investment grade ratings, and participate in stable industries nationwide; and other C&I loans that primarily are made to small and mid-size businesses in Metro New York. Other C&I loans are typically made for working capital, business expansion, and the purchase of machinery and equipment.

The repayment of multi-family and CRE loans generally depends on the income produced by the underlying properties which, in turn, depends on their successful operation and management. To mitigate the potential for credit losses, the Company underwrites its loans in accordance with credit standards it considers to be prudent, looking first at the consistency of the cash flows being produced by the underlying property. In addition, multi-family buildings, CRE properties, and ADC projects are inspected as a prerequisite to approval, and independent appraisers, whose appraisals are carefully reviewed by the Company’s in-house appraisers, perform appraisals on the collateral properties. In many cases, a second independent appraisal review is performed.

To further manage its credit risk, the Company’s lending policies limit the amount of credit granted to any one borrower and typically require conservative debt service coverage ratios and loan-to-value ratios. Nonetheless, the ability of the Company’s borrowers to repay these loans may be impacted by adverse conditions in the local real estate market, the local economy and changes in applicable laws and regulations. Accordingly, there can be no assurance that its underwriting policies will protect the Company from credit-related losses or delinquencies.

ADC loans typically involve a higher degree of credit risk than loans secured by improved or owner-occupied real estate. Accordingly, borrowers are required to provide a guarantee of repayment and completion, and loan proceeds are disbursed as construction progresses, as certified by in-house inspectors or third-party engineers. The Company seeks to minimize the credit risk on ADC loans by maintaining conservative lending policies and rigorous underwriting standards. However, if the estimate of value proves to be inaccurate, the cost of completion is greater than expected, or the length of time to complete and/or sell or lease the collateral property is greater than anticipated, the property could have a value upon completion that is insufficient to assure full repayment of the loan. This could have a material adverse effect on the quality of the ADC loan portfolio, and could result in losses or delinquencies. In addition, the Company utilizes the same stringent appraisal process for ADC loans as it does for its multi-family and CRE loans.

To minimize the risk involved in specialty finance lending and leasing, the Company participates in syndicated loans that are brought to it, and equipment loans and leases that are assigned to it, by a select group of nationally recognized sources who have had long-term relationships with its experienced lending officers. Each of these credits is secured with a perfected first security interest or outright ownership in the underlying collateral, and structured as senior debt or as a non-cancelable lease. To further minimize the risk involved in specialty finance lending and leasing, each transaction is re-underwritten. In addition, outside counsel is retained to conduct a further review of the underlying documentation.

To minimize the risks involved in other C&I lending, the Company underwrites such loans on the basis of the cash flows produced by the business; requires that such loans be collateralized by various business assets, including inventory, equipment, and accounts receivable, among others; and typically requires personal guarantees. However, the capacity of a borrower to repay such a C&I loan is substantially dependent on the degree to which the business is successful. In addition, the collateral underlying such loans may depreciate over time, may not be conducive to appraisal, or may fluctuate in value, based upon the results of operations of the business.

At December 31, 2022, one-to-four family loans represented $5.8 billion and as of December 31, 2021 one-to-four family loans totaled $160 million, with the increase being driven by the Flagstar acquisition. These loans include various types of conforming and non-conforming fixed and adjustable rate loans underwritten using Fannie Mae and Freddie Mac guidelines for the purpose of purchasing or refinancing owner occupied and second home properties.

At December 31, 2022, other loans totaled $2.3 billion and consisted primarily of home equity lines of credit, boat and recreational vehicle indirect lending, point of sale consumer loans and other consumer loans, including overdraft loans acquired in the Flagstar acquisition.

Included in loans held for investment at December 31, 2022 and December 31, 2021, were loans of $101 million and $6 million, respectively, to officers, directors, and their related interests and parties. There were no loans to principal shareholders at that date.

Substantially all LGG are insured or guaranteed by the FHA or the U.S. Department of Veterans Affairs. Nonperforming repurchased loans in this portfolio earn interest at a rate based upon the 10-year U.S. Treasury note rate from the time the underlying loan becomes 60 days delinquent until the loan is conveyed to HUD (if foreclosure timelines are met), which is not paid by the FHA until claimed. The Bank has a unilateral option to repurchase loans sold to GNMA if the loan is due, but unpaid, for three consecutive months (typically referred to as 90 days past due) and can recover losses through a claims process from the guarantor. These loans are recorded in loans held for investment and the liability to repurchase the loans is recorded in other liabilities on the Consolidated Statements of Condition. Certain loans within our portfolio may be subject to indemnifications and insurance limits which expose us to limited credit risk. As of December 31, 2022, LGG loans totaled $1.2 billion and the repurchase liability was $0.3 billion.

Repossessed assets and the associated net claims related to government guaranteed loans are recorded in other assets and was $14 million at December 31, 2022.

At December 31, 2022, loans held for sale were $1.1 billion compared to zero at December 31, 2021, with the increase driven by the Flagstar acquisition. The Company classifies loans as held for sale when we originate or purchase loans that we intend to sell. The Company has elected the fair value option for nearly all of this portfolio. The Company estimates the fair value of mortgage loans based on quoted market prices for securities backed by similar types of loans, where available, or by discounting estimated cash flows using observable inputs inclusive of interest rates, prepayment speeds and loss assumptions for similar collateral. The majority of our mortgage loans originated as LHFS are ultimately sold into the secondary market on a whole loan basis or by securitizing the loans into agency, government, or private label MBS.

All asset quality information excludes LGG that are insured by U.S government agencies.

A loan generally is classified as a non-accrual loan when it is 90 days or more past due or when it is deemed to be impaired because the Company no longer expects to collect all amounts due according to the contractual terms of the loan agreement. When a loan is placed on non-accrual status, management ceases the accrual of interest owed, and previously accrued interest is charged against interest income. A loan is generally returned to accrual status when the loan is current and management has reasonable assurance that the loan will be fully collectible. Interest income on non-accrual loans is recorded when received in cash. At December 31, 2022 and December 31, 2021, all of our non-performing loans were non-accrual loans.

The following table presents information regarding the quality of the Company’s loans held for investment at December 31, 2022:


(in millions)	Loans 30-89 Days Past Due		Non- Accrual Loans		Loans 90 Days or More Delinquent and Still Accruing Interest		Total Past Due Loans		Current Loans		Total Loans Receivable
Multi-family	$	34	$	13	$	—	$	47	$	38,083	$	38,130
Commercial real estate		2		20		—		22		8,504		8,526
One-to-four family first mortgage		21		92		—		113		5,708		5,821
Acquisition, development, and construction		—		—		—		—		1,996		1,996
Commercial and industrial(1)		—		7		—		7		12,269		12,276
Other		13		9		—		22		2,230		2,252
Total	$	70	$	141	$	—	$	211	$	68,790	$	69,001

(1)

Includes lease financing receivables, all of which were current.

The following table presents information regarding the quality of the Company’s loans held for investment at December 31, 2021:


(in millions)	Loans 30-89 Days Past Due		Non- Accrual Loans		Loans 90 Days or More Delinquent and Still Accruing Interest		Total Past Due Loans		Current Loans		Total Loans Receivable
Multi-family	$	57	$	10	$	—	$	67	$	34,561	$	34,628
Commercial real estate		2		16		—		18		6,683		6,701
One-to-four family first mortgage		8		1		—		9		151		160
Acquisition, development, and construction		—		—		—		—		209		209
Commercial and industrial(1)		—		6		—		6		4,029		4,035
Other		—		—		—		—		5		5
Total	$	67	$	33	$	—	$	100	$	45,638	$	45,738

(1)

Includes lease financing receivables, all of which were current.

The following table summarizes the Company’s portfolio of loans held for investment by credit quality indicator at December 31, 2022:


	Mortgage Loans										Other Loans
(in millions)	Multi- Family		Commercial Real Estate		One-to- Four Family		Acquisition, Development, and Construction		Total Mortgage Loans		Commercial and Industrial(1)		Other		Total Other Loans
Credit Quality Indicator:
Pass	$	36,622	$	7,871	$	5,710	$	1,992	$	52,195	$	12,208	$	2,238	$	14,446
Special mention		864		230		8		4		1,106		18		—		18
Substandard		644		425		103		—		1,172		50		14		64
Doubtful		—		—		—		—		—		—		—		—
Total	$	38,130	$	8,526	$	5,821	$	1,996	$	54,473	$	12,276	$	2,252	$	14,528

(1)

Includes lease financing receivables, all of which were classified as Pass.

The following table summarizes the Company’s portfolio of loans held for investment by credit quality indicator at December 31, 2021:


	Mortgage Loans										Other Loans
(in millions)	Multi- Family		Commercial Real Estate		One-to- Four Family		Acquisition, Development, and Construction		Total Mortgage Loans		Commercial and Industrial(1)		Other		Total Other Loans
Credit Quality Indicator:
Pass	$	33,035	$	5,876	$	137	$	204	$	39,252	$	3,987	$	6	$	3,993
Special mention		982		644		14		5		1,645		2		—		2
Substandard		611		181		9		—		801		45		—		45
Doubtful		—		—		—		—		—		—		—		—
Total	$	34,628	$	6,701	$	160	$	209	$	41,698	$	4,034	$	6	$	4,040

(1)

Includes lease financing receivables, all of which were classified as Pass.

The preceding classifications are the most current ones available and generally have been updated within the last twelve months. In addition, they follow regulatory guidelines and can generally be described as follows: pass loans are of satisfactory quality; special mention loans have potential weaknesses that deserve management’s close attention; substandard loans are inadequately protected by the current net worth and paying capacity of the borrower or of the collateral pledged (these loans have a well-defined weakness and

there is a possibility that the Company will sustain some loss); and doubtful loans, based on existing circumstances, have weaknesses that make collection or liquidation in full highly questionable and improbable. In addition, one-to-four family loans are classified based on the duration of the delinquency.

The following table presents, by credit quality indicator, loan class, and year of origination, the amortized cost basis of the Company’s loans and leases as of December 31, 2022:


	Vintage Year
(in millions) Risk Rating Group	2022		2021		2020		2019		2018		Prior To 2018		Revolving Loans		Revolving Loans Converted to Term Loans		Total
Pass	$	12,817	$	10,925	$	9,121	$	5,519	$	4,301	$	8,055	$	1,452	$	5	$	52,195
Special Mention		—		15		103		244		293		451		—		—		1,106
Substandard		1		6		48		224		137		753		—		3		1,172
Total mortgage loans	$	12,818	$	10,946	$	9,272	$	5,987	$	4,731	$	9,259	$	1,452	$	8	$	54,473
Pass		5,415		964		637		727		180		266		6,209		46		14,444
Special Mention		12		—		—		7		—		—		—		—		19
Substandard		1		1		22		2		9		7		19		4		65
Total other loans		5,428		965		659		736		189		273		6,228		50		14,528
Total	$	18,246	$	11,911	$	9,931	$	6,723	$	4,920	$	9,532	$	7,680	$	58	$	69,001

When management determines that foreclosure is probable, for loans that are individually evaluated the expected credit losses are based on the fair value of the collateral adjusted for selling costs. When the borrower is experiencing financial difficulty at the reporting date and repayment is expected to be provided substantially through the operation or sale of the collateral, the collateral-dependent practical expedient has been elected and expected credit losses are based on the fair value of the collateral at the reporting date, adjusted for selling costs as appropriate. For CRE loans, collateral properties include office buildings, warehouse/distribution buildings, shopping centers, apartment buildings, residential and commercial tract development. The primary source of repayment on these loans is expected to come from the sale, permanent financing or lease of the real property collateral. CRE loans are impacted by fluctuations in collateral values, as well as the ability of the borrower to obtain permanent financing.

Other collateral type consists of taxi medallions, cash, accounts receivable and inventory.

There were no significant changes in the extent to which collateral secures the Company’s collateral-dependent financial assets during the twelve months ended December 31, 2022.

At December 31, 2022 and December 31, 2021, the Company had $121 million residential mortgage loans in the process of foreclosure and no residential mortgage loans in the process of foreclosure, respectively.

The Company is required to account for certain loan modifications and restructurings as TDRs. In general, a modification or restructuring of a loan constitutes a TDR if the Company grants a concession to a borrower experiencing financial difficulty. A loan modified as a TDR generally is placed on non-accrual status until the Company determines that future collection of principal and interest is reasonably assured, which requires, among other things, that the borrower demonstrate performance according to the restructured terms for a period of at least six consecutive months.

In an effort to proactively manage delinquent loans, the Company has selectively extended to certain borrowers concessions such as rate reductions, extension of maturity dates, and forbearance agreements. As of December 31, 2022, loans on which concessions were made with respect to rate reductions and/or extension of maturity dates amounted to $38 million.

The following table presents information regarding the Company’s TDRs:


		December 31, 2022									December 31, 2021
(in millions)		Accruing			Non- Accrual			Total			Accruing			Non- Accrual			Total
Loan Category:
Multi-family	$		—	$		6	$		6	$		—	$		7	$		7
Commercial real estate			16			19			35			16			—			16
One-to-four family first mortgage			—			—			—			—			—			—
Acquisition, development, and construction			—			—			—			—			—			—
Commercial and industrial			—			3			3			—			6			6
Total	$		16	$		28	$		44	$		16	$		13	$		29

The eligibility of a borrower for work-out concessions of any nature depends upon the facts and circumstances of each loan, which may change from period to period, and involves judgment by Company personnel regarding the likelihood that the concession will result in the maximum recovery for the Company.

The financial effects of the Company’s TDRs are summarized as follows:


	For the Twelve Months Ended December 31, 2022
							Weighted Average Interest Rate
(dollars in millions)	Number of Loans		Pre- Modification Recorded Investment		Post- Modification Recorded Investment		Pre- Modification			Post- Modification		Charge- off Amount		Capitalized Interest
Loan Category:
Commercial real estate		2	$	22	$	19		6.00	%	4.02	%	$	3	$	—
Total		2	$	22	$	19						$	3	$	—


	For the Twelve Months Ended December 31, 2021
							Weighted Average Interest Rate
(dollars in millions)	Number of Loans		Pre- Modification Recorded Investment		Post- Modification Recorded Investment		Pre- Modification		Post- Modification		Charge- off Amount		Capitalized Interest
Loan Category:
Commercial real estate		2	$	4	$	4	6.00	%	3.55	%	$	—	$	—
Commercial and industrial		1		8		8	3.13		3.25			—		—
Total		3	$	12	$	12							$	—


	For the Twelve Months Ended December 31, 2020
							Weighted Average Interest Rate
(dollars in millions)	Number of Loans		Pre- Modification Recorded Investment		Post- Modification Recorded Investment		Pre- Modification			Post- Modification			Charge- off Amount		Capitalized Interest
Loan Category:
One-to-four family first mortgage		1	$	15	$	15	8.00		%	3.50		%	$	—	$	—
Commercial and industrial		42		9	$	8		2.36			2.23			1		—
Total		43	$	24	$	23							$	1	$	—

At December 31, 2022 and December 31, 2021, no loans have been modified as TDR's that were in payment default during the twelve months ended at that date. At December 31, 2020, C&I loans in the amount of $3 million that had been modified as a TDR during the twelve months ended at that date was in prepayment default.

The Company does not consider a payment to be in default when the loan is in forbearance, or otherwise granted a delay of payment, when the agreement to forebear or allow a delay of payment is part of a modification.

Subsequent to the modification, the loan is not considered to be in default until payment is contractually past due in accordance with the modified terms. However, the Company does consider a loan with multiple modifications or forbearance periods to be in default, and would also consider a loan to be in default if the borrower were in bankruptcy or if the loan were partially charged off subsequent to modification.