(1)	Excludes accrued interest receivable of $119.6 million and $116.9 million at March 31, 2020 and December 31, 2019, respectively, which is included in other assets in the Consolidated Statements of Condition.

(2)	Includes specialty finance loans and leases of $3.0 billion and $2.6 billion, respectively, at March 31, 2020 and December 31, 2019, and other C&I loans of $432.8 million and $420.1 million, respectively, at March 31, 2020 and December 31, 2019.

Loans Held for Investment

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 and the local economy. 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 long-term relationships with its experienced lending officers. Each of these credits is secured with a perfected first security interest in or outright ownership of 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.

Included in loans held for investment at March 31, 2020 and December 31, 2019, were mortgage loans of $38.1 million and $38.2 million, respectively, to officers, directors, and their related interests and parties. There were no loans to principal shareholders at that date.

Asset Quality

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 March 31, 2020 and December 31, 2019, 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 March 31, 2020:


(in thousands)	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	$	2,679	$	4,242	$	—	$	6,921	$	31,264,152	$	31,271,073
Commercial real estate		97		16,101		—		16,198		7,018,522		7,034,720
One-to-four family		—		1,721		—		1,721		350,580		352,301
Acquisition, development, and construction		—		—		—		—		130,675		130,675
Commercial and industrial (1) (2)		38		27,060		—		27,098		3,410,596		3,437,694
Other		14		158		—		172		9,342		9,514

Total	$	2,828	$	49,282	$	—	$	52,110	$	42,183,867	$	42,235,977

(1)	Includes $22.9 million of taxi medallion-related loans that were 90 days or more past due. There were no taxi medallion-related loans that were 30 to 89 days past due.

(2)	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, 2019:


(in thousands)	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	$	1,131	$	5,407	$	—	$	6,538	$	31,152,134	$	31,158,672
Commercial real estate		2,545		14,830		—		17,375		7,064,535		7,081,910
One-to-four family		—		1,730		—		1,730		378,631		380,361
Acquisition, development, and construction		—		—		—		—		200,596		200,596
Commercial and industrial (1) (2)		—		39,024		—		39,024		2,975,354		3,014,378
Other		44		252		—		296		7,806		8,102

Total	$	3,720	$	61,243	$	—	$	64,963	$	41,779,056	$	41,844,019

(1)	Includes $0 and $30.4 million of taxi medallion-related loans that were 30 to 89 days past due and 90 days or more past due, respectively.

(2)	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 March 31, 2020:


	Mortgage Loans										Other Loans
(in thousands)	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	$	31,051,107	$	6,810,593	$	348,953	$	97,390	$	38,308,043	$	3,370,054	$	9,356	$	3,379,410
Special mention		181,529		156,623		1,627		33,285		373,064		22,228		—		22,228
Substandard		38,437		67,504		1,721		—		107,662		45,412		158		45,570
Doubtful		—		—		—		—		—		—		—		—

Total	$	31,271,073	$	7,034,720	$	352,301	$	130,675	$	38,788,769	$	3,437,694	$	9,514	$	3,447,208

(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, 2019:


	Mortgage Loans										Other Loans
(in thousands)	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	$	30,903,657	$	6,902,218	$	377,883	$	158,751	$	38,342,509	$	2,960,557	$	7,850	$	2,968,407
Special mention		239,664		104,648		748		41,456		386,516		1,588		—		1,588
Substandard		15,351		75,044		1,730		389		92,514		52,233		252		52,485
Doubtful		—		—		—		—		—		—		—		—

Total	$	31,158,672	$	7,081,910	$	380,361	$	200,596	$	38,821,539	$	3,014,378	$	8,102	$	3,022,480

(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 March 31, 2020.


(in thousands)	Vintage Year
Risk Rating Group	2020		2019		2018		2017		2016		Prior To 2016		Revolving Loans		Total
Pass	$	1,810,786	$	7,073,176	$	7,192,253	$	5,482,863	$	4,316,731	$	12,434,784	$	25,270	$	38,335,863
Special Mention		—		8,190		37,739		59,749		145,622		121,180		790		373,270
Substandard		—		—		4,533		616		25,322		76,424		—		106,895

Total mortgage loans	$	1,810,786	$	7,081,366	$	7,234,525	$	5,543,228	$	4,487,675	$	12,632,388	$	26,060	$	38,816,028
Pass		237,490		975,096		229,159		251,133		174,287		164,021		1,381,655		3,412,841
Special Mention		—		—		—		—		—		—		22,176		22,176
Substandard		1,095		9,050		4,638		17,041		4,200		4,536		154		40,714
Total other loans		238,585		984,146		233,797		268,174		178,487		168,557		1,403,985		3,475,731

Total	$	2,049,371	$	8,065,512	$	7,468,322	$	5,811,402	$	4,666,162	$	12,800,945	$	1,430,045	$	42,291,759

When management determines that foreclosure is probable, 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.

The following table summarizes the extent to which collateral secures the Company’s collateral-dependent loans held for investment by collateral type as

of March 31, 2020:


	Collateral Type
(in thousands)	Real Property		Other
Multi-family	$	2,413	$	—
Commercial real estate		29,885		—
One-to-four family		577		—
Acquisition, development, and construction		—		—
Commercial and industrial		—		41,144
Other		—		154

Total collateral-dependent loans held for investment	$	32,875	$	41,298

Other collateral primarily 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 three months ended March 31, 2020.

Troubled Debt Restructurings

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 determining

the

Company’s allowance for loan and lease losses, reasonably expected TDRs are individually evaluated and consist of criticized, classified, or maturing loans that will have a modification processed within the next three 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 March 31, 2020, loans on which concessions were made with respect to rate reductions and/or extension of maturity dates amounted to $25.4 million; loans on which forbearance agreements were reached amounted to $4.2 million.

The CARES Act was enacted on March 27, 2020. Under the CARES Act, the Company made the election to deem that loan modifications do not result in TDRs if they are (1) related to the novel coronavirus disease

(“COVID-19”);

(2) executed on a loan that was not more than 30 days past due as of December 31, 2019; and (3) executed between March 1, 2020, and the earlier of (A) 60 days after the date of termination of the National Emergency or (B) December 31, 2020. Additionally, other short-term modifications made on a good faith basis in response to

COVID-19

to borrowers who were current prior to any relief are not TDRs under ASC Subtopic

310-40.

This includes short-term (e.g., up to six months) modifications such as payment deferrals, fee waivers, extensions of repayment terms, or delays in payment that are insignificant. Borrowers considered current are those that are less than 30 days past due on their contractual payments at the time a modification program is implemented.

The following table presents information regarding the Company’s TDRs as of March 31, 2020 and December 31, 2019:


	March 31, 2020						December 31, 2019
(in thousands)	Accruing		Non-Accrual		Total		Accruing		Non-Accrual		Total
Loan Category:
Multi-family	$	—	$	2,412	$	2,412	$	—	$	3,577	$	3,577
Commercial real estate		—		—		—		—		—		—
One-to-four family		—		577		577		—		584		584
Acquisition, development, and construction		—		—		—		389		—		389
Commercial and industrial (1)		865		25,621		26,486		865		35,084		35,949
Other		—		154		154		—		—		—

Total	$	865	$	28,764	$	29,629	$	1,254	$	39,245	$	40,499

(1)	Includes $21.4 million and $27.3 million of taxi medallion-related loans at March 31, 2020 and December 31, 2019, respectively

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 for the three months ended March 31, 2020 and 2019 are summarized as follows:


	For the Three Months Ended March 31, 2020
							Weighted Average Interest Rate
(dollars in thousands)	Number of Loans		Pre-Modification Recorded Investment		Post-Modification Recorded Investment		Pre-Modification			Post- Modification			Charge-off Amount		Capitalized Interest
Commercial and industrial and other		8	$	1,920	$	1,572		3.29	%		3.24	%	$	348	$	—


	For the Three Months Ended March 31, 2019
							Weighted Average Interest Rate
(dollars in thousands)	Number of Loans		Pre-Modification Recorded Investment		Post-Modification Recorded Investment		Pre-Modification			Post- Modification			Charge-off Amount		Capitalized Interest
Loan Category:
Commercial and industrial		15	$	4,194	$	3,088		3.26	%		2.98	%	$	1,106	$	—

At March 31, 2020, five C&I loans and one

1-4

family residential loan, in the amounts of $600,000 and $140,000 have been modified as a TDR during the twelve months ended at that date, and was in payment default. At March 31, 2019, three C&I loans, in the amount of $566,000 that had been modified as TDR

during the twelve months ended at that date and were in payment 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. Management takes into consideration all TDR modifications in determining the appropriate level of the allowance.