FFIC Flushing Financial Corporation

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PART I – FINANCIAL INFORMATION

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES

Notes to Consolidated Financial Statements

(Unaudited)

 

1.

Basis of Presentation

 

The primary business of Flushing Financial Corporation (the “Holding Company”), a Delaware corporation, is the operation of its wholly owned subsidiary, Flushing Bank (the “Bank”).

 

The unaudited consolidated financial statements presented in this Quarterly Report on Form 10-Q (“Quarterly Report”) include the collective results of the Holding Company and its direct and indirect wholly-owned subsidiaries, including the Bank, Flushing Preferred Funding Corporation, Flushing Service Corporation, and FSB Properties Inc., which are collectively herein referred to as “we,” “us,” “our” and the “Company.”

 

The Holding Company also owns Flushing Financial Capital Trust II, Flushing Financial Capital Trust III, and Flushing Financial Capital Trust IV (the “Trusts”), which are special purpose business trusts. The Trusts are not included in the Company’s consolidated financial statements, as the Company would not absorb the losses of the Trusts if any losses were to occur.

 

The accompanying unaudited consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and general practices within the banking industry. The information furnished in these interim statements reflects all adjustments that are, in the opinion of management, necessary for a fair statement of the results for such presented periods of the Company. Such adjustments are of a normal recurring nature, unless otherwise disclosed in this Quarterly Report. All inter-company balances and transactions have been eliminated in consolidation. The results of operations in the interim statements are not necessarily indicative of the results that may be expected for the full year.

 

The accompanying unaudited consolidated financial statements have been prepared in conformity with the instructions to Quarterly Report on Form 10-Q and Article 10, Rule 10-01 of Regulation S-X for interim financial statements. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). The unaudited consolidated interim financial information should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2017.

 

When necessary, certain reclassifications were made to prior-year amounts to conform to the current-year presentation.

 

2.

Use of Estimates

 

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the date of the financial statements, and reported amounts of revenue and expenses during the reporting period. Estimates that are particularly susceptible to change in the near term are used in connection with the determination of the allowance for loan losses (“ALLL”), the evaluation of goodwill for impairment, the review of the need for a valuation allowance of the Company’s deferred tax assets, the fair value of financial instruments and the evaluation of other-than-temporary impairment (“OTTI”) on securities. Actual results could differ from these estimates.

 

3.

Earnings Per Share

 

Earnings per common share have been computed based on the following:

 

		For the three months ended June 30,								For the six months ended June 30,
		2018				2017				2018				2017
		(Dollars in thousands, except per share data)
Net income, as reported		$	13,923			$	12,725			$	25,335			$	24,985
Divided by:
Weighted average common shares outstanding			28,845				29,135				28,909				29,077
Weighted average common stock equivalents			1				1				1				3
Total weighted average common shares outstanding and common stock equivalents			28,846				29,136				28,910				29,080
Basic earnings per common share		$	0.48			$	0.44			$	0.88			$	0.86
Diluted earnings per common share (1)		$	0.48			$	0.44			$	0.88			$	0.86
Dividend payout ratio			41.7	%			40.9	%			45.5	%			41.9	%

 

(1)

For the three and six months ended June 30, 2018 and 2017, there were no common stock equivalents that were anti-dilutive.

 

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PART I – FINANCIAL INFORMATION

FLUSHING FINANCIAL CORPORATION and SUBSIDIARIES

Notes to Consolidated Financial Statements

(Unaudited)

 

4.

Securities

 

The Company did not hold any trading securities at June 30, 2018 and December 31, 2017. Securities available for sale are recorded at fair value. Securities held-to-maturity are recorded at amortized cost.

 

The following table summarizes the Company’s portfolio of securities held-to-maturity at June 30, 2018:

 

		Amortized Cost				Fair Value				Gross Unrealized Gains				Gross Unrealized Losses
		(In thousands)
Securities held-to-maturity:
Municipals		$	23,130			$	21,281			$	-			$	1,849
Total other securities			23,130				21,281				-				1,849
FNMA			7,963				7,373				-				590
Total mortgage-backed securities			7,963				7,373				-				590
Total		$	31,093			$	28,654			$	-			$	2,439

 

The following table summarizes the Company’s portfolio of securities held-to-maturity at December 31, 2017:

 

		Amortized Cost				Fair Value				Gross Unrealized Gains				Gross Unrealized Losses
		(In thousands)
Securities held-to-maturity:
Municipals		$	22,913			$	21,889			$	-			$	1,024
Total other securities			22,913				21,889				-				1,024
FNMA			7,973				7,810				-				163
Total mortgage-backed securities			7,973				7,810				-				163
Total		$	30,886			$	29,699			$	-			$	1,187

 

The following table summarizes the Company’s portfolio of securities available for sale at June 30, 2018:

 

		Amortized Cost				Fair Value				Gross Unrealized Gains				Gross Unrealized Losses
		(In thousands)
Corporate		$	110,000			$	100,532			$	-			$	9,468
Municipals			100,576				101,608				1,063				31
Mutual funds			11,427				11,427				-				-
Other			1,188				1,188				-				-
Total other securities			223,191				214,755				1,063				9,499
REMIC and CMO			342,394				332,381				80				10,093
GNMA			847				898				51				-
FNMA			133,359				129,222				54				4,191
FHLMC			52,925				51,367				12				1,570
Total mortgage-backed securities			529,525				513,868				197				15,854
Total securities available for sale		$	752,716			$	728,623			$	1,260			$	25,353

 

The following table summarizes the Company’s portfolio of securities available for sale at December 31, 2017:

 

		Amortized Cost				Fair Value				Gross Unrealized Gains				Gross Unrealized Losses
		(In thousands)
Corporate		$	110,000			$	102,767			$	-			$	7,233
Municipals			101,680				103,199				1,519				-
Mutual funds			11,575				11,575				-				-
Collateralized loan obligations			10,000				10,053				53				-
Other			1,110				1,110				-				-
Total other securities			234,365				228,704				1,572				7,233
REMIC and CMO			328,668				325,302				595				3,961
GNMA			1,016				1,088				72				-
FNMA			136,198				135,474				330				1,054
FHLMC			48,103				47,786				18				335
Total mortgage-backed securities			513,985				509,650				1,015				5,350
Total securities available for sale		$	748,350			$	738,354			$	2,587			$	12,583

 

Mortgage-backed securities shown in the table above include one private issue collateralized mortgage obligation (“CMO”) that is collateralized by commercial real estate mortgages with an amortized cost and market value of $21,000 at December 31, 2017. We did not hold any private issue CMO’s that are collateralized by commercial real estate mortgages at June 30, 2018.

 

The corporate securities held by the Company at June 30, 2018 and December 31, 2017 are issued by U.S. banking institutions.

 

The following tables detail the amortized cost and fair value of the Company’s securities classified as held-to-maturity and available for sale at June 30, 2018, by contractual maturity. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

 

Securities held-to-maturity:		Amortized Cost				Fair Value
		(In thousands)
Due in one year or less		$	1,353			$	1,353
Due after ten years			21,777				19,928
Total other securities			23,130				21,281
Mortgage-backed securities			7,963				7,373
Total		$	31,093			$	28,654

 

Securities available for sale:		Amortized Cost				Fair Value
		(In thousands)
Due in one year or less		$	-			$	-
Due after one year through five years			4,248				4,269
Due after five years through ten years			125,569				116,201
Due after ten years			81,947				82,858
Total other securities			211,764				203,328
Mutual funds			11,427				11,427
Mortgage-backed securities			529,525				513,868
Total		$	752,716			$	728,623

 

The following tables show the Company’s securities with gross unrealized losses and their fair value, aggregated by category and length of time that individual securities have been in a continuous unrealized loss position, at the dates indicated:

 

		At June 30, 2018
						Total								Less than 12 months								12 months or more
		Count				Fair Value				Unrealized Losses				Fair Value				Unrealized Losses				Fair Value				Unrealized Losses
						(Dollars in thousands)
Held-to-maturity securities
Municipals			1			$	19,928			$	1,849			$	-			$	-			$	19,928			$	1,849
Total other securities			1				19,928				1,849				-				-				19,928				1,849
FNMA			1				7,373				590				7,373				590				-				-
Total mortgage-backed securities			1				7,373				590				7,373				590				-				-
Total			2			$	27,301			$	2,439			$	7,373			$	590			$	19,928			$	1,849
Available for sale securities
Corporate			14			$	100,532			$	9,468			$	9,394			$	606			$	91,138			$	8,862
Municipals			2				5,088				31				5,088				31				-				-
Total other securities			16				105,620				9,499				14,482				637				91,138				8,862
REMIC and CMO			48				312,201				10,093				231,236				5,860				80,965				4,233
FNMA			23				126,338				4,191				110,983				3,445				15,355				746
FHLMC			2				42,830				1,570				39,920				1,438				2,910				132
Total mortgage-backed securities			73				481,369				15,854				382,139				10,743				99,230				5,111
Total			89			$	586,989			$	25,353			$	396,621			$	11,380			$	190,368			$	13,973

 

		At December 31, 2017
						Total								Less than 12 months								12 months or more
		Count				Fair Value				Unrealized Losses				Fair Value				Unrealized Losses				Fair Value				Unrealized Losses
		(Dollars in thousands)
Held-to-maturity securities
Municipals			1			$	20,844			$	1,024			$	20,844			$	1,024			$	-			$	-
Total other securities			1				20,844				1,024				20,844				1,024				-				-
FNMA			1				7,810				163				7,810				163				-				-
Total mortgage-backed  securities			1				7,810				163				7,810				163				-				-
Total securities held-to-maturity			2			$	28,654			$	1,187			$	28,654			$	1,187			$	-			$	-
Available for sale securities
Corporate			14			$	102,767			$	7,233			$	9,723			$	277			$	93,044			$	6,956
Total other securities			14				102,767				7,233				9,723				277				93,044				6,956
REMIC and CMO			36				249,596				3,961				162,781				1,406				86,815				2,555
FNMA			17				120,510				1,054				109,258				850				11,252				204
FHLMC			2				46,829				335				43,258				294				3,571				41
Total mortgage-backed  securities			55				416,935				5,350				315,297				2,550				101,638				2,800
Total securities available for sale			69			$	519,702			$	12,583			$	325,020			$	2,827			$	194,682			$	9,756

 

OTTI losses on impaired securities must be fully recognized in earnings if an investor has the intent to sell the debt security or if it is more likely than not that the investor will be required to sell the debt security before recovery of its amortized cost. However, even if an investor does not expect to sell a debt security in an unrealized loss position, the investor must evaluate the expected cash flows to be received and determine if a credit loss has occurred. In the event that a credit loss has occurred, only the amount of impairment associated with the credit loss is recognized in earnings in the Consolidated Statements of Income. Amounts relating to factors other than credit losses are recorded in accumulated other comprehensive loss (“AOCL”) within Stockholders’ Equity. Unrealized losses on available for sale securities, that are deemed to be temporary, are recorded in AOCL, net of tax.

 

The Company reviewed each investment that had an unrealized loss at June 30, 2018 and December 31, 2017. The unrealized losses in held-to-maturity municipal securities at June 30, 2018 and December 31, 2017 were caused by illiquidity in the market and movements in interest rates. The unrealized losses in held-to-maturity FNMA securities at June 30, 2018 and December 31, 2017 were caused by movements in interest rates. The unrealized losses in securities available for sale at June 30, 2018 and December 31, 2017 were caused by movements in interest rates.

 

It is not anticipated that these securities would be settled at a price that is less than the amortized cost of the Company’s investment. Each of these securities is performing according to its terms and, in the opinion of management, will continue to perform according to its terms. The Company does not have the intent to sell these securities and it is more likely than not the Company will not be required to sell the securities before recovery of the securities’ amortized cost basis. This conclusion is based upon considering the Company’s cash and working capital requirements and contractual and regulatory obligations, none of which the Company believes would cause the sale of the securities. Therefore, the Company did not consider these investments to be other-than-temporarily impaired at June 30, 2018 and December 31, 2017.

 

The Company did not sell any securities during the three and six months ended June 30, 2018 and 2017.

 

5.

Loans

 

Loans are reported at their outstanding principal balance net of any unearned income, charge-offs, deferred loan fees and costs on originated loans and unamortized premiums or discounts on purchased loans. Loan fees and certain loan origination costs are deferred. Net loan origination costs and premiums or discounts on loans purchased are amortized into interest income over the contractual life of the loans using the level-yield method. Prepayment penalties received on loans which pay in full prior to their scheduled maturity are included in interest income in the period they are collected.

 

Interest on loans is recognized on the accrual basis. The accrual of income on loans is generally discontinued when certain factors, such as contractual delinquency of 90 days or more, indicate reasonable doubt as to the timely collectability of such income. Uncollected interest previously recognized on non-accrual loans is reversed from interest income at the time the loan is placed on non-accrual status. A non-accrual loan can be returned to accrual status when contractual delinquency returns to less than 90 days delinquent. Payments received on non-accrual loans that do not bring the loan to less than 90 days delinquent are recorded on a cash basis. Payments can also be applied first as a reduction of principal until all principal is recovered and then subsequently to interest, if in management’s opinion, it is evident that recovery of all principal due is likely to occur.

 

The Company recognizes a loan as non-performing when the borrower has demonstrated the inability to bring the loan current, or due to other circumstances which, in management’s opinion, indicate the borrower will be unable to bring the loan current within a reasonable time. All loans classified as non-performing, which includes all loans past due 90 days or more, are classified as non-accrual unless there is, in our opinion, compelling evidence the borrower will bring the loan current in the immediate future. Prior to a loan becoming 90 days delinquent, an updated appraisal is ordered and/or an internal evaluation is prepared.

 

A loan is considered impaired when, based upon current information, the Company believes it is probable that it will be unable to collect all amounts due, both principal and interest, in accordance with the original terms of the loan. Impaired loans are measured based on the present value of the expected future cash flows discounted at the loan’s effective interest rate or at the loan’s observable market price or, as a practical expedient, the fair value of the collateral if the loan is collateral dependent. All non-accrual loans are considered impaired.

 

The Company maintains an allowance for loan losses at an amount, which, in management’s judgment, is adequate to absorb probable estimated losses inherent in the loan portfolio. Management’s judgment in determining the adequacy of the allowance is based on evaluations of the collectability of loans. This evaluation is inherently subjective, as it requires estimates that are susceptible to significant revisions as more information becomes available. An unallocated component may at times be maintained to cover uncertainties that could affect management's estimate of probable losses. When necessary an unallocated component of the allowance will reflect the margin of imprecision inherent in the underlying assumptions used in the methodologies for estimating specific and general losses in the portfolio. The allowance is established through charges to earnings in the form of a provision for loan losses based on management’s evaluation of the risk inherent in the various components of the loan portfolio and other factors, including historical loan loss experience (which is updated quarterly), current economic conditions, delinquency and non-accrual trends, classified loan levels, risk in the portfolio and volumes and trends in loan types, recent trends in charge-offs, changes in underwriting standards, experience, ability and depth of the Company’s lenders, collection policies and experience, internal loan review function and other external factors. Increases and decreases in the allowance other than charge-offs and recoveries are included in the provision for loan losses. When a loan or a portion of a loan is determined to be uncollectible, the portion deemed uncollectible is charged against the allowance, and subsequent recoveries, if any, are credited to the allowance.

 

The determination of the amount of the allowance for loan losses includes estimates that are susceptible to significant changes due to changes in appraisal values of collateral, national and local economic conditions and other factors. We review our loan portfolio by separate categories with similar risk and collateral characteristics. Impaired loans are segregated and reviewed separately.

 

The Company reviews each impaired loan on an individual basis to determine if either a charge-off or a valuation allowance needs to be allocated to the loan. The Company does not charge-off or allocate a valuation allowance to loans for which management has concluded the current value of the underlying collateral will allow for recovery of the loan balance through the sale of the loan or by foreclosure and sale of the property.

 

The Company considers fair value of collateral dependent loans to be 85% of the appraised or internally estimated value of the property. The 85% is based on the actual net proceeds the Bank has received from the sale of other real estate owned (“OREO”) as a percentage of OREO’s appraised value. For collateral dependent taxi medallion loans, the Company considers fair value to be the value of the underlying medallion based upon the most recently reported arm’s length sales transaction. When there is no recent sale activity, the fair value is calculated using capitalization rates. For both collateral dependent mortgage loans and taxi medallion loans, the amount by which the loan’s book value exceeds fair value is charged-off. During the three months ended June 30, 2018, the fair value of Chicago taxi medallion loans was reduced from $60,000 per medallion to $25,000 per medallion, based upon recent sales transactions. At June 30, 2018, our exposure to the Chicago taxi medallion portfolio totals $0.2 million and to all taxi medallion loans held $6.2 million, which is 0.12% of total loans.

 

The Company segregated its loans into two portfolios based on year of origination. One portfolio was reviewed for loans originated after December 31, 2009 and a second portfolio for loans originated prior to January 1, 2010. Our decision to segregate the portfolio based upon origination dates was based on changes made in our underwriting standards during 2009. By the end of 2009, all loans were being underwritten based on revised and tightened underwriting standards. Loans originated prior to 2010 have a higher delinquency rate and loss history. Each of the years in the portfolio for loans originated prior to 2010 has a similar delinquency rate. During the three months ended June 30, 2018, the Loss Emergence Period (“LEP”) used was 1.33 years for the Residential portfolio and 1.58 years for the Commercial portfolio. In the prior quarter, a blended LEP of 1.33 years was used for both portfolios. The Company’s Board of Directors reviews and approves management’s evaluation of the adequacy of the allowance for loan losses on a quarterly basis.

 

The Company evaluates the underlying collateral through a third party appraisal, or when a third party appraisal is not available, the Company will use an internal evaluation. The internal evaluations are prepared using an income approach or a sales approach. The income approach is used for income producing properties and uses current revenues less operating expenses to determine the net cash flow of the property. Once the net cash flow is determined, the value of the property is calculated using an appropriate capitalization rate for the property. The sales approach uses comparable sales prices in the market. When an internal evaluation is used, we place greater reliance on the income approach to value the collateral.

 

The Company may restructure a loan to enable a borrower experiencing financial difficulties to continue making payments when it is deemed to be in the Company’s best long-term interest. This restructure may include reducing the interest rate or amount of the monthly payment for a specified period of time, after which the interest rate and repayment terms revert to the original terms of the loan. We classify these loans as Troubled Debt Restructured (“TDR”).

 

These restructurings have not included a reduction of principal balance. The Company believes that restructuring these loans in this manner will allow certain borrowers to become and remain current on their loans. All loans classified as TDR are considered impaired, however TDR loans which have been current for six consecutive months at the time they are restructured as TDR remain on accrual status and are not included as part of non-performing loans. Loans which were delinquent at the time they are restructured as a TDR are placed on non-accrual status and reported as non-accrual performing TDR loans until they have made timely payments for six consecutive months.

 

The allocation of a portion of the allowance for loan losses for a performing TDR loan is based upon the present value of the future expected cash flows discounted at the loan’s original effective rate, or for a non-performing TDR loan which is collateral dependent, the fair value of the collateral. At June 30, 2018, there were no commitments to lend additional funds to borrowers whose loans were modified to a TDR. The modification of loans to a TDR did not have a significant effect on our operating results, nor did it require a significant allocation of the allowance for loan losses.

 

The Company did not modify any loans as TDR during the three and six months ended June 30, 2018.

 

The following tables shows loans modified and classified as TDR during the periods indicated:

 

		For the three and six months ended June 30, 2017
(Dollars in thousands)		Number				Balance				Modification description
Taxi medallion			5			$	4,289			Three received a below market interest rate and a loan amortization extension, while two received an amortization extension.
Total			5			$	4,289

 

The recorded investment of the loans modified and classified as TDR presented in the table above, were unchanged as there was no principal forgiven in this modification.

 

The following table shows our recorded investment for loans classified as TDR that are performing according to their restructured terms at the periods indicated:

 

		June 30, 2018								December 31, 2017
(Dollars in thousands)		Number of contracts				Recorded investment				Number of contracts				Recorded investment
Multi-family residential			9			$	2,488				9			$	2,518
Commercial real estate			-				-				2				1,986
One-to-four family - mixed-use property			5				1,726				5				1,753
One-to-four family - residential			3				562				3				572
Taxi medallion			19				5,482				20				5,916
Commercial business and other			2				351				2				462
Total performing troubled debt restructured			38			$	10,609				41			$	13,207

 

During the six months ended June 30, 2018, we sold one commercial real estate TDR loan totaling $1.8 million, for a loss of $0.3 million and foreclosed on one taxi medallion TDR loan of $35,000, which is included in “Other Assets”. There were no TDR loans that defaulted during the period, which were within 12 months of their modification date.

 

The following table shows our recorded investment for loans classified as TDR that are not performing according to their restructured terms at the periods indicated:

 

		June 30, 2018								December 31, 2017
(Dollars in thousands)		Number of contracts				Recorded investment				Number of contracts				Recorded investment
Multi-family residential			1			$	383				1			$	383
Total troubled debt restructurings that subsequently defaulted			1			$	383				1			$	383

 

There were no TDR loans transferred to non-performing status during the three months ended June 30, 2018 and 2017 and the six months ended June 30, 2017.

 

The following table shows our non-performing loans at the periods indicated:

 

(In thousands)		June 30, 2018				December 31, 2017
Loans ninety days or more past due and still accruing:
Commercial real estate		$	-			$	2,424
Construction			730				-
Total			730				2,424
Non-accrual mortgage loans:
Multi-family residential			2,165				3,598
Commercial real estate			1,448				1,473
One-to-four family - mixed-use property			2,157				1,867
One-to-four family - residential			6,969				7,808
Co-operative apartments			575				-
Total			13,314				14,746
Non-accrual non-mortgage loans:
Small Business Administration			-				46
Taxi medallion			743				918
Commercial business and other			2				-
Total			745				964
Total non-accrual loans			14,059				15,710
Total non-performing loans		$	14,789			$	18,134

 

The following is a summary of interest foregone on non-accrual loans and loans classified as TDR for the periods indicated:

 

		For the three months ended June 30,								For the six months ended June 30,
		2018				2017				2018				2017
		(In thousands)
Interest income that would have been recognized had the loans performed in accordance with their original terms		$	390			$	433			$	798			$	848
Less:  Interest income included in the results of operations			156				141				315				268
Total foregone interest		$	234			$	292			$	483			$	580

 

The following tables show an age analysis of our recorded investment in loans, including loans past maturity, at the periods indicated:

 

		June 30, 2018
(In thousands)		30 - 59 Days Past Due				60 - 89 Days Past Due				Greater than 90 Days				Total Past Due				Current				Total Loans
Multi-family residential		$	2,887			$	410			$	2,165			$	5,462			$	2,242,390			$	2,247,852
Commercial real estate			4,139				3,206				1,448				8,793				1,463,101				1,471,894
One-to-four family - mixed-use property			2,080				-				2,157				4,237				560,237				564,474
One-to-four family - residential			767				400				6,969				8,136				179,605				187,741
Co-operative apartments			-				-				575				575				7,264				7,839
Construction loans			-				-				730				730				33,096				33,826
Small Business Administration			1,537				-				-				1,537				12,868				14,405
Taxi medallion			-				-				-				-				6,225				6,225
Commercial business and other			562				761				2				1,325				782,579				783,904
Total		$	11,972			$	4,777			$	14,046			$	30,795			$	5,287,365			$	5,318,160

 

		December 31, 2017
(In thousands)		30 - 59 Days Past Due				60 - 89 Days Past Due				Greater than 90 Days				Total Past Due				Current				Total Loans
Multi-family residential		$	2,533			$	279			$	3,598			$	6,410			$	2,267,185			$	2,273,595
Commercial real estate			1,680				2,197				3,897				7,774				1,360,338				1,368,112
One-to-four family - mixed-use property			1,570				860				1,867				4,297				559,909				564,206
One-to-four family - residential			1,921				680				7,623				10,224				170,439				180,663
Co-operative apartments			-				-				-				-				6,895				6,895
Construction loans			-				-				-				-				8,479				8,479
Small Business Administration			-				-				-				-				18,479				18,479
Taxi medallion			-				108				-				108				6,726				6,834
Commercial business and other			2				-				-				2				732,971				732,973
Total		$	7,706			$	4,124			$	16,985			$	28,815			$	5,131,421			$	5,160,236

 

The following tables show the activity in the allowance for loan losses for the three month periods indicated:

 

June 30, 2018
(In thousands)		Multi-family residential				Commercial real estate				One-to-four family - mixed-use property				One-to-four family - residential				Construction loans				Small Business Administration				Taxi medallion				Commercial business and other				Unallocated				Total
Allowance for credit losses:
Beginning balance		$	5,750			$	4,602			$	2,470			$	1,041			$	191			$	675			$	-			$	5,813			$	-			$	20,542
Charge-off's			(28	)			-				-				-				-				(27	)			(353	)			(8	)			-				(416	)
Recoveries			-				-				79				4				-				9				-				2				-				94
Provision (Benefit)			(184	)			124				(252	)			(42	)			73				(108	)			353				25				11				-
Ending balance		$	5,538			$	4,726			$	2,297			$	1,003			$	264			$	549			$	-			$	5,832			$	11			$	20,220

 

 

June 30, 2017
(In thousands)		Multi-family residential				Commercial real estate				One-to-four family - mixed-use property				One-to-four family - residential				Construction loans				Small Business Administration				Taxi medallion				Commercial business and other				Unallocated				Total
Allowance for credit losses:
Beginning balance		$	5,907			$	4,485			$	2,691			$	979			$	94			$	315			$	2,213			$	4,712			$	815			$	22,211
Charge-off's			(148	)			(4	)			(1	)			(170	)			-				(24	)			-				(3	)			-				(350	)
Recoveries			201				-				68				-				-				10				-				17				-				296
Provision (Benefit)			(43	)			207				(190	)			181				36				5				117				(58	)			(255	)			-
Ending balance		$	5,917			$	4,688			$	2,568			$	990			$	130			$	306			$	2,330			$	4,668			$	560			$	22,157

 

The following tables show the activity in the allowance for loan losses for the six month periods indicated:

 

June 30, 2018
(In thousands)		Multi-family residential				Commercial real estate				One-to-four family - mixed-use property				One-to-four family - residential				Construction loans				Small Business Administration				Taxi medallion				Commercial business and other				Unallocated				Total
Allowance for credit losses:
Beginning balance		$	5,823			$	4,643			$	2,545			$	1,082			$	68			$	669			$	-			$	5,521			$	-			$	20,351
Charge-off's			(81	)			-				-				(1	)			-				(52	)			(353	)			(14	)			-				(501	)
Recoveries			2				-				79				112				-				15				-				9				-				217
Provision (Benefit)			(206	)			83				(327	)			(190	)			196				(83	)			353				316				11				153
Ending balance		$	5,538			$	4,726			$	2,297			$	1,003			$	264			$	549			$	-			$	5,832			$	11			$	20,220

 

 

June 30, 2017
(In thousands)		Multi-family residential				Commercial real estate				One-to-four family - mixed-use property				One-to-four family - residential				Construction loans				Small Business Administration				Taxi medallion				Commercial business and other				Unallocated				Total
Allowance for credit losses:
Beginning balance		$	5,923			$	4,487			$	2,903			$	1,015			$	92			$	481			$	2,243			$	4,492			$	593			$	22,229
Charge-off's			(162	)			(4	)			(35	)			(170	)			-				(89	)			(54	)			(15	)			-				(529	)
Recoveries			231				68				68				-				-				49				-				41				-				457
Provision (Benefit)			(75	)			137				(368	)			145				38				(135	)			141				150				(33	)			-
Ending balance		$	5,917			$	4,688			$	2,568			$	990			$	130			$	306			$	2,330			$	4,668			$	560			$	22,157

 

The following tables show the manner in which loans were evaluated for impairment at the periods indicated:

 

June 30, 2018
(In thousands)		Multi-family residential				Commercial real estate				One-to-four family - mixed-use property				One-to-four family- residential				Co-operative apartments				Construction loans				Small Business Administration				Taxi medallion				Commercial business and other				Unallocated				Total
Financing Receivables:
Ending Balance		$	2,247,852			$	1,471,894			$	564,474			$	187,741			$	7,839			$	33,826			$	14,405			$	6,225			$	783,904			$	-			$	5,318,160
Ending balance: individually evaluated for impairment		$	6,482			$	4,967			$	5,625			$	8,733			$	-			$	730			$	49			$	6,225			$	16,136			$	-			$	48,947
Ending balance: collectively evaluated for impairment		$	2,241,370			$	1,466,927			$	558,849			$	179,008			$	7,839			$	33,096			$	14,356			$	-			$	767,768			$	-			$	5,269,213
Allowance for credit losses:
Ending balance: individually evaluated for impairment		$	147			$	-			$	159			$	53			$	-			$	-			$	-			$	-			$	4			$	-			$	363
Ending balance: collectively evaluated for impairment		$	5,391			$	4,726			$	2,138			$	950			$	-			$	264			$	549			$	-			$	5,828			$	11			$	19,857

 

December 31, 2017
(In thousands)		Multi-family residential				Commercial real estate				One-to-four family - mixed-use property				One-to-four family- residential				Co-operative apartments				Construction loans				Small Business Administration				Taxi medallion				Commercial business and other				Unallocated				Total
Financing Receivables:
Ending Balance		$	2,273,595			$	1,368,112			$	564,206			$	180,663			$	6,895			$	8,479			$	18,479			$	6,834			$	732,973			$	-			$	5,160,236
Ending balance: individually evaluated for impairment		$	7,311			$	9,089			$	5,445			$	9,686			$	-			$	-			$	137			$	6,834			$	661			$	-			$	39,163
Ending balance: collectively evaluated for impairment		$	2,266,284			$	1,359,023			$	558,761			$	170,977			$	6,895			$	8,479			$	18,342			$	-			$	732,312			$	-			$	5,121,073
Allowance for credit losses:
Ending balance: individually evaluated for impairment		$	205			$	177			$	198			$	56			$	-			$	-			$	-			$	-			$	6			$	-			$	642
Ending balance: collectively evaluated for impairment		$	5,618			$	4,466			$	2,347			$	1,026			$	-			$	68			$	669			$	-			$	5,515			$	-			$	19,709

 

The following table shows our recorded investment, unpaid principal balance and allocated allowance for loan losses for impaired loans at the periods indicated:

 

		June 30, 2018												December 31, 2017
		Recorded Investment				Unpaid Principal Balance				Related Allowance				Recorded Investment				Unpaid Principal Balance				Related Allowance
		(In thousands)
With no related allowance recorded:
Mortgage loans:
Multi-family residential		$	4,285			$	4,814			$	-			$	5,091			$	5,539			$	-
Commercial real estate			4,967				4,967				-				7,103				7,103				-
One-to-four family mixed-use property			4,419				4,676				-				4,218				4,556				-
One-to-four family residential			8,326				9,281				-				9,272				10,489				-
Construction			730				730
Non-mortgage loans:
Small Business Administration			49				58				-				137				151				-
Taxi medallion			6,225				17,450				-				6,834				18,063				-
Commercial business and other			15,829				16,198				-				313				682				-
Total loans with no related allowance recorded			44,830				58,174				-				32,968				46,583				-
With an allowance recorded:
Mortgage loans:
Multi-family residential			2,197				2,197				147				2,220				2,220				205
Commercial real estate			-				-				-				1,986				1,986				177
One-to-four family mixed-use property			1,206				1,206				159				1,227				1,227				198
One-to-four family residential			407				407				53				414				414				56
Non-mortgage loans:
Commercial business and other			307				307				4				348				348				6
Total loans with an allowance recorded			4,117				4,117				363				6,195				6,195				642
Total Impaired Loans:
Total mortgage loans		$	26,537			$	28,278			$	359			$	31,531			$	33,534			$	636
Total non-mortgage loans		$	22,410			$	34,013			$	4			$	7,632			$	19,244			$	6

 

The following table shows our average recorded investment and interest income recognized for impaired loans for the three months ended:

 

		June 30, 2018								June 30, 2017
		Average Recorded Investment				Interest Income Recognized				Average Recorded Investment				Interest Income Recognized
		(In thousands)
With no related allowance recorded:
Mortgage loans:
Multi-family residential		$	4,431			$	16			$	2,730			$	22
Commercial real estate			5,847				52				6,438				59
One-to-four family mixed-use property			4,397				39				5,560				41
One-to-four family residential			8,382				10				10,263				30
Construction			365				10				602				-
Non-mortgage loans:
Small Business Administration			74				1				160				2
Taxi medallion			6,421				86				4,352				25
Commercial business and other			7,954				308				2,187				43
Total loans with no related allowance recorded			37,871				522				32,292				222
With an allowance recorded:
Mortgage loans:
Multi-family residential			2,203				30				2,471				50
Commercial real estate			-				-				2,043				24
One-to-four family mixed-use property			1,212				15				1,450				16
One-to-four family residential			409				4				424				4
Non-mortgage loans:
Small Business Administration			-				-				-				-
Taxi medallion			-				-				14,216				50
Commercial business and other			318				4				391				6
Total loans with an allowance recorded			4,142				53				20,995				150
Total Impaired Loans:
Total mortgage loans		$	27,246			$	176			$	31,981			$	246
Total non-mortgage loans		$	14,767			$	399			$	21,306			$	126

 

The following table shows our average recorded investment and interest income recognized for impaired loans for the six months ended:

 

		June 30, 2018								June 30, 2017
		Average Recorded Investment				Interest Income Recognized				Average Recorded Investment				Interest Income Recognized
		(In thousands)
With no related allowance recorded:
Mortgage loans:
Multi-family residential		$	4,651			$	36			$	3,040			$	45
Commercial real estate			6,266				126				5,788				154
One-to-four family mixed-use property			4,337				80				5,851				78
One-to-four family residential			8,678				25				10,028				56
Construction			243				10				401				7
Non-mortgage loans:
Small Business Administration			95				2				245				4
Taxi medallion			6,559				168				3,679				55
Commercial business and other			5,407				310				2,148				87
Total loans with no related allowance recorded			36,236				757				31,180				486
With an allowance recorded:
Mortgage loans:
Multi-family residential			2,208				59				2,401				79
Commercial real estate			662				-				2,049				48
One-to-four family mixed-use property			1,217				24				1,758				34
One-to-four family residential			411				8				425				8
Non-mortgage loans:
Small Business Administration			-				-				507				-
Taxi medallion			-				-				14,126				93
Commercial business and other			328				9				401				12
Total loans with an allowance recorded			4,826				100				21,667				274
Total Impaired Loans:
Total mortgage loans		$	28,673			$	368			$	31,741			$	509
Total non-mortgage loans		$	12,389			$	489			$	21,106			$	251

 

 

In accordance with our policy and the current regulatory guidelines, we designate loans as “Special Mention,” which are considered “Criticized Loans,” and “Substandard,” “Doubtful,” or “Loss,” which are considered “Classified Loans”. If a loan does not fall within one of the previous mentioned categories then the loan would be considered “Pass.” Loans that are non-accrual are designated as Substandard, Doubtful or Loss. These loan designations are updated quarterly. We designate a loan as Substandard when a well-defined weakness is identified that may jeopardize the orderly liquidation of the debt. We designate a loan Doubtful when it displays the inherent weakness of a Substandard loan with the added provision that collection of the debt in full, on the basis of existing facts, is highly improbable. We designate a loan as Loss if it is deemed the debtor is incapable of repayment. The Company does not hold any loans designated as Loss, as loans that are designated as Loss are charged to the Allowance for Loan Losses. We designate a loan as Special Mention if the asset does not warrant classification within one of the other classifications, but does contain a potential weakness that deserves closer attention.

 

The following table sets forth the recorded investment in loans designated as Criticized or Classified at the periods indicated:

 

		June 30, 2018
(In thousands)		Special Mention				Substandard				Doubtful				Loss				Total
Multi-family residential		$	3,432			$	3,994			$	-			$	-			$	7,426
Commercial real estate			4,475				4,206				-				-				8,681
One-to-four family - mixed-use property			1,223				3,899				-				-				5,122
One-to-four family - residential			883				7,597				-				-				8,480
Co-operative apartments			-				575				-				-				575
Construction loans			-				730				-				-				730
Small Business Administration			879				45				-				-				924
Taxi medallion			-				6,225				-				-				6,225
Commercial business and other			10,927				16,852				-				-				27,779
Total loans		$	21,819			$	44,123			$	-			$	-			$	65,942

 

		December 31, 2017
(In thousands)		Special Mention				Substandard				Doubtful				Loss				Total
Multi-family residential		$	6,389			$	4,793			$	-			$	-			$	11,182
Commercial real estate			2,020				8,871				-				-				10,891
One-to-four family - mixed-use property			2,835				3,691				-				-				6,526
One-to-four family - residential			2,076				9,115				-				-				11,191
Small Business Administration			548				108				-				-				656
Taxi medallion			-				6,834				-				-				6,834
Commercial business and other			14,859				545				-				-				15,404
Total loans		$	28,727			$	33,957			$	-			$	-			$	62,684

 

Commitments to extend credit (principally real estate mortgage loans) and lines of credit (principally home equity lines of credit and business lines of credit) amounted to $25.2 million and $300.8 million, respectively, at June 30, 2018.