What changed in this filing

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Item 1. Financial Statements

2022-05-10 compared with 2021-11-09 · 275 added, 590 removed, 965 unchanged (47% of the section changed)

3 unchanged sentences

Consolidated Statements of Financial Condition

September 30, 2021 (Unaudited) and December 31, 2020

March 31, 2022 (Unaudited) and December 31, 2021

(Dollars in Thousands)

September 30, 2021 December 31, 2020

March 31, 2022 December 31, 2021

Cash and due from banks $ 330,814 $ 506,270

2 unchanged sentences

Available for sale debt securities, at fair value 2,072,337 2,057,851

Held to maturity debt securities, net (fair value of $ 441,888 at September 30, 2021 (unaudited) and $ 472,529 at December 31, 2020)

Held to maturity debt securities, net (fair value of $ 417,664 and $ 449,709 at March 31, 2022 and December 31, 2021, respectively).

421,958 436,150

24 unchanged sentences

Preferred stock, $ 0.01 par value, 50,000,000 shares authorized, none issued

Common stock, $ 0.01 par value, 200,000,000 shares authorized, 83,209,012 shares issued and 77,226,485 shares outstanding at September 30, 2021 and 77,611,107 outstanding at December 31, 2020

Common stock, $ 0.01 par value, 200,000,000 shares authorized, 83,209,012 shares issued and 75,881,889 shares outstanding at March 31, 2022, and 83,209,012 shares issued and 76,969,999 shares outstanding at December 31, 2021, respectively.

Additional paid-in capital 972,552 969,815

Retained earnings 839,807 814,533

Accumulated other comprehensive income 7,757 17,655

Accumulated other comprehensive (loss) income ( 67,946 ) 6,863

Treasury stock ( 109,581 ) ( 79,603 )

8 unchanged sentences

Consolidated Statements of Income

Three and nine months ended September 30, 2021 and 2020 (Unaudited)

Three months ended March 31, 2022 and 2021 (Unaudited)

(Dollars in Thousands, except per share data)

Three months ended September 30, Nine months ended September 30,

2021 2020 2021 2020

Three months ended March 31,

Interest income:

12 unchanged sentences

Net interest income 94,526 90,000

Provision for credit losses 969 6,400 ( 24,736 ) 32,017

Provision benefit for credit losses ( 6,405 ) ( 15,001 )

Net interest income after provision for credit losses 100,931 105,001

14 unchanged sentences

Advertising and promotion expense 1,104 877

Credit loss expense for off-balance sheet credit exposures 980 ( 575 ) 2,155 5,714

Credit loss benefit for off-balance sheet credit exposures ( 2,390 ) ( 875 )

Other operating expenses 9,367 10,103

11 unchanged sentences

Consolidated Statements of Comprehensive Income

Three and nine months ended September 30, 2021 and 2020 (Unaudited)

Three months ended March 31, 2022 and 2021 (Unaudited)

(Dollars in Thousands)

Three months ended September 30, Nine months ended September 30,

2021 2020 2021 2020

Three months ended March 31,

Net income $ 43,962 $ 48,559

Other comprehensive income, net of tax:

Other comprehensive (loss) income, net of tax:

Unrealized gains and losses on available for sale debt securities:

Net unrealized (losses) gains arising during the period ( 7,990 ) ( 428 ) ( 14,569 ) 15,388

Net unrealized losses arising during the period ( 84,971 ) ( 9,019 )

Reclassification adjustment for gains included in net income — ( 171 )

Total ( 84,971 ) ( 9,190 )

Unrealized gains (losses) on derivatives 1,768 880 5,165 ( 6,117 )

Unrealized gains on derivatives 10,438 4,621

Amortization related to post-retirement obligations ( 276 ) ( 109 )

Total other comprehensive (loss) income ( 6,325 ) 537 ( 9,898 ) 9,510

Total comprehensive income $ 30,943 $ 27,680 $ 120,720 $ 65,894

Total other comprehensive loss ( 74,809 ) ( 4,678 )

Total comprehensive (loss) income $ ( 30,847 ) $ 43,881

See accompanying notes to unaudited consolidated financial statements.

2 unchanged sentences

Consolidated Statements of Changes in Stockholders’ Equity

For the three and nine months ended September 30, 2020 (Unaudited)

For the three months ended March 31, 2021 (Unaudited)

(Dollars in Thousands)

For the three months ended September 30, 2020

COMMON STOCK ADDITIONAL PAID-IN CAPITAL RETAINED EARNINGS ACCUMULATED OTHER COMPREHENSIVE INCOME TREASURYSTOCK UNALLOCATED ESOP SHARES COMMON STOCK ACQUIRED BY DEFERRED COMP PLANS DEFERRED COMPENSATION PLANS TOTAL STOCKHOLDERS’ EQUITY

Balance at June 30, 2020 $ 832 $ 1,009,978 $ 685,509 $ 12,794 $ ( 275,359 ) $ ( 23,347 ) $ ( 3,498 ) $ 3,498 $ 1,410,407

Net income — — 27,143 — — — — — 27,143

Other comprehensive income, net of tax — — — 537 — — — — 537

Cash dividends paid — — ( 18,412 ) — — — — — ( 18,412 )

Acquisition of supplemental director retirement plan — — — — — — ( 1,336 ) 1,336 —

Distributions from DDFP — 16 — — — — 168 ( 168 ) 16

Purchases of treasury stock — — — — ( 961 ) — — — ( 961 )

Purchase of employee restricted shares to fund statutory tax withholding — — — — ( 13 ) — — — ( 13 )

Allocation of ESOP shares — ( 163 ) — — — 768 — — 605

Allocation of Stock Award Plan ("SAP") shares — 1,371 — — — — — — 1,371

Treasury shares issued due to acquisition — ( 50,387 ) — — 231,215 — — — 180,828

Allocation of stock options — 48 — — — — — — 48

Balance at September 30, 2020 $ 832 $ 960,863 $ 694,240 $ 13,331 $ ( 45,118 ) $ ( 22,579 ) $ ( 4,666 ) $ 4,666 $ 1,601,569

For the nine months ended September 30, 2020

COMMONSTOCK ADDITIONAL

PAID-IN CAPITAL RETAINEDEARNINGS ACCUMULATED OTHER COMPREHENSIVE INCOME TREASURYSTOCK UNALLOCATED

ESOP SHARES COMMON STOCK ACQUIRED BY DEFERRED COMP PLANS DEFERRED COMPENSATION PLANS TOTAL

STOCKHOLDERS’ EQUITY

For the three months ended March 31, 2021

COMMON STOCK ADDITIONAL PAID-IN CAPITAL RETAINED EARNINGS ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) TREASURYSTOCK UNALLOCATED ESOP SHARES COMMON STOCK ACQUIRED BY DEFERRED COMP PLANS DEFERRED COMPENSATION PLANS TOTAL STOCKHOLDERS’ EQUITY

Balance at December 31, 2020 $ 832 $ 962,453 $ 718,090 $ 17,655 $ ( 59,018 ) $ ( 20,215 ) $ ( 4,549 ) $ 4,549 $ 1,619,797

Net income — — 48,559 — — — — — 48,559

Other comprehensive income, net of tax — — — 9,510 — — — — 9,510

Other comprehensive loss, net of tax — — — ( 4,678 ) — — — — ( 4,678 )

Cash dividends paid — — ( 18,075 ) — — — — — ( 18,075 )

Effect of adopting Accounting Standards Update No.

2016-13 ("CECL")

— — ( 8,311 ) — — — — — ( 8,311 )

Acquisition of supplemental director retirement plan — — — — — — ( 1,336 ) 1,336 —

Distributions from DDFP — 28 — — — — 168 ( 168 ) 28

4 unchanged sentences

Allocation of ESOP shares — 145 — — — 768 — — 913

Allocation of SAP shares — 3,866 — — — — — — 3,866

Treasury shares issued due to acquisition — ( 50,387 ) — — 231,215 — — — 180,828

Allocation of Stock Award Plan ("SAP") shares — 959 — — — — — — 959

Allocation of stock options — 53 — — — — — — 53

Balance at September 30, 2020 $ 832 $ 960,863 $ 694,240 $ 13,331 $ ( 45,118 ) $ ( 22,579 ) $ ( 4,666 ) $ 4,666 $ 1,601,569

Balance at March 31, 2021 $ 832 $ 963,556 $ 748,574 $ 12,977 $ ( 59,261 ) $ ( 19,447 ) $ ( 4,381 ) $ 4,381 $ 1,647,231

See accompanying notes to unaudited consolidated financial statements.

2 unchanged sentences

Consolidated Statements of Changes in Stockholders’ Equity

For the three and nine months ended September 30, 2021 (Unaudited)

For the three months ended March 31, 2022 (Unaudited)

(Dollars in Thousands)

For the three months ended September 30, 2021

For the three months ended March 31, 2022

COMMON STOCK ADDITIONAL PAID-IN CAPITAL RETAINED EARNINGS ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) TREASURY STOCK UNALLOCATED ESOP SHARES COMMON STOCK ACQUIRED BY DEFERRED COMP PLANS DEFERRED COMPENSATION PLANS TOTAL STOCKHOLDERS’ EQUITY

Balance at June 30, 2021 832 965,470 775,235 14,082 ( 59,307 ) ( 18,678 ) ( 4,213 ) 4,213 1,677,634

Net income — — 37,268 — — — — — 37,268

Other comprehensive loss, net of tax — — — ( 6,325 ) — — — — ( 6,325 )

Cash dividends paid — — ( 17,790 ) — — — — — ( 17,790 )

Distributions from DDFP — 38 — — — — 89 ( 89 ) 38

Purchases of treasury stock — — — — ( 13,865 ) — — — ( 13,865 )

Allocation of ESOP shares — 225 — — — 769 — — 994

Allocation of SAP shares — 1,421 — — — — — — 1,421

Allocation of stock options — 49 — — — — — — 49

Balance at September 30, 2021 $ 832 $ 967,203 $ 794,713 $ 7,757 $ ( 73,172 ) $ ( 17,909 ) $ ( 4,124 ) $ 4,124 $ 1,679,424

For the nine months ended September 30, 2021

COMMONSTOCK ADDITIONAL

CAPITAL RETAINED EARNINGS ACCUMULATED

COMPREHENSIVE

INCOME (LOSS) TREASURY

STOCK UNALLOCATED

SHARES COMMON STOCK ACQUIRED BY DEFERRED COMP PLANS DEFERRED COMPENSATION PLANS TOTAL STOCKHOLDERS’ EQUITY

Balance at December 31, 2021 832 969,815 814,533 6,863 ( 79,603 ) ( 15,344 ) ( 3,984 ) 3,984 1,697,096

5 unchanged sentences

Purchase of employee restricted shares to fund statutory tax withholding — — — — ( 953 ) — — — ( 953 )

Shares issued dividend reinvestment plan — — — — — — — — —

Stock option exercises — — — — — — — — —

2 unchanged sentences

Allocation of stock options — 49 — — — — — — 49

Balance at September 30, 2021 $ 832 $ 967,203 $ 794,713 $ 7,757 $ ( 73,172 ) $ ( 17,909 ) $ ( 4,124 ) $ 4,124 $ 1,679,424

Balance at March 31, 2022 $ 832 $ 972,552 $ 839,807 $ ( 67,946 ) $ ( 109,581 ) $ ( 14,533 ) $ ( 3,844 ) $ 3,844 $ 1,621,131

See accompanying notes to unaudited consolidated financial statements.

2 unchanged sentences

Consolidated Statements of Cash Flows

Nine months ended September 30, 2021 and 2020 (Unaudited)

Three months ended March 31, 2022 and 2021 (Unaudited)

(Dollars in Thousands)

Nine months ended September 30,

Three months ended March 31,

Cash flows from operating activities:

2 unchanged sentences

Depreciation and amortization of intangibles 3,247 3,264

Provision (benefit) charge for credit losses on loans and securities ( 24,736 ) 32,017

Credit loss expense for off-balance sheet credit exposure 2,155 5,714

Deferred tax expense (benefit) 5,323 ( 7,531 )

Provision benefit for credit losses on loans and securities ( 6,405 ) ( 15,001 )

Credit loss benefit for off-balance sheet credit exposure ( 2,390 ) ( 875 )

Deferred tax expense 10,625 6,271

Amortization of operating lease right-of-use assets 2,807 2,812

13 unchanged sentences

Net gain on sale of foreclosed assets — ( 170 )

Decrease in accrued interest receivable 5,584 5,989

Decrease (increase) in other assets 10,596 ( 145,561 )

(Decrease) increase in other liabilities ( 31,000 ) 78,047

Decrease (increase) in accrued interest receivable 957 ( 2,567 )

(Increase) decrease in other assets ( 6,718 ) 41,160

Increase (decrease) in other liabilities 1,073 ( 44,565 )

Net cash provided by operating activities 51,135 36,416

7 unchanged sentences

Purchases of Federal Home Loan Bank stock — ( 1,656 )

Cash received, net of cash consideration paid for acquisition — 78,089

BOLI claim benefits received 3,851 6,527

Purchases of loans 2,610 —

Net decrease (increase) in loans 274,399 ( 668,612 )

Net (increase) decrease in loans ( 76,328 ) 24,217

Proceeds from sales of premises and equipment 8 15

3 unchanged sentences

Net increase in deposits 132,075 459,684

Nine months ended September 30,

Increase in mortgage escrow deposits 5,744 3,474

Cash dividends paid to stockholders ( 18,688 ) ( 18,075 )

Shares issued dividend reinvestment plan — 451

Purchase of treasury stock $ ( 29,025 ) $ ( 48 )

Three months ended March 31,

Purchase of employee restricted shares to fund statutory tax withholding ( 953 ) ( 915 )

2 unchanged sentences

Payments on long-term borrowings ( 229,111 ) ( 619,265 )

Net decrease in short-term borrowings ( 11,142 ) ( 74,783 )

Net cash provided by financing activities 375,230 728,976

Net increase (decrease) in short-term borrowings 1,943 ( 16,096 )

Net cash (used in) provided by financing activities ( 138,015 ) 209,397

Net (decrease) increase in cash and cash equivalents ( 279,317 ) 155,217

Cash and cash equivalents at beginning of period 685,163 418,083

Restricted cash at beginning of period 27,300 114,270

Total cash, cash equivalents and restricted cash at beginning of period 712,463 532,353

Cash and cash equivalents at end of period 428,326 644,940

Restricted cash at end of period 4,820 42,630

Total cash, cash equivalents and restricted cash at end of period $ 433,146 $ 687,570

Cash paid during the period for:

3 unchanged sentences

Transfer of loans receivable to foreclosed assets $ 47 $ 434

Acquisitions:

Non-cash assets acquired at fair value:

Investment securities $ — 255,242

Loans, net — 1,752,529

Bank-owned life insurance — 37,237

Goodwill and other intangible assets 1,422 $ 32,404

Bank premises and equipment — 16,620

Other assets ( 1,422 ) 19,786

Total non-cash assets acquired at fair value $ — $ 2,113,818

Liabilities assumed

Deposits $ — $ 1,757,777

Borrowings and subordinated debt — 226,656

Other Liabilities — 26,648

Total liabilities assumed $ — $ 2,011,081

Common stock issued for acquisitions $ — $ 180,828

See accompanying notes to unaudited consolidated financial statements.

8 unchanged sentences

Actual results could differ from these estimates.

The allowance for credit losses and the valuation of deferred tax assets are material estimates that are particularly susceptible to near-term change.

The allowance for credit losses and the valuation of deferred tax assets are estimates that are particularly susceptible to change.

The interim unaudited consolidated financial statements reflect all normal and recurring adjustments, which are, in the opinion of management, considered necessary for a fair presentation of the financial condition and results of operations for the periods presented.

The results of operations for the three and nine months ended September 30, 2021 are not necessarily indicative of the results of operations that may be expected for all of 2021.

The results of operations for the three months ended March 31, 2022 are not necessarily indicative of the results of operations that may be expected for all of 2022.

Certain information and note disclosures normally included in financial statements prepared in accordance with U.S.

2 unchanged sentences

Earnings Per Share

The following is a reconciliation of the numerators and denominators of the basic and diluted earnings per share calculations for the three and nine months ended September 30, 2021 and 2020 (dollars in thousands, except per share amounts):

Three months ended September 30,

Income Weighted

Outstanding Per

The following is a reconciliation of the numerators and denominators of the basic and diluted earnings per share calculations for the three months ended March 31, 2022 and 2021 (dollars in thousands, except per share amounts):

Three months ended March 31,

Income Weighted

Outstanding Per

Net income $ 37,268 $ 27,143

Basic earnings per share:

Income available to common stockholders $ 37,268 76,604,653 $ 0.49 $ 27,143 72,519,123 $ 0.37

Dilutive shares 80,553 85,175

Diluted earnings per share:

Income available to common stockholders $ 37,268 76,685,206 $ 0.49 $ 27,143 72,604,298 $ 0.37

Nine months ended September 30,

Income Weighted

Outstanding Per

Income Weighted

Common Shares Outstanding Per

Net income $ 43,962 $ 48,559

4 unchanged sentences

Income available to common stockholders $ 43,962 75,914,079 $ 0.58 $ 48,559 76,580,862 $ 0.63

Anti-dilutive stock options and awards at September 30, 2021 and 2020, totaling 830,628 shares and 1.1 million shares, respectively, were excluded from the earnings per share calculations.

Anti-dilutive stock options and awards at March 31, 2022 and 2021, totaling 971,452 shares and 1.2 million shares, respectively, were excluded from the earnings per share calculations.

Loans Receivable and Allowance for Credit Losses

On January 1, 2020, the Company adopted ASU 2016-13, "Measurement of Credit Losses on Financial Instruments,” which replaced the incurred loss methodology with the current expected credit loss methodology (“CECL”).

The Company used the modified retrospective method for all financial assets measured at amortized cost and off-balance sheet credit exposures.

Results for reporting periods beginning after January 1, 2020 are presented under CECL.

Going forward, the impact of utilizing the CECL approach to calculate the allowance for credit losses on loans will be significantly influenced by the composition, characteristics and quality of the Company’s loan portfolio, as well as the prevailing economic conditions and forecast utilized.

The impact of utilizing the current expected credit loss ("CECL") methodology approach to calculate the allowance for credit losses on loans is significantly influenced by the composition, characteristics and quality of the Company’s loan portfolio, as well as the prevailing economic conditions and forecast utilized.

Material changes to these and other relevant factors may result in greater volatility to the allowance for credit losses, and therefore, greater volatility to the Company’s reported earnings.

For the three and nine months ended September 30, 2021, the improved economic outlook and the resulting lower allowance requirements led to reductions to the provisions for credit losses and off-balance sheet credit exposures.

For the three months ended March 31, 2022, the improved economic outlook and the resulting lower allowance requirements led to reductions to the provisions for credit losses and off-balance sheet credit exposures.

See Note 3 to the Consolidated Financial Statements for more information on the allowance for credit losses on loans.

5 unchanged sentences

The Company completed its annual goodwill impairment test as of July 1, 2021.

Based upon its qualitative assessment of goodwill, the Company concluded that goodwill was not impaired and no further quantitative analysis was warranted.

Business Combinations

SB One Bancorp Acquisition

On July 31, 2020, the Company completed its acquisition of SB One Bancorp ("SB One"), which added $ 2.20 billion to total assets, $ 1.77 billion to total loans and $ 1.76 billion to total deposits, and 18 full-service banking offices in New Jersey and New York.

As part of the acquisition, the addition of SB One Insurance Agency, Inc.

expanded the Company's product offerings to its customers to include an array of commercial and personal insurance products.

Under the merger agreement, each share of outstanding SB One common stock was exchanged for 1.357 shares of the Company's common stock.

The Company issued 12.8 million shares of common stock from treasury stock, plus cash in lieu of fractional shares in the acquisition of SB One.

The total consideration paid for the acquisition of SB One was $ 180.8 million.

In connection with the acquisition, SB One Bank, a wholly owned subsidiary of SB One, was merged with and into Provident Bank, a wholly owned subsidiary of the Company.

The acquisition was accounted for under the acquisition method of accounting.

Under this method of accounting, the purchase price has been allocated to the respective assets acquired and liabilities assumed based upon their estimated fair values, net of tax.

The excess of consideration paid over the estimated fair value of the net assets acquired was recorded as goodwill and initially totaled $ 22.4 million.

The calculation of goodwill was subject to change for up to one year after the date of acquisition as additional information relative to the closing date estimates and uncertainties become available.

(see Goodwill section for further details).

The following table summarizes the estimated fair values of the assets acquired and the liabilities assumed at the date of acquisition from SB One, net of cash consideration paid (in thousands):

At July 31, 2020

Assets acquired:

Cash and cash equivalents, net $ 78,089

Available for sale debt securities 231,645

Held to maturity debt securities 12,381

Federal Home Loan Bank stock 11,216

Loans 1,766,115

Allowance for credit losses on PCD loans ( 13,586 )

Loans, net 1,752,529

Bank-owned life insurance 37,237

Banking premises and equipment 16,620

Accrued interest receivable 8,947

Goodwill 22,439

Other intangibles assets 9,965

Foreclosed assets, net 2,441

Other assets 12,199

Total assets acquired $ 2,195,708

Liabilities assumed:

Deposits 1,757,777

Borrowed funds 201,582

Subordinated debentures 25,074

Other liabilities 30,447

Total liabilities assumed $ 2,014,880

Net assets acquired $ 180,828

Fair Value Measurement of Assets Assumed and Liabilities Assumed

The methods used to determine the fair value of the assets acquired and liabilities assumed in the SB One acquisition were as follows:

Securities Available for Sale

The estimated fair values of the available for sale debt securities, primarily comprised of U.S.

Government agency mortgage-backed securities and U.S.

government agencies and municipal bonds carried on SB One's balance sheet was confirmed using open market pricing provided by multiple independent securities brokers.

Management reviewed the open market quotes used in pricing the securities and a fair value adjustment was not recorded on the investments.

Held to Maturity Debt Securities

The estimated fair values of the held to maturity debt securities, primarily comprised of municipal bonds, were determined using open market pricing provided by multiple independent securities brokers.

Management reviewed the open market quotes used in pricing the securities.

A fair value premium of $ 133,000 was recorded on the investments.

Loans acquired in the SB One acquisition were recorded at fair value, and there was no carryover related allowance for loan and lease losses.

The fair values of loans acquired from SB One were estimated using the discounted cash flow method based on the remaining maturity and repricing terms.

Cash flows were adjusted for expected losses and prepayments.

Projected cash flows were then discounted to present value based on:

the relative risk of the cash flows, taking into account the loan type, liquidity risk, the maturity of the loans, servicing costs, and a required return on capital;

and monthly principal and interest cash flows were discounted to present value and summed to arrive at the calculated value of the loans.

The fair value of the acquired loans receivable had a gross amortized cost basis of $ 1.77 billion.

For loans acquired without evidence of more-than-insignificant deterioration in credit quality since origination, the Company prepared the interest rate loan fair value and credit fair value adjustments.

Loans were grouped into pools based on similar characteristics, such as loan type, fixed or adjustable interest rates, payment type, index rate and caps/floors, and non-accrual status.

The loans were valued at the sub-pool level and were pooled at the summary level based on loan type.

Market rates for similar loans were obtained from various internal and external data sources and reviewed by management for reasonableness.

The average of these market rates was used as the fair value interest rate that a market participant would utilize.

A present value approach was utilized to calculate the interest rate fair value premium of $ 8.4 million.

Loans acquired that have experienced more-than-insignificant deterioration in credit quality since origination are considered purchased credit deteriorated (“PCD”) loans.

The Company evaluated acquired loans for deterioration in credit quality based on any of, but not limited to, the following:

(1) non-accrual status;

(2) troubled debt restructured designation;

(3) risk ratings of special mention, substandard or doubtful;

(4) watchlist credits;

and (5) delinquency status, including loans that are current on acquisition date, but had been previously delinquent.

At the acquisition date, an estimate of expected credit losses is made for groups of PCD loans with similar risk characteristics and individual PCD loans without similar risk characteristics.

Additionally for PCD loans, an allowance for credit losses was calculated using management's best estimate of projected losses over the remaining life of the loans in accordance with ASC 326-20.

This represents the portion of the loan balances that has been deemed uncollectible based on the Company’s expectations of future cash flows for each respective PCD loan pool, given the outlook and forecasts inclusive of the impact of the COVID-19 pandemic and related fiscal and regulatory interventions.

The expected lifetime losses were calculated using historical losses observed at the Bank, SB One and peer banks.

A $ 13.6 million allowance for credit losses was recorded on PCD loans.

The interest rate fair value adjustment related to PCD loans will be substantially recognized as interest income on a level yield amortization or straight line method over the expected life of the loans.

Subsequent to the acquisition date, the initial allowance for credit losses on PCD loans will increase or decrease based on future evaluations, with changes recognized in the provision for credit losses.

The table below illustrates the fair value adjustments made to the amortized cost basis in order to present a fair value of the loans acquired (in thousands):

Gross amortized cost basis at July 31, 2020 $ 1,787,057

Interest rate fair value adjustment on all loans 455

Credit fair value adjustment on non-PCD loans ( 21,397 )

Fair value of acquired loans at July 31, 2020 1,766,115

Allowance for credit losses on PCD loans ( 13,586 )

Fair value of acquired loans at July 31, 2020 $ 1,752,529

The table below is a summary of the PCD loans accounted for in accordance with ASC 310-26 that were acquired in the SB One acquisition as of the closing date (in thousands):

Gross amortized cost basis at July 31, 2020 $ 315,784

Interest component of expected cash flows (accretable difference) ( 7,988 )

Allowance for credit losses on PCD loans ( 13,586 )

Net PCD loans $ 294,210

Banking Premises and Equipment

The Company acquired 18 branches from SB One, eight of which were owned premises.

The fair value of properties acquired was derived by valuations prepared by an independent third party utilizing the sales comparison approach to value the property as improved.

Core Deposit Intangible and Customer Relationship Intangible

The fair value of the core deposit intangible was determined based on a discounted cash flow analysis using a discount rate commensurate with market participants.

To calculate cash flows, deposit account servicing costs (net of deposit fee income) and interest expense on deposits were compared to the cost of alternative funding sources available through national brokered CD offering rates.

The projected cash flows were developed using projected deposit attrition rates.

The fair value of the customer relationship intangible was determined based on a discounted cash flow analysis using the excess of the future cash inflows (i.e., revenue from existing customer relationships) over the related cash outflows (i.e., operating costs) generated over the useful life of the acquired customer base.

These cash flows were discounted to present value using an asset-specific risk-adjusted discount rate.

The projected cash flows were developed using projected customer revenue retention rates.

The core deposit intangible totaled $ 3.2 million and is being amortized over its estimated useful life of approximately 10 years based on dollar weighted deposit runoff on an annualized basis.

The insurance agency customer relationship intangible totaled $ 6.8 million and is being amortized over its estimated useful life of approximately 13 years based on customer revenue attrition on an annualized basis.

As noted above, the acquisition was accounted for under the acquisition method of accounting.

Under this method of accounting, the purchase price has been allocated to the respective assets acquired and liabilities assumed based upon their estimated fair values, net of tax.

The excess of consideration paid over the estimated fair value of the net assets acquired was recorded as goodwill, and initially totaled $ 22.4 million.

The calculation of goodwill was subject to change for up to one year after the date of acquisition as additional information relative to the closing date estimates and uncertainties become available.

The Company updated certain estimates used in the purchase price allocation, primarily with respect to the marginal tax rate of deferred tax assets (“DTA”).

As a result, the fair value of the net assets acquired decreased by $ 1.4 million.

The impact of these measurement period adjustments increased goodwill to $ 23.9 million.

The Company has finalized the purchase price allocation and these measurement period adjustments are recorded as current period adjustments in accordance with ASU 2015-16.

Goodwill is not deductible for tax purposes and will be evaluated annually for impairment.

Bank Owned Life Insurance ("BOLI")

SB One's BOLI cash surrender value was $ 37.2 million with no fair value adjustment.

Time Deposits

The fair value adjustment for time deposits represents a discount from the value of the contractual repayments of fixed-maturity deposits using prevailing market interest rates for similar-term time deposits.

The time deposit discount of approximately $ 4.3 million is being amortized into income on a level yield amortization method over the contractual life of the deposits.

The fair value of Federal Home Loan Bank of New York ("FHLBNY") advances was determined based on a discounted cash flow analysis using a discount rate commensurate with FHLBNY rates as of July 31, 2020.

The cash flows of the advances were projected based on the scheduled payments of the fixed rate of each advance.

Subordinated Debentures

At the valuation date, SB One had one outstanding Trust Preferred and one subordinated debt issuance with an aggregate balance of $ 27.5 million .

The fair value of Trust Preferred and subordinated debt issuances was determined based on a discounted cash flow analysis using a discount rate commensurate with yields and terms of comparable issuances.

The cash flows were projected through the remaining contractual term of the Trust Preferred issuance and based on the call date for the subordinated debt issuance.

As of March 31, 2022, it is not more likely than not that the fair value of Provident Financial Services, Inc., the reporting unit, is below its carrying amount and therefore a test for impairment between annual tests is not required at this time.

Investment Securities

At September 30, 2021, the Company had $ 1.92 billion and $ 427.0 million in available for sale debt securities and held to maturity debt securities, respectively.

At March 31, 2022, the Company had $ 2.07 billion and $ 422.0 million in available for sale debt securities and held to maturity debt securities, respectively.

Many factors, including lack of liquidity in the secondary market for certain securities, variations in pricing information, regulatory actions, changes in the business environment or any changes in the competitive marketplace could have an adverse effect on the Company’s investment portfolio.

The total number of available for sale and held to maturity debt securities in an unrealized loss position at September 30, 2021 totaled 160 , compared with 49 at December 31, 2020.

The increase in the number of securities in an unrealized loss position at September 30, 2021 was due to higher current market interest rates compared to rates at December 31, 2020.

On January 1, 2020, the Company adopted CECL which replaces the incurred loss methodology with an expected loss methodology.

The Company did not record an allowance for credit losses on available for sale debt securities as this portfolio consisted primarily of debt securities explicitly or implicitly backed by the U.S.

Government for which credit risk is deemed immaterial.

The impact going forward will depend on the composition, characteristics, and credit quality of the securities portfolio as well as the economic conditions at future reporting periods.

The Company recorded a $ 70,000 increase to the allowance for credit losses on held to maturity debt securities with a corresponding cumulative effect adjustment to decrease retained earnings by $ 52,000 , net of income taxes.

(See Adoption of CECL table below for additional detail.)

The total number of available for sale and held to maturity debt securities in an unrealized loss position at March 31, 2022 totaled 489 , compared with 166 at December 31, 2021.

The increase in the number of securities in an unrealized loss position at March 31, 2022 was due to higher current market interest rates compared to rates at December 31, 2021.

Management measures expected credit losses on held to maturity debt securities on a collective basis by security type.

8 unchanged sentences

government, are highly rated by major rating agencies and have a long history of no credit losses.

The majority of the state and municipal, and corporate obligations carry no lower than A ratings from the rating agencies at September 30, 2021 and the Company had two securities rated BBB by Moody’s Investors Service.

The Company adopted CECL using the prospective transition approach for debt securities for which other-than-temporary impairment had been recognized prior to January 1, 2020.

As a result, the amortized cost basis remains the same before and after the effective date of CECL.

The majority of the state and municipal, and corporate obligations carry no lower than A ratings from the rating agencies at March 31, 2022 and the Company had one security rated BBB by Moody’s Investors Service.

Available for Sale Debt Securities

The following tables present the amortized cost, gross unrealized gains, gross unrealized losses and the fair value for available for sale debt securities at September 30, 2021 and December 31, 2020 (in thousands):

September 30, 2021

The following tables present the amortized cost, gross unrealized gains, gross unrealized losses and the fair value for available for sale debt securities at March 31, 2022 and December 31, 2021 (in thousands):

March 31, 2022

Treasury obligations $ 274,876 — ( 14,711 ) 260,165

5 unchanged sentences

December 31, 2021

Agency obligations $ 1,001 8 — 1,009

Treasury obligations $ 196,897 298 ( 866 ) 196,329

Mortgage-backed securities 1,711,312 14,082 ( 16,563 ) 1,708,831

3 unchanged sentences

$ 2,058,135 17,619 ( 17,903 ) 2,057,851

The amortized cost and fair value of available for sale debt securities at September 30, 2021, by contractual maturity, are shown below (in thousands).

The amortized cost and fair value of available for sale debt securities at March 31, 2022, by contractual maturity, are shown below (in thousands).

Expected maturities may differ from contractual maturities due to prepayment or early call privileges of the issuer.

September 30, 2021

March 31, 2022

Due in one year or less $ 997 1,005

4 unchanged sentences

Investments which pay principal on a periodic basis totaling $ 1.81 billion at amortized cost and $ 1.72 billion at fair value are excluded from the table above, as their expected lives are likely to be shorter than the contractual maturity date due to principal prepayments.

For the three months ended September 30, 2021, no securities were sold or called from the available for sale debt securities portfolio.

For the nine months ended September 30, 2021, proceeds from sales on securities in the available for sale debt securities portfolio totaled $ 9.4 million, with gains of $ 230,000 and no loss recognized.

For the three and nine months ended September 30, 2020, proceeds from calls on securities in the available for sale debt securities portfolio totaled $ 13.9 million, with no gain or loss recognized.

The following tables present the fair values and gross unrealized losses for available for sale debt securities in an unrealized loss position at September 30, 2021 and December 31, 2020 (in thousands):

September 30, 2021

For the three months ended March 31, 2022, no securities were sold or called from the available for sale debt securities portfolio.

For the three months ended March 31, 2021, proceeds from calls on securities in the available for sale debt securities portfolio totaled $ 9.4 million, with gains of $ 230,000 and no loss recognized.

The following tables present the fair values and gross unrealized losses for available for sale debt securities in an unrealized loss position at March 31, 2022 and December 31, 2021 (in thousands):

March 31, 2022

Less than 12 months 12 months or longer Total

1 unchanged sentence

Mortgage-backed securities 1,352,508 ( 84,395 ) 155,913 ( 13,665 ) 1,508,422 ( 98,060 )

Asset-backed securities 1,810 ( 98 ) — — 1,810 ( 98 )

State and municipal obligations 60,024 ( 4,638 ) — — 60,024 ( 4,638 )

3 unchanged sentences

Less than 12 months 12 months or longer Total

Treasury obligations $ 98,621 ( 866 ) — — 98,621 ( 866 )

Mortgage-backed securities 1,147,403 ( 15,176 ) 33,850 ( 1,387 ) 1,181,253 ( 16,563 )

Asset-backed securities 1,930 ( 5 ) — — 1,930 ( 5 )

State and municipal obligations 10,732 ( 122 ) — — 10,732 ( 122 )

1 unchanged sentence

$ 1,277,160 ( 16,516 ) 33,850 ( 1,387 ) 1,311,010 ( 17,903 )

The number of available for sale debt securities in an unrealized loss position at September 30, 2021 totaled 99 , compared with 42 at December 31, 2020.

The increase in the number of securities in an unrealized loss position at September 30, 2021 was due to higher current market interest rates compared to rates at December 31, 2020.

At September 30, 2021, there was one private label mortgage-backed security in an unrealized loss position, with an amortized cost of $ 17,277 and an unrealized loss of $ 450 .

This private-label mortgage-backed security was investment grade at September 30, 2021.

The number of available for sale debt securities in an unrealized loss position at March 31, 2022 totaled 309 , compared with 113 at December 31, 2021.

The increase in the number of securities in an unrealized loss position at March 31, 2022 was due to higher current market interest rates compared to rates at December 31, 2021.

At March 31, 2022, there were three private label mortgage-backed securities in an unrealized loss position, with an amortized cost of $ 3.4 million and an unrealized loss of $ 212,000 .

These private-label mortgage-backed securities were investment grade at March 31, 2022.

Held to Maturity Debt Securities

The following tables present the amortized cost, gross unrealized gains, gross unrealized losses and the estimated fair value for held to maturity debt securities at September 30, 2021 and December 31, 2020 (in thousands):

September 30, 2021

The following tables present the amortized cost, gross unrealized gains, gross unrealized losses and the estimated fair value for held to maturity debt securities at March 31, 2022 and December 31, 2021 (in thousands):

March 31, 2022

Treasury obligations $ 1,430 — — 1,430

Agency obligations 9,997 — ( 622 ) 9,375

3 unchanged sentences

$ 421,992 3,412 ( 7,740 ) 417,664

At September 30, 2021, the allowance for credit losses on held to maturity debt securities totaled $ 42,000 .

At March 31, 2022, the allowance for credit losses on held to maturity debt securities totaled $ 34,000 and is excluded from amortized cost in the table above.

December 31, 2021

4 unchanged sentences

$ 436,189 14,482 ( 962 ) 449,709

At December 31, 2020, the allowance for credit losses on held to maturity debt securities totaled $ 78,000 .

At December 31, 2021, the allowance for credit losses on held to maturity debt securities totaled $ 39,000 and is excluded from amortized cost in the table above.

The Company generally purchases securities for long-term investment purposes, and differences between amortized cost and fair value may fluctuate during the investment period.

There were no sales of securities from the held to maturity debt securities portfolio for the three and nine months ended September 30, 2021 and 2020.

For the three and nine months ended September 30, 2021, proceeds from calls on securities in the held to maturity debt securities portfolio totaled $ 21.1 million and $ 34.0 million, respectively.

As to these calls on securities, for the three and nine months ended September 30, 2021, there were gross gains of $ 26,505 and no gross losses.

For the three and nine months ended September 30, 2020, proceeds from calls on securities in the held to maturity debt securities portfolio totaled $ 13.7 million and $ 39.5 million, respectively.

As to these calls on securities, for the three months ended September 30, 2020, there were no gross gains and no gross losses.

For the nine months ended September 30, 2020, there were gross gains of 55,000 and no gross losses.

The amortized cost and fair value of investment securities in the held to maturity debt securities portfolio at September 30, 2021 by contractual maturity are shown below (in thousands).

There were no sales of securities from the held to maturity debt securities portfolio for the three months ended March 31, 2022 and 2021.

For the three months ended March 31, 2022, proceeds from calls on securities in the held to maturity debt securities portfolio totaled $ 15.8 million with gross gains of $ 16,000 and no gross losses.

For the three months ended March 31, 2021, proceeds from calls on securities in the held to maturity debt securities portfolio totaled $ 6.8 million with gross losses of $ 33,000 and no gross gains.

The amortized cost and fair value of investment securities in the held to maturity debt securities portfolio at March 31, 2022 by contractual maturity are shown below (in thousands).

Expected maturities may differ from contractual maturities due to prepayment or early call privileges of the issuer.

September 30, 2021

March 31, 2022

Due in one year or less $ 17,286 17,338

5 unchanged sentences

Additionally, the allowance for credit losses totaling $ 34,000 is excluded from the table above.

The following table illustrates the impact of the January 1, 2020 adoption of CECL on held to maturity debt securities (in thousands):

January 1, 2020

As reported under CECL Prior to CECL Impact of CECL adoption

Held to Maturity Debt Securities

Allowance for credit losses on corporate securities $ 6 — 6

Allowance for credit losses on municipal securities 64 — 64

Allowance for credit losses on held to maturity debt securities $ 70 — 70

The following tables present the fair values and gross unrealized losses for held to maturity debt securities in an unrealized loss position at September 30, 2021 and December 31, 2020 (in thousands):

September 30, 2021 Unrealized Losses

The following tables present the fair values and gross unrealized losses for held to maturity debt securities in an unrealized loss position at March 31, 2022 and December 31, 2021 (in thousands):

March 31, 2022 Unrealized Losses

Less than 12 months 12 months or longer Total

9 unchanged sentences

$ 44,820 ( 798 ) 5,022 ( 164 ) 49,842 ( 962 )

The number of held to maturity debt securities in an unrealized loss position at September 30, 2021 totaled 61 , compared with 7 at December 31, 2020.

The increase in the number of securities in an unrealized loss position at September 30, 2021, was due to higher current market interest rates compared to rates at December 31, 2020.

The number of held to maturity debt securities in an unrealized loss position at March 31, 2022 totaled 180 , compared with 53 at December 31, 2021.

The increase in the number of securities in an unrealized loss position at March 31, 2022, was due to higher current market interest rates compared to rates at December 31, 2021.

Credit Quality Indicators.

The following table provides the amortized cost of held to maturity debt securities by credit rating as of September 30, 2021 (in thousands):

September 30, 2021

The following table provides the amortized cost of held to maturity debt securities by credit rating as of March 31, 2022 (in thousands):

March 31, 2022

Total Portfolio AAA AA A BBB Not Rated Total

Treasury Obligations $ 1,430 — — — — 1,430

Agency obligations 9,997 — — — — 9,997

11 unchanged sentences

Credit quality indicators are metrics that provide information regarding the relative credit risk of debt securities.

At September 30, 2021, the held to maturity debt securities portfolio was comprised of 14 % rated AAA, 73 % rated AA, 13 % rated A, and less than 1 % either below an A rating or not rated by Moody’s Investors Service or Standard and Poor’s.

At March 31, 2022, the held to maturity debt securities portfolio was comprised of 15 % rated AAA, 73 % rated AA, 11 % rated A, and less than 1 % either below an A rating or not rated by Moody’s Investors Service or Standard and Poor’s.

Securities not explicitly rated, such as U.S.

Government mortgage-backed securities, were grouped where possible under the credit rating of the issuer of the security.

At September 30, 2021, the allowance for credit losses on held to maturity debt securities was $ 42,000 , a decrease from $ 78,000 at December 31, 2020.

At March 31, 2022, the allowance for credit losses on held to maturity debt securities was $ 34,000 , a decrease from $ 39,000 at December 31, 2021.

Loans Receivable and Allowance for Credit Losses

On January 1, 2020, the Company adopted CECL, which replaced the incurred loss methodology with an expected loss methodology.

The adoption of the new standard resulted in the Company recording a $ 7.9 million increase to the allowance for credit losses on loans with a corresponding cumulative effect adjustment to decrease retained earnings by $ 5.9 million, net of income taxes.

(See Adoption of CECL table below for additional detail.)

Loans receivable at September 30, 2021 and December 31, 2020 are summarized as follows (in thousands):

September 30, 2021 December 31, 2020

Loans receivable at March 31, 2022 and December 31, 2021 are summarized as follows (in thousands):

March 31, 2022 December 31, 2021

Mortgage loans:

8 unchanged sentences

Premiums on purchased loans 1,482 1,451

Unearned discounts ( 6 ) ( 12 )

Net deferred fees ( 14,735 ) ( 18,522 )

Net deferred fees and unearned discounts ( 12,520 ) ( 13,706 )

Total loans $ 9,662,882 9,581,624

In the first quarter of 2021, $ 101.7 million of loans acquired in the SB One transaction that were previously classified as consumer loans were classified as commercial mortgage loans, following further analysis of the underwriting documents and operational intent of the borrower.

These loans are comprised of term loans and lines of credit secured by 1-4 family residential properties that are held by borrowers to generate rental income.

The following tables summarize the aging of loans receivable by portfolio segment and class of loans (in thousands):

September 30, 2021

March 31, 2022

30-59 Days 60-89 Days Non-accrual Recorded

1 unchanged sentence

Due Current Total Loans

Receivable Non-accrual loans with no related allowance

Receivable Non-accrual loans with no specific allowance

Mortgage loans:

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accruing Total Past

Due Current Total Loans Receivable Non-accrual loans with no related allowance

Due Current Total Loans Receivable Non-accrual loans with no specific allowance

Mortgage loans:

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Included in loans receivable are loans for which the accrual of interest income has been discontinued due to deterioration in the financial condition of the borrowers.

The principal amounts of these non-accrual loans were $ 66.2 million and $ 87.1 million at September 30, 2021 and December 31, 2020, respectively.

Included in non-accrual loans were $ 28.5 million and $ 35.3 million of loans which were less than 90 days past due at September 30, 2021 and December 31, 2020, respectively.

There were no loans 90 days or greater past due and still accruing interest at September 30, 2021 and December 31, 2020.

Management has elected to measure an allowance for credit losses for accrued interest receivables specifically related to any loan that has been deferred as a result of COVID-19.

The principal amounts of these non-accrual loans were $ 44.3 million and $ 48.0 million at March 31, 2022 and December 31, 2021, respectively.

Included in non-accrual loans were $ 20.3 million and $ 23.0 million of loans which were less than 90 days past due at March 31, 2022 and December 31, 2021, respectively.

There were no loans 90 days or greater past due and still accruing interest at March 31, 2022 and December 31, 2021.

Generally, accrued interest is written off by reversing interest income during the quarter the loan is moved from an accrual to a non-accrual status.

The Company defines an impaired loan as a non-homogeneous loan greater than $ 1.0 million, for which, based on current information, the Bank does not expect to collect all amounts due under the contractual terms of the loan agreement.

The Company defines an impaired loan as a non-homogeneous loan greater than $ 1.0 million, for which, based on current information, it is not expected to collect all amounts due under the contractual terms of the loan agreement.

Impaired loans also include all loans modified as troubled debt restructurings (“TDRs”).

3 unchanged sentences

A financial asset is considered collateral-dependent when the debtor is experiencing financial difficulty and repayment is expected to be provided substantially through the sale or operation of the collateral.

For all classes of loans deemed collateral-dependent, the Company estimates expected credit losses based on the fair value of the collateral less any selling costs.

For all classes of loans deemed collateral-dependent, the Company estimates expected credit losses based on the collateral’s fair value less any selling costs.

A specific allocation of the allowance for credit losses is established for each collateral-dependent loan with a carrying balance greater than the collateral’s fair value, less estimated selling costs.

3 unchanged sentences

The Company believes there have been no significant time lapses resulting from this process.

At September 30, 2021, there were 159 impaired loans totaling $ 68.0 million.

Included in this total were 111 TDRs related to 107 borrowers totaling $ 21.8 million that were performing in accordance with their restructured terms and which continued to accrue interest at September 30, 2021.

At March 31, 2022, there were 134 impaired loans totaling $ 48.3 million.

Included in this total were 105 TDRs related to 102 borrowers totaling $ 20.3 million that were performing in accordance with their restructured terms and which continued to accrue interest at March 31, 2022.

At December 31, 2021, there were 155 impaired loans totaling $ 52.3 million, of which 132 loans totaling $ 30.6 million were TDRs.

Included in this total were 115 TDRs to 111 borrowers totaling $ 21.9 million that were performing in accordance with their restructured terms and which continued to accrue interest at December 31, 2021.

At September 30, 2021 and December 31, 2020, the Company had $ 31.7 million and $ 26.3 million related to the fair value of underlying collateral-dependent impaired loans, respectively.

These collateral-dependent impaired loans at September 30, 2021 consisted of $ 30.1 million in commercial loans, $ 1.6 million in residential real estate loans, and $ 75,000 in consumer loans.

At March 31, 2022 and December 31, 2021, the fair value of the assets securing collateral-dependent impaired loans totaled $ 16.2 million and $ 18.2 million, respectively.

These collateral-dependent impaired loans at March 31, 2022 consisted of $ 14.4 million in commercial loans, $ 1.7 million in residential real estate loans, and $ 64,000 in consumer loans.

The collateral for these impaired loans was primarily real estate.

The activity in the allowance for credit losses by portfolio segment for the three and nine months ended September 30, 2021 and 2020 was as follows (in thousands):

Three months ended September 30, Mortgage loans Commercial loans Consumer loans Total

Balance at beginning of period $ 55,469 21,262 4,228 80,959

Provision charge (benefit) to operations 626 963 ( 589 ) 1,000

Recoveries of loans previously charged-off 71 336 140 547

Loans charged-off ( 2,110 ) ( 263 ) ( 100 ) ( 2,473 )

Balance at end of period $ 54,056 22,298 3,679 80,033

Balance at beginning of period $ 54,871 25,284 6,104 86,259

Provision charge to operations 2,922 2,767 722 6,411

Initial allowance on credit loans related to PCD loans 11,984 1,582 20 13,586

Recoveries of loans previously charged-off 35 679 144 858

Loans charged-off ( 22 ) ( 727 ) ( 51 ) ( 800 )

Balance at end of period $ 69,790 29,585 6,939 106,314

Nine months ended September 30, Mortgage loans Commercial loans Consumer loans Total

The activity in the allowance for credit losses by portfolio segment for the three months ended March 31, 2022 and 2021 was as follows (in thousands):

Three months ended March 31, Mortgage loans Commercial loans Consumer loans Total

Balance at beginning of period $ 52,104 26,343 2,293 80,740

4 unchanged sentences

Balance at beginning of period $ 68,307 27,084 6,075 101,466

Provision charge to operations 17,987 12,672 1,352 32,011

Initial allowance on credit loans related to PCD loans 11,984 1,582 20 13,586

Provision benefit to operations ( 13,467 ) ( 467 ) ( 1,066 ) ( 15,000 )

Recoveries of loans previously charged-off 276 528 303 1,107

Increase (decrease) due to initial CECL adoption - retained earnings 14,188 ( 9,974 ) 3,706 7,920

Loans charged-off ( 918 ) ( 843 ) ( 221 ) ( 1,982 )

Balance at end of period $ 54,198 26,302 5,091 85,591

As a result of the January 1, 2020 adoption of CECL, the Company recorded a $ 7.9 million increase to the allowance for credit losses on loans.

For the three and nine months ended September 30, 2021, the Company recorded a $ 1.0 million provision for credit losses on loans and a $ 24.7 million negative provision for credit losses on loans, respectively.

The reduction in provision for credit losses for three and nine months ended September 30, 2021, compared to the same period in the prior year, was primarily the result of improved asset quality, an improved economic forecast and the resultant favorable impact on expected credit losses, compared to the prior year where the provision for credit losses was based upon a weak economic forecast and a more uncertain outlook attributable to the COVID-19 pandemic.

The following table illustrates the impact of the January 1, 2020 adoption of CECL on the allowance for credit losses for the loan portfolio (in thousands):

January 1, 2020

As reported under CECL Prior to CECL Impact of CECL adoption

Residential $ 8,950 3,414 5,536

Commercial 17,118 12,831 4,287

Multi-family 9,519 3,374 6,145

Construction 4,152 5,892 ( 1,740 )

Total mortgage loans 39,739 25,511 14,228

Commercial loans 18,254 28,263 ( 10,009 )

Consumer loans 5,452 1,751 3,701

Allowance for credit losses on loans $ 63,445 55,525 7,920

For the three months ended March 31, 2022, the Company recorded a $ 6.4 million provision benefit for credit losses on loans, compared to a $ 15.0 million provision benefit for the same period in 2021.

The decrease in the period-over-period provision benefit was largely a function of the relative change in the economic outlook and the significant favorable impact of the post-pandemic recovery in the prior year period.

The following tables summarize loans receivable by portfolio segment and impairment method (in thousands):

September 30, 2021

March 31, 2022

loans Commercial

12 unchanged sentences

The allowance for credit losses is summarized by portfolio segment and impairment classification as follows (in thousands):

September 30, 2021

March 31, 2022

loans Commercial loans Consumer loans Total

7 unchanged sentences

Total gross loans $ 52,104 26,343 2,293 80,740

Loan modifications to borrowers experiencing financial difficulties that are considered TDRs primarily involve lowering the monthly payments on such loans through either a reduction in interest rate below a market rate, an extension of the term of the loan without a corresponding adjustment to the risk premium reflected in the interest rate, or a combination of these two methods.

Loan modifications for borrowers experiencing financial difficulties that are considered TDRs primarily involve lowering the monthly payments on such loans through either a reduction in interest rate below a market rate, an extension of the term of the loan without a corresponding adjustment to the risk premium reflected in the interest rate, or a combination of these two methods.

These modifications generally do not result in the forgiveness of principal or accrued interest.

In addition, management attempts to obtain

additional collateral or guarantor support when modifying such loans.

In addition, management attempts to obtain additional collateral or guarantor support when modifying such loans.

If the borrower has demonstrated performance under the previous terms and our underwriting process shows the borrower has the capacity to continue to perform under the restructured terms, the loan will continue to accrue interest.

Non-accruing restructured loans may be returned to accrual status when there has been a sustained period of repayment performance (generally six consecutive months of payments) and both principal and interest are deemed collectible.

The following tables present the number of loans modified as TDRs during the three and nine months ended September 30, 2021 and 2020, along with their balances immediately prior to the modification date and post-modification as of September 30, 2021 and 2020 (in thousands):

The following tables present the number of loans modified as TDRs during the three months ended March 31, 2022 and 2021, along with their balances immediately prior to the modification date and post-modification as of March 31, 2022 and 2021 (in thousands):

For the three months ended

September 30, 2021 September 30, 2020

Troubled Debt Restructurings Number of

Loans Pre-Modification

Investment Post-Modification

Recorded Investment Number of

Loans Pre-Modification

Recorded Investment Post-Modification

Recorded Investment

Mortgage loans:

Residential 2 $ 375 $ 369 1 $ 91 $ 79

Total mortgage loans 2 375 369 1 91 79

Commercial loans — — — 1 1,399 1,399

Total restructured loans 2 $ 375 $ 369 2 $ 1,490 $ 1,478

For the nine months ended

September 30, 2021 September 30, 2020

March 31, 2022 March 31, 2021

Troubled Debt Restructurings Number of

6 unchanged sentences

Mortgage loans:

Residential 3 $ 546 $ 538 2 $ 434 $ 360

Total mortgage loans 3 546 538 2 434 360

Commercial loans — — — 3 1,361 1,359

1 unchanged sentence

All TDRs are impaired loans, which are individually evaluated for impairment.

During the three and nine months ended September 30, 2021, $ 2.1 million and $ 3.5 million of charge-offs were recorded on collateral-dependent impaired loans, respectively.

During the three and nine months ended September 30, 2020, $ 612,000 and $ 3.8 million of charge-offs were recorded on collateral-dependent impaired loans, respectively.

For the nine months ended September 30, 2021, the allowance for credit losses associated with the TDRs presented in the preceding tables totaled $ 56,000 , and was included in the allowance for credit losses for loans individually evaluated for impairment.

For the three and nine months ended September 30, 2021, the TDRs presented in the preceding tables had a weighted average modified interest rate of 3.22 % and 4.35 %, respectively, compared to a weighted average rate of 4.83 % and 4.64 % prior to modification, for the three and nine months ended September 30, 2021, respectively.

There were no loans which had a payment default (90 days or more past due) for loans modified as TDRs within the 12 month periods ending September 30, 2021 and September 30, 2020.

During the three months ended March 31, 2022, no charge-offs were recorded on collateral-dependent impaired loans, while $ 1.5 million of charge-offs were recorded on collateral-dependent impaired loans during the three months ended March 31, 2021.

For the three months ended March 31, 2022, there was no allowance for credit losses for loans associated with the TDRs presented in the preceding tables.

There were no loans which had a payment default (90 days or more past due) for loans modified as TDRs within the 12 month periods ending March 31, 2022 and March 31, 2021.

For TDRs that subsequently default, the Company determines the amount of the allowance for the respective loans in accordance with the accounting policy for the allowance for credit losses on loans individually evaluated for impairment.

As allowed by CECL, the Company elected to maintain pools of loans accounted for under ASC 310-30.

At December 31, 2020, purchased credit impaired (“PCI”) loans totaled $ 746,000 .

In accordance with the CECL standard, management did not reassess whether modifications of individually acquired financial assets accounted for in pools were TDRs as of the date of adoption.

Loans considered to be PCI prior to January 1, 2020 were converted to PCD loans on that date.

Any additional loans acquired by the Company after January 1, 2020 that experience more-than-insignificant deterioration in credit quality after origination, will be classified as PCD loans.

The table below is a summary of the PCD loans accounted for in accordance with ASC 310-26 that were acquired in the SB One acquisition as of the July 31, 2020 closing date (in thousands):

Gross amortized cost basis at July 31, 2020 $ 315,784

Interest component of expected cash flows (accretable difference) ( 7,988 )

Fair value of PCD loans 307,796

Allowance for credit losses on PCD loans ( 13,586 )

Net PCD loans $ 294,210

At September 30, 2021, the balance of PCD loans totaled $ 259.3 million with a related allowance for credit losses of $ 12.3 million.

As allowed by CECL, loans acquired by the Company that experience more-than-insignificant deterioration in credit quality after origination, are classified as Purchased Credit Deteriorated ("PCD") loans.

At March 31, 2022, the balance of PCD loans totaled $ 242.7 million with a related allowance for credit losses of $ 2.8 million.

The balance of PCD loans at December 31, 2021 was $ 246.9 million with a related allowance for credit losses of $ 2.8 million.

The following table presents loans individually evaluated for impairment by class and loan category (in thousands):

September 30, 2021 December 31, 2020

March 31, 2022 December 31, 2021

Unpaid Principal Balance Recorded Investment Related Allowance Average Recorded Investment Interest Income Recognized Unpaid Principal Balance Recorded Investment Related Allowance Average Recorded Investment Interest Income Recognized

13 unchanged sentences

Commercial 862 862 16 867 12 871 871 17 894 48

Multi-family — — — — — — — — — —

Total 8,787 8,446 840 8,484 84 8,865 8,523 875 8,636 326

12 unchanged sentences

Total impaired loans $ 55,080 48,323 2,034 51,575 248 59,280 52,254 4,284 53,352 1,265

Specific allocations of the allowance for credit losses attributable to impaired loans totaled $ 5.2 million at September 30, 2021 and $ 9.0 million at December 31, 2020.

At September 30, 2021 and December 31, 2020, impaired loans for which there was no related allowance for credit losses totaled $ 40.3 million and $ 43.7 million, respectively.

The average balance of impaired loans for the nine months ended September 30, 2021 and the twelve months ended December 31, 2020 was $ 75.0 million and $ 66.8 million, respectively.

Specific allocations of the allowance for credit losses attributable to impaired loans totaled $ 2.0 million at March 31, 2022 and $ 4.3 million at December 31, 2021.

At March 31, 2022 and December 31, 2021, impaired loans for which there was no related allowance for credit losses totaled $ 34.1 million and $ 34.2 million, respectively.

The average balance of impaired loans for the three months ended March 31, 2022 and the twelve months ended December 31, 2021 was $ 51.6 million and $ 53.4 million, respectively.

Management utilizes an internal nine-point risk rating system to summarize its loan portfolio into categories with similar risk characteristics.

Loans deemed to be “acceptable quality” are rated 1 through 4, with a rating of 1 established for loans with minimal

Loans deemed to be “acceptable quality” are rated 1 through 4, with a rating of 1 established for loans with minimal risk.

Loans that are deemed to be of “questionable quality” are rated 5 (watch) or 6 (special mention).

2 unchanged sentences

These risk ratings are then reviewed by the department manager and/or the Chief Lending Officer and by the Credit Department.

The risk ratings are also confirmed through periodic loan review examinations which are currently performed by an independent third-party.

Reports by the independent third-party are presented directly to the Audit Committee of the Board of Directors.

The risk ratings are also reviewed periodically through loan review examinations which are currently performed by an independent third-party.

Reports by the independent third-party are presented to the Audit Committee of the Board of Directors.

The Company participated in the Paycheck Protection Program (“PPP”) through the United States Department of the Treasury and Small Business Administration ("SBA").

As of September 30, 2021, the Company secured 2,066 PPP loans for its customers totaling $ 681.9 million, which includes both the initial round and the second round of PPP.

As of September 30, 2021, 1,521 PPP loans totaling $ 508.1 million were forgiven.

The balance at September 30, 2021 for PPP loans was $ 173.8 million.

The PPP loans are fully guaranteed by the SBA and may be eligible for forgiveness by the SBA to the extent that the proceeds are used to cover eligible payroll costs, interest costs, rent, and utility costs over a period of up to 24 weeks after the loan was made as long as certain conditions are met regarding employee retention and compensation levels.

PPP loans deemed eligible for forgiveness by the SBA will be repaid by the SBA to the Company.

PPP loans are included in the commercial loan portfolio.

The following table summarizes the Company's gross loans held for investment by year of origination and internally assigned credit grades as of September 30, 2021 and December 31, 2020 (in thousands):

Gross Loans Held by Investment by Year of Origination

at September 30, 2021

As of March 31, 2022, the Company secured 2,067 PPP loans for its customers totaling $ 682.0 million, which includes both the initial round and the second round of PPP.

As of March 31, 2022, 1,994 PPP loans totaling $ 653.1 million were forgiven and repaid by the SBA.

At March 31, 2022, PPP loans totaled $ 28.9 million, and are included in the commercial loan portfolio.

The following table summarizes the Company's gross loans held for investment by year of origination and internally assigned credit grades as of March 31, 2022 and December 31, 2021 (in thousands):

Gross Loans Held for Investment by Year of Origination

at March 31, 2022

2022 2021 2020 2019 2018 Prior to 2018 Revolving Loans Revolving loans to term loans Total Loans

21 unchanged sentences

Total multi-family $ 51,221 154,053 284,879 155,014 193,026 552,710 2,695 1,163 1,394,761

Gross Loans Held by Investment by Year of Origination

at September 30, 2021

2021 2020 2019 2018 2017 Prior to 2017 Revolving Loans Revolving loans to term loans Total Loans

Special mention $ — — — 939 19,014 — — — 19,953

2 unchanged sentences

Loss — — — — — — — — —

Gross Loans Held for Investment by Year of Origination

at March 31, 2022

2022 2021 2020 2019 2018 Prior to 2018 Revolving Loans Revolving loans to term loans Total Loans

Total criticized and classified — — — 1,321 21,379 — — — 22,700

26 unchanged sentences

Doubtful — — — — — — — — —

Gross Loans Held by Investment by Year of Origination

at September 30, 2021

2021 2020 2019 2018 2017 Prior to 2017 Revolving Loans Revolving loans to term loans Total Loans

Loss — — — — — — — — —

Total criticized and classified — — 1,408 40,110 87,037 181,421 23,943 2,306 336,225

Pass/Watch 481,919 1,774,090 1,519,745 1,283,403 767,261 2,783,475 637,003 90,799 9,337,695

Gross Loans Held for Investment by Year of Origination

at March 31, 2022

2022 2021 2020 2019 2018 Prior to 2018 Revolving Loans Revolving loans to term loans Total Loans

Total gross loans $ 481,919 1,774,090 1,521,153 1,323,513 854,298 2,964,896 660,946 93,105 9,673,920

(1) For consumer loans, the Company assigns internal credit grades based on the delinquency status of each loan.

Gross Loans Held by Investment by Year of Origination

Gross Loans Held for Investment by Year of Origination

at December 31, 2021

24 unchanged sentences

Substandard — — — 2,365 — — — — 2,365

Gross Loans Held by Investment by Year of Origination

at December 31, 2020

2021 2020 2019 2018 2017 Prior to 2017 Revolving Loans Revolving loans to term loans Total Loans

Doubtful — — — — — — — — —

1 unchanged sentence

Total criticized and classified — 1,125 — 2,365 — — — — 3,490

Gross Loans Held for Investment by Year of Origination

at December 31, 2021

2021 2020 2019 2018 2017 Prior to 2017 Revolving Loans Revolving loans to term loans Total Loans

Pass/Watch 173,843 176,182 219,331 94,363 9,604 103 6,250 679,676

27 unchanged sentences

Total criticized and classified 1,232 7,586 37,057 68,440 51,092 178,234 23,935 4,070 371,646

Gross Loans Held by Investment by Year of Origination

Pass/Watch 1,653,537 1,533,512 1,292,138 809,590 799,482 2,460,548 578,942 94,484 9,222,233

Gross Loans Held for Investment by Year of Origination

at December 31, 2021

2021 2020 2019 2018 2017 Prior to 2017 Revolving Loans Revolving loans to term loans Total Loans

Pass/Watch 1,956,865 1,427,318 1,075,792 971,833 721,926 2,382,453 605,314 92,396 9,233,898

Total gross loans $ 1,654,769 1,541,098 1,329,195 878,030 850,574 2,638,782 602,877 98,554 9,593,879

(1) For consumer loans, the Company assigns internal credit grades based on the delinquency status of each loan.

Deposits at September 30, 2021 and December 31, 2020 are summarized as follows (in thousands):

September 30, 2021 December 31, 2020

Deposits at March 31, 2022 and December 31, 2021 are summarized as follows (in thousands):

March 31, 2022 December 31, 2021

Savings $ 1,490,624 1,460,541

5 unchanged sentences

Borrowed Funds

Borrowed funds at September 30, 2021 and December 31, 2020 are summarized as follows (in thousands):

September 30, 2021 December 31, 2020

Borrowed funds at March 31, 2022 and December 31, 2021 are summarized as follows (in thousands):

March 31, 2022 December 31, 2021

Securities sold under repurchase agreements $ 118,759 116,760

2 unchanged sentences

Total borrowed funds $ 399,606 626,774

At September 30, 2021, FHLB advances were at fixed rates and mature between October 2021 and July 2025, and at December 31, 2020, FHLB advances were at fixed rates with maturities between January 2021 and June 2025.

At March 31, 2022, FHLB advances were at fixed rates and mature between April 2022 and July 2025, and at December 31, 2021, FHLB advances were at fixed rates with maturities between January 2022 and July 2025.

These advances are secured by loans receivable under a blanket collateral agreement.

Scheduled maturities of FHLB advances at September 30, 2021 are as follows (in thousands):

Scheduled maturities of FHLB advances at March 31, 2022 are as follows (in thousands):

Due in one year or less $ 102,971

2 unchanged sentences

Due after three years through four years 58,160

Due after four years through five years —

Total FHLB advances $ 280,848

Scheduled maturities of securities sold under repurchase agreements at September 30, 2021 are as follows (in thousands):

Scheduled maturities of securities sold under repurchase agreements at March 31, 2022 are as follows (in thousands):

Due in one year or less $ 118,759

Due after one year through two years —

Due after two years through three years —

Due after three years through four years —

Due after four years through five years —

Total securities sold under repurchase agreements $ 118,759

The following tables set forth certain information as to borrowed funds for the periods ended September 30, 2021 and December 31, 2020 (in thousands):

The following tables set forth certain information as to borrowed funds for the periods ended March 31, 2022 and December 31, 2021 (in thousands):

Weighted average

interest rate

September 30, 2021

March 31, 2022

Securities sold under repurchase agreements $ 120,188 117,615 0.30 %

7 unchanged sentences

The Bank uses available for sale debt securities to pledge as collateral for the repurchase agreements.

At September 30, 2021 and December 31, 2020, available for sale debt securities pledged as collateral for repurchase agreements totaled $ 129.7 million and $ 105.1 million, respectively.

Interest expense on borrowings for the three and nine months ended September 30, 2021 amounted to $ 1.8 million and $ 7.1 million, respectively.

Interest expense on borrowings for the three and nine months ended September 30, 2020 amounted to $ 3.9 million and $ 13.1 million, respectively.

At March 31, 2022 and December 31, 2021, available for sale debt securities pledged as collateral for repurchase agreements totaled $ 133.3 million and $ 136.0 million, respectively.

Interest expense on borrowings for the three months ended March 31, 2022 and 2021 was $ 1.2 million and $ 2.8 million, respectively.

Components of Net Periodic Benefit Cost

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Effective January 1, 2007, eligibility for retiree life insurance benefits was frozen as to new entrants and retiree life insurance benefits were eliminated for employees with less than ten years of service as of December 31, 2006.

Net periodic (benefit) increase cost for pension benefits and other post-retirement benefits for the three and nine months ended September 30, 2021 and 2020 includes the following components (in thousands):

Three months ended September 30, Nine months ended September 30,

Pension benefits Other post-retirement benefits Pension benefits Other post-retirement benefits

Net periodic (benefit) increase cost for pension benefits and other post-retirement benefits for the three months ended March 31, 2022 and 2021, includes the following components (in thousands):

Three months ended March 31,

Pension benefits Other post-retirement benefits

2022 2021 2022 2021

4 unchanged sentences

Amortization of the net loss (gain) — 118 ( 326 ) ( 268 )

Net periodic (decrease) increase in benefit cost $ ( 491 ) ( 313 ) ( 153 ) 135 $ ( 1,473 ) ( 939 ) ( 459 ) 407

Net periodic (benefit) cost $ ( 650 ) ( 491 ) ( 208 ) ( 153 )

In its consolidated financial statements for the year ended December 31, 2021, the Company previously disclosed that it does not expect to contribute to the pension plan in 2022.

As of September 30, 2021, no contributions have been made to the pension plan.

The net periodic (decrease) increase in benefit cost for pension benefits and other post-retirement benefits for the three and nine months ended September 30, 2021 were calculated using the January 1, 2021 pension and other post-retirement benefits actuarial valuations.

As of March 31, 2022, no contributions have been made to the pension plan.

The changes in net periodic benefit cost for pension benefits and other post-retirement benefits for the three months ended March 31, 2022 were calculated using the January 1, 2022 pension and other post-retirement benefits actuarial valuations.

Impact of Recent Accounting Pronouncements

Accounting Pronouncements Not Yet Adopted

ASU 2020-04, "Reference Rate Reform (Topic 848)" ("ASU 2020-04") provides optional expedients and exceptions for applying GAAP to loan and lease agreements, derivative contracts, and other transactions affected by the anticipated transition away from LIBOR toward new interest rate benchmarks.

In March 2022, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2022-02, "Financial Instruments-Credit Losses (Topic 326):

Troubled Debt Restructurings and Vintage Disclosures," which addresses areas identified by the FASB as part of its post-implementation review of the credit losses standard (ASU 2016-13) that introduced the CECL model.

The amendments eliminate the accounting guidance for troubled debt restructurings by creditors that have adopted the CECL model and enhance the disclosure requirements for loan refinancing and restructurings made with borrowers experiencing financial difficulty.

In addition, the amendments require a public business entity to disclose current-period gross write-offs for financing receivables and net investment in leases by year of origination in the vintage disclosures.

For entities that have adopted ASU 2016-13, ASU 2022-02 is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years.

Early adoption is permitted if an entity has adopted ASU 2016-13.

The Company continues to assess the impact that this guidance will have on the Company’s consolidated financial statements.

In March 2022, the FASB issued ASU 2022-01, "Derivatives and Hedging (Topic 815):

Fair Value Hedging - Portfolio Layer Method." This ASU clarifies the guidance in ASC 815 on fair value hedge accounting of interest rate risk for portfolios of financial assets.

The ASU amends the guidance in ASU 2017-12 that, among other things, established the “last-of-layer” method for making the fair value hedge accounting for these portfolios more accessible.

ASU 2022-01 renames that method the “portfolio layer” method and addresses feedback from stakeholders regarding its application.

Under current guidance, the last-of-layer method enables an entity to apply fair value hedging to a stated amount of a closed portfolio of prepayable financial assets (or one or more beneficial interests secured by a portfolio of prepayable financial instruments) without having to consider prepayment risk or credit risk when measuring those assets.

ASU 2022-01 expands the scope of this guidance to allow entities to apply the portfolio layer method to portfolios of all financial assets, including both prepayable and nonprepayable financial assets.

This scope expansion is consistent with the FASB’s efforts to simplify hedge accounting and allows entities to apply the same method to similar hedging strategies.

Also, ASU 2022-01 expands the current model to explicitly allow entities to designate multiple layers in a single portfolio as individual hedged items.

This allows entities to designate multiple hedging relationships with a single closed portfolio, and therefore a larger portion of the interest rate risk associated with such a portfolio is eligible to be hedged.

ASU 2022-01 also addresses questions about the types of derivatives that could be used as the hedging instrument in potential multiple-layer hedges.

ASU 2022-01, an entity has the flexibility to use any type of derivative or combination of derivatives (e.g., spot-starting constant-notional swaps with different term lengths, a combination of spot-starting and forward-starting constant-notional swaps, amortizing-notional swaps) by applying the multiple-layer model that aligns with its risk management strategy.

ASU 2022-01 expands and clarifies the current guidance on accounting for fair value hedge basis adjustments under the portfolio layer method for both single-layer and multiple-layer hedges.

For public business entities, ASU 2022-01 is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years.

Early adoption is permitted if an entity has adopted ASU 2017-12.

The Company continues to assess the impact that this guidance will have on the Company’s consolidated financial statements.

In March 2020, the FASB issued ASU 2020-04, "Reference Rate Reform (Topic 848)," which provides optional expedients and exceptions for applying GAAP to loan and lease agreements, derivative contracts, and other transactions affected by the anticipated transition away from LIBOR toward new interest rate benchmarks.

For transactions that are modified because of reference rate reform and that meet certain scope guidance (i) modifications of loan agreements should be accounted for by prospectively adjusting the effective interest rate and the modification will be considered "minor" so that any existing unamortized origination fees/costs would carry forward and continue to be amortized and (ii) modifications of lease agreements should be accounted for as a continuation of the existing agreement with no reassessments of the lease classification and the discount rate or re-measurements of lease payments that otherwise would be required for modifications not accounted for as separate contracts.

6 unchanged sentences

2021-01 “Reference Rate Reform — Scope,” which clarified the scope of ASC 848 relating to contract modifications.

The Company is evaluating the impacts of this guidance and has not determined whether LIBOR transition and this guidance will have material effects on the Company's business operations and consolidated financial statements.

In the fourth quarter of 2019 the Company formed, a cross-functional team to develop transition plans for the LIBOR transition to address potential revisions to documentation, as well as customer management and communication, internal training, financial, operational and risk management implications, and legal and contract management.

The working group is comprised of individuals from various functional areas including lending, risk management, finance and credit, among others.

In addition, the

Company has engaged with its regulators and with industry working groups and trade associations to develop strategies for transitioning away from LIBOR.

The Company is currently in the process of transitioning from LIBOR and plans to move to the Secured Overnight Financing Rate ("SOFR") and no longer offers LIBOR as an option to customers.

The Company continues to assess the impacts of this guidance, and has not determined whether LIBOR transition and this guidance will have a material effect on the Company's business operations and consolidated financial statements.

Allowance for Credit Losses on Off-Balance Sheet Credit Exposures

On January 1, 2020, the Company adopted CECL, which replaced the incurred loss methodology with an expected loss methodology.

This new methodology applies to off-balance sheet credit exposures, including loan commitments and lines of credit.

The adoption of this new standard resulted in the Company recording a $ 3.2 million increase to the allowance for credit losses on off-balance sheet credit exposures with a corresponding cumulative effect adjustment to decrease retained earnings $ 2.4 million, net of income taxes.

Management analyzes the Company's exposure to credit losses for both on-balance sheet and off-balance sheet activity using a consistent methodology for the quantitative framework as well as the qualitative framework.

For purposes of estimating the allowance for credit losses for off-balance sheet credit exposures, the exposure at default includes an estimated drawdown of unused credit based on historical credit utilization factors and current loss factors, resulting in a proportionate amount of expected credit losses.

The following table illustrates the impact of the January 1, 2020 adoption of CECL on off-balance sheet credit exposures:

January 1, 2020

As reported under CECL Prior to CECL Impact of CECL adoption

Allowance for credit losses on off-balance sheet credit exposure $ 3,206 — 3,206

For the three and nine months ended September 30, 2021, the Company recorded a $ 980,000 and $ 2.2 million provision for credit losses for off-balance sheet credit exposures, respectively.

For the three and nine months ended September 30, 2020, the Company recorded a $ 575,000 negative provision for credit losses for off-balance sheet credit exposures and a $ 5.7 million provision for credit losses for off-balance sheet credit exposures, respectively.

The increase for the three months ended September 30, 2021, compared to the prior year was primarily a function of an increase in the pipeline of loans that have been approved and awaiting closing, partially offset by an improved economic forecast resulting in a decline in projected loss factors.

The decrease for the nine months ended September 30, 2021, compared to the prior year was primarily a function of an improved economic forecast resulting in a decline in projected loss factors, partially offset by an increase in the pipeline of loans that have been approved and awaiting closing.

The allowance for credit losses for off-balance sheet credit exposures was $ 7.2 million and $ 5.0 million at September 30, 2021 and December 31, 2020, respectively, and are included in other liabilities on the Consolidated Statements of Financial Condition.

For the three months ended March 31, 2022, the Company recorded a $ 2.4 million benefit to the provision for credit losses for off-balance sheet credit exposures compared to an $ 875,000 benefit to the provision for credit losses for off-balance sheet credit exposures for the same period in 2021.

The increase in the period-over period provision benefit was primarily due to an increase in line of credit utilization.

The allowance for credit losses for off-balance sheet credit exposures was $ 4.1 million and $ 6.5 million at March 31, 2022 and December 31, 2021, respectively, and are included in other liabilities on the Consolidated Statements of Financial Condition.

Fair Value Measurements

14 unchanged sentences

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The valuation techniques described below were used to measure fair value of financial instruments in the table below on a recurring basis as of September 30, 2021 and December 31, 2020.

The valuation techniques described below were used to measure fair value of financial instruments in the table below on a recurring basis as of March 31, 2022 and December 31, 2021.

Available for Sale Debt Securities, at Fair Value

13 unchanged sentences

The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether the Company has elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting.

The Company has interest rate derivatives resulting from a service provided to certain qualified borrowers in a loan related transaction which, therefore, are not used to manage interest rate risk in the Company’s assets or liabilities.

The Company has interest rate derivatives resulting from a service provided to certain qualified borrowers in a loan related

transaction which, therefore, are not used to manage interest rate risk in the Company’s assets or liabilities.

As such, all changes in fair value of the Company’s derivatives are recognized directly in earnings.

2 unchanged sentences

These derivatives were used to hedge the variable cash outflows associated with FHLBNY borrowings and brokered demand deposits.

The change in the fair value of these derivatives is recorded in accumulated other comprehensive income, and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings.

The change in the fair value of these derivatives is recorded in accumulated other comprehensive (loss) income, and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings.

The fair value of the Company's derivatives is determined using discounted cash flow analysis using observable market-based inputs, which are considered Level 2 inputs.

Assets Measured at Fair Value on a Non-Recurring Basis

The valuation techniques described below were used to estimate fair value of financial instruments measured on a non-recurring basis as of September 30, 2021 and December 31, 2020.

The valuation techniques described below were used to estimate fair value of financial instruments measured on a non-recurring basis as of March 31, 2022 and December 31, 2021.

Collateral-Dependent Impaired Loans

11 unchanged sentences

Operating results from real estate owned, including rental income, operating expenses, and gains and losses realized from the sales of real estate owned, are recorded as incurred.

There were no changes to the valuation techniques for fair value measurements as of September 30, 2021 and December 31, 2020.

The following tables present the assets and liabilities reported on the consolidated statements of financial condition at their fair values as of September 30, 2021 and December 31, 2020, by level within the fair value hierarchy (in thousands):

There were no changes to the valuation techniques for fair value measurements as of March 31, 2022 and December 31, 2021.

The following tables present the assets and liabilities reported on the consolidated statements of financial condition at their fair values as of March 31, 2022 and December 31, 2021, by level within the fair value hierarchy (in thousands):

Fair Value Measurements at Reporting Date Using:

September 30, 2021 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3)

March 31, 2022 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3)

Measured on a recurring basis:

18 unchanged sentences

Available for sale debt securities:

Agency obligations $ 1,009 1,009 — —

Treasury obligations $ 196,329 196,329 — —

Mortgage-backed securities 1,708,831 — 1,708,831 —

11 unchanged sentences

$ 26,968 — — 26,968

There were no transfers between Level 1, Level 2 and Level 3 during the three and nine months ended September 30, 2021.

There were no transfers between Level 1, Level 2 and Level 3 during the three months ended March 31, 2022.

Other Fair Value Disclosures

3 unchanged sentences

For cash and due from banks, federal funds sold and short-term investments, the carrying amount approximates fair value.

Included in cash and cash equivalents at September 30, 2021 and December 31, 2020 was $ 47.6 million and $ 114.3 million, respectively, representing cash collateral pledged to secure loan level swaps and reserves required by banking regulations.

Included in cash and cash equivalents at March 31, 2022 and December 31, 2021 was $ 4.8 million and $ 27.3 million, respectively, representing cash collateral pledged to secure loan level swaps and reserves required by banking regulations.

Held to Maturity Debt Securities

33 unchanged sentences

The fair value of commitments to extend credit and letters of credit was estimated using the fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the present creditworthiness of the counterparties.

For fixed rate loan commitments, fair value also considers the difference between current levels of interest rates and the committed rates.

rate loan commitments, fair value also considers the difference between current levels of interest rates and the committed rates.

The Company classifies these commitments as Level 3 within the fair value hierarchy.

7 unchanged sentences

In addition, the tax ramifications related to the realization of the unrealized gains and losses can have a significant effect on fair value estimates and have not been considered in the estimates.

The following tables present the Company’s financial instruments at their carrying and fair values as of September 30, 2021 and December 31, 2020.

The following tables present the Company’s financial instruments at their carrying and fair values as of March 31, 2022 and December 31, 2021.

Fair values are presented by level within the fair value hierarchy.

Fair Value Measurements at September 30, 2021 Using:

Fair Value Measurements at March 31, 2022 Using:

(Dollars in thousands) Carrying value Fair value Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3)

3 unchanged sentences

Treasury obligations 260,165 260,165 260,165 — —

Agency obligations — — — — —

Mortgage-backed securities 1,670,464 1,670,464 — 1,670,464 —

4 unchanged sentences

Held to maturity debt securities, net of allowance for credit losses:

US Treasury obligations 1,430 1,430 1,430 — —

Agency obligations 9,997 9,375 9,375 — —

20 unchanged sentences

Treasury obligations 196,329 196,329 196,329 — —

Agency obligations 1,009 1,009 1,009 — —

Mortgage-backed securities 1,708,831 1,708,831 — 1,708,831 —

18 unchanged sentences

Borrowings 626,774 625,636 — 625,636 —

Subordinated Debt 25,135 24,375 — 24,375 —

Subordinated debentures 10,283 9,750 — 9,750 —

Derivative liabilities 61,412 61,412 — 61,412 —

Other Comprehensive Income

The following table presents the components of other comprehensive income, both gross and net of tax, for the three and nine months ended September 30, 2021 and 2020 (in thousands):

Three months ended September 30,

Other Comprehensive Income (Loss)

The following table presents the components of other comprehensive loss, both gross and net of tax, for the three months ended March 31, 2022 and 2021 (in thousands):

Three months ended March 31,

Components of Other Comprehensive Income:

Unrealized gains and losses on available for sale debt securities:

Net unrealized (losses) gains arising during the period $ ( 10,765 ) 2,775 ( 7,990 ) ( 578 ) 150 ( 428 )

Net unrealized losses arising during the period $ ( 116,081 ) 31,110 ( 84,971 ) ( 12,152 ) 3,133 ( 9,019 )

Reclassification adjustment for gains included in net income — — — ( 230 ) 59 ( 171 )

3 unchanged sentences

Total other comprehensive (loss) income $ ( 102,199 ) 27,390 ( 74,809 ) ( 6,306 ) 1,628 ( 4,678 )

Nine months ended September 30,

Components of Other Comprehensive Income:

Unrealized gains and losses on available for sale debt securities:

Net unrealized (losses) gains arising during the period $ ( 19,630 ) 5,061 ( 14,569 ) 20,733 ( 5,345 ) 15,388

Reclassification adjustment for gains included in net income ( 230 ) 59 ( 171 ) — — —

Total ( 19,860 ) 5,120 ( 14,740 ) 20,733 ( 5,345 ) 15,388

Unrealized gains ( losses) on derivatives (cash flow hedges) 6,959 ( 1,794 ) 5,165 ( 8,242 ) 2,125 ( 6,117 )

Amortization related to post-retirement obligations ( 435 ) 112 ( 323 ) 322 ( 83 ) 239

Total other comprehensive (loss) income $ ( 13,336 ) 3,438 ( 9,898 ) 12,813 ( 3,303 ) 9,510

The following tables present the changes in the components of accumulated other comprehensive income, net of tax, for the three and nine months ended September 30, 2021 and 2020 (in thousands):

Changes in Accumulated Other Comprehensive Income (Loss) by Component, net of tax

for the three months ended September 30,

Gains (Losses) on

Available for Sale Debt Securities Post- Retirement

Obligations Unrealized (Losses) Gains on Derivatives (cash flow hedges) Accumulated

Comprehensive

Income (Loss) Unrealized Gains on

Available for Sale Debt Securities Post- Retirement

Obligations Unrealized Gains (Losses) on Derivatives (cash flow hedges) Accumulated

Comprehensive(Loss) Income

June 30, $ 16,940 ( 1,301 ) ( 1,557 ) 14,082 24,562 ( 5,086 ) ( 6,682 ) 12,794

Current - period other comprehensive (loss) income ( 7,990 ) ( 103 ) 1,768 ( 6,325 ) ( 428 ) 85 880 537

Balance at September 30, $ 8,950 ( 1,404 ) 211 7,757 24,134 ( 5,001 ) ( 5,802 ) 13,331

Changes in Accumulated Other Comprehensive Income (Loss) by Component, net of tax

for the nine months ended September 30,

Gains (Losses) on

The following tables present the changes in the components of accumulated other comprehensive (loss) income, net of tax, for the three months ended March 31, 2022 and 2021 (in thousands):

Changes in Accumulated Other Comprehensive (Loss) Income by Component, net of tax

for the three months ended March 31,

Unrealized Losses on

Available for Sale Debt Securities Post- Retirement

Obligations Unrealized (Losses) Gains on Derivatives (cash flow hedges) Accumulated

Obligations Unrealized Gains on Derivatives (cash flow hedges) Accumulated

Comprehensive

2 unchanged sentences

Obligations Unrealized Gains (Losses) on Derivatives (cash flow hedges) Accumulated

Comprehensive(Loss) Income

Balance at December 31, $ 23,690 ( 1,081 ) ( 4,954 ) 17,655 8,746 ( 5,240 ) 315 3,821

Current - period other comprehensive (loss) income ( 14,740 ) ( 323 ) 5,165 ( 9,898 ) 15,388 239 ( 6,117 ) 9,510

Balance at September 30, $ 8,950 ( 1,404 ) 211 7,757 24,134 ( 5,001 ) ( 5,802 ) 13,331

The following tables summarize the reclassifications from accumulated other comprehensive income (loss) to the consolidated statements of income for the three and nine months ended September 30, 2021 and 2020 (in thousands):

Reclassifications From Accumulated Other Comprehensive

Income ("AOCI")

Amount reclassified from AOCI for the three months ended September 30, Affected line item in the Consolidated

Statement of Income

Details of AOCI:

Post-retirement obligations:

Amortization of actuarial (losses) gains $ ( 149 ) 112 Compensation and employee benefits (1)

38 ( 27 ) Income tax expense

Total reclassification $ ( 111 ) 85 Net of tax

Comprehensive Income (Loss)

December 31, $ ( 211 ) 2,981 4,093 6,863 23,690 ( 1,081 ) ( 4,954 ) 17,655

Current - period other comprehensive (loss) ( 84,971 ) ( 276 ) 10,438 ( 74,809 ) ( 9,190 ) ( 109 ) 4,621 ( 4,678 )

Balance at March 31, $ ( 85,182 ) 2,705 14,531 ( 67,946 ) 14,500 ( 1,190 ) ( 333 ) 12,977

The following tables summarize the reclassifications from accumulated other comprehensive income (loss) to the consolidated statements of income for the three and three months ended March 31, 2022 and 2021 (in thousands):

Reclassifications From Accumulated Other Comprehensive

Income ("AOCI")

Amount reclassified from AOCI for the nine months ended September 30, Affected line item in the Consolidated

Amount reclassified from AOCI for the three months ended March 31, Affected line item in the Consolidated

Statement of Income

4 unchanged sentences

— ( 171 ) Net of tax

Cash flow hedges:

Unrealized losses on derivatives 666 879 Interest expense

( 178 ) ( 227 ) Income tax expense

Post-retirement obligations:

Amortization of actuarial (losses) gains $ ( 449 ) 336 Compensation and employee benefits (1)

Amortization of actuarial gains $ ( 326 ) ( 150 ) Compensation and employee benefits (1)

87 41 Income tax expense

Total reclassification $ ( 330 ) 239 Net of tax

$ ( 239 ) ( 109 ) Net of tax

Total reclassifications $ 249 372 Net of tax

(1) This item is included in the computation of net periodic benefit cost.

10 unchanged sentences

As the Company has not elected to apply hedge accounting and these interest rate swaps do not meet the hedge accounting requirements, changes in the fair value of both the customer swaps and the offsetting swaps are recognized directly in earnings.

At September 30, 2021 and December 31, 2020, the Company had 170 and 172 loan related interest rate swaps, respectively, with aggregate notional amounts of $ 2.55 billion and $ 2.63 billion, respectively.

At March 31, 2022 and December 31, 2021, the Company had 166 loan related interest rate swaps, with an aggregate notional amount of $ 2.43 billion and $ 2.42 billion, respectively.

The Company periodically enters into risk participation agreements ("RPAs"), with the Company functioning as either the lead institution, or as a participant when another company is the lead institution on a commercial loan.

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The Company has minimum collateral posting thresholds with certain of its risk participation counterparties, and has posted collateral of $ 70,000 against the potential risk of default by the borrower under these agreements.

At September 30, 2021 and December 31, 2020, the Company had 13 credit derivatives, with aggregate notional amounts of $ 140.7 million and $ 121.7 million, respectively, from participations in interest rate swaps as part of these loan participation arrangements.

At September 30, 2021 and December 31, 2020, the fair value of these credit derivatives were $ 106,500 and $ 97,000 , respectively.

At March 31, 2022 and December 31, 2021, the Company had 13 credit derivatives, with aggregate notional amounts of $ 147.2 million and $ 144.8 million, respectively, from participations in interest rate swaps as part of these loan participation arrangements.

At March 31, 2022 and December 31, 2021, the fair value of these credit derivatives were $ 77,700 and $ 108,800 , respectively.

Cash Flow Hedges of Interest Rate Risk.

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Interest rate swaps designated as cash flow hedges involve the receipt of variable payment amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount.

Changes in the fair value of derivatives designated and that qualify as cash flow hedges of interest rate risk are recorded in accumulated other comprehensive income and are subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings.

During the three and nine months ended September 30, 2021 and 2020, such derivatives were used to hedge the variable cash outflows associated with borrowings and brokered demand deposits.

Amounts reported in accumulated other comprehensive income (loss) related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s borrowings or demand deposits.

During the next twelve months, the Company estimates that $ 3.3 million will be reclassified as an increase to interest expense.

As of September 30, 2021, the Company had 14 outstanding interest rate derivatives with an aggregate notional amount of $ 600.0 million that were each designated as a cash flow hedge of interest rate risk.

The tables below presents the fair value of the Company’s derivative financial instruments as well as their classification on the Consolidated Statements of Financial Condition at September 30, 2021 and December 31, 2020 (in thousands):

At September 30, 2021

Asset Derivatives Liability Derivatives

Consolidated Statements of Financial Condition Fair

Derivatives not designated as a hedging instrument:

Interest rate products Other assets $ 71,779 Other liabilities 72,947

Credit contracts Other assets 107 Other liabilities 40

Total derivatives not designated as a hedging instrument $ 71,886 72,987

Derivatives designated as a hedging instrument:

Interest rate products Other assets $ 4,337 Other liabilities 4,052

Total derivatives designated as a hedging instrument $ 4,337 4,052

At December 31, 2020

Asset Derivatives Liability Derivatives

Consolidated Statements of Financial Condition Fair

Derivatives not designated as a hedging instrument:

Interest rate products Other assets $ 107,652 Other liabilities 109,148

Credit contracts Other assets 97 Other liabilities —

Total derivatives not designated as a hedging instrument $ 107,749 109,148

Derivatives designated as a hedging instrument:

Interest rate products Other assets $ ( 6,671 ) Other liabilities —

Total derivatives designated as a hedging instrument $ ( 6,671 ) —

(1) The fair values related to interest rate products in the above derivative financial instruments tables show the value of assets and liabilities, excluding accrued interest receivable and accrued interest payable for the periods ended September 30, 2021 and December 31, 2020.

The tables below present the effect of the Company’s derivative financial instruments on the Consolidated Statements of Income during the three and nine months ended September 30, 2021 and 2020 (in thousands).

Gain (loss) recognized in income on derivatives for the three months ended

Consolidated Statements of Income September 30, 2021 September 30, 2020

Derivatives not designated as a hedging instrument:

Interest rate products Other income $ 191 26

Credit contracts Other income ( 19 ) 460

Total $ 172 486

Derivatives designated as a hedging instrument:

Interest rate products Interest expense $ 1,030 855

Total $ 1,030 855

Gain (loss) recognized in income on derivatives for the nine months ended

Consolidated Statements of Income September 30, 2021 September 30, 2020

Derivatives not designated as a hedging instrument:

Interest rate products Other income $ 268 ( 1,022 )

Credit contracts Other income 28 459

Total $ 296 ( 563 )

Derivatives designated as a hedging instrument:

Interest rate products Interest expense $ 2,856 875

Total $ 2,856 875

Assets and liabilities relating to certain financial instruments, including derivatives, may be eligible for offset in the Consolidated Statements of Condition and/or subject to enforceable master netting arrangements or similar agreements.

The Company does not offset asset and liabilities under such arrangements in the Consolidated Statements of Condition.

The tables below present a gross presentation, the effects of offsetting, and a net presentation of the Company’s financial instruments that are eligible for offset in the Consolidated Statements of Condition at September 30, 2021 and December 31, 2020 (in thousands).

Fair Values of Derivative Instruments as of September 30, 2021

Changes in the fair value of derivatives designated and that qualify as cash flow hedges of interest rate risk are recorded in accumulated other comprehensive (loss) income and are subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings.

During the three months ended March 31, 2022 and 2021, such derivatives were used to hedge the variable cash outflows associated with FHLBNY borrowings and brokered demand deposits.

Amounts reported in accumulated other comprehensive (loss) income related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s borrowings or demand deposits.

During the next twelve months, the Company estimates that $ 4.9 million will be reclassified as a reduction to interest expense.

As of March 31, 2022, the Company had 13 outstanding interest rate derivatives with an aggregate notional amount of $ 500.0 million that were each designated as a cash flow hedge of interest rate risk.

Assets and liabilities relating to certain financial instruments, including derivatives, may be eligible for offset in the Consolidated Statements of Financial Condition and/or subject to enforceable master netting arrangements or similar agreements.

The Company does not offset asset and liabilities under such arrangements in the Consolidated Statements of Financial Condition.

The tables below present a gross presentation, the effects of offsetting, and a net presentation of the Company’s financial instruments that are eligible for offset in the Consolidated Statements of Financial Condition at March 31, 2022 and December 31, 2021 (in thousands).

Fair Values of Derivative Instruments as of March 31, 2022

Asset Derivatives Liability Derivatives

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Therefore, excess cash collateral, if any, is not reflected above.

(2) The fair values related to interest rate products in the above net derivative tables show the total value of assets and liabilities, which include accrued interest receivable and accrued interest payable for the periods ended September 30, 2021 and December 31, 2020.

The tables below present the effect of the Company’s derivative financial instruments on the Consolidated Statements of Income during the three months ended March 31, 2022 and 2021 (in thousands).

Gain recognized in income on derivatives for the three months ended

Consolidated Statements of Income March 31, 2022 March 31, 2021

Derivatives not designated as a hedging instrument:

Interest rate products Other income $ 366 400

Credit contracts Other income ( 17 ) 23

Total $ 349 423

Consolidated Statements of Income Loss recognized in expense on derivatives for the three months ended

March 31, 2022 March 31, 2021

Derivatives designated as a hedging instrument:

Interest rate products Interest expense $ 666 879

Total $ 666 879

The Company has agreements with certain of its dealer counterparties which contain a provision that if the Company defaults on any of its indebtedness, including a default where repayment of the indebtedness has not been accelerated by the lender, then the Company could also be deemed in default on its derivative obligations.

In addition, the Company has agreements with certain of its dealer counterparties which contain a provision that if the Company fails to maintain its status as a well or adequately capitalized institution, then the counterparty could terminate the derivative positions and the Company would be required to settle its obligations under the agreements.

At September 30, 2021, the Company had four dealer counterparties.

The Company had a net liability position with respect to all four of the counterparties.

The termination value for this net liability position, which includes accrued interest, was $ 50.0 million at September 30, 2021.

At March 31, 2022, the Company had four dealer counterparties.

The Company had a net liability position with respect to one of the counterparties.

The termination value for this net liability position, which includes accrued interest, was $ 5.6 million at March 31, 2022.

The Company has minimum collateral posting thresholds with certain of its derivative counterparties, and has posted collateral of $ 4.8 million against its obligations under these agreements.

If the Company had breached any of these provisions at September 30, 2021, it could have been required to settle its obligations under the agreements at the termination value.

If the Company had breached any of these provisions at March 31, 2022, it could have been required to settle its obligations under the agreements at the termination value.

Revenue Recognition

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The guidance in ASU 2014-09, Revenue from Contracts with Customers (Topic 606) does not apply to revenue associated with financial instruments, including interest income on loans and investments, which comprise the majority of the Company's revenue.

For the three months and nine months ended September 30, 2021, the out-of-scope revenue related to financial instruments was 81.0 % and 82.0 % of the Company's total revenue, respectively, compared to 81.9 % and 83.5 % for the three and nine months ended September 30, 2020, respectively.

For the three months ended March 31, 2022, and 2021 the out-of-scope revenue related to financial instruments was 83.4 % and 82.3 %, respectively, of the Company's total revenue.

Revenue-generating activities that are within the scope of Topic 606, are components of non-interest income.

1 unchanged sentence

wealth management revenue, insurance agency income and banking service charges and other fees.

The following table presents non-interest income, segregated by revenue streams in-scope and out-of-scope of Topic 606, for the three and nine months ended September 30, 2021 and 2020 (in thousands):

Three months ended September 30, Nine months ended September 30,

2021 2020 2021 2020

The following table presents non-interest income, segregated by revenue streams in-scope and out-of-scope of Topic 606, for the three months ended March 31, 2022 and 2021 (in thousands):

Three months ended March 31,

Non-interest income

23 unchanged sentences

These fees are generally transaction-based, or time-based services.

The Company's performance obligation for these services are generally satisfied, and revenue recognized, at the time the transaction is completed, or the service rendered.

The Company's performance obligation for these services are generally satisfied,

and revenue recognized, at the time the transaction is completed, or the service rendered.

Fees for these services are generally received from the customer either at the time of transaction, or monthly.

6 unchanged sentences

None of these revenue streams are subject to the requirements of Topic 606.

The following table represents the consolidated statements of financial condition classification of the Company’s right-of use-assets and lease liabilities at September 30, 2021 and December 31, 2020 (in thousands):

Classification September 30, 2021 December 31, 2020

The following table represents the consolidated statements of financial condition classification of the Company’s right-of use-assets and lease liabilities at March 31, 2022 and December 31, 2021 (in thousands):

Classification March 31, 2022 December 31, 2021

Lease Right-of-Use Assets:

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All of the leases in which the Company is the lessee are classified as operating leases and are primarily comprised of real estate properties for branches and administrative offices with terms extending through 2040.

At September 30, 2021, the weighted-average remaining lease term and the weighted-average discount rate for the Company's operating leases were 9.1 years and 2.80 %, respectively.

At March 31, 2022, the weighted-average remaining lease term and the weighted-average discount rate for the Company's operating leases were 9.2 years and 2.50 %, respectively.

The following tables represent lease costs and other lease information for the Company's operating leases.

The variable lease cost primarily represents variable payments such as common area maintenance and utilities (in thousands):

Three months ended September 30, 2021 Three months ended September 30, 2020

Operating lease cost $ 2,417 $ 2,303

Variable lease cost 728 754

Total lease cost $ 3,145 $ 3,057

Nine months ended September 30, 2021 Nine months ended September 30, 2020

For the Three Months Ended

March 31, 2022 March 31, 2021

Operating lease cost $ 2,807 $ 2,812

1 unchanged sentence

Total lease cost $ 3,525 $ 3,615

For the Three Months Ended

March 31, 2022 March 31, 2021

Cash paid for amounts included in the measurement of lease liabilities:

Nine months ended September 30, 2021 Nine months ended September 30, 2020

Operating cash flows from operating leases $ 1,939 $ 2,345

During the three and nine months ended September 30, 2021, the Company added one new lease obligation related to the Company's new office location in Woodbridge, New Jersey.

During the three months ended March 31, 2022, the Company added one new lease obligation related to the Company's new administrative office location in Iselin, New Jersey.

The Company recorded a right-of-use asset and lease liability of $ 16.0 million for this lease obligation.

Future minimum payments for operating leases with initial or remaining terms of one year or more as of September 30, 2021, were as follows (in thousands):

Future minimum payments for operating leases with initial or remaining terms of one year or more as of March 31, 2022, were as follows (in thousands):

Operating leases

6 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements