What changed in this filing

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Item 7. Management’s Discussion and Analysis

2024-02-22 compared with 2023-02-28 · 119 added, 138 removed, 371 unchanged (41% of the section changed)

13 unchanged sentences

These reclassifications did not have an impact on net income or total stockholders' equity.

COVID-19 Pandemic Response

Following the March 2020 passage of the Paycheck Protection Program (“PPP”), administered by the SBA, the Company participated in assisting its customers with applications for resources through the program.

Since the inception of the program, the consolidated PPP originations for the Company through December 31, 2021, including originations by both Legacy Dime and Bridge, exceeded $1.90 billion.

Following the completion of the PPP, the Company sold its 2021 PPP loan originations in order to re-deploy funds into ongoing loan portfolio growth.

The Company believes that the remainder of its SBA PPP loans will ultimately be forgiven by the SBA in accordance with the terms of the program.

As of December 31, 2022, the Company had SBA PPP loans totaling $5.8 million, net of deferred fees.

It is the Company’s expectation that loans funded through the PPP are fully guaranteed by the U.S.

We continue to monitor unfunded commitments, including commercial and home equity lines of credit, for evidence of increased credit exposure as borrowers utilize these lines for liquidity purposes.

It is possible that there will be continued material, adverse impacts to significant estimates, asset valuations, and business operations, including intangible assets, investments, loans, deferred tax assets, and derivative counter party risk, changes in consumer behavior, and supply chain interruptions as a result of the COVID-19 pandemic.

Future government actions in response to the COVID-19 pandemic, including vaccination mandates, may also affect our workforce, human capital resources, and infrastructure.

Critical Accounting Estimates

Note 1 Summary of Significant Accounting Policies, to the Company’s Audited Consolidated Financial Statement for the year ended December 31, 2022 contains a summary of significant accounting policies.

These accounting policies may require various levels of subjectivity, estimates or judgement by management.

Critical accounting estimates are those estimates made in accordance with Generally Accepted Accounting Principles that involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on the financial condition or the results of the operations of the Registrant.

Note 1 Summary of Significant Accounting Policies (page 51), to the Company’s Audited Consolidated Financial Statement for the year ended December 31, 2023 contains a summary of significant accounting policies.

These accounting policies may require various levels of subjectivity, estimates or judgment by management.

Policies with respect to the methodologies it uses to determine the allowance for credit losses on loans held for investment and fair value of loans acquired in a business combinations are critical accounting policies because they are important to the presentation of the Company’s consolidated financial condition and results of operations.

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Management assesses the sensitivity of key assumptions at least annually by stressing the assumptions to understand the impact on the model.

At June 30, 2023, if the four-quarter national unemployment rate forecast had increased 100 basis points our quantitative ACL reserve would have increased 10.5%.

Changes in quantitative inputs may not occur in the same direction or magnitude across all segments of our loan portfolio and deterioration in some quantitative inputs may offset improvement in others.

This sensitivity analysis does not represent a change to our expectations of the economic environment but provides a hypothetical result to assess the sensitivity of the ACL to a change in a key input.

This sensitivity analysis does not incorporate changes to management’s judgment of qualitative loss factors.

Statistical regression is utilized to relate historical macro-economic variables to historical credit loss experience of a peer group of banks that operate in and around Dime’s footprint.

These models are then utilized to forecast future expected loan losses based on expected future behavior of the same macro-economic variables.

Adjustments to the quantitative results are made using qualitative factors.

Adjustments to the quantitative results are made using qualitative factors, which are subjective and require significant management judgment .

These factors include:

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Factors that may be considered are borrower delinquency trends and non-accrual status, probability of foreclosure or note sale, changes in the borrower’s circumstances or cash collections, borrower’s industry, or other facts and circumstances of the loan or collateral.

The expected credit loss is measured based on net realizable value, that is, the

difference between the discounted value of the expected future cash flows, based on the original effective interest rate, and the amortized cost basis of the loan.

The expected credit loss is measured based on net realizable value, that is, the difference between the discounted value of the expected future cash flows, based on the original effective interest rate, and the amortized cost basis of the loan.

For collateral dependent loans, expected credit loss is measured as the difference between the amortized cost basis of the loan and the fair value of the collateral, less estimated costs to sell.

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Future additions or reductions to the allowance may be necessary based on changes in economic, market or other conditions.

Changes in estimates could result in a material change in the allowance through charges to earnings would materially decrease our net income.

Changes in estimates could result in a material change in the allowance through charges to earnings and would materially decrease our net income.

We may experience significant credit losses if borrowers experience financial difficulties, which could have a material adverse effect on our operating results.

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Additionally, the provision for credit losses on acquired individually analyzed PCD loans may be impacted due to changes in the assumptions used to calculate expected cash flows.

Comparison of Operating Results Years Ended December 31, 2022, 2021 and 2020

Comparison of Operating Results For The Years Ended December 31, 2023, 2022 and 2021

The Company’s results of operations for the year ended December 31, 2021, include income for the eleven months following the Merger and the results of Legacy Dime for the month ended January 31, 2021.

The Company’s historical operating results as of and for the year ended December 31, 2020, as presented and discussed in this Annual Report on Form 10-K, only include the historical results of Legacy Dime.

Accordingly, the Company’s historical operating results as of and for periods before February 1, 2021, including the year ended December 31, 2020, as presented and discussed in this Annual Report on Form 10-K, do not include the historical results of Bridge.

The Company’s historical operating results as of and for periods before February 1, 2021, as presented and discussed in this Annual Report on Form 10-K, do not include the historical results of Bridge.

Net income was $96.1 million in 2023, compared to $152.6 million in 2022, and $104.0 million in 2021.

During 2022, net interest income increased by $22.3 million, provision for credit losses decreased by $0.8 million, and non-interest expense decreased by $44.6 million.

These items were partially offset by a non-interest income decrease of $3.9 million and an income tax expense increase of $15.2 million.

During 2021, net interest income increased by $179.9 million, provision for credit losses decreased by $20.0 million, and non-interest income increased by $20.8 million.

These items were partially offset by a non-interest expense increase of $127.5 million and an income tax expense increase of $31.5 million.

The discussion of net interest income for the years ended December 31, 2022, 2021, and 2020 should be read in conjunction with the following tables, which set forth certain information related to the consolidated statements of income for those periods, and which also present the average yield on assets and average cost of liabilities for the periods indicated.

During 2023, net interest income decreased by $63.3 million, non-interest expense increased by $12.4 million and non-interest income decreased by $2.0 million, partially offset by a decrease of $18.6 million in income tax expense and a decrease of $2.6 million in provision for credit losses.

During 2022, net interest income increased by $22.3 million, provision for credit losses decreased by $0.8 million, and non-interest expense decreased by $44.6 million, partially offset by a non-interest income decrease of $3.9 million and an income tax expense increase of $15.2 million.

During 2021, net interest income increased by $179.9 million, provision for credit losses decreased by $20.0 million and non-interest income increased $20.8 million, partially offset by a non-interest expense increase of $127.5 million and an income tax expense increase of $31.5 million.

The discussion of net interest income for the years ended December 31, 2023, 2022, and 2021 should be read in conjunction with the following tables, which set forth certain information related to the consolidated statements of operations for those periods, and which also present the average yield on assets and average cost of liabilities for the periods indicated.

The average yields and costs were derived by dividing income or expense by the average balance of their related assets or liabilities during the periods represented.

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Loan fees included in interest income were $1.5 million in 2023, $3.1 million in 2022, and $12.5 million in 2021.

The decrease in loan fees in 2023 was primarily due to a decline in loan prepayment fees.

There are no out-of-period adjustments included in the rate/volume analysis in the following table.

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Real estate loans (1) (4)

Commercial and industrial loans (1)

Commercial and industrial loans ("C&I") (1)

Other loans (1)

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Interest-bearing checking

Certificates of deposit

Certificates of deposit ("CDs")

Total interest-bearing deposits

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(3) Net interest margin represents net interest income divided by average interest-earning assets.

(4) At December 31, 2023, the loan portfolio included a fair value hedge basis point adjustment to the carrying amount of hedged one-to-four family residential mortgage loans, multifamily residential mortgage loans and CRE loans.

Rate/Volume Analysis

Years Ended December 31,

Year Ended December 31,

2023 over 2022

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Increase/(Decrease) Due to

Interest-earning assets:

(In thousands)

Interest-earning assets:

Real estate loans (1)

Commercial and industrial (1)

Other loans (1)

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Interest-bearing checking

Certificates of deposit

FHLBNY advances

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Interest income was $609.4 million in 2023, $439.2 million in 2022, and $384.6 million in 2021.

During 2023, interest income increased $170.2 million from 2022, primarily reflecting increases in interest income of $119.0 million on real estate loans, $29.1 million on C&I loans and $19.3 million on short-term investments.

The increased interest income on real estate loans was primarily due to an 85-basis point increase in yield and an increase of $909.3 million in the average balances of such loans in the period.

The increased interest income on C&I loans was primarily due to a 218-basis point increase in yield and an increase of $112.4 million in the average balances of such loans in the period.

The increased interest income from short-term investments was primarily due to a 376-basis point increase in yield and an increase of $193.8 million in the average balances of such short-term investments in the period.

Increased yields across interest-earning assets were a result of the rising interest rate environment.

During 2022, interest income increased $54.6 million from 2021, primarily reflecting increases in interest income of $55.7 million on real estate loans and $6.6 million on securities.

The increased interest income on real estate loans was primarily due to growth of $829.5 million in the average balances, and a 28-basis point increase in yield during the period due to the rising interest rate environment.

The increased interest income from securities was primarily due to the increase in the average balances of $392.4 million, offset in part by a 2-basis point decrease in the yield.

During 2021, interest income increased $150.6 million from 2020, primarily reflecting increases in interest income of $102.5 million on real estate loans, $38.5 million on commercial and industrial (“C&I”) loans, $8.5 million on securities, and $1.4 million on other loans.

The increased interest income on real estate loans was due to an increase of $3.05 billion in the average balance of such loans in the period, offset in part by a 24-basis point decrease in the yield.

The increased interest income on C&I loans was primarily due to growth of $960.0 million in the average balances, and a 13-basis point increase in yield during the period.

The increased interest income from securities was primarily due to the increase in the average balances of $775.2 million, offset in part by a 97-basis point decrease in the yield.

The increased average balances in 2021 versus 2020 were related primarily to the Merger transaction.

The increased interest income on real estate loans was primarily due to an increase of $829.5 million in the average balance of real estate loans and a 28-basis point increase in the yield of such loans.

The increased interest income from securities was primarily due to an increase of $392.4 million in the average balance of securities, offset by a 2-basis point decrease in the yield of such securities.

Interest Expense.

Interest expense was $292.8 million in 2023, $59.4 million in 2022, and $27.0 million in 2021.

During 2023, interest expense increased $233.4 million from 2022, primarily reflecting increases in interest expense of $73.1 million on money market accounts, $57.4 million on savings accounts, $49.1 million on Federal Home Loan Bank of New York (“FHLBNY”) advances and $44.7 million on CDs.

The increase in interest expense on money market accounts was primarily due to a 254-basis point increase in rates paid on money market accounts, offset by a decrease of $88.5 million

in the average balances of such deposits in the period.

The increase in interest expense on savings accounts was primarily due to a 229-basis point increase in rates paid on savings accounts and an increase of $496.1 million in the average balances of such deposits in the period.

The increase in interest expense on CDs was primarily due to a 277-basis point increase in rates paid on CDs and an increase of $517.7 million in the average balances of such deposits in the period.

The increase in interest expense on FHLBNY advances primarily reflects a $999.0 million increase in the average balance of FHLBNY advances and a 169-basis point increase in rates paid on such advances.

During 2022, interest expense increased $32.3 million from 2021, primarily reflecting increases in interest expense of $15.2 million on savings accounts, $5.1 million on FHLBNY advances, and $4.4 million on money market accounts.

The increase in interest expense on savings accounts was primarily due to increased rates offered on savings accounts and, an increase of $673.1 million in the average balances of such accounts.

The increase in interest expense on FHLB advances was primarily due to the increased cost of wholesale borrowings.

The increase in interest expense on money market accounts was primarily due to increased rates offered on money market accounts.

During 2021, interest expense decreased $29.3 million from 2020, primarily reflecting decreases in interest expense of $15.9 million on FHLBNY advances, and $14.6 million on CDs.

The decrease in interest expense on CDs was primarily due to decreased rates offered on CD accounts and, a decrease of $216.2 million in the average balances of such accounts.

The decrease in interest expense on FHLBNY advances was primarily due to a decrease of $806.2 million in the average balances of FHLBNY advances, and a decrease of 92 basis points in the cost of such borrowings.

The increase in interest expense on savings accounts was primarily due to an 82-basis point increase in yield on savings account and an increase of $673.1 million in the average balances of such deposits in the period.

The increase in interest expense on FHLBNY advances was primarily due to a 203-basis point increase in rates paid on FHLBNY wholesale borrowings, partially offset by a $6.4 million decrease in the average balance of such borrowings.

The increase in interest expense on money market accounts was primarily due to an 18-basis point increase in rates paid on money market accounts, partially offset by a $520.6 million decrease in the average balance of such accounts.

Provision for Credit Losses.

The Company recognized a provision for credit losses of $2.8 million in 2023, $5.4 million in 2022 and $6.2 million in 2021.

The $2.8 million provision for credit losses recognized in 2023 was associated with increased provisioning for individually analyzed loans.

The $5.4 million provision for credit losses recognized in 2022 was associated with growth in the loan portfolio and a deterioration of forecasted macroeconomic conditions, offset by a reduction in reserves on individually analyzed loans and unfunded commitments.

The $6.2 million provision for credit losses recognized in 2021 included a provision recorded on acquired non-PCD loans for the Day 2 accounting of acquired loans from the Merger, offset by improvements in forecasted macroeconomic conditions, and releases of reserves on individually analyzed loans.

The $26.2 million provision for credit losses recognized in 2020 resulted mainly from an increase in the general reserve allowance for credit losses due to an adjustment of qualitative factors to account for the effects of the COVID-19 pandemic and related economic disruption, and additional specific reserves on non-performing loans.

The provision for credit losses recognized in 2023, 2022 and 2021 was calculated in accordance with the CECL Standard adopted by the Company on January 1, 2021.

The provision for credit losses recognized in 2020 was calculated in accordance with prior GAAP, in accordance with ASC 310.

Non-Interest Income.

Non-interest income was $36.2 million in 2023, $38.2 million in 2022, and $42.1 million in 2021.

During 2022, non-interest income decreased $3.9 million from 2021, due primarily to a decrease in gains on the sales of SBA PPP loans, and a decrease in gain on sale of residential loans and other non-interest income of $1.3 million each.

During 2023, non-interest income decreased $2.0 million from 2022, primarily due to a decrease of $2.9 million from net gain on sale of securities and other assets, offset by a $3.4 million increase in loan level derivative income.

During 2022, non-interest income decreased $3.9 million from 2021, due primarily to a decrease in gain on the sales of SBA PPP loans, and a decrease in gain on sale of residential loans and other non-interest income of $1.3 million each.

Offsetting these declines was an increase in BOLI income of $3.3 million and no loss on termination of derivatives in 2022 (versus a $16.5 million loss on termination of derivatives in 2021).

During 2021, non-interest income increased $20.8 million from 2020, due primarily to a gain on the sale of SBA PPP loans of $20.7 million, an increase in service charges and other fees of $10.4 million, and an increase in other non-interest income of $3.0 million, partially offset by an increase in loss on termination of derivatives of $9.9 million, a decrease in loan level derivative income of $6.0 million, and a decrease in net gain on sale of securities and other assets of $2.9 million.

Non-Interest Expense.

Non-interest expense was $213.1 million in 2023, $200.7 million in 2022, and $245.3 million in 2021.

During 2023, non-interest expense increased $12.4 million from 2022, primarily due to a $6.9 million increase in severance expense, a $5.0 million increase in federal deposit insurance premiums (including $1.0 million of pre-tax expense related to the FDIC special assessment for the recovery of losses related to the closures of Silicon Valley Bank and Signature Bank), partially offset by a $2.7 million decrease in salaries and employee benefits.

During 2022, non-interest expense decreased $44.6 million from 2021, primarily due to not recognizing any merger expenses and transaction costs and branch restructuring costs in 2022 (versus $44.8 million in merger expenses and transaction costs and $5.1 million of branch restructuring costs in 2021).

These declines were offset by an increase of $11.8 million in salaries and employee benefits expenses.

During 2021, non-interest expense increased $127.5 million from 2020, reflecting an increase of $47.6 million in salaries and employee benefits expense, an increase of $29.6 million in merger expenses and transaction costs, an increase of $14.5 million in occupancy and equipment expense, an increase of $8.3 million in data processing costs, an increase of $7.2 million in other expenses, and an increase of $5.9 million in professional services expenses, all of which increased primarily due to the Merger.

We also incurred branch restructuring costs of $5.1 million during the 2021 period.

Non-interest expense was 1.56%, 1.61%, and 2.03% of average assets during 2023, 2022, and 2021, respectively.

The increase in 2021 was primarily due to merger expenses and transaction costs.

Income Tax Expense.

Income tax expense was $40.8 million in 2023, $59.4 million in 2022, and $44.2 million in 2021.

Income tax expense increased $15.2 million during 2022 compared to 2021, primarily as a result of $63.7 million of higher pre-tax income during 2022.

Income tax expense decreased $18.6 million during 2023 compared to 2022, primarily as a result of $75.0 million of lower pre-tax income during 2023.

Income tax expense increased $15.2 million during 2022 compared to 2021, primarily as a result of $63.7 million of higher pre-tax income during 2022.

The Company’s consolidated tax rate was 29.8%, 28.0% and 29.8% in 2023, 2022, and 2021, respectively.

The increase in the effective tax rate in 2022 and 2021 compared to 2020 was primarily the result of the loss of benefits from Legacy Dime’s REITs as the Company’s total assets exceeded $8 billion, and non-deductible expenses during 2021.

Comparison of Financial Condition at December 31, 2023 and December 31, 2022

Assets totaled $13.19 billion at December 31, 2022, $1.13 billion above their level at December 31, 2021, primarily due to an increase in the loan portfolio of $1.32 billion, partially offset by a decrease in cash and due from banks of $224.4 million, and a decrease in total securities of $206.6 million.

Total net loans held for investment increased $1.32 billion during the year ended December 31, 2022, to $10.48 billion at period end.

During the period, the Bank had originations of $2.83 billion.

Total securities decreased $206.6 million during the year ended December 31, 2022, to $1.54 billion at period end, primarily due to proceeds from principal payments and calls of $195.3 million and an increase in unrealized losses of $109.7 million, offset in part by purchases of $102.4 million.

We transferred $372.2 million of securities available-for-sale to securities held-to-maturity during the year ended December 31, 2022.

Total liabilities increased $1.15 billion during the year ended December 31, 2022, to $12.02 billion at period end, primarily due to an increase of $1.11 billion in FHLBNY advances, and an increase of $148.5 million in derivative cash collateral.

We maintained a higher level of borrowings to support loan growth and offset a $204.6 million decline in deposits.

During the year ended December 31, 2022, the Company did not terminate any derivatives.

During the year ended December 31, 2021, the Company terminated 34 derivatives with notional values totaling $785.0 million, resulting in a termination value of $16.5 million which was recognized in loss on termination of derivatives in non-interest income.

Assets totaled $13.64 billion at December 31, 2023, $446.1 million above their level at December 31, 2022, primarily due to an increase in cash and due from banks of $288.3 million, an increase in the loan portfolio of $218.4

million, partially offset by a decrease in total securities of $55.5 million, and a decrease in derivative assets of $32.4 million.

Total net loans held for investment increased $218.4 million during the year ended December 31, 2023, to $10.70 billion at period end.

During the period, the Bank had originations of $997.8 million.

Total securities decreased $55.5 million during the year ended December 31, 2023, to $1.48 billion at period end, primarily due to proceeds from principal payments, calls, maturities and sales of $177.8 million offset in part by purchases of $114.4 million and a decrease in unrealized losses of $11.8 million.

There were no transfers to or from securities held-to-maturity for the year ended ended December 31, 2023.

Total liabilities increased $389.4 million during the year ended December 31, 2023, to $12.41 billion at period end, primarily due to an increase of $276.2 in deposits, an increase of $182.0 million in FHLBNY advances, partially offset by a decrease of $44.9 million in derivative cash collateral and a decrease of $16.1 million in derivative liabilities.

We maintained a higher level of borrowings to support loan growth.

Stockholders’ Equity.

Stockholders’ equity decreased $23.0 million during the year ended December 31, 2022 to $1.17 billion at period end, primarily due to an increase in accumulated other comprehensive loss of $88.2 million, repurchases of shares of common stock of $46.8 million, common stock dividends of $37.2 million and preferred stock dividends of $7.3 million, offset in part by net income for the period of $152.6 million.

Stockholders’ equity increased $56.6 million during the year ended December 31, 2023 to $1.23 billion at period end, primarily due to net income for the period of $96.1 million, a decrease in accumulated other comprehensive loss of $2.8 million, offset in part by common stock dividends of $38.6 million, preferred stock dividends of $7.3 million and repurchases of shares of common stock of $947 thousand.

Loan Portfolio Composition

1 unchanged sentence

(In thousands)

December 31, 2022

December 31, 2021

December 31, 2020

One-to-four family, including condominium and cooperative apartment

Multifamily residential and residential mixed-use

Commercial real estate ("CRE")

Acquisition, development, and construction ("ADC")

Total real estate loans

Fair value hedge basis point adjustments (1)

Total loans, net of fair value hedge basis point adjustments

Allowance for credit losses

Loans held for investment, net

During the year ended December 31, 2022, our real estate loans and C&I loans increased $1.19 billion and $138.2 million, respectively.

(1) At December 31, 2023, the loan portfolio included a fair value hedge basis point adjustment to the carrying amount of hedged one-to-four family residential mortgage loans, multifamily residential mortgage loans and CRE loans.

During the year ended December 31, 2023, our real estate loans increased $206.7 million and our C&I loans decreased $4.7 million.

Loan Purchases, Sales and Servicing

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Servicing fees are typically derived based upon the difference between the actual origination rate and contractual pass-through rate of the loans at the time of sale.

At December 31, 2022 and 2021, the Bank had recorded servicing right assets ("SRAs") of $3.1 million and $3.8 million, respectively, associated with the sale of loans to third-party institutions in which the Bank retained the servicing of the loan.

At December 31, 2023 and 2022, the Bank had recorded servicing right assets ("SRAs") of $2.9 million and $3.1 million, respectively, associated with the sale of loans to third-party institutions in which the Bank retained the servicing of the loan.

The Bank outsources the servicing of a portion of our one-to-four family mortgage loan portfolio to an unrelated third-party under a sub-servicing agreement.

Fees paid under the sub-servicing agreement are reported as a component of other non-interest expense in the consolidated statements of income.

Fees paid under the sub-servicing agreement are reported as a component of other non-interest expense in the consolidated statements of operations.

Loan Maturity and Repricing

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The table does not include scheduled principal amortization.

Less than 1 year

(In thousands)

5 to 15 years

Over 15 years

(In thousands)

One-to-four family residential and cooperative/condominium apartment

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Monitoring and Collection of Delinquent Loans

Our management reviews delinquent loans on a monthly basis and reports to our Board of Directors at each regularly scheduled Board meeting regarding the status of all non-performing and otherwise delinquent loans in our loan portfolio.

Our loan servicing policies and procedures require that an automated late notice be sent to a delinquent borrower as soon as possible after a payment is ten days late in the case of multifamily residential, commercial real estate loans, and C&I loans, or fifteen days late in connection with one-to-four family or consumer loans.

Thereafter, periodic letters are mailed and phone calls placed to the borrower until payment is received.

Our management reviews delinquent loans on a monthly basis and reports to our Board of Directors or Committees of the Board of the Directors at each regularly scheduled Board or Committee meeting regarding the status of all non-performing and otherwise delinquent loans in our loan portfolio.

Our loan servicing policies and procedures require that an automated late notice be sent to a delinquent borrower as soon as possible after a payment is ten days late in the case of multifamily residential, CRE loans, and C&I loans, or fifteen days late in connection with one-to-four family and consumer loans.

Thereafter, periodic letters are mailed and phone calls are placed to the borrower until payment is received.

When contact is made with the borrower at any time prior to foreclosure, we will attempt to obtain the full payment due or negotiate a repayment schedule with the borrower to avoid foreclosure.

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or (iii) an election has otherwise been made to maintain the loan on a cash basis due to deterioration in the financial condition of the borrower.

Such non-accrual determination practices are applied consistently to all loans regardless of their internal classification or designation.

Such non-accrual

determination practices are applied consistently to all loans regardless of their internal classification or designation.

Upon entering non-accrual status, we reverse all outstanding accrued interest receivable.

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We have not initiated any expected or imminent foreclosure proceedings that are likely to have a material adverse impact on our consolidated financial statements.

In the event that a non-accrual loan is subsequently brought current, it is returned to accrual status once the doubt concerning collectability has been removed and the borrower has demonstrated performance in accordance with the loan terms and conditions for a period of generally at least six months.

The C&I portfolio is actively managed by our lenders and underwriters.

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Within our held-for-investment loan portfolio, non-accrual loans totaled $29.1 million at December 31, 2023 and $34.2 million at December 31, 2022.

We are required to recognize loans for which certain modifications or concessions have been made as TDRs.

Loan Restructurings

The Company adopted ASU No.

2022-02 on January 1, 2023, which eliminates the recognition and measurement of a TDR.

Due to the removal of the TDR designation, the Company applies the loan refinancing and restructuring guidance to determine whether a modification or other forms of restructuring result in a new loan or a continuation of an existing loan.

Loan modifications to borrowers experiencing financial difficulty that result in a direct change in the timing or amount of contractual cash flows include conditions where there is principal forgiveness, interest rate reductions, other-than-insignificant payment delays, term extensions, and/or a combinations of these modifications.

The disclosures related to loan restructuring are only for modifications that directly affect cash flows.

Please refer to Note 5 to our condensed Consolidated Financial Statements for a further discussion loan restructurings.

Troubled Debt Restructurings (“TDRs”)

Prior to the adoption of ASU No.2022-02, we were required to recognize loans for which certain modifications or concessions have been made as TDRs.

A TDR has been created in the event that, for economic or legal reasons, any of the following concessions has been granted that would not have otherwise been considered to a debtor experiencing financial difficulties.

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We modified twelve loans in a manner that met the criteria for a TDR during the year ended December 31, 2022.

We modified four loans in a manner that met the criteria for a TDR during the year ended December 31, 2021.

Accrual status for TDRs is determined separately for each TDR in accordance with our policies for determining accrual or non-accrual status.

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If a loan is on non-accrual status at the time it is restructured, it continues to be classified as non-accrual until the borrower has demonstrated compliance with the modified loan terms for a period of at least six months.

Conversely, if at the time of restructuring the

loan is performing (and accruing) it will remain accruing throughout its restructured period, unless the loan subsequently meets any of the criteria for non-accrual status under our policy and agency regulations.

Conversely, if at the time of restructuring the loan is performing (and accruing) it will remain accruing throughout its restructured period, unless the loan subsequently meets any of the criteria for non-accrual status under our policy and agency regulations.

Within the allowance for credit losses, losses are estimated for TDRs on accrual status as well as TDRs on non-accrual status that are one-to-four family loans or consumer loans, on a pooled basis with loans that share similar risk characteristics.

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As a result, OREO properties have generally not warranted subsequent independent appraisals.

There was no carrying value of OREO properties on our consolidated balance sheets at December 31, 2022 or December 31, 2021.

There was no carrying value of OREO properties on our consolidated statements of financial condition at December 31, 2023 or December 31, 2022.

We did not recognize any provisions for losses on OREO properties during the years ended December 31, 2023, 2022 or 2021.

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Accruing Loans 90 Days or More Past Due

At December 31, 2022, there were no accruing loans 90 days or more past due.

At December 31, 2021, we had nine loans with an aggregate outstanding balance of $3.0 million, all of which were 90 days or more past due.

These loans were either well secured, awaiting a forbearance extension or formal payment deferral, or will likely be forgiven through the PPP or repurchased by the SBA, and, therefore, remained on accrual status and were deemed performing assets.

There were no accruing loans 90 days or more past due at December 31, 2023 or 2022.

Reserve for Loan Commitments

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The amount of reserve was $2.7 million at December 31, 2023 and $2.8 million at December 31, 2022.

This reserve is

determined based upon the outstanding volume of loan commitments at each period end.

This reserve is determined based upon the outstanding volume of loan commitments at each period end.

Any increases or reductions in this reserve are recognized in provision for credit losses.

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On January 1, 2021, the Company adopted ASU No.

2016-13 "Financial Instruments – Credit Losses (Topic 326)".

ASU 2016-13 was effective for the Company as of January 1, 2020.

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A provision of $2.8 million and $5.4 million were recorded during the twelve-month periods ended December 31, 2023 and 2022, respectively.

The $5.4 million provision for credit losses recognized in 2022 was associated with growth in the loan portfolio and a deterioration of forecased economic conditions, offset by a reduction in reserves on individually analyzed loans and unfunded commitments.

The $6.2 million provision for credit losses recognized in 2021 included a provision recorded on acquired non-PCD loans for the Day 2 accounting of acquired loans from the Merger offset by improvements in forecasted macroeconomic conditions, and release of reserves on individually analyzed loans.

The $2.8 million provision for credit losses recognized in 2023 was primarily associated with provisioning for individually analyzed loans.

The $5.4 million provision for credit losses recognized in 2022 was associated with growth in the loan portfolio and a deterioration of forecasted economic conditions, offset by a reduction in reserves on individually analyzed loans and unfunded commitments.

For further discussion of the allowance for credit losses and related activity during the years ended December 31, 2023, 2022 and 2021, please see Note 5 to the Consolidated Financial Statements.

The following table presents our allowance for credit losses allocated by loan type and the percent of each to total loans at the dates indicated.

December 31, 2022

December 31, 2021

December 31, 2020

(Dollars in thousands)

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Multifamily residential and residential mixed-use

Acquisition, development, and construction

The following table sets forth information about our allowance for credit losses at or for the dates indicated:

At or for the Year Ended December 31,

(Dollars in thousands)

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Multifamily residential and residential mixed-use

Acquisition, development, and construction

(1) Total loans represent gross loans (excluding loans held for sale), inclusive of deferred fees/costs and premiums/discounts.

(2) Total average loans represent gross loans (including loans held for sale), inclusive of deferred loan fees/costs and premiums/discounts.

(1) Total loans represent gross loans (excluding loans held for sale), fair value hedge basis point adjustments, inclusive of deferred fees/costs and premiums/discounts.

(2) Total average loans represent gross loans (including loans held for sale and fair value hedge basis point adjustments), inclusive of deferred loan fees/costs and premiums/discounts.

Investment Activities

Securities available-for-sale

Our consolidated investment in securities available-for-sale totaled $950.6 million at December 31, 2022.

The average duration of these securities was 3.5 years as of December 31, 2022.

The following table presents the amortized cost, fair value and weighted average yield of our securities available-for-sale at December 31, 2023, categorized by remaining period to contractual maturity:

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The following table presents the weighted average contractual maturity of our securities available-for-sale:

Weighted average contractual maturity (years) - Available-for-sale:

Treasury securities

Corporate securities

Pass-through MBS issued by GSEs and agency CMOs

Pass-through MBS issued by U.S.

GSEs and agency collateralized mortgage obligations ("CMOs")

State and municipal obligations

Securities held-to-maturity

Our investment in securities held-to-maturity totaled $585.8 million at December 31, 2022.

The average duration of these securities was 6.1 years as of December 31, 2022.

The following table presents the amortized cost, fair value and weighted average yield of our securities held-to-maturity at December 31, 2023, categorized by remaining period to contractual maturity:

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The following table presents the weighted average contractual maturity of our securities held-to-maturity:

Weighted average contractual maturity (years) - Held-to-maturity:

Corporate securities

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Sources of Funds

The following table presents our deposit accounts and the related weighted average interest rates at the dates indicated:

The following table presents our deposit accounts and the related weighted average interest rates at the dates indicated (Dollars in thousands):

December 31, 2023

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December 31, 2021

(Dollars in Thousands)

Savings accounts

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The weighted average maturity of our CDs at December 31, 2023 was 5.1 months, compared to 7.6 months at December 31, 2022.

As of December 31, 2022 and 2021, the portion of deposit accounts in excess of the $250,000 FDIC insurance limit was $5.73 billion and $5.83 billion, respectively.

The following table sets forth the amount of time deposits in uninsured accounts by maturity, all of which are CDs:

Non-insured deposits (excluding collateralized deposits and deposits with pass through insurance) represented 28.9% and 31.0% of total deposits as of December 31, 2023 and 2022, respectively.

The Bank had $1.88 billion and $1.90 billion of public funds collateralized by securities and Municipal Letters of Credit (“MULOC”), and $680.8 million and $615.6 million of deposits with pass through insurance as of December 31, 2023, and 2022, respectively.

The following table sets forth the amount of time deposits in uninsured accounts by maturity, all of which are CDs at December 31, 2023:

(In thousands)

December 31, 2022

Maturity Period

Three months or less

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At December 31, 2023, brokered deposits totaled $898.7 million, which included purchased CDs from the CDARS program, purchased MMAs from the ICS program and purchased CDs through a broker.

At December 31, 2021, brokered deposits totaled $200.0 million, which included purchased MMAs from the ICS program.

At December 31, 2022, brokered deposits totaled $538.9 million, which included purchased CDs from the CDARS program, purchased MMAs from the ICS program and purchased CDs through a broker.

At December 31, 2021, brokered deposits totaled $200.0 million, which included purchased MMAs from the ICS program.

The Bank’s total borrowing line with FHLBNY equaled $4.09 billion at December 31, 2023.

The Bank had $1.13 billion of FHLBNY advances outstanding at December 31, 2022, and $25.0 million at December 31, 2021.

The Bank had $1.31 billion of FHLBNY advances outstanding at December 31, 2023, and $1.13 billion at December 31, 2022.

The Bank maintained sufficient collateral, as defined by the FHLBNY (principally in the form of real estate loans), to secure such advances.

The Company had $1.4 million outstanding of securities sold under agreements to repurchase (“repurchase agreements”) at December 31, 2022.

The Company had no outstanding securities sold under agreements to repurchase (“repurchase agreements”) at December 31, 2023.

The Company had $1.4 million outstanding of securities sold under agreements to repurchase at December 31, 2022.

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Liquidity is primarily needed to meet customer borrowing commitments and deposit withdrawals, either on demand or on contractual maturity, to repay borrowings as they mature, to fund current and planned expenditures and to make new loans and investments as opportunities arise.

The Bank’s primary sources of funding for its lending and investment activities include deposits, loan and MBS payments, investment security principal and interest payments and advances from the FHLBNY.

The Bank may also sell or securitize selected multifamily residential, mixed-use or one-to-four family residential real estate loans to private sector secondary market purchasers, and has in the past sold such loans to FNMA and FHLMC.

The Bank’s primary sources of funding for its lending and investment activities include deposits, loan payments, investment security principal and interest payments and advances from the FHLBNY.

The Company may additionally issue debt or equity under appropriate circumstances.

Although maturities and scheduled amortization of loans and investments are predictable sources of funds, deposit flows and prepayments on real estate loans and MBS are influenced by interest rates, economic conditions and competition.

The Bank is a member of AFX, through which it may either borrow or lend funds on an overnight or short-term basis with other member institutions.

The Bank is a member of American Financial Exchange (“AFX”), through which it may either borrow or lend funds on an overnight or short-term basis with other member institutions.

The availability of funds changes daily.

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Repurchase agreements represent funds received from customers, generally on an overnight basis, which are collateralized by investment securities.

As of December 31, 2022, the Bank’s repurchase agreements totaled $1.4 million, included in other short-term borrowings on the consolidated balance sheets.

As of December 31, 2023 the Bank did not have any repurchase agreements.

As of December 31, 2022, the Bank’s repurchase agreements totaled $1.4 million, included in other short-term borrowings on the consolidated statements of financial condition.

The Bank gathers deposits in direct competition with commercial banks, savings banks and brokerage firms, many among the largest in the nation.

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However, favorable performance of the equity or bond markets could adversely impact the Bank’s deposit flows.

Total deposits decreased $204.6 million during the year ended December 31, 2022 compared to an increase of $5.93 billion during the year ended December 31, 2021.

The increase in total deposits during the 2021 period was primarily due to the acquisition of deposits in the Merger.

Within deposits, core deposits ( i.e., non-CDs) decreased $466.7 million during the year ended December 31, 2022 and increased $6.40 billion during the year ended December 31.

CDs increased $262.1 million during the year ended December 31, 2022 compared to a decrease of $469.4 million during the year ended December 31, 2021.

Total deposits (including mortgage escrow deposits) increased $276.2 million during the year ended December 31, 2023 compared to a decrease of $204.6 million during the year ended December 31, 2022.

The increase in total deposits during the 2023 period was primarily due to an increase in money market deposits.

Within deposits, core deposits ( i.e., non-CDs) decreased $216.1 million during the year ended December 31, 2023 and decreased $466.7 million during the year ended December 31, 2022.

CDs increased $492.3 million during the year ended December 31, 2023 compared to an increase of

$262.1 million during the year ended December 31, 2022.

The increase in CDs during the current period was primarily due to a $359.9 million increase in brokered CDs.

The Bank increased its outstanding FHLBNY advances by $1.11 billion during the year ended December 31, 2022, compared to a $1.18 billion decrease during the year ended December 31, 2021.

The Bank increased its outstanding FHLBNY advances by $182.0 million during the year ended December 31, 2023, compared to a $1.11 billion increase during the year ended December 31, 2022.

“Federal Home Loan Bank Advances” to our Consolidated Financial Statements for further information.

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“Subordinated Debentures” to our Consolidated Financial Statements for further information.

In the event that the Bank should require funds beyond its ability or desire to generate them internally, an additional source of funds is available through its borrowing line at the FHLBNY or borrowing capacity through AFX and lines of credit

with unaffiliated correspondent banks.

At December 31, 2022, the Bank had an additional unused borrowing capacity of $1.57 billion through the FHLBNY, subject to customary minimum FHLBNY common stock ownership requirements ( i.e.

, 4.5% of the Bank’s outstanding FHLBNY borrowings).

During the year ended December 31, 2022 and 2021, real estate loan originations totaled $2.67 billion and $1.67 billion, respectively.

In the event that the Bank should require funds beyond its ability or desire to generate them internally, additional sources of liquidity are available through its collateralized borrowing lines at the FHLBNY and the FRB, as well as unsecured borrowing capacity through the AFX and lines of credit with unaffiliated correspondent banks.

At December 31, 2023, the Bank had remaining borrowing capacity of $1.19 billion through the FHLBNY, subject to customary minimum FHLBNY common stock ownership requirements ( i.e.

, 4.5% of the Bank’s drawn FHLBNY borrowings).

The Bank also had access to the FRB Discount Window and the FRB Bank Term Funding Program.

At December 31, 2023, an available line of credit totaling $848.4 million was in place at the FRB backed by investment securities with no advances drawn.

Additionally, at December 31, 2023, a line of credit totaling $2.01 billion was in place at the FRB secured by certain qualifying 1-4 family residential mortgage loans, construction loans and CRE loans with no amounts drawn.

During the year ended December 31, 2023 and 2022, real estate loan originations totaled $885.5 million and $2.67 billion, respectively.

During the year ended December 31, 2023 and 2022, C&I loan originations totaled $112.3 million and $160.1 million, respectively.

Included in the 2021 period was PPP loan originations of $579.9 million.

The PPP program ended on May 31, 2021.

The Bank did not have proceeds from sales of securities available-for-sale during the year ended December 31, 2022.

Proceeds from sales of available-for-sale securities totaled $138.1 million during the year ended December 31, 2021.

Purchases of available-for-sale securities totaled $39.2 million and $1.10 billion during the years ended December 31, 2022 and 2021, respectively.

Sales of securities available-for-sale totaled $77.8 million during the year ended December 31, 2023.

There were no sales of securities available-for-sale during the year ended December 31, 2022.

Purchases of available-for-sale securities totaled $86.1 million and $39.2 million during the years ended December 31, 2023 and 2022, respectively.

Proceeds from pay downs and calls and maturities of available-for-sale securities were $79.9 million and $165.1 million for the years ended December 31, 2023 and 2022, respectively.

The Bank did not have proceeds from sales of held-to-maturity securities during the years ended December 31, 2022 and 2021.

The Bank did not have proceeds from sales of held-to-maturity securities during the years ended December 31, 2023 or 2022.

Purchases of held-to-maturity securities totaled $28.3 million and $63.2 million during the year ended December 31, 2023 and 2022, respectively.

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As a general matter, these capital requirements are based on the amount and composition of an institution’s assets.

At December 31, 2022, each of the Company and the Bank were in compliance with all applicable regulatory capital requirements and the Bank was considered "well capitalized"

for all regulatory purposes.

At December 31, 2023, each of the Company and the Bank were in compliance with all applicable regulatory capital requirements and the Bank was considered "well capitalized" for all regulatory purposes.

The Holding Company repurchased 36,813 shares of its common stock during the year ended December 31, 2023.

1 unchanged sentence

As of December 31, 2023, up to 1,566,947 shares remained available for purchase under the authorized share repurchase programs.

See "Part II - Item 5.

Issuer Purchases of Equity Securities"

for additional information about repurchases of common stock.

See "Part II - Item 5.

Issuer Purchases of Equity Securities" for additional information about repurchases of common stock.

The Holding Company paid $7.3 million in cash dividends on its preferred stock during the years ended December 31, 2023 and 2022, respectively.

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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-K

Item 7. Management’s Discussion and Analysis