Item 7. Management’s Discussion and Analysis
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
In this Annual Report on Form 10-K, unless otherwise mentioned, the terms the “Company”, “we”, “us” and “our” refer to Dime Community Bancshares, Inc. and our wholly-owned subsidiary, Dime Community Bank (the “Bank”). We use the term “Holding Company” to refer solely to Dime Community Bancshares, Inc. and not to our consolidated subsidiary.
Overview
Dime Community Bancshares, Inc., a New York corporation, is a bank holding company formed in 1988. On a parent-only basis, the Holding Company has minimal operations, other than as owner of Dime Community Bank. The Holding Company is dependent on dividends from its wholly-owned subsidiary, Dime Community Bank, its own earnings, additional capital raised, and borrowings as sources of funds. The information in this report reflects principally the financial condition and results of operations of the Bank. The Bank's results of operations are primarily dependent on its net interest income, which is the difference between interest income on loans and investments and interest expense on deposits and borrowings. The Bank also generates non-interest income, such as fee income on deposit and loan accounts, merchant credit and debit card processing programs, loan swap fees, investment services, income from its title insurance subsidiary, and net gains on sales of securities and loans and other assets. The level of non-interest expenses, such as salaries and benefits, occupancy and equipment costs, other general and administrative expenses, expenses from the Bank’s title insurance subsidiary, and income tax expense, further affects our net income. Certain reclassifications have been made to prior year amounts and the related discussion and analysis to conform to the current year presentation. These reclassifications did not have an impact on net income or total stockholders' equity.
Critical Accounting Estimates
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 53), to the Company’s Audited Consolidated Financial Statement for the year ended December 31, 2024 contains a summary of significant accounting policies. These critical accounting estimates involve a significant degree of complexity and require management to make difficult and subjective judgments which often necessitate assumptions or estimates about highly uncertain matters. Policies with respect to the methodologies used to determine the allowance for credit losses on loans held for investment are important to the presentation of the Company’s consolidated financial condition and results of operations. The use of different judgments, assumptions or estimates could result in material variations in the Company’s consolidated results of operations or financial condition.
Management has reviewed the following critical accounting estimates and related disclosures with its Audit Committee.
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Allowance for Credit Losses on Loans Held for Investment
Methods and Assumptions Underlying the Estimate
On January 1, 2021, we adopted the Current Expected Credit Losses (“CECL”) Standard, which requires that loans held for investment be accounted for under the current expected credit losses model. The allowance for credit losses is established and maintained through a provision for credit losses based on expected losses inherent in our loan portfolio. Management evaluates the adequacy of the allowance on a quarterly basis, and additions to the allowance are charged to expense and realized losses, net of recoveries, are charged against the allowance.
Determining the appropriateness of the allowance is complex and requires judgment by management about the effect of matters that are inherently uncertain. In determining the allowance for credit losses for loans that share similar risk characteristics, the Company utilizes a model which compares the amortized cost basis of the loan to the net present value of expected cash flows to be collected. Expected credit losses are determined by aggregating the individual cash flows and calculating a loss percentage by loan segment, or pool, for loans that share similar risk characteristics. For a loan that does not share risk characteristics with other loans, the Company will evaluate the loan on an individual basis. Within the model, assumptions are made in the determination of probability of default, loss given default, reasonable and supportable economic forecasts, prepayment rate, curtailment rate, and recovery lag periods.
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, which are subjective and require significant management judgment. These factors include: (1) lending policies and procedures and the experience, ability, and depth of the lending management and other relevant staff; (2) international, national, regional and local economic business conditions and developments that affect the collectability of the portfolio, including the condition of various markets; (3) the nature and volume of the loan portfolio; (4) the volume and severity of past due loans; (5) the quality of our loan review system; (6) the value of underlying collateral for collateralized loans; (7) the existence and effect of any concentrations of credit, and changes in the level of such concentrations; and (8) the effect of external factors such as competition and legal and regulatory requirements on the level of estimated credit losses in the existing portfolio.
Although management believes that it uses the best information available to establish the Allowance for Credit Loss, management assesses the sensitivity of key quantitative assumptions including macroeconomic forecasts and prepayment rate assumptions. 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. At June 30, 2024, if the four-quarter national unemployment rate forecast had increased 100 basis points our quantitative ACL reserve would have increased 11.8%. The 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 quantitative input. Additionally, the sensitivity analysis described above does not incorporate changes to management’s judgment of qualitative loss factors.
Uncertainties Regarding the Estimate
Estimating the timing and amounts of future losses is subject to significant management judgment as these projected cash flows rely upon the estimates discussed above and factors that are reflective of current or future expected conditions. These estimates depend on the duration of current overall economic conditions, industry, borrower, or portfolio specific conditions. Volatility in certain credit metrics and differences between expected and actual outcomes are to be expected.
Customers may not repay their loans according to the original terms, and the collateral securing the payment of those loans may be insufficient to pay any remaining loan balance. Bank regulators periodically review our allowance for credit losses and may require us to increase our provision for credit losses or loan charge-offs.
Impact on Financial Condition and Results of Operations
If our assumptions prove to be incorrect, the allowance for credit losses may not be sufficient to cover expected losses in the loan portfolio, resulting in additions to the allowance. Future additions or reductions to the allowance may be necessary
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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 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.
In addition, various regulatory agencies, as an integral part of the examination process, periodically review the allowance for credit losses. Such agencies may require the Bank to recognize adjustments to the allowance based on their judgments of the information available to them at the time of their examination.
Comparison of Operating Results For The Years Ended December 31, 2024, 2023 and 2022
General. Net income was $29.1 million in 2024, compared to $96.1 million in 2023, and $152.6 million in 2022. During 2024, non-interest income decreased by $40.2 million, provision for credit losses increased by $33.3 million and non-interest expense increased by $13.4 million, partially offset by an increase in net interest income of $1.5 million and a decrease in income tax expense of $18.4 million. 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 $839 thousand, 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.
The discussion of net interest income for the years ended December 31, 2024, 2023, and 2022 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. Average balances were derived from average daily balances. No tax-equivalent adjustments have been made for interest income exempt from Federal, state, and local taxation. The yields include loan fees consisting of amortization of loan origination and commitment fees and certain direct and indirect origination costs, prepayment fees, and late charges that are considered adjustments to yields. Loan fees included in interest income were $1.0 million in 2024, $1.5 million in 2023, and $3.1 million in 2022. The decrease in loan fees in 2024 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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Average Balance Sheets
Year Ended December 31,
2024
2023
2022
Average
Average
Average
Average
Yield/
Average
Yield/
Average
Yield/
Balance
Interest
Cost
Balance
Interest
Cost
Balance
Interest
Cost
Assets:
(Dollars in thousands)
Interest-earning assets:
Business loans (1) (3) (6)
$
2,500,904
$
175,604
7.02
%
$
2,246,442
$
147,530
6.57
%
$
2,006,287
$
99,296
4.95
%
One-to-four family residential, including condo and coop (3) (6)
910,096
41,823
4.60
847,706
35,148
4.15
703,055
24,705
3.51
Multifamily residential and residential mixed-use (3) (6)
3,927,197
181,736
4.63
4,096,025
180,286
4.40
3,675,595
139,562
3.80
Non-owner-occupied commercial real estate (3) (6)
3,323,299
177,173
5.33
3,353,805
171,475
5.11
3,071,837
125,659
4.09
ADC (3)
155,279
13,936
8.97
214,106
19,656
9.18
279,620
16,752
5.99
Other loans (3)
5,046
220
4.36
6,514
393
6.03
11,493
627
5.46
Securities
1,515,962
33,563
2.21
1,640,066
32,179
1.96
1,687,835
29,224
1.73
Other short-term investments
499,633
26,094
5.22
442,574
22,693
5.13
248,779
3,400
1.37
Total interest-earning assets
12,837,416
650,149
5.06
%
12,847,238
609,360
4.74
%
11,684,501
439,225
3.76
%
Non-interest earning assets
781,373
777,977
782,261
Total assets
$
13,618,789
$
13,625,215
$
12,466,762
Liabilities and Stockholders' Equity:
Interest-bearing liabilities:
Interest-bearing checking (2)
$
731,709
$
12,472
1.70
%
$
775,904
$
8,562
1.10
%
$
851,931
$
3,115
0.37
%
Money market
3,650,266
134,367
3.68
2,882,859
83,950
2.91
2,971,312
10,879
0.37
Savings (2)
2,177,372
80,239
3.69
2,311,275
73,270
3.17
1,815,198
15,906
0.88
CDs
1,351,408
57,667
4.27
1,444,554
53,263
3.69
926,837
8,533
0.92
Total interest-bearing deposits
7,910,755
284,745
3.60
7,414,592
219,045
2.95
6,565,278
38,433
0.59
FHLBNY advances
699,940
27,268
3.90
1,251,871
56,140
4.48
252,838
7,062
2.79
Subordinated debt, net
236,738
13,765
5.81
200,243
10,212
5.10
217,753
10,616
4.88
Other short-term borrowings
189
3
1.59
3,150
120
3.81
56,030
1,439
2.57
Total borrowings
936,867
41,036
4.38
1,455,264
66,472
4.57
526,621
19,117
3.63
Derivative cash collateral
116,567
6,314
5.42
143,735
7,272
5.06
97,225
1,812
1.86
Total interest-bearing liabilities
8,964,189
332,095
3.70
%
9,013,591
292,789
3.25
%
7,189,124
59,362
0.83
%
Non-interest-bearing checking (2)
3,140,423
3,126,575
3,890,642
Other non-interest-bearing liabilities
230,910
270,033
218,194
Total liabilities
12,335,522
12,410,199
11,297,960
Stockholders' equity
1,283,267
1,215,016
1,168,802
Total liabilities and stockholders' equity
$
13,618,789
$
13,625,215
$
12,466,762
Net interest income
$
318,054
$
316,571
$
379,863
Net interest rate spread (4)
1.36
%
1.49
%
2.93
%
Net interest-earning assets
$
3,873,227
$
3,833,647
$
4,495,377
Net interest margin (5)
2.48
%
2.46
%
3.25
%
Ratio of interest-earning assets to interest-bearing liabilities
143.21
%
142.53
%
162.53
%
Deposits (including non-interest-bearing checking accounts) (2)
$
11,051,178
$
284,745
2.58
%
$
10,541,167
$
219,045
2.08
%
$
10,455,920
38,433
0.37
%
(1) Business loans include commercial and industrial loans (“C&I”), owner-occupied commercial real estate loans and SBA Paycheck Protection Program (“PPP”) loans.
(2) Includes mortgage escrow deposits.
(3) Amounts are net of deferred origination costs/(fees) and allowance for credit losses, and include loans held for sale.
(4) Net interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities.
(5) Net interest margin represents net interest income divided by average interest-earning assets.
(6) At December 31, 2024 and 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 .
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Rate/Volume Analysis
Years Ended December 31,
2024 over 2023
2023 over 2022
Increase/(Decrease) Due to
Increase/(Decrease) Due to
Volume
Rate
Total
Volume
Rate
Total
Interest-earning assets:
(In thousands)
Business loans (1) (2)
$
17,341
$
10,733
$
28,074
$
13,860
$
34,374
$
48,234
One-to-four family residential, including condo and coop
2,724
3,951
6,675
5,510
4,933
10,443
Multifamily residential and residential mixed-use
(7,700)
9,150
1,450
17,323
23,401
40,724
Non-owner-occupied commercial real estate
(1,620)
7,318
5,698
13,007
32,809
45,816
ADC
(5,335)
(385)
(5,720)
(4,970)
7,874
2,904
Other loans
(76)
(97)
(173)
(286)
52
(234)
Securities
(2,574)
3,958
1,384
(877)
3,832
2,955
Other short-term investments
2,965
436
3,401
6,297
12,996
19,293
Total interest-earning assets
5,725
35,064
40,789
49,864
120,271
170,135
Interest-bearing liabilities:
Interest-bearing checking
(616)
4,526
3,910
(527)
5,974
5,447
Money market
25,275
25,142
50,417
(1,364)
74,435
73,071
Savings
(4,648)
11,617
6,969
10,080
47,284
57,364
CDs
(3,706)
8,110
4,404
11,909
32,821
44,730
FHLBNY advances
(23,169)
(5,703)
(28,872)
36,339
12,739
49,078
Subordinated debt, net
1,996
1,557
3,553
(869)
465
(404)
Other short-term borrowings
(80)
(37)
(117)
(1,687)
368
(1,319)
Derivative cash collateral
(1,425)
467
(958)
1,607
3,853
5,460
Total interest-bearing liabilities
(6,373)
45,679
39,306
55,488
177,939
233,427
Net change in net interest income
$
12,098
$
(10,615)
$
1,483
$
(5,624)
$
(57,668)
$
(63,292)
(1) Business loans include C&I loans, owner-occupied commercial real estate loans and PPP loans.
(2) Amounts are net of deferred origination costs/(fees) and allowance for credit losses, and include loans held for sale .
Net Interest Income. Net interest income was $318.1 million in 2024, $316.6 million in 2023, and $379.9 million in 2022. Average interest-earning assets were $12.84 billion in 2024, $12.85 billion in 2023 and $11.68 billion in 2022. Net interest margin was 2.48% in 2024, 2.46% in 2023, and 3.25% in 2022.
Interest Income. Interest income was $650.1 million in 2024, $609.4 million in 2023, and $439.2 million in 2022. During 2024, interest income increased $40.7 million from 2023, primarily reflecting increases in interest income of $28.1 million on business loans, $6.7 million on one-to-four family loans, $5.7 million on non-owner-occupied CRE loans, $3.4 million on other short-term investments, $1.5 million on multifamily loans, and $1.4 million in securities. The increased interest income on business loans was primarily due to an increase of $254.5 million in the average balances of business loans and a 45-basis point increase in yield of such loans in the period. The increased interest income on one-to-four family loans was primarily due to a 45-basis point increase in the yield of one-to four family loans and an increase of $62.4 million in the average balances of such loans in the period. The increased interest income on non-owner-occupied CRE loans was primarily due to a 22-basis point increase in yield of non-owner-occupied CRE loans, offset by a decrease of $30.5 million in the average balances of such loans in the period. The increased interest income from short-term investments was primarily due to an increase of $57.1 million in the average balances of short-term investments and a 9-basis point increase in yield of such investments in the period. The increased interest income on multifamily loans was primarily due to a 23-basis point increase in yield of multifamily loans, offset by a decrease of $168.9 million in the average balances of such loans in the period. The increased interest income on securities was primarily due to a 25-basis point increase in yield of securities, offset by a decrease of $124.1 million in the average balances of such securities in the period. During 2023, interest income increased $170.2 million from 2022, primarily reflecting increases in interest income of $48.2 million on business loans, $45.8 million on non-owner occupied CRE loans, $40.7 million on multifamily loans and $19.3 million on short-term investments. The increased interest income on business loans was primarily due to an increase of $240.2 million in the average balances of business loans and a 162-basis point increase in the yield of such loans. The increased interest income on non-owner occupied CRE loans was primarily due to an increase of $282.0 million in the average balances of non-owner occupied CRE loans and a 102-basis point increase in the yield of such loans. The increased interest income on multifamily loans was primarily due to an increase of $420.4 million in the average balances of multifamily loans and a 60-basis point increase in the yield of such loans. The increased interest income from short-term investments was primarily due to an increase of $193.8 million in the average balances of short-term investments and a 376-basis point increase in the yield of such investments.
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Interest Expense. Interest expense was $332.1 million in 2024, $292.8 million in 2023, and $59.4 million in 2022. During 2024, interest expense increased $39.3 million from 2023, primarily reflecting increases in interest expense of $50.4 million on money market accounts, $7.0 million on savings accounts, $4.4 million on CDs, $3.9 million on interest-bearing checking accounts and $3.6 million on subordinated debt. The increase in interest expense on money market accounts primarily reflects a $767.4 million increase in the average balances of money market accounts and a 77-basis point increase in rates paid on such deposits in the period. The increase in interest expense on savings accounts was primarily due to a 52-basis point increase in rates paid on saving accounts, offset by a decrease of $133.9 million in the average balances of such deposits in the period. The increase in interest expense on CDs was primarily due to a 58-basis point increase in rates paid on CDs, offset by a decrease of $93.1 million in the average balances of such deposits in the period. The increase in interest expense on interest-bearing checking accounts was primarily due to a 60-basis point increase in rates paid on interest-bearing checking accounts, offset by a decrease of $44.2 million in the average balances of such deposits in the period. The increase in interest expense on subordinated debt primarily reflects a $36.5 million increase in the average balances of subordinated debt and a 71-basis point increase in rates paid on such debt. 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 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.
Provision for Credit Losses. The Company recognized a provision for credit losses of $36.1 million in 2024, $2.8 million in 2023 and $5.4 million in 2022. The $36.1 million provision for credit losses recognized in 2024 was related to additional provisioning for the pooled multifamily, C&I, and criticized loan portfolios. 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.
Non-Interest Income. Non-interest income was a loss of $4.0 million in 2024, compared to income of $36.2 million in 2023, and income of $38.2 million in 2022. During 2024, non-interest income decreased $40.2 million from 2023, primarily due to a increase of $41.4 million from net loss on sale of securities as a result of a securities portfolio restructuring in 2024 and a decrease of $5.0 million in loan level derivative income, partially offset by an increase of $7.2 million from a gain on sale of other assets. During 2023, non-interest income decreased $2.0 million from 2022, due primarily to a decrease of $2.9 million from net gain on sale of securities and other assets, partially offset by a $3.4 million increase in loan level derivative income.
Non-Interest Expense. Non-interest expense was $226.5 million in 2024, $213.1 million in 2023, and $200.7 million in 2022. During 2024, non-interest expense increased $13.4 million from 2023, primarily due to a $18.7 million increase in salaries and employee benefits as the Bank continued to add business teams and a $2.5 million increase in professional services, partially offset by a $7.8 million decrease in severance expense. In addition, during 2024, the Company recorded a $1.2 million loss from a pension settlement. 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.
Non-interest expense was 1.66%, 1.56%, and 1.61% of average assets during 2024, 2023, and 2022, respectively.
Income Tax Expense. Income tax expense was $22.4 million in 2024, $40.8 million in 2023, and $59.4 million in 2022. Income tax expense decreased $18.4 million during 2024 compared to 2023, primarily as a result of $85.4 million of lower pre-tax income during 2024. Income tax expense during 2024 included $9.1 million of expense related to the taxable gain and Modified Endowment Contract (“MEC”) Tax on the surrender of legacy BOLI assets. 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.
The Company’s consolidated tax rate was 43.5%, 29.8% and 28.0% in 2024, 2023, and 2022, respectively.
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Comparison of Financial Condition at December 31, 2024 and December 31, 2023
Assets. Assets totaled $14.35 billion at December 31, 2024, $717.3 million above their level at December 31, 2023, primarily due to an increase in cash and due from banks of $826.0 million, an increase in the loan portfolio of $81.5 million and an increase in other assets of $62.8 million, partially offset by a decrease in total securities of $152.8 million, a decrease in BOLI of $59.2 million and a decrease in restricted stock of $29.6 million.
Total net loans held for investment increased $81.5 million during the year ended December 31, 2024, to $10.78 billion at period end. During the period, the Bank had originations of $570.9 million.
Total securities decreased $152.8 million during the year ended December 31, 2024, to $1.32 billion at period end, primarily due to proceeds from principal payments, calls, maturities and sales of $621.6 million offset in part by purchases of $402.8 million and a decrease in unrealized losses of $66.0 million. There were no transfers to or from securities held-to-maturity for the year ended December 31, 2024 or 2023.
BOLI decreased $59.2 million during the year ended December 31, 2024, to $290.7 million. The decrease in BOLI is primarily due to the surrender of legacy BOLI assets of $84.5 million, offset by $15.0 million in purchases of new assets and an increase in cash surrender value of $10.3 million.
Premises and fixed assets decreased $10.0 million during the year ended December 30, 2024, to $34.8 million at period end, primarily due to the sale of Bank’s premises and other assets which resulted in a $7.2 million net gain in the current period.
Total restricted stock decreased $29.6 million during the year ended December 30, 2024, to $69.1 million at period end, primarily due to a reduction in FHLBNY advances.
Liabilities. Total liabilities increased $547.0 million during the year ended December 31, 2024, to $12.96 billion at period end, primarily due to an increase in deposits of $1.16 billion, an increase in subordinated debt of $72.1 million and an increase in other short-term borrowings of $50.0 million, partially offset by a decrease in FHLBNY advances of $705.0 million, and a decrease in derivative liabilities of $12.9 million.
Subordinated debt increased $72.1 million during the year ended December 31, 2024, to $272.3 million at period end, due to a registered public offering of the Company’s 9.000% fixed-to-floating rate subordinated notes due 2034 (the “Notes”).
Stockholders’ Equity. Stockholders’ equity increased $170.3 million during the year ended December 31, 2024, to $1.40 billion at period end, primarily due to $135.8 million in net proceeds raised in connection with a common equity offering, net income for the period of $29.1 million and a decrease in accumulated other comprehensive loss of $46.6 million, offset in part by common stock dividends of $40.3 million and preferred stock dividends of $7.3 million.
Additional paid-in capital increased $130.4 million during the year ended December 31, 2024, to $624.8 million at period end, due to the Company completing a public offering of 4,492,187 shares of common stock at a price of $32.00 per share, for gross proceeds of approximately $144.0 million. The net proceeds of the offering, after deducting underwriting discounts and commissions, and offering expenses, were $135.8 million.
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Loan Portfolio Composition
The following table presents an analysis of outstanding loans by loan type, excluding loans held for sale, net of unearned discounts and premiums and deferred origination fees and costs, at the dates presented:
December 31,
(In thousands)
2024
2023
2022
Business loans (1)
$
2,725,726
25.1
%
$
2,308,171
21.4
%
$
2,211,857
20.9
%
One-to-four family residential and cooperative/condominium apartment
951,528
8.8
887,555
8.2
773,321
7.3
Multifamily residential and residential mixed-use
3,820,283
35.1
4,017,176
37.3
4,026,826
38.1
Non-owner-occupied commercial real estate
3,230,535
29.7
3,379,667
31.4
3,317,485
31.4
Acquisition, development, and construction ("ADC")
136,172
1.3
168,513
1.6
229,663
2.2
Other loans
5,084
0.0
5,755
0.1
7,679
0.1
Total
10,869,328
100.0
%
10,766,837
100.0
%
10,566,831
100.0
%
Fair value hedge basis point adjustments (2)
2,615
6,591
—
Total loans, net of fair value hedge basis point adjustments
10,871,943
10,773,428
10,566,831
Allowance for credit losses
(88,751)
(71,743)
(83,507)
Loans held for investment, net
$
10,783,192
10,701,685
10,483,324
(1) Business loans include C&I loans and owner-occupied commercial real estate loans.
(2) The loan portfolio included a fair value hedge basis point adjustment to the carrying amount of hedged owner-occupied commercial real estate in business loans, one-to-four family residential mortgage loans, multifamily residential mortgage loans and non-owner occupied commercial real estate loans.
During the year ended December 31, 2024, business loans increased $417.6 million and one-to-four family loans increased $64.0 million, multifamily loans decreased $196.9 million, non-owner-occupied CRE loans decreased $149.1 million, and ADC loans decreased $32.3 million.
Loan Purchases, Sales and Servicing
In the event that the Bank sells loans in the secondary market or through securitization, it generally retains servicing rights on the loans sold. 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, 2024 and 2023, the Bank had recorded servicing right assets ("SRAs") of $2.4 million and $2.9 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 operations.
Loan Maturity and Repricing
The following table presents the portfolio of fixed and adjustable rate loans (“ARMs”) by the earlier of the maturity or next reprice date as of December 31, 2024. ARMs have repricing frequencies of greater than or equal to one year and are included in the period during which their interest rates are next scheduled to adjust or mature. The table does not include scheduled principal amortization.
Less than
(In thousands)
1 year
1 to 2 years
2 to 3 years
3 to 5 years
Over 5 years
Total
Business loans
$
130,693
$
119,458
$
167,411
$
342,897
$
327,814
$
1,088,273
One-to-four family residential and cooperative/condominium apartment
85,594
75,316
61,083
234,418
492,040
948,451
Multifamily residential and residential mixed-use
356,666
724,962
1,014,426
733,903
300,802
3,130,759
Non-owner-occupied commercial real estate
396,163
436,320
508,746
722,595
453,480
2,517,304
ADC
145
2,445
—
—
655
3,245
Other loans
4
90
245
737
3,833
4,909
Total
$
969,265
$
1,358,591
$
1,751,911
$
2,034,550
$
1,578,624
$
7,692,941
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Variable rate loans have repricing frequencies less than one year. The following table presents variable rate loans by time to maturity as of December 31, 2024:
Less than
(In thousands)
1 year
1 to 2 years
2 to 3 years
3 to 5 years
Over 5 years
Total
Variable rate loans
$
854,910
$
272,840
$
391,706
$
522,095
$
1,134,836
$
3,176,387
Concentrations of Lending Activities
Non-owner occupied commercial real estate loans and multifamily residential and residential mixed-use loans have collectively represented the largest percentage of the Company’s loan portfolio, accounting for 65% and 69% of total loans held for investment as of December 31, 2024 and December 31, 2023, respectively. Non-owner occupied commercial real estate loans represent 30% and 31% of total loans held for investment as of December 31, 2024 and December 31, 2023, respectively. Multifamily residential and residential mixed-use loans made up 35% and 37% of total loans held for investment as of December 31, 2024 and December 31, 2023, respectively. The Company expects that non-owner occupied commercial real estate loans and multifamily residential and residential mixed-use loans will continue to be a significant portion of the Company’s total loan portfolio.
Non-owner occupied commercial real estate loans and multifamily residential and residential mixed-use loans are subject to a varying degree of risk associated with changing general economic conditions. The Company employs heightened risk management practices that address key elements, including board and management oversight and strategic planning, portfolio management, development of underwriting standards, risk assessment and monitoring through market analysis and stress testing, and maintenance of appropriate capital levels as needed to support lending activities.
Despite the Company's concentration in non-owner occupied commercial real estate and multifamily residential and residential mixed-use loans, the properties securing these portfolios are diversified in terms of type and geographic location. This diversity helps reduce the exposure to adverse economic events that affect any single market or industry. As a matter of policy, the non-owner occupied commercial real estate loan and the multifamily residential and residential mixed-use loan portfolios are subject to risk exposure limits by individual asset classes as well as geographic collateral locations outside of our market areas.
We regularly identify and assess concentration levels through ongoing reporting to our Board of Directors as well as committees at both the Board and Management levels. The management team has extensive knowledge and experience in underwriting non-owner occupied commercial real estate loans and multifamily residential and residential mixed-use loans. Management has established the Credit Risk Management Committee which meets quarterly to review all policies and procedures, large lending exposures, and emerging trends including trends related to delinquency, debt service coverage ratios, loan-to-value, and loan ratings to aid in early detection and escalation of potential issues. The Company has a dedicated team responsible for conducting comprehensive annual reviews of the portfolios, ensuring consistent oversight. Credit underwriting standards are periodically reviewed and adjusted based upon observations from our ongoing monitoring of economic conditions in major real estate markets in which we lend. In response to the current dynamic interest rate environment and changes in the benchmark rates that determine loan pricing, the Company has enhanced its stress testing and loan review activities to mitigate interest rate reset risk with a specific emphasis on borrowers' abilities to absorb the impact of higher interest loan rates and measure the resiliency of the portfolios. As a general rule, Management takes a selective approach to originating non-owner occupied commercial real estate and multifamily residential and residential mixed-use loans, prioritizing quality and strategic alignment.
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The following tables present the composition by property type and weighted average loan-to-value (“LTV”) of the Company’s non-owner occupied commercial real estate loans:
December 31, 2024
Weighted
Average Rate
(Dollars in thousands)
NY
NJ
Other
Balance
LTV
Investor commercial real estate:
Retail
$
1,085,618
$
62,990
$
3,594
$
1,152,202
51
%
Investor office
439,359
135,584
3,127
578,070
58
Warehouse/ Industrial
337,288
43,458
69,314
450,060
54
Hotels
356,450
425
11,934
368,809
57
Supportive housing
161,207
—
—
161,207
59
Medical office
106,403
—
28,470
134,873
62
Educational facility or library
120,719
—
—
120,719
59
Medical facility
60,866
—
—
60,866
71
Other (1)
196,304
2,763
4,662
203,729
54
Total investor commercial real estate
$
2,864,214
245,220
121,101
$
3,230,535
55
%
(1) Includes various property types such as gas stations, restaurants, storage facilities, and other special use properties.
December 31, 2023
Weighted
Average Rate
(Dollars in thousands)
NY
NJ
Other
Balance
LTV
Investor commercial real estate:
Retail
$
1,119,896
$
64,577
$
3,722
$
1,188,195
53
%
Investor office
476,958
140,713
3,195
620,866
59
Warehouse/ Industrial
351,863
47,577
70,523
469,963
54
Hotels
340,656
426
12,016
353,098
57
Supportive housing
166,356
—
—
166,356
61
Medical office
114,211
—
29,063
143,274
63
Educational facility or library
105,541
—
—
105,541
64
Medical facility
91,391
3,573
18,483
113,447
58
Other (1)
204,573
3,675
10,679
218,927
57
Total investor commercial real estate
$
2,971,445
260,541
147,681
$
3,379,667
56
%
(1) Includes various property types such as gas stations, restaurants, storage facilities, and other special use properties.
The following tables present the composition by property type and weighted average LTV of the Company’s multifamily residential and residential mixed-use loans:
December 31, 2024
Weighted
Total
Average Rate
(Dollars in thousands)
Balance
LTV
Multifamily residential and residential mixed-use:
New York City (1)
100% rent regulated (2)
$
572,054
58
%
Majority rent regulated (2)
643,908
59
Majority free market
1,846,525
55
Total New York City
3,062,487
56
Outside New York City
757,796
59
Total multifamily residential and residential mixed-use
$
3,820,283
57
%
(1) New York City includes the Bronx, Brooklyn, Queens, Staten Island and Manhattan.
(2) Composition based on revenue.
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December 31, 2023
Weighted
Total
Average Rate
(Dollars in thousands)
Balance
LTV
Multifamily residential and residential mixed-use:
New York City (1)
100% rent regulated (2)
$
547,977
57
%
Majority rent regulated (2)
687,424
60
Majority free market
2,025,511
56
Total New York City
3,260,912
57
Outside New York City
756,264
61
Total multifamily residential and residential mixed-use
$
4,017,176
58
%
(1) New York City includes the Bronx, Brooklyn, Queens, Staten Island and Manhattan.
(2) Composition based on revenue.
Additional information related to the granularity in the non-owner occupied commercial real estate and multifamily residential and residential mixed-use portfolios is presented in the tables below as of December 31, 2024 and December 31, 2023:
December 31, 2024
Number of
Average
loans
(Dollars in thousands)
Loan Size
> $20 million
Investor commercial real estate:
Retail
$
2,613
4
Investor Office
5,781
8
Warehouse/ Industrial
3,983
5
Hotels
8,781
8
Supportive housing
20,151
3
Medical office
6,423
2
Educational facility or library
10,060
—
Medical facility
7,608
1
Other (1)
1,922
—
Multifamily residential and residential mixed-use:
New York City (2)
100% rent regulated (3)
2,487
—
Majority rent regulated (3)
3,810
2
Majority free market
3,864
7
Outside New York City
4,521
8
(1) Includes various property types such as gas stations, restaurants, storage facilities, and other special use properties.
(2) New York City includes the Bronx, Brooklyn, Queens, Staten Island and Manhattan.
(3) Composition based on revenue.
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December 31, 2023
Number of
Average
loans
(Dollars in thousands)
Loan Size
> $20 million
Investor commercial real estate:
Retail
$
2,577
5
Investor Office
5,749
10
Warehouse/ Industrial
3,949
5
Hotels
8,025
7
Supportive housing
23,765
4
Medical office
6,823
2
Educational facility or library
9,595
—
Medical facility
9,454
1
Other (1)
2,027
—
Multifamily residential and residential mixed-use:
New York City (2)
100% rent regulated (3)
2,502
—
Majority rent regulated (3)
3,819
3
Majority free market
3,964
10
Outside New York City
4,201
8
(1) Includes various property types such as gas stations, restaurants, storage facilities, and other special use properties.
(2) New York City includes the Bronx, Brooklyn, Queens, Staten Island and Manhattan.
(3) Composition based on revenue.
Asset Quality
General
We do not originate or purchase loans, either whole loans or loans underlying mortgage-backed securities (“MBS”), which would have been considered subprime loans at origination, i.e ., real estate loans advanced to borrowers who did not qualify for market interest rates because of problems with their income or credit history. See Note 3 of our Consolidated Financial Statements for a discussion of evaluation for impaired securities.
Monitoring and Collection of Delinquent Loans
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 business loans, multifamily residential and mixed use, non-owner-occupied commercial real estate loans, and ADC 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 or the loan is transferred to workout. 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.
Accrual of interest is generally discontinued on a loan that meets any of the following three criteria: (i) full payment of principal or interest is not expected; (ii) principal or interest has been in default for a period of 90 days or more (unless the loan is both deemed to be well secured and in the process of collection); 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. Upon entering non-accrual status, the system will reverse all outstanding accrued interest receivable.
We generally initiate foreclosure proceedings on real estate loans when a loan enters non-accrual status based upon non-payment, unless the borrower is paying in accordance with an agreed upon modified payment agreement. We obtain an
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Table of Contents
updated appraisal upon the commencement of legal action to calculate a potential collateral shortfall and to reserve appropriately for the potential loss. If a foreclosure action is instituted and the loan is not brought current, paid in full, or refinanced before the foreclosure action is completed, the property securing the loan is transferred to Other Real Estate Owned (“OREO”) status. We generally attempt to utilize all available remedies, such as note sales in lieu of foreclosure, in an effort to resolve non-accrual loans and OREO properties as quickly and prudently as possible in consideration of market conditions, the physical condition of the property and any other mitigating circumstances. 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 has made at least six months of payments.
The C&I portfolio, which is within our business loans, is actively managed by our lenders. Most credit facilities typically require an annual review of the exposure and borrowers are required to submit annual financial reporting and loans are structured with financial covenants to indicate expected performance levels. Smaller C&I loans are monitored based on performance and the ability to draw against a credit line is curtailed if there are any indications of credit deterioration. Guarantors are also required to update their financial reporting on an annual basis or alternative schedule as provided in their loan documents. All exposures are credit risk rated and those entering adverse ratings due to financial performance concerns of the borrower or material delinquency of any payments or financial reporting are subjected to added management scrutiny and monitoring. Measures taken typically include amendments to the amount of the available credit facility, requirements for increased collateral, additional guarantor support or a material enhancement to the frequency and quality of financial reporting. Loans determined to reach adverse risk rating standards are monitored closely by Credit Administration to identify any potential credit losses. When warranted, loans reaching a Substandard rating could be reassigned to the Workout Group for direct handling.
Non-accrual Loans
Within our held-for-investment loan portfolio, non-accrual loans totaled $49.5 million at December 31, 2024 and $29.1 million at December 31, 2023.
Loan Restructurings
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 combination of these modifications. The disclosures related to loan restructuring are only for modifications that directly affect cash flows.
Please refer to Note 4 of our condensed Consolidated Financial Statements for further discussion on loan restructurings.
OREO
Property acquired by the Bank, or a subsidiary, as a result of foreclosure on a mortgage loan or a deed in lieu of foreclosure is classified as OREO. Upon entering OREO status, we obtain a current appraisal on the property and reassesses the likely realizable value ( a/k/a fair value) of the property quarterly thereafter. OREO is carried at the lower of the fair value or book balance, with any write downs recognized through a provision recorded in non-interest expense. Only the appraised value, or either a contractual or formal marketed value that falls below the appraised value, is used when determining the likely realizable value of OREO at each reporting period. We typically seek to dispose of OREO properties in a timely manner. As a result, OREO properties have generally not warranted subsequent independent appraisals.
There was no carrying value of OREO properties on our consolidated statements of financial condition at December 31, 2024 or December 31, 2023. We did not recognize any provisions for losses on OREO properties during the years ended December 31, 2024, 2023 or 2022.
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Past Due Loans
Loans Delinquent 30 to 59 Days
At December 31, 2024, we had loans totaling $10.3 million that were past due between 30 and 59 days, compared to $12.0 million at December 31, 2023. The 30 to 59-day delinquency levels fluctuate monthly, and are generally considered a less accurate indicator of near-term credit quality trends than non-accrual loans.
Loans Delinquent 60 to 89 Days
At December 31, 2024, we had loans totaling $31.3 million that were past due between 60 and 89 days, compared to $1.3 million at December 31, 2023. The 60 to 89-day delinquency levels fluctuate monthly, and are generally considered a less accurate indicator of near-term credit quality trends than non-accrual loans.
Accruing Loans 90 Days or More Past Due
There were no accruing loans 90 days or more past due at December 31, 2024 or 2023.
Reserve for Unfunded Loan Commitments
We maintain a reserve, recorded in other liabilities, associated with unfunded loan commitments accepted by the borrower. The amount of reserve was $2.7 million at December 31, 2024 and 2023, respectively. This reserve is determined based upon the outstanding volume of unfunded loan commitments at each period end. Any increases or reductions in this reserve are recognized in provision for credit losses.
Allowance for Credit Losses
Provision for credit losses of $36.1 million and $2.8 million were recorded during the twelve-month periods ended December 31, 2024 and 2023, respectively. The $36.1 million provision for credit losses recognized in 2024 was related to additional provisioning for the pooled multifamily, C&I, and criticized loan portfolios. The $2.8 million provision for credit losses recognized in 2023 was associated with provisioning for individually analyzed loans.
For further discussion of the allowance for credit losses and related activity during the years ended December 31, 2024, 2023 and 2022, please see Note 4 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,
2024
2023
2022
Percent
Percent
Percent
of Loans
of Loans
of Loans
in Each
in Each
in Each
Category
Category
Category
Allocated
to Total
Allocated
to Total
Allocated
to Total
(Dollars in thousands)
Amount
Loans
Amount
Loans
Amount
Loans
Business loans
$
42,898
25.08
%
$
35,962
21.44
%
47,029
20.93
One-to-four family residential and cooperative/condominium apartment
9,501
8.75
6,813
8.24
5,969
7.32
Multifamily residential and residential mixed-use
11,946
35.16
7,237
37.31
8,360
38.11
Non-owner-occupied commercial real estate
21,876
29.72
19,623
31.39
20,153
31.40
ADC
2,323
1.25
1,989
1.57
1,723
2.17
Other loans
207
0.04
119
0.05
273
0.07
Total
$
88,751
100.00
%
$
71,743
100.00
%
$
83,507
100.00
%
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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)
2024
2023
2022
Total loans outstanding at end of period (1)
$
10,869,328
$
10,766,837
$
10,566,831
Average total loans outstanding during the period (2)
10,821,821
10,764,598
9,747,887
Allowance for credit losses balance at end of period
88,751
71,743
83,507
Allowance for credit losses to total loans at end of period
0.82
%
0.67
%
0.79
%
Non-performing loans to total loans at end of period
0.46
0.27
0.32
Allowance for credit losses to total non-performing loans at end of period
179.37
246.55
243.91
Ratio of net charge-offs to average loans outstanding during the period:
Business loans
0.30
%
1.37
%
0.77
%
One-to-four family residential and cooperative/condominium apartment
—
—
—
Multifamily residential and residential mixed-use
0.12
—
—
Non-owner-occupied commercial real estate
0.21
—
—
ADC
—
—
—
Other loans
1.80
4.34
0.42
Total
0.18
0.14
0.07
(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
The following table presents the amortized cost, fair value and weighted average yield of our securities available-for-sale at December 31, 2024, categorized by remaining period to contractual maturity:
Weighted
Amortized
Fair
Average
(Dollars in thousands)
Cost
Value
Yield
Due within 1 year
$
6,717
$
6,597
1.13
%
Due after 1 year but within 5 years
158,420
153,169
3.98
Due after 5 years but within 10 years
165,772
157,104
4.73
Due after ten years
403,225
373,823
3.74
Total
$
734,134
$
690,693
3.99
%
The entire carrying amount of each security at December 31, 2024 is reflected in the above table in the maturity period that includes the final security payment date and, accordingly, no effect has been given to periodic repayments or possible prepayments. The weighted average duration of our securities available-for-sale approximated 2.9 years as of December 31, 2024, when giving consideration to anticipated repayments or possible prepayments, which is significantly less than their weighted average maturity.
The following table presents the weighted average contractual maturity of our securities available-for-sale:
December 31,
(In years)
2024
Agency notes
1.85
Corporate securities
5.90
Pass-through MBS issued by U.S. GSEs and agency collateralized mortgage obligations ("CMOs")
18.24
State and municipal obligations
3.18
Securities held-to-maturity
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The following table presents the amortized cost, fair value and weighted average yield of our securities held-to-maturity at December 31, 2024, categorized by remaining period to contractual maturity:
Weighted
Amortized
Fair
Average
(Dollars in thousands)
Cost
Value
Yield
Due within 1 year
$
—
$
—
—
%
Due after 1 year but within 5 years
44,898
42,359
2.64
Due after 5 years but within 10 years
180,658
157,523
2.71
Due after ten years
411,783
352,395
2.98
Total
$
637,339
$
552,277
2.88
%
The entire carrying amount of each security at December 31, 2024 is reflected in the above table in the maturity period that includes the final security payment date and, accordingly, no effect has been given to periodic repayments or possible prepayments. The weighted average duration of our securities held-to-maturity approximated 5.1 years as of December 31, 2024 when giving consideration to anticipated repayments or possible prepayments, which is significantly less than their weighted average maturity.
The following table presents the weighted average contractual maturity of our securities held-to-maturity at the date indicated below:
December 31,
(In years)
2024
Agency notes
5.26
Corporate securities
8.14
Pass-through MBS issued by GSEs and agency CMOs
20.88
Sources of Funds
Deposits
The following table presents our deposit accounts and the related weighted average interest rates at the dates indicated (Dollars in thousands):
December 31, 2024
December 31, 2023
December 31, 2022
Percent
Percent
Percent
of
Weighted
Of
Weighted
Of
Weighted
Total
Average
Total
Average
Total
Average
Amount
Deposits
Rate
Amount
Deposits
Rate
Amount
Deposits
Rate
Savings accounts
$
1,927,909
16.5
%
2.98
%
$
2,335,490
22.2
%
3.67
%
$
2,260,101
22.0
%
2.24
%
CDs
1,069,081
9.1
3.73
1,607,683
15.3
4.43
1,115,364
10.9
2.25
Money market accounts
4,198,784
36.0
3.01
3,125,996
29.6
3.46
2,532,270
24.7
1.50
Interest-bearing checking accounts
1,079,823
9.2
1.92
515,987
4.9
0.77
827,454
8.1
1.01
Non-interest-bearing checking accounts
3,410,544
29.2
—
2,945,499
28.0
—
3,519,218
34.3
—
Totals
$
11,686,141
100.00
%
2.09
%
$
10,530,655
100.00
%
2.56
%
$
10,254,407
100.00
%
1.19
%
The weighted average maturity of our CDs at December 31, 2024 was 5.8 months, compared to 5.1 months at December 31, 2023.
Non-insured deposits (excluding collateralized deposits and deposits with pass through insurance) represented 31.2% and 28.9% of total deposits as of December 31, 2024 and 2023, respectively. The Bank had $1.89 billion and $1.88 billion of public funds collateralized by securities and Municipal Letters of Credit (“MULOC”), and $1.55 billion and $680.8 million of deposits with pass through insurance as of December 31, 2024, and 2023, respectively.
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The following table presents the time deposits with balances exceeding the $250,000 FDIC insurance limit by maturity at December 31, 2024:
(Dollars in thousands)
Three months or less
$
92,786
Over three through six months
73,233
Over six through twelve months
44,118
Over twelve months
24,432
Total
$
234,569
As of December 31, 2024, the portion of uninsured time deposits in excess of the $250,000 FDIC insurance limit was $93.3 million.
Our Board of Directors authorized the Bank to accept brokered deposits up to an aggregate limit of 10.0% of total assets. Brokered deposits totaled $422.8 million and $898.7 million at December 31, 2024 and 2023, respectively. Core deposit growth was used to reduce the brokered deposit position over the course of 2024.
Borrowings
The Bank’s total borrowing line with FHLBNY equaled $3.87 billion at December 31, 2024. The Bank had $608.0 million of FHLBNY advances outstanding at December 31, 2024, and $1.31 billion at December 31, 2023. 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 no outstanding securities sold under agreements to repurchase (“repurchase agreements”) at December 31, 2024 or December 31, 2023.
Liquidity and Capital Resources
The Board of Directors of the Bank has approved a liquidity policy that it reviews and updates at least annually. Senior management is responsible for implementing the policy. The Bank’s Asset Liability Committee (“ALCO”) is responsible for general oversight and strategic implementation of the policy and management of the appropriate departments are designated responsibility for implementing any strategies established by ALCO. On a daily basis, appropriate senior management receives a current cash position report and 30-day forecast to ensure that all short-term obligations are timely satisfied, and that adequate liquidity exists to fund future activities. Reports detailing the Bank’s liquidity reserves are presented to appropriate senior management on at least a monthly basis, and the Board of Directors at each of its meetings. In addition, a twelve-month liquidity forecast is presented to ALCO in order to assess potential future liquidity concerns. A forecast of cash flow data for the upcoming 12 months is presented to the Board of Directors no less than annually. Given recent banking industry events, management monitors the level of uninsured deposits on a regular basis.
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 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 Federal Home Loan Mortgage Corporation (“FHLMC”). 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 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. At December 31, 2024, the Bank had $50.0 million of such borrowings outstanding through the AFX, which is included in other short-term borrowings on the consolidated statements of financial condition. At December 31, 2023, the Bank did not utilize funds available through the AFX.
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The Bank utilizes repurchase agreements as part of its borrowing policy to add liquidity. Repurchase agreements represent funds received from customers, generally on an overnight basis, which are collateralized by investment securities. As of December 31, 2024 and December 31, 2023, the Bank did not have any repurchase agreements.
The Bank gathers deposits in direct competition with commercial banks, savings banks and brokerage firms, many among the largest in the nation. It must additionally compete for deposit monies against the stock and bond markets, especially during periods of strong performance in those arenas. The Bank’s deposit flows are affected primarily by the pricing and marketing of its deposit products compared to its competitors, as well as the market performance of depositor investment alternatives such as the U.S. bond or equity markets. To the extent that the Bank is responsive to general market increases or declines in interest rates, its deposit flows should not be materially impacted. However, favorable performance of the equity or bond markets could adversely impact the Bank’s deposit flows.
Total deposits (including mortgage escrow deposits) increased $1.16 billion during the year ended December 31, 2024 compared to an increase of $276.2 million during the year ended December 31, 2023. Within deposits, core deposits ( i.e., non-CDs) increased $1.74 billion during the year ended December 31, 2024 and decreased $216.1 million during the year ended December 31, 2023. The increase in core deposits during the 2024 period was primarily due to an increase in money market deposits, interest bearing checking and non interest-bearing checking accounts. During 2024, the Company made significant investments in its Private and Commercial Bank, including the hiring and onboarding of several deposit-gathering teams. CDs decreased $538.6 million during the year ended December 31, 2024 compared to an increase of $492.3 million during the year ended December 31, 2023. The decrease in CDs during the current period was primarily due to a $475.9 million decrease in brokered CDs.
The Bank reduced its outstanding FHLBNY advances by $705.0 million during the year ended December 31, 2024, compared to a $182.0 million increase during the year ended December 31, 2023. See Note 12. “Federal Home Loan Bank Advances” to our Consolidated Financial Statements for further information.
Subordinated debentures totaled $272.3 million at December 31, 2024 compared to $200.2 million at December 31, 2023. The increase in subordinated debentures was due to the Company’s issuance of subordinated notes that are described in more detail in Note 13, “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, 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, 2024, the Bank had remaining borrowing capacity of $1.84 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. At December 31, 2024, an available line of credit totaling $394.6 million was in place at the FRB backed by investment securities with no advances drawn. Additionally, at December 31, 2024, a line of credit totaling $3.04 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, 2024 and 2023, business loan originations totaled $371.2 million and $343.9 million, respectively. During the year ended December 31, 2024 and 2023, real estate loan originations (excluding owner-occupied commercial real estate) totaled $199.6 million and $653.7 million, respectively.
The Company and the Bank are subject to minimum regulatory capital requirements imposed by its primary federal regulator. As a general matter, these capital requirements are based on the amount and composition of an institution’s assets. At December 31, 2024, 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 did not repurchase any shares of its common stock during the year ended December 31, 2024. The Holding Company repurchased 36,813 shares of its common stock at an aggregate cost of $947 thousand during the year ended December 31, 2023. As of December 31, 2024, 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.
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The Holding Company paid $7.3 million in cash dividends on its preferred stock during the years ended December 31, 2024 and 2023, respectively.
The Holding Company paid $38.0 million and $37.3 million in cash dividends on its common stock during the years ended December 31, 2024 and 2023, respectively.
Contractual Obligations
The Bank generally has borrowings outstanding in the form of FHLBNY advances, short-term or overnight borrowings, subordinated debt, as well as customer CDs with fixed contractual interest rates. In addition, the Bank is obligated to make rental payments under leases on certain of its branches and equipment.
Off-Balance Sheet Arrangements
As part of its loan origination business, the Bank generally has outstanding commitments to extend credit to borrowers, which are originated pursuant to its regular underwriting standards. Available lines of credit may not be drawn on or may expire prior to funding, in whole or in part, and amounts are not estimates of future cash flows. As of December 31, 2024, the Bank had $77.8 million of firm loan commitments that were accepted by the borrowers.
Additionally, in connection with a loan securitization completed in 2017, the Bank executed a reimbursement agreement with FHLMC that obligates the Company to reimburse FHLMC for any contractual principal and interest payments on defaulted loans, not to exceed 10% of the original principal amount of the loans comprising the aggregate balance of the loan pool at securitization. The maximum exposure under this reimbursement obligation is $28.0 million. The Bank has pledged $28.0 million of pass-through MBS issued by GSEs as collateral.
Recently Issued Accounting Standards
For a discussion of the impact of recently issued accounting standards, please see Note 1 to the Company’s Consolidated Financial Statements.