Northfield Bancorp Inc.
11/07/2025 | Press release | Distributed by Public on 11/07/2025 13:05
Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Cautionary Statement Regarding Forward-Looking Statements
This Quarterly Report may contain certain "forward-looking statements," which can be identified by the use of such words as "estimate," "project," "believe," "intend," "anticipate," "plan," "seek," "expect," "annualized," "could," "may," "should," "will," and words of similar meaning. These forward-looking statements include, but are not limited to:
•statements of our goals, intentions, and expectations;
•statements regarding our business plans, prospects, growth and operating strategies;
•statements regarding the quality of our loan and investment portfolios
•statements about our performance, financial condition and liquidity; and
•estimates of our risks and future costs and benefits.
These forward-looking statements are based on the current beliefs and expectations of our management and are subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control. In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change.
The following factors, among others, could cause actual results to differ materially from the anticipated results or other expectations expressed in the forward-looking statements:
•general economic conditions, internationally, nationally, or in our market areas, including inflationary pressures and/or recessionary conditions, employment prospects, fluctuations in residential and commercial real estate values and market conditions, military conflict, geopolitical risks, and downgrades of the U.S. credit rating;
•competition among depository and other financial institutions, including with respect to fees and interest rates;
•changes in the interest rate environment that reduce our margins and yields, or reduce the market value of our assets, including the fair value of financial instruments, or reduce our ability to originate loans;
•adverse changes in the securities or credit markets, and changes in investor sentiment;
•changes in laws, tax policies, government regulations or policies affecting financial institutions;
•changes in regulatory fees, assessments, and capital requirements;
•the imposition of tariffs or other domestic or international governmental policies and retaliatory responses;
•changes in the quality and/or composition of our loan and securities portfolios, changes in prepayment speeds, charge-offs, and in the estimates or methodology used to determine our allowance for credit losses;
•changes in the size and composition of our deposit portfolio and the percentage of uninsured deposits in the portfolio;
•our ability to manage our liquidity, including unanticipated changes in our liquidity position, changes in our access to or the cost of funding, and our ability to secure alternate funding sources;
•our ability to enter new markets successfully and capitalize on growth opportunities;
•our ability to successfully integrate acquired entities;
•changes in consumer demand, spending, borrowing and savings habits;
•changes in accounting policies and practices, as may be adopted by the bank regulatory agencies, the Financial Accounting Standards Board (the "FASB"), the Securities and Exchange Commission (the "SEC"), or the Public Company Accounting Oversight Board;
•cyber-attacks and fraud risks, computer viruses and other technological risks that may breach the security of our website or other systems (including critical third-parties) to obtain unauthorized access to confidential information and destroy data or disable our systems;
•the failure to maintain current technologies and to successfully implement future technological enhancements;
•changes in our organization, compensation structure, and benefit plans;
•our ability to attract and/or retain key employees;
•changes in the value of our goodwill or other intangible assets;
•changes in the level of government support for housing finance;
•changes in monetary or fiscal policies of the U.S. Government, including policies of the U.S. Treasury and the Federal Reserve Board;
•the effect of the current U.S. government shutdown;
•the ability of third-party providers to perform their obligations to us;
•the effects of natural or man-made disasters, climate change, severe weather conditions, or other extraordinary events beyond our control, and our ability to effectively respond to and manage these disruptions;
•changes in our ability to continue to pay dividends, either at current rates or at all;
•operational or risk management failures by us or critical third parties;
•increased operational risks resulting from remote work;
•negative outcomes from claims or litigation;
•our ability to manage our reputation risks;
•our ability to timely and effectively implement our strategic initiatives;
•the disruption to local, regional, national and global economic activity caused by the spread of infectious disease, epidemics, pandemics, or other extraordinary events that are beyond our control and could impact our growth, operations, earnings and asset quality; and
•changes in the financial condition, results of operations, or future prospects of issuers of securities that we own.
Because of these and other uncertainties, our actual future results may be materially different from the results indicated by these forward-looking statements. Accordingly, you should not place undue reliance on such statements. Except as required by law, we disclaim any intention or obligation to update or revise any forward-looking statements after the date of this Quarterly Report on Form 10-Q, whether as a result of new information, future events or otherwise.
Critical Accounting Policies
Note 1 to the Company's Audited Consolidated Financial Statements for the year ended December 31, 2024, included in the Company's Annual Report on Form 10-K, as supplemented by this report, contains a summary of our significant accounting policies. Various elements of these accounting policies are subject to estimation techniques, valuation assumptions, and other subjective assessments. Certain assets are carried on the consolidated balance sheets at estimated fair value or the lower of cost or estimated fair value. Policies with respect to the methodologies used to determine the allowance for credit losses on loans are the most critical accounting policies because they are important to the presentation of the Company's financial condition and results of operations, involve a higher degree of complexity, and require management to make subjective judgments which often require assumptions or estimates about highly uncertain matters. The use of different judgments, assumptions, and estimates could result in material differences in the results of operations or financial condition. These critical accounting policies and their application are reviewed periodically and, at least annually, with the Audit Committee of the Board of Directors.
The accounting estimates relating to the allowance for credit losses remain "critical accounting estimates" for the following reasons:
•Changes in the provision for credit losses can materially affect our financial results;
•Estimates relating to the allowance for credit losses require us to utilize a reasonable and supportable forecast period based upon forward-looking economic scenarios in order to estimate probability of default and loss given default rates, which our Current Expected Credit Losses ("CECL") methodology encompasses;
•The allowance for credit losses is influenced by factors outside of our control such as industry and business trends, as well as economic conditions such as trends in housing prices, interest rates, gross domestic product, inflation, and unemployment; and
•Judgment is required to determine whether the models used to generate the allowance for credit losses produce an estimate that is sufficient to encompass the current view of lifetime expected credit losses.
Our estimation process is subject to risks and uncertainties, including a reliance on historical loss and trend information that may not be representative of current conditions and indicative of future performance. Changes in such estimates could significantly impact our allowance and provision for credit losses. Accordingly, our actual credit loss experience may not be in line with our expectations.
For a further discussion of our critical accounting policies, see "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the year ended December 31, 2024.
Overview
This overview highlights selected information and may not contain all the information that is important to you in understanding our performance during the periods presented. For a more complete understanding of trends, events, commitments, uncertainties, liquidity, capital resources, and critical accounting estimates, you should read this entire document carefully, as well as our Annual Report on Form 10-K for the year ended December 31, 2024.
Net income was $28.2 million for the nine months ended September 30, 2025, as compared to $18.7 million for the nine months ended September 30, 2024. The increase in net income for the nine months ended September 30, 2025, as compared to the nine months ended September 30, 2024, was primarily the result of an increase in net interest income, attributable to lower funding costs and higher yields on interest-earning assets, partially offset by an increase in the provision for credit losses on loans. Net income for the nine months ended September 30, 2025, included $609,000 of interest income related to settlement of a non-accrual loan and $580,000 of additional tax expense related to options that expired in May 2025. Net income for the nine months ended September 30, 2024, included $795,000 of additional tax expense related to options that expired in June 2024, and $683,000 of severance expense. Basic and diluted earnings per common share were $0.70 for the nine months ended September 30, 2025, compared to basic and diluted earnings per common share of $0.45 for the nine months ended September 30, 2024. For the nine months ended September 30, 2025, our return on average assets was 0.67%, as compared to 0.43% for the nine months ended September 30, 2024. For the nine months ended September 30, 2025, our return on average stockholders' equity was 5.31% as compared to 3.59% for the nine months ended September 30, 2024.
Comparison of Financial Condition at September 30, 2025 and December 31, 2024
Total assets increased by $59.1 million, or 1.0%, to $5.73 billion at September 30, 2025, from $5.67 billion at December 31, 2024. The increase was primarily due to an increase in available-for-sale debt securities of $230.1 million, or 20.9%, partially offset by decreases in total loans of $126.8 million, or 3.1%, cash and cash equivalents of $36.0 million, or 21.5%, and other assets of $8.3 million, or 17.8%.
Cash and cash equivalents decreased by $36.0 million, or 21.5%, to $131.7 million at September 30, 2025, from $167.7 million at December 31, 2024, as excess liquidity was deployed into purchasing higher-yielding mortgage-backed securities. Balances fluctuate based on the timing of receipt of security and loan repayments and the redeployment of cash into higher-yielding assets such as loans and securities, or the funding of deposit outflows or borrowing maturities.
The Company's available-for-sale debt securities portfolio increased by $230.1 million, or 20.9%, to $1.33 billion at September 30, 2025, from $1.10 billion at December 31, 2024. The increase was primarily attributable to purchases of mortgage-backed securities, partially offset by paydowns and maturities. At September 30, 2025, $1.30 billion of the portfolio consisted of residential mortgage-backed securities issued or guaranteed by Fannie Mae, Freddie Mac, or Ginnie Mae. In addition, the Company held $30.0 million in corporate bonds, substantially all of which were investment grade, $484,000 in municipal bonds and $556,000 in U.S. Government agency securities at September 30, 2025. Unrealized losses, net of tax, on available-for-sale debt securities and held-to-maturity securities approximated $12.2 million and $234,000, respectively, at September 30, 2025, and $21.8 million and $400,000, respectively, at December 31, 2024. The effective duration of the securities portfolio at September 30, 2025 was 0.95 years.
Equity securities were $5.0 million at September 30, 2025 and $14.3 million at December 31, 2024. At September 30, 2025, equity securities were primarily comprised of an investment in a Small Business Administration ("SBA") Loan Fund. This investment in the SBA Loan Fund is utilized by Northfield Bank (the "Bank") to satisfy its Community Reinvestment Act lending requirements. The decrease in equity securities was due to a redemption, at par, of $5.0 million of our investment in the SBA Loan Fund during the quarter ended September 30, 2025, and a $4.3 million decrease in money market mutual funds which were liquidated in the third quarter of 2025.
Loans held-for-investment, net, decreased by $121.9 million, or 3.0%, to $3.90 billion at September 30, 2025 from $4.02 billion at December 31, 2024, primarily due to a decrease in multifamily real estate loans, partially offset by increases in commercial mortgage, one-to-four family residential mortgage, and home equity and lines of credit loans. The decrease in multifamily loan balances reflects the Company's continued strategic focus on managing concentration risk within its multifamily real estate loan portfolio, while maintaining disciplined loan pricing. Multifamily loans decreased $157.0 million, or 6.0%, to $2.44 billion at September 30, 2025 from $2.60 billion at December 31, 2024, construction and land loans decreased $1.5 million, or 4.3%, to $34.4 million at September 30, 2025 from $35.9 million at December 31, 2024, and commercial and industrial loans decreased $1.4 million, or 0.8%, to $162.1 million at September 30, 2025 from $163.4 million at December 31, 2024. Partially offsetting these decreases was an increase in home equity loans and lines of credit loans of $19.2 million, or 11.1%, to $193.3 million at September 30, 2025 from $174.1 million at December 31, 2024, attributable to new originations, existing customers drawing down on their lines of credit, and decreases in paydowns, an increase in one-to-four family residential loans of $15.8 million, or 10.5%, to $166.0 million at September 30, 2025 from $150.2 million at December 31, 2024, attributable to a combination of retail originations through our recently established mortgage department and the purchase of residential mortgage pools from other banks, and an increase in commercial mortgage loans of $4.7 million, or 0.5%, to $894.5 million at September 30, 2025 from $889.8 million at December 31, 2024, attributable to new originations.
The following table represents the Company's loan balances and associated percentage of each major category in the Company's loan portfolio as of September 30, 2025 and December 31, 2024:
| September 30, 2025 | December 31, 2024 | ||||||||||||||||||||||
| Amount | % of Total | Amount | % of Total | ||||||||||||||||||||
| Real estate loans: | |||||||||||||||||||||||
| Multifamily | $ | 2,440,505 | 62.6 | % | $ | 2,597,484 | 64.6 | % | |||||||||||||||
| Commercial mortgage | 894,523 | 22.9 | 889,801 | 22.1 | |||||||||||||||||||
| One-to-four family residential mortgage | 165,969 | 4.2 | 150,217 | 3.7 | |||||||||||||||||||
| Home equity and lines of credit | 193,309 | 5.0 | 174,062 | 4.3 | |||||||||||||||||||
| Construction and land | 34,365 | 0.9 | 35,897 | 0.9 | |||||||||||||||||||
| Total real estate loans | 3,728,671 | 95.6 | % | 3,847,461 | 95.6 | % | |||||||||||||||||
| Commercial and industrial loans | 162,053 | 4.2 | 163,425 | 4.1 | |||||||||||||||||||
| Other loans | 1,204 | - | 2,165 | 0.1 | |||||||||||||||||||
| Total commercial and industrial and other loans | 163,257 | 4.2 | % | 165,590 | 4.2 | % | |||||||||||||||||
| Loans held-for-investment, net (excluding purchased credit-deteriorated ("PCD") loans | 3,891,928 | 99.8 | 4,013,051 | 99.8 | |||||||||||||||||||
| PCD loans | 8,418 | 0.2 | 9,173 | 0.2 | |||||||||||||||||||
| Total loans held-for-investment, net | $ | 3,900,346 | 100.0 | % | $ | 4,022,224 | 100.0 | % | |||||||||||||||
The following table summarizes commercial mortgage real estate loans by property type and owner-occupied status as a percentage of the total commercial mortgage real estate portfolio as of September 30, 2025:
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September 30, 2025
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| Concentration by Property Type | Percentage of Total | ||||||||||||||||||||||
| Amount | % of Total | Owner-Occupied | Non-Owner Occupied | ||||||||||||||||||||
| Office buildings | $ | 175,583 | 19.6 | % | 7.5 | % | 12.1 | % | |||||||||||||||
| Mixed use (majority of space is non-residential) | 156,703 | 17.5 | 2.5 | 15.0 | |||||||||||||||||||
| Retail | 137,987 | 15.4 | 2.3 | 13.1 | |||||||||||||||||||
| Warehousing | 122,734 | 13.7 | 12.4 | 1.3 | |||||||||||||||||||
| Healthcare facilities | 67,969 | 7.6 | 5.8 | 1.8 | |||||||||||||||||||
| Manufacturing | 65,336 | 7.3 | 5.0 | 2.3 | |||||||||||||||||||
| Accommodations (hotel/motel) | 48,315 | 5.4 | - | 5.4 | |||||||||||||||||||
| Services | 45,410 | 5.1 | 3.7 | 1.4 | |||||||||||||||||||
| Recreational | 12,805 | 1.4 | 1.3 | 0.1 | |||||||||||||||||||
| Schools/daycare | 12,190 | 1.4 | 1.0 | 0.4 | |||||||||||||||||||
| Restaurants | 4,995 | 0.6 | 0.3 | 0.3 | |||||||||||||||||||
| Other | 44,496 | 5.0 | 2.3 | 2.7 | |||||||||||||||||||
| Total commercial real estate loans | $ | 894,523 | 100.0 | % | 44.1 | % | 55.9 | % | |||||||||||||||
The Company obtains an appraisal of the real estate collateral securing a commercial real estate loan prior to originating the loan. The appraised value is used to calculate the ratio of the outstanding loan balance to the value of the real estate collateral, or loan-to-value ratio ("LTV"). The original appraisal is used to monitor the LTVs within the commercial real estate portfolio unless an updated appraisal is received, which may happen for a variety of reasons, including but not limited to payment delinquency, additional loan requests using the same collateral, or loan modifications. The following table presents the ranges in the LTVs of our commercial mortgage loans at September 30, 2025:
| LTV Range % | Number of Loans | Amount | ||||||||||||
| (Dollars in thousands) | ||||||||||||||
| 0 - 25 | 196 | $ | 73,087 | |||||||||||
| >25 - 50 | 248 | 341,576 | ||||||||||||
| >50 - 60 | 102 | 204,805 | ||||||||||||
| >60 - 70 | 80 | 235,149 | ||||||||||||
| >70 - 80 | 20 | 34,270 | ||||||||||||
| >80 - 90 | 1 | 170 | ||||||||||||
| >90 | 4 | 5,466 | ||||||||||||
| Total commercial real estate loans | 651 | $ | 894,523 | |||||||||||
The following table summarizes the commercial real estate portfolio by geographic region in which the loans were originated as a percentage of total commercial real estate loans as of September 30, 2025:
| Geographic Region | Amount | Percent | ||||||||||||
| (Dollars in thousands) | ||||||||||||||
| New York | $ | 480,655 | 54 | % | ||||||||||
| New Jersey | 386,102 | 43 | % | |||||||||||
| Pennsylvania and Other | 27,766 | 3 | % | |||||||||||
| Total commercial real estate loans | $ | 894,523 | 100 | % | ||||||||||
As of September 30, 2025, non-owner occupied commercial real estate loans (as defined by regulatory guidance) to total risk-based capital was estimated at approximately 406%. Management believes that the Bank maintains appropriate risk management practices including risk assessments, board-approved underwriting policies and related procedures, which includes monitoring Bank portfolio performance, performing market analysis (economic and real estate), and stressing of the Bank's commercial real estate portfolio under severe, adverse economic conditions. Although management believes the Bank has implemented appropriate policies and procedures to manage its commercial real estate concentration risk, the Bank's regulators could require it to implement additional policies and procedures or could require it to maintain higher levels of regulatory capital, which might adversely affect its loan originations, the Company's ability to pay dividends, and overall profitability.
Our real estate portfolio includes credit risk exposure to loans collateralized by office buildings and multifamily properties in New York subject to some form of rent regulation limiting rent increases for rent-stabilized multifamily properties. At September 30, 2025, office-related loans represented $175.6 million, or 4.5%, of our total loan portfolio, with an average balance of $1.7 million (although we have originated these type of loans in amounts substantially greater than this average) and a weighted average loan-to-value ratio of 58%. Approximately 38% were owner-occupied. The geographic locations of the properties collateralizing our office-related loans are: 49.5% in New York, 49.0% in New Jersey and 1.5% in Pennsylvania. At September 30, 2025, our largest office-related loan had a principal balance of $90.0 million (with a net active principal balance for the Bank of $29.0 million as we have a 33.3% participation interest), was secured by an office facility located in Staten Island, New York, and was performing in accordance with its original contractual terms. At September 30, 2025, multifamily loans that have some form of rent stabilization or rent control totaled $423.7 million, or 10.8% of our total loan portfolio, with an average balance of $1.7 million (although we have originated these type of loans in amounts substantially greater than this average) and a weighted average loan-to-value ratio of 50%. At September 30, 2025, our largest rent-regulated loan had a principal balance of $16.5 million, was secured by an apartment building located in Staten Island, New York, and was performing in accordance with its original contractual terms. Management continues to closely monitor its office and rent-regulated portfolios. For further details on our rent-regulated multifamily portfolio see "Asset Quality".
PCD loans totaled $8.4 million and $9.2 million at September 30, 2025 and December 31, 2024, respectively. The majority of the remaining PCD loan balance consists of loans acquired as part of a Federal Deposit Insurance Corporation-assisted transaction. The Company accreted interest income of $241,000 and $710,000 attributable to PCD loans for the three and nine months ended September 30, 2025, respectively, compared to $327,000 and $1.1 million for the three and nine months ended September 30, 2024, respectively. PCD loans had an allowance for credit losses of approximately $2.7 million at September 30, 2025.
Other assets decreased by $8.3 million, or 17.8%, to $38.6 million at September 30, 2025, from $46.9 million at December 31, 2024. The decrease was primarily attributable to a decrease in deferred tax assets primarily due to a decrease in unrealized losses on the securities available-for-sale portfolio.
Total liabilities increased $44.2 million, or 0.9%, to $5.01 billion at September 30, 2025, from $4.96 billion at December 31, 2024. The increase was primarily attributable to an increase in borrowings of $213.7 million, partially offset by a decrease in deposits of $164.7 million. Brokered deposits decreased by $233.4 million, or 88.6%, as the Company placed less reliance on brokered deposits, which were used as a lower-cost alternative to borrowings in the fourth quarter of 2024. The Company routinely utilizes brokered deposits and borrowed funds to manage interest rate risk, the cost of interest-bearing liabilities, and funding needs related to loan originations and deposit activity.
Deposits, excluding brokered deposits, increased $68.7 million, or 1.8%. The increase in deposits, excluding brokered deposits, was primarily attributable to an increase of $101.7 million in transaction accounts, partially offset by decreases of $16.2 million in time deposits, $15.4 million in savings accounts, and $1.4 million in money market accounts. Growth in transaction accounts was primarily due to new municipal relationships and new commercial customer relationships. Estimated gross uninsured deposits at September 30, 2025 were $1.93 billion, which included fully collateralized uninsured governmental deposits and intercompany deposits of $989.0 million, leaving estimated uninsured deposits of approximately $944.6 million, or 23.8%, of total deposits. At December 31, 2024, estimated uninsured deposits, excluding fully collateralized uninsured governmental deposits and intercompany deposits, totaled $896.5 million, or 21.7% of total deposits.
Borrowed funds increased to $941.7 million at September 30, 2025, from $727.8 million at December 31, 2024. The increase in borrowings for the period was primarily due to a $213.7 million increase in other borrowings, which were used in lieu of higher costing brokered deposits. Management utilizes borrowings to mitigate interest rate risk, for short-term liquidity, and to a lesser extent from time to time, as part of leverage strategies.
The following table sets forth term borrowing maturities (excluding overnight borrowings, floating rate advances, and subordinated debt) and the weighted average rate by year at September 30, 2025 (dollars in thousands):
| Year | Amount | Weighted Average Rate | ||||||||||||
| 2025 | $ | 250,000 | 4.38% | |||||||||||
| 2026 | 288,484 | 4.20% | ||||||||||||
| 2027 | 173,000 | 3.19% | ||||||||||||
| 2028 | 162,343 | 3.94% | ||||||||||||
| $ | 873,827 | 4.00% | ||||||||||||
Total stockholders' equity increased by $14.9 million to $719.6 million at September 30, 2025, from $704.7 million at December 31, 2024. The increase was attributable to net income of $28.2 million for the nine months ended September 30, 2025, a $14.7 million decrease in accumulated other comprehensive loss associated with an increase in the estimated fair value of our debt securities available-for-sale portfolio, and a $2.9 million increase in equity award activity, partially offset by $15.0 million in stock repurchases and $15.9 million in dividend payments. On February 26, 2025, the Board of Directors of the Company approved a $5.0 million stock repurchase program, and on April 23, 2025, the Board of Directors approved a $10.0 million stock repurchase program. During the nine months ended September 30, 2025, the Company repurchased 1.3 million shares of its common stock outstanding at an average price of $11.52 for a total of $15.0 million pursuant to the approved stock repurchase plans. As of September 30, 2025, the Company had no outstanding repurchase program.
Comparison of Operating Results for the Nine Months Ended September 30, 2025 and 2024
Net Income. Net income was $28.2 million and $18.7 million for the nine months ended September 30, 2025 and September 30, 2024, respectively. Significant variances from the comparable prior year period are as follows: a $15.9 million increase in net interest income, a $3.4 million increase in the provision for credit losses on loans, a $2.5 million increase in non-interest income, a $2.1 million increase in non-interest expense, and a $3.4 million increase in income tax expense.
Interest Income. Interest income increased $7.3 million, or 4.1%, to $185.5 million for the nine months ended September 30, 2025, from $178.2 million for the nine months ended September 30, 2024, primarily due to a 25 basis point increase in the yield on interest-earning assets, which increased to 4.60% for the nine months ended September 30, 2025, from 4.35% for the nine months ended September 30, 2024, due to higher yields on mortgage-backed securities and loans, partially offset by an $86.3 million, or 1.6%, decrease in the average balance of interest-earning assets. The decrease was primarily due to decreases in the average balance of loans of $173.0 million, the average balance of other securities of $257.4 million, and the average balance of interest-earning deposits in financial institutions of $90.4 million, partially offset by an increase in the average balance of mortgage-backed securities of $434.1 million. The changes reflect the purchase of higher-yielding mortgage-related securities with excess cash and proceeds from the maturities of other securities and paydown of lower-yielding multifamily loans. Interest income for the nine months ended September 30, 2025, included $609,000 of interest income related to the settlement of a non-accrual loan in May 2025. The Company accreted interest income related to PCD loans of $710,000 for the nine months ended September 30, 2025, as compared to $1.1 million for the nine months ended September 30, 2024. Net interest income for the nine months ended September 30, 2025, also included loan prepayment income of $872,000 as compared to $648,000 for the nine months ended September 30, 2024.
Interest Expense. Interest expense decreased $8.6 million, or 9.2%, to $84.8 million for the nine months ended September 30, 2025, as compared to $93.4 million for the nine months ended September 30, 2024. The decrease was primarily due to a decrease in the average balance of interest-bearing liabilities of $107.7 million, or 2.5%, as well as a decrease in the cost of interest-bearing liabilities, which decreased by 20 basis points to 2.73% for the nine months ended September 30, 2025, from 2.93% for the nine months ended September 30, 2024. The average balance of interest-bearing liabilities decreased primarily due to a $309.9 million, or 29.4%, decrease in the average balance of borrowed funds, which was primarily due to the repayment of borrowings from the Federal Reserve Bank in the fourth quarter of 2024. In January 2024, the Company borrowed $300.0 million from the Federal Reserve Bank through the Bank Term Funding Program ("BTFP") at favorable terms and conditions and invested the proceeds in higher-yielding interest-bearing deposits in other financial institutions and investment securities. This was partially offset by a $202.0 million, or 6.4%, increase in the average balance of interest-bearing deposits, primarily certificates of deposit. The decrease in the cost of interest-bearing liabilities was driven primarily by a 14 basis point decrease in the cost of interest-bearing deposits to 2.42% from 2.56%, partially offset by a three basis point increase in the cost of borrowings to 3.92% from 3.89%.
Net Interest Income. Net interest income for the nine months ended September 30, 2025, increased $15.9 million, or 18.7%, to $100.7 million, from $84.8 million for the nine months ended September 30, 2024, primarily due to a 43 basis point increase in net interest margin to 2.50% from 2.07% for the nine months ended September 30, 2024. The increase in net interest margin was primarily due to higher yields on loans and mortgage-backed securities, coupled with a decrease in the cost of interest-bearing liabilities.
Provision for Credit Losses. The provision for credit losses on loans increased by $3.4 million to $5.7 million for the nine months ended September 30, 2025, compared to $2.3 million for the nine months ended September 30, 2024, primarily due to an increase in general reserves related to a worsening macroeconomic forecast in the current period within our Current Expected Credit Loss ("CECL") model, partially offset by a decline in loan balances and lower net charge-offs. Net charge-offs were $4.0 million for the nine months ended September 30, 2025, primarily due to $3.5 million in net charge-offs on small business unsecured commercial and industrial loans, as compared to net charge-offs of $4.7 million for the nine months ended September 30, 2024. Management continues to closely monitor the small business unsecured commercial and industrial loan portfolio, which totaled $22.4 million at September 30, 2025.
Non-interest Income. Non-interest income increased by $2.5 million, or 25.0%, to $12.3 million for the nine months ended September 30, 2025, compared to $9.8 million for the nine months ended September 30, 2024. The increase was primarily due to an increase in income on bank-owned life insurance of $2.3 million, primarily related to the exchange of certain policies in the fourth quarter of 2024, which have higher yields. Additionally, there was a $301,000 increase in fees and service charges for customer services, primarily higher overdraft fees.
Non-interest Expense. Non-interest expense increased by $2.1 million, or 3.2%, to $67.8 million for the nine months ended September 30, 2025, compared to $65.7 million for the nine months ended September 30, 2024. The increase was primarily due to a $1.4 million increase in employee compensation and benefits, primarily due to higher salary expense related to annual merit increases and an increase in headcount, and higher stock compensation expense as the prior year included a credit of $461,000 related to performance stock awards not expected to vest. Partially offsetting this increase was a decrease due to $683,000 of severance expense recorded in the nine months ended September 30, 2024. Additionally, there was an $859,000 increase in data processing costs attributable to an increase in core system expenses commensurate with deposit account growth and digital banking system conversion expenses, and a $402,000 increase in professional fees related to outsourced audit services and recruitment fees. Partially offsetting the increases was a $428,000 decrease in advertising expense attributable to a change in marketing strategy and the timing of specific deposit and lending campaigns, and a $171,000 decrease in credit loss expense/(benefit) for off-balance sheet exposure. The decrease in credit loss expense/(benefit) for off-balance sheet exposure was due to a provision of $166,000 recorded during the nine months ended September 30, 2025, as compared to a provision of $337,000 recorded during the nine months ended September 30, 2024, due to a decrease in the pipeline of loans committed and awaiting closing.
Income Tax Expense. The Company recorded income tax expense of $11.3 million for the nine months ended September 30, 2025, compared to $7.9 million for the nine months ended September 30, 2024, with the increase due to higher taxable income. The effective tax rate for the nine months ended September 30, 2025, was 28.5% compared to 29.7% for the nine months ended September 30, 2024. In May 2025, options granted in 2015 expired and resulted in additional tax expense of $580,000 for the nine months ended September 30, 2025, as compared to options granted in 2014 that expired in June 2024 and resulted in additional tax expense of $795,000 for the nine months ended September 30, 2024.
The following table sets forth average balances, average yields and costs, and certain other information for the periods indicated.
|
For the Nine Months Ended
|
|||||||||||||||||||||||||||||||||||
|
September 30, 2025
|
September 30, 2024
|
||||||||||||||||||||||||||||||||||
| Average Outstanding Balance | Interest |
Average Yield/ Rate (1)
|
Average Outstanding Balance | Interest |
Average Yield/ Rate (1)
|
||||||||||||||||||||||||||||||
| Interest-earning assets: | |||||||||||||||||||||||||||||||||||
|
Loans (2)
|
$ | 3,954,440 | $ | 138,346 | 4.68 | % | $ | 4,127,409 | $ | 138,030 | 4.47 | % | |||||||||||||||||||||||
|
Mortgage-backed securities (3)
|
1,225,940 | 40,654 | 4.43 | 791,850 | 20,246 | 3.42 | |||||||||||||||||||||||||||||
|
Other securities (3)
|
75,383 | 1,616 | 2.87 | 332,831 | 10,031 | 4.03 | |||||||||||||||||||||||||||||
| Federal Home Loan Bank of New York stock | 39,209 | 2,296 | 7.83 | 38,781 | 2,819 | 9.71 | |||||||||||||||||||||||||||||
| Interest-earning deposits in financial institutions | 94,037 | 2,551 | 3.63 | 184,420 | 7,060 | 5.11 | |||||||||||||||||||||||||||||
| Total interest-earning assets | 5,389,009 | 185,463 | 4.60 | 5,475,291 | 178,186 | 4.35 | |||||||||||||||||||||||||||||
| Non-interest-earning assets | 280,165 | 269,180 | |||||||||||||||||||||||||||||||||
| Total assets | $ | 5,669,174 | $ | 5,744,471 | |||||||||||||||||||||||||||||||
| Interest-bearing liabilities: | |||||||||||||||||||||||||||||||||||
| Savings, NOW, and money market accounts | $ | 2,502,904 | $ | 36,790 | 1.97 | % | $ | 2,457,320 | $ | 38,231 | 2.08 | % | |||||||||||||||||||||||
| Certificates of deposit | 841,877 | 23,707 | 3.76 | 685,510 | 22,010 | 4.29 | |||||||||||||||||||||||||||||
| Total interest-bearing deposits | 3,344,781 | 60,497 | 2.42 | 3,142,830 | 60,241 | 2.56 | |||||||||||||||||||||||||||||
| Borrowed funds | 742,703 | 21,783 | 3.92 | 1,052,589 | 30,653 | 3.89 | |||||||||||||||||||||||||||||
| Subordinated debt | 61,518 | 2,484 | 5.40 | 61,294 | 2,492 | 5.43 | |||||||||||||||||||||||||||||
| Total interest-bearing liabilities | 4,149,002 | 84,764 | 2.73 | 4,256,713 | 93,386 | 2.93 | |||||||||||||||||||||||||||||
| Non-interest bearing deposits | 716,729 | 691,406 | |||||||||||||||||||||||||||||||||
| Accrued expenses and other liabilities | 93,765 | 101,639 | |||||||||||||||||||||||||||||||||
| Total liabilities | 4,959,496 | 5,049,758 | |||||||||||||||||||||||||||||||||
| Stockholders' equity | 709,678 | 694,713 | |||||||||||||||||||||||||||||||||
| Total liabilities and stockholders' equity | $ | 5,669,174 | $ | 5,744,471 | |||||||||||||||||||||||||||||||
| Net interest income | $ | 100,699 | $ | 84,800 | |||||||||||||||||||||||||||||||
|
Net interest rate spread (4)
|
1.87 | % | 1.42 | % | |||||||||||||||||||||||||||||||
|
Net interest-earning assets (5)
|
$ | 1,240,007 | $ | 1,218,578 | |||||||||||||||||||||||||||||||
|
Net interest margin (6)
|
2.50 | % | 2.07 | % | |||||||||||||||||||||||||||||||
| Average interest-earning assets to interest-bearing liabilities | 129.89 | % | 128.63 | % | |||||||||||||||||||||||||||||||
(1) Average yields and rates are annualized.
(2) Includes non-accruing loans. Interest income on loans includes amortization of deferred loan fees, net of deferred loan costs, which was not material.
(3) Securities available-for-sale and other securities are reported at amortized cost.
(4) Net interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average cost of interest-bearing liabilities.
(5) Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.
(6) Net interest margin represents net interest income divided by average total interest-earning assets.
Comparison of Operating Results for the Three Months Ended September 30, 2025 and 2024
Net Income. Net income was $10.8 million and $6.5 million for the quarters ended September 30, 2025 and September 30, 2024, respectively. Significant variances from the comparable prior year quarter are as follows: a $6.3 million increase in net interest income, a $1.5 million decrease in the provision for credit losses on loans, a $1.1 million increase in non-interest income, a $3.0 million increase in non-interest expense, and a $1.7 million increase in income tax expense.
Interest Income. Interest income increased $3.6 million, or 6.1%, to $62.9 million for the quarter ended September 30, 2025, from $59.3 million for the quarter ended September 30, 2024, primarily due to a 25 basis point increase in the yield on interest-earning assets, which increased to 4.63% for the quarter ended September 30, 2025, from 4.38% for the quarter ended September 30, 2024, due to higher yields on mortgage-backed securities and loans, partially offset by a $3.8 million, or 0.1%, decrease in the average balance of interest-earning assets. The decrease was primarily due to decreases in the average balance of other securities of $221.1 million, the average balance of loans of $167.7 million, and the average balance of interest-earning deposits in financial institutions of $15.8 million, partially offset by an increase in the average balance of mortgage-backed securities of $395.4 million. The changes reflect the purchase of higher-yielding mortgage-related securities with excess cash and proceeds from the maturities of other securities and paydown of lower-yielding multifamily loans. The Company accreted interest income related to PCD loans of $241,000 for the quarter ended September 30, 2025, as compared to $327,000 for the quarter ended September 30, 2024. Net interest income for the quarter ended September 30, 2025, included loan prepayment income of $106,000, as compared to $87,000 for the quarter ended September 30, 2024.
Interest Expense. Interest expense decreased $2.7 million, or 8.5%, to $28.4 million for the quarter ended September 30, 2025, from $31.1 million for the quarter ended September 30, 2024. The decrease in interest expense was primarily due to a decrease in the average balance of interest-bearing liabilities of $40.9 million, or 1.0%, as well as a decrease in the cost of interest-bearing liabilities, which decreased by 23 basis points to 2.72% for the three months ended September 30, 2025, from 2.95% for the three months ended September 30, 2024. The average balance of interest-bearing liabilities decreased primarily due to a $173.9 million, or 17.2%, decrease in the average balance of borrowed funds which was primarily due to the repayment of borrowings from the Federal Reserve Bank under the BTFP in the fourth quarter of 2024. This was partially offset by a $132.8 million, or 4.3%, increase in the average balance of interest-bearing deposits. The decrease in the cost of interest-bearing liabilities was driven by a 27 basis point decrease in the cost of interest-bearing deposits to 2.32% from 2.59%, partially offset by a 15 basis point increase in the cost of borrowed funds to 4.08% from 3.93%.
Net Interest Income. Net interest income for the quarter ended September 30, 2025, increased $6.3 million, or 22.3%, to $34.5 million, from $28.2 million for the quarter ended September 30, 2024, primarily due to a 46 basis point increase in net interest margin to 2.54% for the quarter ended September 30, 2025, from 2.08% for the quarter ended September 30, 2024. The increase in net interest margin was primarily due to higher yields on loans and mortgage-backed securities, coupled with a decrease in the cost of interest-bearing liabilities.
Provision for Credit Losses. The provision for credit losses on loans decreased by $1.5 million to $1.1 million for the quarter ended September 30, 2025, from $2.5 million for the quarter ended September 30, 2024, primarily due to lower net charge-offs and a decline in loan balances, partially offset by an increase in general reserves related to a worsening macroeconomic forecast in the current quarter within our CECL model. Net charge-offs were $299,000 for the quarter ended September 30, 2025, as compared to net charge-offs of $2.1 million for the quarter ended September 30, 2024. The decrease was primarily due to lower net charge-offs on small business unsecured commercial and industrial loans.
Non-interest Income. Non-interest income increased by $1.1 million, or 32.1%, to $4.7 million for the quarter ended September 30, 2025, from $3.6 million for the quarter ended September 30, 2024. The increase was primarily due to an increase of $864,000 in income on bank-owned life insurance, primarily related to the exchange of certain policies in the fourth quarter of 2024 which have higher yields, and a $181,000 increase in fees and service charges for customer services, primarily higher overdraft fees.
Non-interest Expense. Non-interest expense increased by $3.0 million, or 14.7%, to $23.4 million for the quarter ended September 30, 2025, from $20.4 million for the quarter ended September 30, 2024, primarily due to a $2.1 million increase in employee compensation and benefits, attributable to higher salary expense related to annual merit increases and an increase in headcount, as well as an increase in medical benefits expense. Additionally, there was an increase of $659,000 in data processing costs attributable to an increase in core system expenses commensurate with deposit account growth and digital banking system conversion expenses, and a $411,000 increase in other expense driven by higher general operating costs.
Income Tax Expense. The Company recorded income tax expense of $4.0 million for the quarter ended September 30, 2025, compared to $2.4 million for the quarter ended September 30, 2024, with the increase due to higher taxable income. The effective tax rate for the quarter ended September 30, 2025 was 27.3%, compared to 26.6% for the quarter ended September 30, 2024.
The following table sets forth average balances, average yields and costs, and certain other information for the periods indicated.
| For the Three Months Ended | |||||||||||||||||||||||||||||||||||
|
September 30, 2025
|
September 30, 2024
|
||||||||||||||||||||||||||||||||||
| Average Outstanding Balance | Interest |
Average Yield/ Rate (1)
|
Average Outstanding Balance | Interest |
Average Yield/ Rate (1)
|
||||||||||||||||||||||||||||||
| Interest-earning assets: | |||||||||||||||||||||||||||||||||||
|
Loans (2)
|
$ | 3,912,274 | $ | 46,402 | 4.71 | % | $ | 4,079,974 | $ | 46,016 | 4.49 | % | |||||||||||||||||||||||
|
Mortgage-backed securities (3)
|
1,296,463 | 14,757 | 4.52 | 901,042 | 8,493 | 3.75 | |||||||||||||||||||||||||||||
|
Other securities (3)
|
52,233 | 377 | 2.86 | 273,312 | 2,684 | 3.91 | |||||||||||||||||||||||||||||
| Federal Home Loan Bank of New York stock | 43,401 | 706 | 6.45 | 38,044 | 914 | 9.56 | |||||||||||||||||||||||||||||
| Interest-earning deposits in financial institutions | 84,050 | 704 | 3.32 | 99,837 | 1,211 | 4.83 | |||||||||||||||||||||||||||||
| Total interest-earning assets | 5,388,421 | 62,946 | 4.63 | 5,392,209 | 59,318 | 4.38 | |||||||||||||||||||||||||||||
| Non-interest-earning assets | 282,745 | 275,342 | |||||||||||||||||||||||||||||||||
| Total assets | $ | 5,671,166 | $ | 5,667,551 | |||||||||||||||||||||||||||||||
| Interest-bearing liabilities: | |||||||||||||||||||||||||||||||||||
| Savings, NOW, and money market accounts | $ | 2,514,578 | $ | 12,415 | 1.96 | % | $ | 2,417,725 | $ | 12,717 | 2.09 | % | |||||||||||||||||||||||
| Certificates of deposit | 736,704 | 6,606 | 3.56 | 700,763 | 7,587 | 4.31 | |||||||||||||||||||||||||||||
| Total interest-bearing deposits | 3,251,282 | 19,021 | 2.32 | 3,118,488 | 20,304 | 2.59 | |||||||||||||||||||||||||||||
| Borrowed funds | 834,425 | 8,576 | 4.08 | 1,008,338 | 9,949 | 3.93 | |||||||||||||||||||||||||||||
| Subordinated debt | 61,573 | 837 | 5.39 | 61,350 | 836 | 5.42 | |||||||||||||||||||||||||||||
| Total interest-bearing liabilities | 4,147,280 | 28,434 | 2.72 | 4,188,176 | 31,089 | 2.95 | |||||||||||||||||||||||||||||
| Non-interest bearing deposits | 720,124 | 683,283 | |||||||||||||||||||||||||||||||||
| Accrued expenses and other liabilities | 91,466 | 102,233 | |||||||||||||||||||||||||||||||||
| Total liabilities | 4,958,870 | 4,973,692 | |||||||||||||||||||||||||||||||||
| Stockholders' equity | 712,296 | 693,859 | |||||||||||||||||||||||||||||||||
| Total liabilities and stockholders' equity | $ | 5,671,166 | $ | 5,667,551 | |||||||||||||||||||||||||||||||
| Net interest income | $ | 34,512 | $ | 28,229 | |||||||||||||||||||||||||||||||
|
Net interest rate spread (4)
|
1.91 | % | 1.42 | % | |||||||||||||||||||||||||||||||
|
Net interest-earning assets (5)
|
$ | 1,241,141 | $ | 1,204,033 | |||||||||||||||||||||||||||||||
|
Net interest margin (6)
|
2.54 | % | 2.08 | % | |||||||||||||||||||||||||||||||
| Average interest-earning assets to interest-bearing liabilities | 129.93 | % | 128.75 | % | |||||||||||||||||||||||||||||||
(1) Average yields and rates are annualized.
(2) Includes non-accruing loans. Interest income on loans includes amortization of deferred loan fees, net of deferred loan costs, which was not material.
(3) Securities available-for-sale and other securities are reported at amortized cost.
(4) Net interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average cost of interest-bearing liabilities.
(5) Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.
(6) Net interest margin represents net interest income divided by average total interest-earning assets.
Asset Quality
PCD Loans (Held-for-Investment)
The Company accounts for PCD loans at estimated fair value using discounted expected future cash flows deemed to be collectible on the date acquired. Based on its detailed review of PCD loans and experience in loan workouts, management has a reasonable expectation about the amount and timing of future cash flows and accordingly has classified PCD loans ($8.4 million at September 30, 2025 and $9.2 million at December 31, 2024, respectively) as accruing, even though they may be contractually past due. At September 30, 2025, 2.6% of PCD loans were past due 30 to 89 days, and 25.0% were past due 90 days or more, as compared to 2.1% and 24.9%, respectively, at December 31, 2024.
Loans
The following table details total non-accrual loans (excluding PCD), non-performing assets, loans over 90 days delinquent on which interest is accruing, and accruing loans 30 to 89 days delinquent at September 30, 2025 and December 31, 2024 (dollars in thousands):
| September 30, 2025 | December 31, 2024 | ||||||||||
| Non-accrual loans: | |||||||||||
| Held-for-investment | |||||||||||
| Real estate loans: | |||||||||||
| Multifamily | $ | 2,632 | $ | 2,609 | |||||||
| Commercial mortgage | 5,833 | 4,578 | |||||||||
| Home equity and lines of credit | 1,947 | 1,270 | |||||||||
| Commercial and industrial | 4,853 | 5,807 | |||||||||
| Total non-accrual loans held-for-investment | 15,265 | 14,264 | |||||||||
| Loans delinquent 90 days or more and still accruing: | |||||||||||
| Held-for-investment | |||||||||||
| Real estate loans: | |||||||||||
| Multifamily | - | 164 | |||||||||
| Commercial mortgage | 52 | - | |||||||||
| One-to-four family residential | 870 | 882 | |||||||||
| Home equity and lines of credit | 29 | 140 | |||||||||
| Commercial and industrial | 2,851 | - | |||||||||
| Total loans delinquent 90 days or more and still accruing held-for-investment | 3,802 | 1,186 | |||||||||
| Non-performing loans held-for-sale | |||||||||||
| Commercial real estate loans | - | 4,397 | |||||||||
| Commercial and industrial | - | 500 | |||||||||
| Total non-performing loans held-for-sale | - | 4,897 | |||||||||
| Total non-performing loans | 19,067 | 20,347 | |||||||||
| Total non-performing assets | $ | 19,067 | $ | 20,347 | |||||||
| Non-performing loans to total loans | 0.49 | % | 0.51 | % | |||||||
| Non-performing assets to total assets | 0.33 | % | 0.36 | % | |||||||
| Accruing loans 30 to 89 days delinquent | $ | 16,655 | $ | 9,336 | |||||||
The increase in non-accrual loans was largely due to one commercial real estate relationship with an outstanding balance of $1.3 million which was put on non-accrual status during the third quarter of 2025 due to business operational issues. The loan was current as of September 30, 2025, was individually evaluated for impairment with no reserve and is considered well secured by collateral property with an estimated fair value of $2.3 million and is in the process of collection.
The increase in loans delinquent 90 days or more and still accruing was driven by one commercial and industrial relationship with an outstanding balance of $2.9 million, which was past maturity at September 30, 2025. The Bank has been working with the borrower to renew the loan, which was renewed subsequent to the quarter end.
The decrease in non-performing loans held-for-sale from December 31, 2024, was due to repayment of the loans in full from a settlement agreement in bankruptcy.
Other Real Estate Owned
At September 30, 2025 and December 31, 2024, the Company had no assets acquired through foreclosure.
Accruing Loans 30 to 89 Days Delinquent
Loans 30 to 89 days delinquent and on accrual status totaled $16.7 million and $9.3 million at September 30, 2025 and December 31, 2024, respectively.
The following table sets forth delinquencies for accruing loans by type and by amount at September 30, 2025 and December 31, 2024 (dollars in thousands):
| September 30, 2025 | December 31, 2024 | ||||||||||
| Held-for-investment | |||||||||||
| Real estate loans: | |||||||||||
| Multifamily | $ | 2,337 | $ | 2,831 | |||||||
| Commercial mortgage | 8,139 | 78 | |||||||||
| One-to-four family residential | 2,546 | 2,407 | |||||||||
| Home equity and lines of credit | 1,220 | 1,472 | |||||||||
| Commercial and industrial loans | 2,413 | 2,545 | |||||||||
| Other loans | - | 3 | |||||||||
| Total delinquent accruing loans held-for-investment | $ | 16,655 | $ | 9,336 | |||||||
The increase in loans 30 to 89 days delinquent and on accrual status at September 30, 2025, as compared to December 31, 2024, was largely due to a number of loans which were exactly 30 days past due at September 30, 2025. Of the delinquent loans above $12.6 million, or approximately 75%, made at least one contractual payment subsequent to September 30, 2025.
Rent-Regulated Multifamily Loans
Our multifamily loan portfolio at September 30, 2025 totaled $2.44 billion, or 63% of our total loan portfolio, of which $423.7 million, or 10.8%, included loans collateralized by properties in New York with units subject to some percentage of rent regulation. The table below sets forth details about our multifamily loan portfolio in New York (dollars in thousands).
| % Rent Regulated | Balance | % Portfolio Total NY Multifamily Portfolio | Average Balance | Largest Loan |
LTV*
|
Debt Service Coverage Ratio (DSCR)*
|
30-89 Days Delinquent | Non-Accrual | Special Mention | Substandard | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| 0 | $ | 292,701 | 40.9 | % | $ | 1,230 | $ | 16,280 | 50.4% | 1.64x | $ | - | $ | 618 | $ | - | $ | 855 | ||||||||||||||||||||||||||||||||||||||||||||
| >0-10 | 4,648 | 0.5 | % | 1,549 | 2,087 | 50.3 | 1.43 | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||||
| >10-20 | 16,894 | 2.4 | % | 1,408 | 2,802 | 47.8 | 1.62 | 191 | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||||
| >20-30 | 19,053 | 2.7 | % | 2,117 | 5,385 | 52.6 | 1.52 | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||||
| >30-40 | 15,779 | 2.2 | % | 1,315 | 2,998 | 43.0 | 1.80 | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||||
| >40-50 | 19,615 | 2.7 | % | 1,154 | 2,185 | 46.5 | 1.62 | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||||
| >50-60 | 9,145 | 1.3 | % | 1,524 | 2,285 | 38.9 | 1.91 | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||||
| >60-70 | 21,687 | 3.0 | % | 2,711 | 11,022 | 52.9 | 1.46 | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||||
| >70-80 | 22,650 | 3.2 | % | 2,265 | 4,836 | 47.1 | 1.77 | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||||
| >80-90 | 17,910 | 2.5 | % | 1,119 | 3,102 | 44.9 | 1.74 | - | - | - | 1,111 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| >90-100 | 276,359 | 38.6 | % | 1,727 | 16,489 | 51.1 | 1.57 | 1,082 | 2,014 | 1,174 | 4,295 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | $ | 716,441 | 100.0 | % | $ | 1,459 | $ | 16,489 | 50.1% | 1.62x | $ | 1,273 | $ | 2,632 | $ | 1,174 | $ | 6,261 | ||||||||||||||||||||||||||||||||||||||||||||
The table below sets forth our New York rent-regulated loans by county (dollars in thousands):
| County | Balance |
LTV*
|
DSCR*
|
|||||||||||||||||
| Bronx | $ | 115,564 | 50.6% | 1.65x | ||||||||||||||||
| Kings | 179,623 | 49.5% | 1.60 | |||||||||||||||||
| Nassau | 2,134 | 35.5% | 2.13 | |||||||||||||||||
| New York | 45,538 | 45.8% | 1.49 | |||||||||||||||||
| Queens | 36,451 | 43.5% | 1.86 | |||||||||||||||||
| Richmond | 31,180 | 60.2% | 1.41 | |||||||||||||||||
| Westchester | 13,250 | 58.0% | 1.21 | |||||||||||||||||
| Total | $ | 423,740 | 49.9% | 1.60x | ||||||||||||||||
* Weighted Average
None of the loans that are rent-regulated in New York are interest-only. During the remainder of 2025, six loans with an aggregate principal balance of $18.6 million will re-price.
Liquidity and Capital Resources
Liquidity. The objective of our liquidity management is to ensure the availability of sufficient funds to meet financial commitments and deposit withdrawals, to repay borrowings as they mature, and to fund new loans and investments as opportunities arise.
The Bank's primary sources of funds are deposits, principal and interest payments on loans and securities, borrowed funds, the proceeds from maturing securities and short-term investments, and to a lesser extent, proceeds from the sales of loans and securities, and wholesale borrowings. The scheduled amortization of loans and securities, as well as proceeds from borrowed funds, are predictable sources of funds. Other funding sources, however, such as deposit inflows and loan prepayments are greatly influenced by market interest rates, economic conditions, and competition. The Bank is a member of the Federal Home Loan Bank of New York ("FHLBNY"), which provides an additional source of short-term and long-term funding. The Bank also has short-term borrowing capabilities with the Federal Reserve Bank of New York ("FRBNY"). The Bank's total short-term borrowed funds, excluding lease obligations, floating rate advances and an overnight line of credit, were $873.8 million at September 30, 2025, and had a weighted average interest rate of 4.00%. A total of $488.5 million of these borrowings will mature in less than one year. Short-term borrowed funds, excluding floating rate advances, were $658.5 million at December 31, 2024.
On June 17, 2022, the Company issued $62.0 million in aggregate principal amount of fixed to floating subordinated notes (the "Notes"). The Notes are non-callable for five years, have a stated maturity of June 30, 2032, and bear interest at a fixed rate of 5.00% until June 30, 2027. From July 2027 to the maturity date or early redemption date, the interest rate will reset quarterly to a level equal to the then current three-month Secured Overnight Financing Rate plus 200 basis points.
The Bank has the ability to obtain additional funding from the FHLBNY and FRBNY of approximately $1.67 billion utilizing unencumbered securities of $617.9 million, loans of $1.05 billion, and encumbered securities of $2.5 million at September 30, 2025. Additionally, the Bank has remaining borrowing capacity utilizing encumbered securities through the FRBNY Discount Window of $96.6 million. The Bank expects to have sufficient funds available to meet current commitments in the normal course of business.
We monitor our liquidity position on a daily basis. We anticipate that we will have sufficient funds to meet our current funding commitments. Based on our deposit retention experience and current pricing strategy, we anticipate that a significant portion of maturing time deposits will be retained. However, if a substantial portion of these deposits are not retained, we may utilize FHLB advances, the FRBNY Discount Window, brokered deposits, sell unencumbered securities or raise interest rates on deposits to attract new accounts, which may result in higher levels of interest expense.
The Company has a diversified deposit base, and government deposits are collateralized by assets or letters of credit issued by the FHLBNY. Estimated gross uninsured deposits at September 30, 2025 were $1.93 billion. This total includes fully collateralized uninsured governmental deposits and intercompany deposits of $989.0 million, leaving estimated net uninsured deposits of approximately $944.6 million, or 23.8% of total deposits. At December 31, 2024, estimated net uninsured deposits totaled $896.5 million, or 21.7% of total deposits.
Northfield Bancorp, Inc. (standalone) is a separate legal entity from the Bank and must provide for its own liquidity to pay dividends, repurchase its stock, and for other corporate purposes. Northfield Bancorp, Inc.'s primary source of liquidity is dividend payments from the Bank. At September 30, 2025, Northfield Bancorp, Inc. (standalone) had liquid assets of $18.8 million.
Capital Resources. Federal regulations require federally insured depository institutions to meet several minimum capital standards: a common equity Tier 1 capital to risk-based assets ratio of 4.5%, a Tier 1 capital to risk-based assets ratio of 6.0%, a total capital to risk-based assets of 8.0%, and a 4.0% Tier 1 capital to total assets leverage ratio. In addition to establishing the minimum regulatory capital requirements, the regulations limit capital distributions and certain discretionary bonus payments to management if the institution does not hold a "capital conservation buffer" consisting of 2.5% of common equity Tier 1 capital to risk-weighted assets in addition to the amount necessary to meet its minimum risk-based capital requirements.
The federal banking agencies developed a "Community Bank Leverage Ratio" ("CBLR") (the ratio of a bank's tangible equity capital to average total consolidated assets) for financial institutions with assets of less than $10 billion. A qualifying community bank that exceeds this ratio will be deemed to be in compliance with all other capital and leverage requirements, including the capital requirements to be considered "well capitalized" under Prompt Corrective Action statutes. The federal banking agencies have approved 9% as the current minimum capital for the CBLR. Northfield Bank and Northfield Bancorp have elected to opt into the CBLR framework. The CBLR replaced the risk-based and leverage capital requirements in the generally applicable capital rules.
At September 30, 2025, and December 31, 2024, as set forth in the following table, both Northfield Bank and Northfield Bancorp, Inc. exceeded all of the regulatory capital requirements to which they were subject at such dates.
| Northfield Bank | Northfield Bancorp, Inc. | For Capital Adequacy Purposes | For Well Capitalized Under Prompt Corrective Action Provisions | ||||||||||||||||||||
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As of September 30, 2025:
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| CBLR | 12.64% | 12.15% | 9.00% | 9.00% | |||||||||||||||||||
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As of December 31, 2024:
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| CBLR | 12.46% | 12.11% | 9.00% | 9.00% | |||||||||||||||||||
Off-Balance Sheet Arrangements and Contractual Obligations
In the normal course of operations, the Company engages in a variety of financial transactions that, in accordance with U.S. GAAP, are not recorded in the financial statements. These transactions primarily relate to lending commitments. These arrangements are not expected to have a material impact on the Company's results of operations or financial condition.
Commitments to fund unused lines of credit are agreements to lend additional funds to customers as long as there have been no violations of any of the conditions established in the agreements (original or restructured). Commitments to originate loans generally have a fixed expiration or other termination clauses, which may require payment of a fee. Since some of these loan commitments are expected to expire without being drawn upon, total commitments do not necessarily represent future cash requirements. At September 30, 2025, the reserve for commitments to fund unused lines of credit recorded in accrued expenses and other liabilities was $684,000.
For further information regarding our off-balance sheet arrangements and contractual obligations, see "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Company's Annual Report on Form 10-K for the year ended December 31, 2024.
Accounting Pronouncements Not Yet Adopted
ASU No. 2023-09.In December 2023, the FASB issued ASU No. 2023-09, "Income Taxes (Topic 740): Improvements to Income Tax Disclosures". The amendments in this ASU require improved annual income tax disclosures surrounding rate reconciliation, income taxes paid, and other disclosures. This update will be effective for financial statements issued for fiscal years beginning after December 15, 2024, and interim periods within fiscal years beginning after December 15, 2025. Early adoption is permitted. The adoption of this guidance is not expected to have a material impact on the Company's consolidated financial statements.
ASU No. 2024-03. In November 2024, the FASB issued ASU No. 2024-03, "Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40)", which improves financial reporting by requiring public entities to provide disaggregated disclosures, in the notes to the financial statements, of certain categories of expenses that are included in expense line items on the face of the income statement. ASU 2024-03 is effective for the Company for fiscal years beginning after December 15, 2026 and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted. The adoption of this guidance is not expected to have a material impact on the Company's consolidated financial statements.
Northfield Bancorp Inc. published this content on November 07, 2025, and is solely responsible for the information contained herein. Distributed via Edgar on November 07, 2025 at 19:06 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]