NFBK 10-Q Quarterly Report Sept. 30, 2024

NORTHFIELD BANCORP, INC.

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nfbk-20240930

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2024

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For transition period from __________ to __________

Commission File Number: 001-35791

Northfield Bancorp, Inc.

(Exact name of registrant as specified in its charter)


Delaware						80-0882592
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

581 Main Street,

Woodbridge,

New Jersey

07095

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: ( 732 ) 499-7200

Not Applicable

(Former name, former address, and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol

Name of exchange on which registered

Common stock, par value $0.01 per share

NFBK

The NASDAQ Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐


Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act:

Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of October 31, 2024, the registrant had 42,904,081 shares of Common Stock, par value $0.01 per share, issued and outstanding.

NORTHFIELD BANCORP, INC.

Form 10-Q Quarterly Report

Table of Contents


		Page
PART I - FINANCIAL INFORMATION
Item 1.	Financial Statements	4





Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	43
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	61
Item 4.	Controls and Procedures	63

PART II - OTHER INFORMATION
Item 1.	Legal Proceedings	64
Item 1A.	Risk Factors	64
Item 2.	Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities	64
Item 3.	Defaults Upon Senior Securities	65
Item 4.	Mine Safety Disclosures	65
Item 5.	Other Information	65
Item 6.	Exhibits	65
	SIGNATURES	66

Table of Contents

PART I

ITEM 1. FINANCIAL STATEMENTS

NORTHFIELD BANCORP, INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited) (In thousands, except share amounts)


	September 30, 2024		December 31, 2023
ASSETS:
Cash and due from banks	$	14,193	$	13,889
Interest-bearing deposits in other financial institutions	218,733		215,617
Total cash and cash equivalents	232,926		229,506
Trading securities	13,759		12,549
Debt securities available-for-sale, at estimated fair value (with no allowance for credit losses at September 30, 2024 and December 31, 2023)	1,063,486		795,464
Debt securities held-to-maturity, at amortized cost	9,681		9,866
(estimated fair value of $ 9,519 at September 30, 2024, and $ 9,586 at December 31, 2023, with no allowance for credit losses at September 30, 2024 and December 31, 2023)
Equity securities	10,699		10,629
Loans held-for-sale	4,897		—
Loans held-for-investment	4,059,106		4,203,654
Less: allowance for credit losses	( 35,197 )		( 37,535 )
Net loans held-for-investment	4,023,909		4,166,119
Accrued interest receivable	19,299		18,491
Bank-owned life insurance	174,482		171,543
Federal Home Loan Bank ( “ FHLB ” ) of New York stock, at cost	37,269		39,667
Operating lease right-of-use assets	28,943		30,202
Premises and equipment, net	22,973		24,771
Goodwill	41,012		41,012

Other assets	47,516		48,577
Total assets	$	5,730,851	$	5,598,396

LIABILITIES AND STOCKHOLDERS’ EQUITY:
LIABILITIES:
Deposits	$	3,875,569	$	3,878,435
Securities sold under agreements to repurchase	—		25,000
FHLB advances and other borrowings	990,871		834,272
Subordinated debentures, net of issuance costs	61,386		61,219
Operating lease liabilities	33,529		35,205
Advance payments by borrowers for taxes and insurance	22,492		25,102
Accrued expenses and other liabilities	47,440		39,718
Total liabilities	5,031,287		4,898,951

STOCKHOLDERS’ EQUITY:
Preferred stock, $ 0.01 par value: 25,000,000 shares authorized, none issued or outstanding	—		—
Common stock, $ 0.01 par value: 150,000,000 shares authorized, 64,770,875 shares issued at
September 30, 2024 and December 31, 2023, 42,904,342 and 44,524,929 outstanding at September 30, 2024 and December 31, 2023, respectively	648		648
Additional paid-in-capital	590,164		590,973
Unallocated common stock held by employee stock ownership plan	( 13,692 )		( 14,340 )
Retained earnings	435,459		433,227
Accumulated other comprehensive loss	( 18,316 )		( 32,442 )
Treasury stock at cost: 21,866,533 and 20,245,946 shares at September 30, 2024 and December 31, 2023, respectively	( 294,699 )		( 278,621 )
Total stockholders’ equity	699,564		699,445
Total liabilities and stockholders’ equity	$	5,730,851	$	5,598,396

See accompanying notes to unaudited consolidated financial statements.

Table of Contents

NORTHFIELD BANCORP, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited) (In thousands, except per share data)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Interest income:
Loans	$	46,016	$	46,213	$	138,030	$	135,220
Mortgage-backed securities	8,493		3,664		20,246		11,170
Other securities	2,684		1,095		10,031		3,593
FHLB of New York dividends	914		933		2,819		2,125
Deposits in other financial institutions	1,211		831		7,060		2,225
Total interest income	59,318		52,736		178,186		154,333
Interest expense:
Deposits	20,304		13,614		60,241		31,918
Borrowings	9,949		8,593		30,653		24,182
Subordinated debt	836		837		2,492		2,484
Total interest expense	31,089		23,044		93,386		58,584
Net interest income	28,229		29,692		84,800		95,749
Provision for credit losses	2,542		188		2,339		1,082
Net interest income after provision for credit losses	25,687		29,504		82,461		94,667
Non-interest income:
Fees and service charges for customer services	1,611		1,317		4,796		4,006
Income on bank-owned life insurance	999		920		2,939		2,679
Losses on available-for-sale debt securities, net	( 7 )		—		( 6 )		( 17 )
Gains (losses) on trading securities, net	710		( 295 )		1,597		723
Gain on sale of loans	—		99		51		134
Other	265		80		441		744
Total non-interest income	3,578		2,121		9,818		8,269
Non-interest expense:
Compensation and employee benefits	11,424		10,920		37,577		34,310
Occupancy	3,030		3,416		9,805		10,032
Furniture and equipment	450		479		1,411		1,393
Data processing	1,780		1,994		6,104		6,308
Professional fees	943		883		2,433		2,622
Advertising	282		414		1,282		1,834
Federal Deposit Insurance Corporation insurance	626		591		1,863		1,763
Credit loss expense (benefit) for off-balance sheet exposures	151		160		337		( 390 )
Other	1,692		1,710		4,891		4,598
Total non-interest expense	20,378		20,567		65,703		62,470
Income before income tax expense	8,887		11,058		26,576		40,466
Income tax expense	2,364		2,877		7,882		11,019
Net income	$	6,523	$	8,181	$	18,694	$	29,447
Net income per common share:
Basic	$	0.16	$	0.19	$	0.45	$	0.67
Diluted	$	0.16	$	0.19	$	0.45	$	0.67


See accompanying notes to unaudited consolidated financial statements.

Table of Contents


NORTHFIELD BANCORP, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - (Continued) (Unaudited) (In thousands)

	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Net income	$	6,523	$	8,181	$	18,694	$	29,447
Other comprehensive income (loss):
Unrealized gains (losses) on debt securities available-for-sale:
Net unrealized holding gains (losses)	15,352		( 4,039 )		19,527		467
Less: reclassification adjustment for net losses included in net income	7		—		6		17
Net unrealized gains (losses)	15,359		( 4,039 )		19,533		484
Post-retirement benefits adjustment	—		—		58		—

Other comprehensive income (loss) before tax	15,359		( 4,039 )		19,591		484
Income tax (expense) benefit related to net unrealized holding gains (losses) on debt securities available-for-sale	( 4,272 )		1,130		( 5,447 )		( 131 )
Income tax benefit related to reclassification adjustment for losses included in net income	( 2 )		—		( 2 )		( 5 )
Income tax benefit related to post retirement benefit adjustment	—		—		( 16 )		—

Other comprehensive income (loss), net of tax	11,085		( 2,909 )		14,126		348
Comprehensive income	$	17,608	$	5,272	$	32,820	$	29,795

See accompanying notes to unaudited consolidated financial statements.

Table of Contents

NORTHFIELD BANCORP, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

Three Months Ended September 30, 2024 and 2023

(Unaudited) (In thousands, except share data)



	Common Stock
	Shares Outstanding	Par Value		Additional Paid-in Capital		Unallocated Common Stock Held by the Employee Stock Ownership Plan		Retained Earnings		Accumulated Other Comprehensive Income (loss) Net of tax		Treasury Stock		Total Stockholders' Equity
Balance at June 30, 2023	45,243,673	$	648	$	589,335	$	( 15,192 )	$	427,921	$	( 45,074 )	$	( 270,997 )	$	686,641
Net income								8,181						8,181
Other comprehensive loss, net of tax										( 2,909 )				( 2,909 )
ESOP shares allocated or committed to be released				75		234								309
Stock compensation expense				580										580
Restricted stock forfeitures	( 1,967 )			28								( 28 )		—

Cash dividends declared and paid ($ 0.13 per common share)								( 5,567 )						( 5,567 )
Repurchase of treasury stock (average cost of $ 11.06 per share)	( 285,588 )											( 3,160 )		( 3,160 )

Balance at September 30, 2023	44,956,118	$	648	$	590,018	$	( 14,958 )	$	430,535	$	( 47,983 )	$	( 274,185 )	$	684,075

Balance at June 30, 2024	43,466,961	$	648	$	589,349	$	( 13,909 )	$	434,310	$	( 29,401 )	$	( 287,973 )	$	693,024
Net income								6,523						6,523
Other comprehensive income, net of tax										11,085				11,085
ESOP shares allocated or committed to be released				80		217								297
Stock compensation expense				717										717

Restricted stock forfeitures	( 1,198 )			18								( 18 )		—

Cash dividends declared and paid ($ 0.13 per common share)								( 5,374 )						( 5,374 )
Purchase of employee restricted stock to fund statutory tax withholding	( 738 )											( 8 )		( 8 )
Repurchase of treasury stock, including excise tax (average cost of $ 11.95 per share)	( 560,683 )											( 6,700 )		( 6,700 )
Balance at September 30, 2024	42,904,342	$	648	$	590,164	$	( 13,692 )	$	435,459	$	( 18,316 )	$	( 294,699 )	$	699,564

See accompanying notes to unaudited consolidated financial statements.

Table of Contents

NORTHFIELD BANCORP, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

Nine Months Ended September 30, 2024 and 2023

(Unaudited) (In thousands, except share data)



	Common Stock
	Shares Outstanding	Par Value		Additional Paid-in Capital		Unallocated Common Stock Held by the Employee Stock Ownership Plan		Retained Earnings		Accumulated Other Comprehensive Income (loss) Net of tax		Treasury Stock		Total Stockholders' Equity
Balance at December 31, 2022	47,442,488	$	648	$	590,249	$	( 15,650 )	$	418,353	$	( 48,331 )	$	( 243,879 )	$	701,390
Net income								29,447						29,447
Other comprehensive income, net of tax										348				348
ESOP shares allocated or committed to be released				307		692								999
Stock compensation expense				1,803										1,803
Restricted stock issuance	173,060			( 2,670 )								2,670		—
Restricted stock forfeitures	( 23,219 )			336								( 336 )		—
Exercise of stock options, net	7,600			( 7 )								107		100
Cash dividends declared and paid ($ 0.39 per common share)								( 17,265 )						( 17,265 )
Repurchase of treasury stock (average cost of $ 12.27 per share)	( 2,643,811 )											( 32,747 )		( 32,747 )

Balance at September 30, 2023	44,956,118	$	648	$	590,018	$	( 14,958 )	$	430,535	$	( 47,983 )	$	( 274,185 )	$	684,075

Balance at December 31, 2023	44,524,929	$	648	$	590,973	$	( 14,340 )	$	433,227	$	( 32,442 )	$	( 278,621 )	$	699,445
Net income								18,694						18,694
Other comprehensive income, net of tax										14,126				14,126
ESOP shares allocated or committed to be released				157		648								805
Stock compensation expense				1,632										1,632
Restricted stock issuance	213,702			( 2,772 )								2,772		—
Restricted stock forfeitures	( 12,714 )			174								( 174 )		—

Cash dividends declared and paid ($ 0.39 per common share)								( 16,462 )						( 16,462 )
Purchase of employee restricted stock to fund statutory tax withholding	( 19,503 )											( 231 )		( 231 )
Repurchase of treasury stock, including excise tax (average cost of $ 10.24 per share)	( 1,802,072 )											( 18,445 )		( 18,445 )

Balance at September 30, 2024	42,904,342	$	648	$	590,164	$	( 13,692 )	$	435,459	$	( 18,316 )	$	( 294,699 )	$	699,564

See accompanying notes to unaudited consolidated financial statements.

Table of Contents

NORTHFIELD BANCORP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited) (In thousands)


	Nine Months Ended September 30,
	2024		2023
Net income	$	18,694	$	29,447
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for credit losses	2,339		1,082
ESOP and stock compensation expense	2,437		2,802

Depreciation	2,710		2,765
Amortization of premiums and deferred loan costs, net of accretion of discounts and deferred loan fees	754		5,483
Amortization of debt issuance costs	167		167
Amortization of intangible assets	64		93
Amortization of operating lease right-of-use assets	3,486		3,526
Income on bank-owned life insurance	( 2,939 )		( 2,679 )
Net gain on sale of loans	( 51 )		( 134 )
Proceeds from sale of loans held-for-sale	673		1,583
Origination of loans held-for-sale	( 622 )		( 1,449 )
Losses on available-for-sale debt securities, net	6		17
Gains on trading securities, net	( 1,597 )		( 723 )
Loss on sale of other real estate owned, net	—		7
Net sales (purchases) of trading securities	387		( 30 )
(Increase) decrease in accrued interest receivable	( 808 )		71
Increase in other assets	( 8,313 )		( 12,157 )
Increase in accrued expenses and other liabilities	7,722		2,813
Net cash provided by operating activities	25,109		32,684
Cash flows from investing activities:
Net decrease in loans receivable	135,317		10,190
Purchases of loans	( 1,529 )		( 3,781 )

Purchases of FHLB of New York stock	( 6,381 )		( 44,998 )
Redemptions of FHLB of New York stock	8,779		34,215
Purchases of debt securities available-for-sale	( 928,815 )		( 765 )
Purchases of equity securities	( 70 )		( 185 )
Principal payments and maturities on debt securities available-for-sale	680,751		205,310
Principal payments and maturities on debt securities held-to-maturity	186		630




Proceeds from sale of other real estate owned	—		63
Purchases and improvements of premises and equipment	( 912 )		( 2,075 )

Net cash (used in) provided by investing activities	( 112,674 )		198,604
Cash flows from financing activities:
Net decrease in deposits	( 2,866 )		( 481,706 )
Dividends paid	( 16,462 )		( 17,265 )



Exercise of stock options	—		100
Purchase of treasury stock	( 18,676 )		( 32,747 )

Decrease in advance payments by borrowers for taxes and insurance	( 2,610 )		( 27 )

Proceeds from borrowings and securities sold under agreements to repurchase	455,684		743,553
Repayments related to securities sold under agreements to repurchase and other borrowings	( 324,085 )		( 408,439 )
Net cash provided by (used in) financing activities	90,985		( 196,531 )
Net increase in cash and cash equivalents	3,420		34,757
Cash and cash equivalents at beginning of period	229,506		45,799
Cash and cash equivalents at end of period	$	232,926	$	80,556

See accompanying notes to unaudited consolidated financial statements

Table of Contents

NORTHFIELD BANCORP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS - (Continued)

(Unaudited) (In thousands)


	Nine Months Ended September 30,
	2024		2023
Supplemental cash flow information:
Cash paid during the period for:
Interest	$	87,322	$	56,109
Income taxes	6,178		13,336
Non-cash transactions:
Loan charge-offs, net	4,667		5,219
Transfer of loans held-for-investment to other real estate owned	—		70
Right-of-use assets obtained in exchange for new lease liabilities	2,227		645
Transfer of loans held-for-investment to loans held-for-sale at fair value	4,897		950

See accompanying notes to unaudited consolidated financial statements.

NORTHFIELD BANCORP, INC.

Notes to Unaudited Consolidated Financial Statements

Note 1 – Consolidated Financial Statements

Basis of Presentation

The consolidated financial statements are comprised of the accounts of Northfield Bancorp, Inc. and its wholly owned subsidiaries, Northfield Investments, Inc. and Northfield Bank (the “Bank”), and the Bank’s wholly-owned subsidiaries, NSB Services Corp. and NSB Realty Trust (collectively the “Company”). All significant intercompany accounts and transactions have been eliminated in consolidation.

In the opinion of management, all adjustments (consisting solely of normal and recurring adjustments) necessary for the fair presentation of the consolidated balance sheets and the consolidated statements of comprehensive income for the unaudited periods presented have been included. The results of operations and other data presented for the three and nine months ended September 30, 2024 are not necessarily indicative of the results of operations that may be expected for the year ending December 31, 2024 or for any other period. Whenever necessary, certain prior year amounts are reclassified to conform to the current year presentation.

In preparing the unaudited consolidated financial statements in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”), management has made estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the consolidated balance sheets and for the periods indicated in the consolidated statements of comprehensive income. Material estimates that are particularly susceptible to change are: the allowance for credit losses and the valuation allowance against deferred tax assets. Estimates and assumptions are reviewed periodically and the effects of revisions are reflected in the consolidated financial statements in the period they are deemed necessary. While management uses its best judgment, actual amounts or results could differ significantly from those estimates.

Certain information and note disclosures usually included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for the preparation of interim financial statements. The consolidated financial statements presented should be read in conjunction with the audited consolidated financial statements and notes to consolidated financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2023, as filed with the SEC.

Table of Contents

NORTHFIELD BANCORP, INC.

Notes to Unaudited Consolidated Financial Statements - (Continued)

Note 2 – Debt Securities Available-for-Sale

The following is a comparative summary of mortgage-backed securities and other debt securities available-for-sale at September 30, 2024 and December 31, 2023 (in thousands):


	September 30, 2024
			Gross		Gross		Estimated
	Amortized		unrealized		unrealized		fair
	cost		gains		losses		value

U.S. Government agency securities	75,734		—		( 833 )		74,901
Mortgage-backed securities:
Pass-through certificates:
Government sponsored enterprises ("GSEs")	295,840		3		( 18,194 )		277,649
Real estate mortgage investment conduits ("REMICs"):
GSE	597,142		1,694		( 7,075 )		591,761

Total mortgage-backed securities	892,982		1,697		( 25,269 )		869,410
Other debt securities:
Municipal bonds	684		—		—		684

Corporate bonds	119,574		81		( 1,164 )		118,491

	120,258		81		( 1,164 )		119,175
Total debt securities available-for-sale	$	1,088,974	$	1,778	$	( 27,266 )	$	1,063,486


	December 31, 2023
			Gross		Gross		Estimated
	Amortized		unrealized		unrealized		fair
	cost		gains		losses		value
U.S. Treasuries	$	44,364	$	15	$	—	$	44,379
U.S. Government agency securities	75,898		—		( 1,990 )		73,908
Mortgage-backed securities:
Pass-through certificates:
GSE	365,823		2		( 28,285 )		337,540
REMICs:
GSE	224,931		—		( 11,831 )		213,100

Total mortgage-backed securities	590,754		2		( 40,116 )		550,640
Other debt securities:
Municipal bonds	765		—		( 2 )		763
Corporate bonds	128,704		43		( 2,973 )		125,774

	129,469		43		( 2,975 )		126,537
Total debt securities available-for-sale	$	840,485	$	60	$	( 45,081 )	$	795,464

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NORTHFIELD BANCORP, INC.

Notes to Unaudited Consolidated Financial Statements - (Continued)

The following is a summary of the expected maturity distribution of debt securities available-for-sale, other than mortgage-backed securities, at September 30, 2024 (in thousands):


Available-for-sale	Amortized cost		Estimated fair value
Due in one year or less	$	94,396	$	93,588
Due after one year through five years	93,596		92,919
Due after five years through ten years	8,000		7,569

	$	195,992	$	194,076

Contractual maturities for mortgage-backed securities are not included above, as expected maturities on mortgage-backed securities may differ from contractual maturities as borrowers may have the right to call or prepay obligations with or without penalties.

Certain securities available-for-sale are pledged or encumbered to secure borrowings under pledge agreements and repurchase agreements and for other purposes required by law. At September 30, 2024 and December 31, 2023, the fair value of debt securities available-for-sale that were pledged to secure borrowings and deposits was $ 476.5 million and $ 272.9 million, respectively.

For the three months ended September 30, 2024, the Company had no proceeds on sales of debt securities available-for-sale, with no gross realized gains and gross realized losses of $ 7,000 related to calls of securities. For the nine months ended September 30, 2024, the Company had no proceeds on sales of debt securities available-for-sale, with gross realized losses of $ 7,000 and gross realized gains of $ 1,000 related to calls of securities. For the three months ended September 30, 2023, the Company had no proceeds on sales of debt securities available-for-sale, and no gross realized gains or losses. For the nine months ended September 30, 2023, the Company had no proceeds on sales of debt securities available-for-sale, with gross realized gains of $ 22,000 and gross realized losses of $ 39,000 related to calls of securities. The Company recognized net gains of $ 710,000 and $ 1.6 million on its trading securities portfolio during the three and nine months ended September 30, 2024, respectively. During the three and nine months ended September 30, 2023, the Company recognized net losses of $ 295,000 and net gains of $ 723,000 , respectively, on its trading securities portfolio.

Gross unrealized losses on mortgage-backed securities and other debt securities available-for-sale, and the estimated fair value of the related securities, aggregated by security category and length of time that individual securities have been in a continuous unrealized loss position, at September 30, 2024 and December 31, 2023, were as follows (in thousands):


	September 30, 2024
	Less than 12 months				12 months or more				Total
	Unrealized		Estimated		Unrealized		Estimated		Unrealized		Estimated
	losses		fair value		losses		fair value		losses		fair value

U.S. Government agency securities	$	—	$	—	$	( 833 )	$	74,901	$	( 833 )	$	74,901
Mortgage-backed securities:
Pass-through certificates:
GSE	—		—		( 18,194 )		277,443		( 18,194 )		277,443
REMICs:
GSE	—		—		( 7,075 )		178,488		( 7,075 )		178,488

Other debt securities:

Corporate bonds	—		3,308		( 1,164 )		32,603		( 1,164 )		35,911


Total	$	—	$	3,308	$	( 27,266 )	$	563,435	$	( 27,266 )	$	566,743

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NORTHFIELD BANCORP, INC.

Notes to Unaudited Consolidated Financial Statements - (Continued)


	December 31, 2023
	Less than 12 months				12 months or more				Total
	Unrealized		Estimated		Unrealized		Estimated		Unrealized		Estimated
	losses		fair value		losses		fair value		losses		fair value
U.S. Government agency securities	$	—	$	—	$	( 1,990 )	$	73,908	$	( 1,990 )	$	73,908
Mortgage-backed securities:
Pass-through certificates:
GSE	—		17		( 28,285 )		337,438		( 28,285 )		337,455
REMICs:
GSE	—		—		( 11,831 )		213,100		( 11,831 )		213,100

Other debt securities:
Municipal bonds	( 2 )		763		—		—		( 2 )		763
Corporate bonds	( 7 )		9,966		( 2,966 )		96,978		( 2,973 )		106,944
Total	$	( 9 )	$	10,746	$	( 45,072 )	$	721,424	$	( 45,081 )	$	732,170

The Company held 110 pass-through mortgage-backed securities issued or guaranteed by GSEs, 71 REMIC mortgage-backed securities issued or guaranteed by GSEs, five corporate bonds, and five U.S. Government agency securities that were in a continuous unrealized loss position of twelve months or greater at September 30, 2024. There was one corporate bond, no pass-through mortgage-backed securities issued or guaranteed by GSEs, and no REMIC mortgage-backed securities issued or guaranteed by GSEs that were in an unrealized loss position of less than twelve months at September 30, 2024. Substantially all securities referred to above were rated investment grade at September 30, 2024.

Available-for-sale debt securities in unrealized loss positions are evaluated for impairment related to credit losses on a quarterly basis. In performing an assessment of whether any decline in fair value is due to a credit loss, the Company considers the extent to which the fair value is less than the amortized cost, changes in credit ratings, any adverse economic conditions, as well as all relevant information at the individual security level such as credit deterioration of the issuer or collateral underlying the security. In assessing the impairment, the Company compares the present value of cash flows expected to be collected with the amortized cost basis of the security. If it is determined that the decline in fair value was due to credit losses, an allowance for credit losses is recorded, limited to the amount the fair value is less than amortized cost basis. The Company did no t record any allowance for credit losses on its available-for-sale debt securities as of September 30, 2024 or December 31, 2023.

The non-credit related decrease in the fair value, such as a decline due to changes in market interest rates, is recorded in other comprehensive income, net of tax. The Company also assesses its intent to sell the securities (as well as the likelihood of a near-term recovery). If the Company intends to sell an available-for-sale debt security or it is more likely than not that it will be required to sell the security before recovery of its amortized cost basis, the debt security is written down to its fair value and the write down is charged to the debt security’s fair value at the reporting date with any incremental impairment reported in earnings.

The Company has made the accounting policy election to exclude accrued interest receivable on available-for-sale securities from the estimate of credit losses. Accrued interest receivable associated with debt securities available-for-sale totaled $ 3.4 million and $ 2.4 million at September 30, 2024 and December 31, 2023, respectively, and was reported in accrued interest receivable on the consolidated balance sheets . The Company elected not to measure an allowance for credit losses on accrued interest receivable as an allowance on possible uncollectible accrued interest is not warranted.

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NORTHFIELD BANCORP, INC.

Notes to Unaudited Consolidated Financial Statements - (Continued)

Note 3 – Debt Securities Held-to-Maturity

The following is a summary of mortgage-backed securities held-to-maturity at September 30, 2024 and December 31, 2023 (in thousands):


	September 30, 2024
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Mortgage-backed securities:
Pass-through certificates:
GSE	$	9,681	$	143	$	( 305 )	$	9,519
Total securities held-to-maturity	$	9,681	$	143	$	( 305 )	$	9,519


	December 31, 2023
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Mortgage-backed securities:
Pass-through certificates:
GSE	$	9,866	$	107	$	( 387 )	$	9,586
Total securities held-to-maturity	$	9,866	$	107	$	( 387 )	$	9,586

Contractual maturities for mortgage-backed securities are not presented, as expected maturities on mortgage-backed securities may differ from contractual maturities as borrowers may have the right to call or prepay obligations with or without penalties. There were no sales of held-to-maturity securities for the nine months ended September 30, 2024 or September 30, 2023.

At both September 30, 2024 and December 31, 2023, debt securities held-to-maturity with a carrying value of $ 9.5 million and $ 9.7 million, respectively, were pledged to secure borrowings and deposits.

Gross unrealized losses on mortgage-backed securities held-to-maturity, and the estimated fair value of the related securities, aggregated by security category and length of time that individual securities have been in a continuous unrealized loss position at September 30, 2024 and December 31, 2023 were as follows (in thousands):


	September 30, 2024
	Less than 12 months				12 months or more				Total
	Unrealized		Estimated		Unrealized		Estimated		Unrealized		Estimated
	losses		fair value		losses		fair value		losses		fair value
Mortgage-backed securities:
Pass-through certificates:
GSE	$	—	$	—	$	( 305 )	$	6,592	$	( 305 )	$	6,592

Total	$	—	$	—	$	( 305 )	$	6,592	$	( 305 )	$	6,592


	December 31, 2023
	Less than 12 months				12 months or more				Total
	Unrealized		Estimated		Unrealized		Estimated		Unrealized		Estimated
	losses		fair value		losses		fair value		losses		fair value
Mortgage-backed securities:
Pass-through certificates:
GSE	$	—	$	—	$	( 387 )	$	6,661	$	( 387 )	$	6,661

Total	$	—	$	—	$	( 387 )	$	6,661	$	( 387 )	$	6,661

Table of Contents

NORTHFIELD BANCORP, INC.

Notes to Unaudited Consolidated Financial Statements - (Continued)

The Company held nine pass-through mortgage-backed debt securities held-to-maturity issued or guaranteed by GSEs that were in a continuous unrealized loss position of twelve months or greater at September 30, 2024.

The Company's held-to-maturity securities are residential mortgage-backed securities issued by Ginnie Mae, Freddie Mac and Fannie Mae, and it is expected that the securities will not be settled at prices less than the amortized cost bases of the securities as such securities are backed by the full faith and credit of and/or guaranteed by the U.S. Government. Accordingly, no allowance for credit losses has been recorded for these securities.

The Company has made the accounting policy election to exclude accrued interest receivable on held-to-maturity securities from the estimate of credit losses. Accrued interest receivable associated with held-to-maturity securities totaling $ 35,000 and $ 36,000 at September 30, 2024 and December 31, 2023, respectively, was reported in accrued interest receivable on the consolidated balance sheets . The Company elected not to measure an allowance for credit losses on accrued interest receivable as an allowance on possible uncollectible accrued interest is not warranted.

Note 4 – Equity Securities

Equity securities totaled $ 10.7 million and $ 10.6 million at September 30, 2024 and December 31, 2023, respectively. Equity securities consisted of money market mutual funds, recorded at fair value of $ 699,000 and $ 330,000 at September 30, 2024 and December 31, 2023, respectively, and an investment in a private SBA loan fund (the “SBA Loan Fund”) recorded at net asset value of $ 10.0 million and $ 10.3 million at September 30, 2024 and December 31, 2023, respectively. As the SBA Loan Fund operates as a private fund, its shares are not publicly traded and, therefore, has no readily determinable market value. The SBA Loan Fund was recorded at net asset value as a practical expedient for reporting fair value.

Note 5 – Loans

The following table summarizes the Company’s loans held-for-investment (in thousands):


	September 30,		December 31,
	2024		2023
Real estate loans:
Multifamily	$	2,640,944	$	2,750,996
Commercial mortgage	878,173		929,595
One-to-four family residential mortgage	149,682		160,824
Home equity and lines of credit	171,946		163,520
Construction and land	33,024		30,967
Total real estate loans	3,873,769		4,035,902
Commercial and industrial loans	174,413		155,268
Other loans	1,660		2,585
Total commercial and industrial and other loans	176,073		157,853

Loans held-for-investment (excluding purchased credit-deteriorated (“PCD”) loans)	4,049,842		4,193,755
PCD loans	9,264		9,899
Total loans held-for-investment	4,059,106		4,203,654
Allowance for credit losses	( 35,197 )		( 37,535 )
Net loans held-for-investment	$	4,023,909	$	4,166,119

The Company had loans held-for-sale of $ 4.9 million and $ 0 at September 30, 2024 and December 31, 2023, respectively.

Table of Contents

NORTHFIELD BANCORP, INC.

Notes to Unaudited Consolidated Financial Statements - (Continued)

In addition to originating loans, the Company may acquire loans through portfolio purchases or acquisitions of other companies. Purchased loans that have evidence of more than insignificant credit deterioration since origination are deemed PCD loans. For PCD loans, each loan pool is accounted for as a single asset with a single composite interest rate and an aggregate expectation of cash flows. PCD loans totaled $ 9.3 million at September 30, 2024, as compared to $ 9.9 million at December 31, 2023. The majority of the PCD loan balances were acquired as part of a Federal Deposit Insurance Corporation-assisted transaction. At September 30, 2024, PCD loans consisted of approximately 11 % home equity loans, 25 % commercial real estate loans, 55 % commercial and industrial loans, and 9 % in one-to-four family residential loans. At December 31, 2023, PCD loans consisted of approximately 7 % one-to-four family residential loans, 25 % commercial real estate loans, 57 % commercial and industrial loans, and 11 % in home equity loans.

Credit Quality Indicators

The Company monitors the credit quality of its loan portfolio on a regular basis. Credit quality is monitored by reviewing certain credit quality indicators. Management has determined that loan-to-value ( “LTV” ) ratios (at period end) and internally assigned credit risk ratings by loan type are the key credit quality indicators that best measure the credit quality of the Company’s loan receivables. LTV ratios used by management in monitoring credit quality are based on current period loan balances and original appraised values at the time of origination (unless a current appraisal has been obtained as a result of the loan being deemed impaired).

The Company maintains a credit risk rating system as part of the risk assessment of its loan portfolio. The Company’s lending officers are required to assign a credit risk rating to each loan in their portfolio at origination. This risk rating is reviewed periodically and adjusted if necessary. Monthly, management presents monitored assets to the Loan Committee. In addition, the Company engages a third-party independent loan reviewer that performs semi-annual reviews of a sample of loans, validating the credit risk ratings assigned to such loans. The credit risk ratings play an important role in the establishment of the provision for credit losses on loans and the allowance for credit losses for loans held-for-investment. After determining the loss factor for each portfolio segment held-for-investment, the collectively evaluated for impairment balance of the held-for-investment portfolio is multiplied by the collectively evaluated for impairment loss factor for the respective portfolio segment in order to determine the allowance for loans collectively evaluated for impairment.

When assigning a credit risk rating to a loan, management utilizes the Bank’s internal nine-point credit risk rating system.

1. Strong

2. Good

3. Acceptable

4. Adequate

5. Watch

6. Special Mention

7. Substandard

8. Doubtful

9. Loss

Loans rated 1 to 5 are considered pass ratings. An asset is classified substandard if it is inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Substandard assets have well defined weaknesses based on objective evidence, and are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected. Assets classified as doubtful have all of the weaknesses inherent in those classified substandard with the added characteristic that the weaknesses present make collection or liquidation in full highly questionable and improbable based on current circumstances. Assets classified as loss are those considered uncollectible and of such little value that their continuance as assets is not warranted. Assets which do not currently expose the Company to sufficient risk to warrant classification in one of the aforementioned categories, but possess weaknesses, are required to be designated special mention.

Table of Contents

NORTHFIELD BANCORP, INC.

Notes to Unaudited Consolidated Financial Statements - (Continued)

The following table presents the Company’s loans held-for-investment and current period gross charge-offs, excluding PCD loans, by loan class, credit risk ratings and year of origination, at September 30, 2024 (in thousands):


	September 30, 2024
	2024		2023		2022		2021		2020		Prior		Revolving Loans		Total
Real Estate:
Multifamily
Pass	$	—	$	86,528	$	604,112	$	633,977	$	454,824	$	851,003	$	507	$	2,630,951
Special mention	—		—		—		1,204		—		782		—		1,986
Substandard	—		—		—		—		—		8,007		—		8,007
Total multifamily	—		86,528		604,112		635,181		454,824		859,792		507		2,640,944
Current period gross charge-offs	—		—		—		—		—		136		—		136
Commercial mortgage
Pass	32,030		87,572		196,926		150,838		61,719		322,475		1,844		853,404
Special mention	—		—		—		—		2,725		11,271		—		13,996
Substandard	—		—		—		—		—		10,478		295		10,773
Total commercial	32,030		87,572		196,926		150,838		64,444		344,224		2,139		878,173

One-to-four family residential
Pass	2,741		6,637		24,082		11,807		7,025		95,815		923		149,030

Substandard	—		—		—		—		—		652		—		652
Total one-to-four family residential	2,741		6,637		24,082		11,807		7,025		96,467		923		149,682

Home equity and lines of credit
Pass	11,556		20,859		31,717		12,658		6,746		17,898		68,857		170,291
Special mention	—		—		68		—		—		—		—		68
Substandard	—		—		979		422		23		163		—		1,587
Total home equity and lines of credit	11,556		20,859		32,764		13,080		6,769		18,061		68,857		171,946

Construction and land
Pass	1,318		8,798		2,194		625		13,585		5,854		650		33,024


Total construction and land	1,318		8,798		2,194		625		13,585		5,854		650		33,024

Total real estate loans	47,645		210,394		860,078		811,531		546,647		1,324,398		73,076		3,873,769
Commercial and industrial
Pass	6,969		15,615		22,075		14,489		3,477		6,799		87,394		156,818
Special mention	—		822		28		—		—		—		—		850
Substandard	—		622		1,317		13,912		748		146		—		16,745
Total commercial and industrial	6,969		17,059		23,420		28,401		4,225		6,945		87,394		174,413
Current period gross charge-offs	—		—		2,195		2,424		38		185		—		4,842
Other
Pass	—		—		—		—		—		1,611		43		1,654

Substandard	—		—		—		—		—		6		—		6
Total other	—		—		—		—		—		1,617		43		1,660

Total loans held-for-investment	$	54,614	$	227,453	$	883,498	$	839,932	$	550,872	$	1,332,960	$	160,513	$	4,049,842
Total current-period gross charge-offs	$	—	$	—	$	2,195	$	2,424	$	38	$	321	$	—	$	4,978

Table of Contents

NORTHFIELD BANCORP, INC.

Notes to Unaudited Consolidated Financial Statements - (Continued)


	December 31, 2023
	2023		2022		2021		2020		2019		Prior		Revolving Loans		Total
Real Estate:
Multifamily
Pass	$	88,435	$	615,028	$	648,328	$	464,995	$	248,190	$	676,544	$	570	$	2,742,090
Special mention	—		—		—		—		—		328		—		328
Substandard	—		—		—		—		—		8,578		—		8,578
Total multifamily	88,435		615,028		648,328		464,995		248,190		685,450		570		2,750,996
Commercial mortgage
Pass	89,072		211,754		147,656		66,207		86,736		299,615		1,812		902,852
Special mention	—		—		8,528		—		—		4,369		—		12,897
Substandard	—		2,838		—		—		—		10,708		300		13,846
Total commercial	89,072		214,592		156,184		66,207		86,736		314,692		2,112		929,595
One-to-four family residential
Pass	6,747		26,198		12,039		8,321		9,064		96,569		829		159,767
Special mention	—		—		—		—		—		347		—		347
Substandard	—		—		—		—		—		710		—		710
Total one-to-four family residential	6,747		26,198		12,039		8,321		9,064		97,626		829		160,824
Home equity and lines of credit
Pass	23,400		33,022		14,316		7,179		5,353		13,658		65,287		162,215
Special mention	—		—		—		—		—		67		—		67
Substandard	—		627		423		24		89		75		—		1,238
Total home equity and lines of credit	23,400		33,649		14,739		7,203		5,442		13,800		65,287		163,520
Construction and land
Pass	4,877		6,091		630		10,236		1,192		7,291		650		30,967


Total construction and land	4,877		6,091		630		10,236		1,192		7,291		650		30,967
Total real estate loans	212,531		895,558		831,920		556,962		350,624		1,118,859		69,448		4,035,902
Commercial and industrial
Pass	17,197		26,075		17,485		2,727		2,602		7,296		65,603		138,985
Special mention	—		542		361		39		—		56		250		1,248
Substandard	—		847		13,843		132		45		168		—		15,035
Total commercial and industrial	17,197		27,464		31,689		2,898		2,647		7,520		65,853		155,268
Current period gross charge-offs	1,488		2,818		1,439		437		62		328		—		6,572
Other
Pass	2,463		—		—		53		—		23		39		2,578

Substandard	—		—		—		—		—		7		—		7
Total other	2,463		—		—		53		—		30		39		2,585
Total loans held-for-investment	$	232,191	$	923,022	$	863,609	$	559,913	$	353,271	$	1,126,409	$	135,340	$	4,193,755
Total current-period gross charge-offs	$	1,488	$	2,818	$	1,439	$	437	$	62	$	328	$	—	$	6,572

Table of Contents

NORTHFIELD BANCORP, INC.

Notes to Unaudited Consolidated Financial Statements - (Continued)

Past Due and Non-Accrual Loans

Included in loans receivable held-for-investment are loans for which the accrual of interest income has been discontinued due to deterioration in the financial condition of the borrowers (excluding PCD loans). The recorded investment of these non-accrual loans was $ 22.9 million and $ 10.1 million at September 30, 2024 and December 31, 2023, respectively. Generally, originated loans are placed on non-accrual status when they become 90 days or more delinquent, or sooner if considered appropriate by management, and remain on non-accrual status until they are brought current, have six consecutive months of performance under the revised loan terms, and factors indicating reasonable doubt about the timely collection of payments no longer exist. Therefore, loans may be current in accordance with their loan terms, or may be less than 90 days delinquent and still be on non-accruing status.

When an individual loan no longer demonstrates the similar credit risk characteristics as other loans within its current segment, the Company evaluates each for expected credit losses on an individual basis. All non-accrual loans $ 500,000 and above and all loans designated as Troubled Debt Restructurings (“TDRs”) prior to the adoption of Accounting Standards Update (“ASU”) No. 2022-02, “Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures” (“ASU 2022-02”) on January 1, 2023, are individually evaluated. See “Loan Modifications Made to Borrowers Experiencing Financial Difficulty” section below for more information. The non-accrual amounts included in loans individually evaluated for impairment were $ 17.3 million and $ 6.0 million at September 30, 2024, and December 31, 2023, respectively. Loans on non-accrual status with principal balances less than $ 500,000 , and therefore not meeting the Company's definition of an impaired loan, amounted to $ 5.6 million and $ 4.1 million at September 30, 2024 and December 31, 2023, respectively. Loans past due 90 days or more and still accruing interest were $ 2.6 million and $ 1.3 million at September 30, 2024 and December 31, 2023, respectively, and consisted of loans that are well-secured and in the process of collection.

Table of Contents

NORTHFIELD BANCORP, INC.

Notes to Unaudited Consolidated Financial Statements - (Continued)

The following tables set forth the detail, and delinquency status, of non-performing loans (non-accrual loans and loans past due 90 days or more and still accruing), net of deferred fees and costs, at September 30, 2024, and December 31, 2023, excluding PCD loans and non-accrual loans held-for sale (in thousands):


	September 30, 2024
	Total Non-Performing Loans
	Non-Accruing Loans
	Current		30-89 Days Past Due		90 Days or More Past Due		Total		90 Days or More Past Due and Accruing		Total Non-Performing Loans
Loans held-for-investment:
Real estate loans:
Multifamily


Substandard	$	1,738	$	—	$	913	$	2,651	$	—	$	2,651
Total multifamily	1,738		—		913		2,651		—		2,651
Commercial mortgage


Substandard	740		—		3,686		4,426		1,161		5,587
Total commercial	740		—		3,686		4,426		1,161		5,587
One-to-four family residential
Pass	—		—		—		—		169		169

Substandard	66		—		—		66		135		201
Total one-to-four family residential	66		—		—		66		304		370





Home equity and lines of credit
Pass	—		—		—		—		30		30

Substandard	20		—		1,103		1,123		313		1,436
Total home equity and lines of credit	20		—		1,103		1,123		343		1,466
Total real estate	2,564		—		5,702		8,266		1,808		10,074
Commercial and industrial loans
Pass	—		—		—		—		750		750

Substandard	443		260		13,914		14,617		85		14,702
Total commercial and industrial loans	443		260		13,914		14,617		835		15,452
Other loans
Substandard	6		—		—		6		—		6
Total other	6		—		—		6		—		6
Total non-performing loans	$	3,013	$	260	$	19,616	$	22,889	$	2,643	$	25,532

At September 30, 2024, the Company had non-accrual loans held-for-sale of $ 4.9 million.

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NORTHFIELD BANCORP, INC.

Notes to Unaudited Consolidated Financial Statements - (Continued)


	December 31, 2023
	Total Non-Performing Loans
	Non-Accruing Loans
	Current		30-89 Days Past Due		90 Days or More Past Due		Total		90 Days or More Past Due and Accruing		Total Non-Performing Loans
Loans held-for-investment:
Real estate loans:
Multifamily


Substandard	$	1,906	$	—	$	803	$	2,709	$	201	$	2,910
Total multifamily	1,906		—		803		2,709		201		2,910
Commercial mortgage


Substandard	3,245		65		3,181		6,491		—		6,491
Total commercial	3,245		65		3,181		6,491		—		6,491
One-to-four family residential
Pass	—		—		—		—		267		267

Substandard	77		—		27		104		139		243
Total one-to-four family residential	77		—		27		104		406		510
Home equity and lines of credit
Pass	—		—		—		—		61		61

Substandard	21		—		478		499		650		1,149
Total home equity and lines of credit	21		—		478		499		711		1,210





Total real estate	5,249		65		4,489		9,803		1,318		11,121
Commercial and industrial loans


Substandard	73		40		192		305		—		305
Total commercial and industrial loans	73		40		192		305		—		305
Other loans
Substandard	7		—		—		7		—		7
Total other	7		—		—		7		—		7
Total non-performing loans	$	5,329	$	105	$	4,681	$	10,115	$	1,318	$	11,433

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NORTHFIELD BANCORP, INC.

Notes to Unaudited Consolidated Financial Statements - (Continued)

The following tables set forth the detail and delinquency status of loans held-for-investment, excluding PCD loans, net of deferred fees and costs, at September 30, 2024, and December 31, 2023 (in thousands):


	September 30, 2024
			Past Due Loans
	30-89 Days Past Due		90 Days or More Past Due		90 Days or More Past Due and Accruing		Total Past Due		Current		Total Loans Receivable, net
Loans held-for-investment:
Real estate loans:
Multifamily
Pass	$	2,260	$	—	$	—	$	2,260	$	2,628,691	$	2,630,951
Special mention	—		—		—		—		1,986		1,986
Substandard	—		913		—		913		7,094		8,007
Total multifamily	2,260		913		—		3,173		2,637,771		2,640,944
Commercial mortgage
Pass	17		—		—		17		853,387		853,404
Special mention	3,618		—		—		3,618		10,378		13,996
Substandard	2,054		3,686		1,161		6,901		3,872		10,773
Total commercial	5,689		3,686		1,161		10,536		867,637		878,173
One-to-four family residential
Pass	2,286		—		169		2,455		146,575		149,030

Substandard	—		—		135		135		517		652
Total one-to-four family residential	2,286		—		304		2,590		147,092		149,682
Home equity and lines of credit
Pass	1,218		—		30		1,248		169,043		170,291
Special mention	—		—		—		—		68		68
Substandard	151		1,103		313		1,567		20		1,587
Total home equity and lines of credit	1,369		1,103		343		2,815		169,131		171,946
Construction and land
Pass	—		—		—		—		33,024		33,024


Total construction and land	—		—		—		—		33,024		33,024
Total real estate	11,604		5,702		1,808		19,114		3,854,655		3,873,769
Commercial and industrial
Pass	3,810		—		750		4,560		152,258		156,818
Special mention	—		—		—		—		850		850
Substandard	900		13,914		85		14,899		1,846		16,745
Total commercial and industrial	4,710		13,914		835		19,459		154,954		174,413
Other loans
Pass	4		—		—		4		1,650		1,654

Substandard	—		—		—		—		6		6
Total other loans	4		—		—		4		1,656		1,660
Total loans held-for-investment	$	16,318	$	19,616	$	2,643	$	38,577	$	4,011,265	$	4,049,842

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NORTHFIELD BANCORP, INC.

Notes to Unaudited Consolidated Financial Statements - (Continued)


	December 31, 2023
	Past Due Loans
	30-89 Days Past Due		90 Days or More Past Due		90 Days or More Past Due and Accruing		Total Past Due		Current		Total Loans Receivable, net
Loans held-for-investment:
Real estate loans:
Multifamily
Pass	$	740	$	—	$	—	$	740	$	2,741,350	$	2,742,090
Special mention	—		—		—		—		328		328
Substandard	—		803		201		1,004		7,574		8,578
Total multifamily	740		803		201		1,744		2,749,252		2,750,996
Commercial mortgage
Pass	954		—		—		954		901,898		902,852
Special mention	—		—		—		—		12,897		12,897
Substandard	121		3,181		—		3,302		10,544		13,846
Total commercial	1,075		3,181		—		4,256		925,339		929,595
One-to-four family residential
Pass	3,275		—		267		3,542		156,225		159,767
Special mention	64		—		—		64		283		347
Substandard	—		27		139		166		544		710
Total one-to-four family residential	3,339		27		406		3,772		157,052		160,824
Home equity and lines of credit
Pass	691		—		61		752		161,463		162,215
Special mention	37		—		—		37		30		67
Substandard	89		478		650		1,217		21		1,238
Total home equity and lines of credit	817		478		711		2,006		161,514		163,520
Construction and land
Pass	—		—		—		—		30,967		30,967


Total construction and land	—		—		—		—		30,967		30,967
Total real estate	5,971		4,489		1,318		11,778		4,024,124		4,035,902
Commercial and industrial
Pass	1,726		—		—		1,726		137,259		138,985
Special mention	385		—		—		385		863		1,248
Substandard	696		192		—		888		14,147		15,035
Total commercial and industrial	2,807		192		—		2,999		152,269		155,268
Other loans
Pass	10		—		—		10		2,568		2,578

Substandard	—		—		—		—		7		7
Total other loans	10		—		—		10		2,575		2,585
Total loans held-for-investment	$	8,788	$	4,681	$	1,318	$	14,787	$	4,178,968	$	4,193,755

Table of Contents

NORTHFIELD BANCORP, INC.

Notes to Unaudited Consolidated Financial Statements - (Continued)

The following tables summarize information on non-accrual loans, excluding PCD loans, as of September 30, 2024 and December 31, 2023 (in thousands):


	September 30, 2024
	Recorded Investment		Unpaid Principal Balance		With No Related Allowance
Real estate loans:
Multifamily	$	2,651	$	3,065	$	1,738
Commercial mortgage	4,426		4,873		2,970
One-to-four family residential	66		66		—
Home equity and lines of credit	1,123		1,372		—

Commercial and industrial	14,617		22,572		23
Other	6		5		—
Total non-accrual loans	$	22,889	$	31,953	$	4,731


	December 31, 2023
	Recorded Investment		Unpaid Principal Balance		With No Related Allowance
Real estate loans:
Multifamily	$	2,709	$	2,987	$	1,906
Commercial mortgage	6,491		6,946		4,055
One-to-four family residential	104		104		—
Home equity and lines of credit	499		749		—

Commercial and industrial	305		4,405		81
Other	7		6		—
Total non-accrual loans	$	10,115	$	15,197	$	6,042

The following table summarizes interest income recognized on non-accrual loans, excluding PCD loans, during the three and nine months ended September 30, 2024 and September 30, 2023 (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Real estate loans:
Multifamily	$	36	$	41	$	111	$	144
Commercial mortgage	34		63		188		183
One-to-four family residential	1		1		4		6
Home equity and lines of credit	7		—		14		1


Commercial and industrial	898		48		987		77

Total interest income on non-accrual loans	$	976	$	153	$	1,304	$	411

Table of Contents

NORTHFIELD BANCORP, INC.

Notes to Unaudited Consolidated Financial Statements - (Continued)

Collateral-Dependent Loans

Loans for which the borrower is experiencing financial difficulty and repayment is expected to be provided substantially through the operation or sale of the collateral are considered to be collateral-dependent loans. Collateral can have a significant financial effect in mitigating exposure to credit risk and, where there is sufficient collateral, an allowance for credit losses is not recognized or is minimal. For collateral-dependent loans, the allowance for credit losses is individually assessed based on the fair value of the collateral less estimated costs of sale. The Company's collateral-dependent loans are secured by real estate. Collateral values are generally based on appraisals which are adjusted for changes in market indices. As of September 30, 2024 and December 31, 2023, the Company had $ 6.4 million and $ 7.9 million of collateral-dependent impaired loans, respectively. The collateral-dependent loans at September 30, 2024 consisted of $ 4.4 million of commercial real estate loans, $ 1.7 million of multifamily loans, and $ 272,000 of one-to-four family residential loans. For the nine months ended September 30, 2024, there was no significant deterioration or changes in the collateral securing these loans.

Loan Modifications Made to Borrowers Experiencing Financial Difficulty

The Company adopted ASU 2022-02 on January 1, 2023. Since adoption, the Company has modified, and may modify in the future, certain loans to borrowers experiencing financial difficulty. These modifications may include a reduction in interest rate, an extension in term, principal forgiveness and/or other than insignificant payment delay.

The following table presents the amortized cost basis of loan modifications made to borrowers experiencing financial difficulty that were modified during the three and nine months ended September 30, 2024 and 2023, by class and by type of modification (dollars in thousands):


	Three Months Ended September 30, 2024
	Payment Delay		Term Extension		Payment Delay and Term Extension		Payment Delay, Term Extension, and Interest Rate Reductions		Total		Percentage of Total Class of Financing Receivable

Commercial and industrial	$	445	$	—	$	—	$	—	$	445	0.26	%
Total loans	$	445	$	—	$	—	$	—	$	445


	Three Months Ended September 30, 2023
	Payment Delay		Term Extension (1)		Payment Delay and Interest Rate Reduction		Payment Delay, Term Extension, and Interest Rate Reductions		Total		Percentage of Total Class of Financing Receivable
Commercial mortgage	$	171	$	—	$	—	$	—	$	171	0.02	%
Commercial and industrial	96		13,379		—		390		13,865		9.58	%
Total loans	$	267	$	13,379	$	—	$	390	$	14,036


	Nine Months Ended September 30, 2024
	Payment Delay		Term Extension (1)		Payment Delay and Term Extension		Payment Delay, Term Extension, and Interest Rate Reductions		Total		Percentage of Total Class of Financing Receivable
Commercial mortgage	$	—	$	—	$	386	$	295	$	681	0.08	%
Commercial and industrial	569		12,500		—		888		13,957		8.00	%
Total loans	$	569	$	12,500	$	386	$	1,183	$	14,638

Table of Contents

NORTHFIELD BANCORP, INC.

Notes to Unaudited Consolidated Financial Statements - (Continued)


	Nine Months Ended September 30, 2023
	Payment Delay		Term Extension (1)		Payment Delay and Interest Rate Reduction		Payment Delay, Term Extension, and Interest Rate Reductions		Total		Percentage of Total Class of Financing Receivable
Commercial mortgage	$	236	$	—	$	—	$	—	$	236	0.03	%
Commercial and industrial	96		13,379		208		636		14,319		9.89	%
Total loans	$	332	$	13,379	$	208	$	636	$	14,555

(1) Represents one loan with a carrying balance of $ 12.5 million at September 30, 2024, and $ 13.4 million at September 30, 2023, that was risk rated substandard and has received multiple 90 -day extensions through July1 , 2024. The loan experienced credit deterioration and was put on non-accrual status in the third quarter of 2024.

The following table presents the financial effect of loan modifications made to borrowers experiencing financial difficulty during the three and nine months ended September 30, 2024, and September 30, 2023 (in thousands):

Modifications during the three months ended September 30, 2024, had an insignificant financial effect on the Company.


	Weighted-Average Term Extension (in months)	Weighted-Average Interest Rate Reduction



Three Months Ended September 30, 2023

Commercial and industrial	3.4	2.87	%


	Weighted-Average Term Extension (in months)	Weighted-Average Interest Rate Reduction
Nine Months Ended September 30, 2024
Commercial mortgage	60	3.00	%
Commercial and industrial	7.2	3.00	%
Nine Months Ended September 30, 2023

Commercial and industrial	3.5	3.75	%

There were no commitments to lend additional funds at September 30, 2024 to borrowers experiencing financial difficulty whose terms have been restructured.

For modified loans, a subsequent payment default is defined in terms of delinquency, when a principal or interest payment is 90 days past due or classified into non-accrual status during the reporting period. Of the loans modified during the preceding twelve months , there were five commercial and industrial loans with a combined balance of approximately $ 932,000 that subsequently defaulted and were charged-off in full. One additional commercial and industrial loan with a principal balance of $ 13.4 million also defaulted during the three months ended September 30, 2024, and was placed on non-accrual status. The loan had a carrying balance of approximately $ 12.5 million at September 30, 2024, and is currently in the collection process. The loan was individually evaluated for impairment, we charged off $ 878,000 and provided a specific reserve of $ 1.3 million.

Table of Contents

NORTHFIELD BANCORP, INC.

Notes to Unaudited Consolidated Financial Statements - (Continued)

The Company closely monitors the performance of loans that are modified to borrowers experiencing financial difficulty to understand the effectiveness of the modification efforts. The following table presents the aging analysis of loan modifications made to borrowers experiencing financial difficulty during the twelve months ended September 30, 2024 and since adoption of the standard for September 30, 2023 (in thousands):


	As of September 30, 2024
	Current		30-89 Days Past Due		90 Days or More Past Due		Non-Accrual		Total
Commercial mortgage	$	—	$	—	$	—	$	681	$	681
Commercial and industrial	888		479		—		12,729		14,096
Total loans	$	888	$	479	$	—	$	13,410	$	14,777


	As of September 30, 2023
	Current		30-89 Days Past Due		90 Days or More Past Due		Non-Accrual		Total
Commercial mortgage	$	—	$	65	$	—	$	171	$	236
Commercial and industrial	14,319		—		—		—		14,319
Total loans	$	14,319	$	65	$	—	$	171	$	14,555

Note 6 – Allowance for Credit Losses (“ACL”) on Loans

Allowance for Collectively Evaluated Loans Held-for-Investment

In estimating the quantitative component of the allowance on a collective basis, the Company uses a risk rating migration model which calculates an expected life of loan loss percentage for each loan by generating probability of default and loss given default metrics. These metrics are multiplied by the exposure at the potential default, taking into consideration estimated prepayments, to calculate the quantitative component of the ACL. The metrics are based on the migration of loans from performing to loss by credit risk rating or delinquency categories using historical life-of-loan analysis periods for each loan portfolio pool, and the severity of loss, based on the aggregate net lifetime losses incurred using the Company's own historical loss experience and comparable peer data loss history. The model's expected losses based on loss history are adjusted for qualitative adjustments to address risks that may not be adequately represented in the risk rating migration model. Among other things, these adjustments include and account for differences in: (i) changes in lending policies and procedures; (ii) changes in local, regional, national, and international economic and business conditions and developments that affect the collectability of our portfolio, including the condition of various market segments; (iii) changes in the experience, ability and depth of lending management and other relevant staff; (iv) changes in the quality of our loan review system; (v) the existence and effect of any concentrations of credit, and changes in the level of such concentrations; and (vi) the effect of other external factors such as competition and legal and regulatory requirements on the level of estimated credit losses in our existing portfolio.

The Company utilizes a two-year reasonable and supportable forecast period after which estimated losses revert to historical loss experience immediately for the remaining life of the loan. In establishing its estimate of expected credit losses, the Company utilizes five externally-sourced forward-looking economic scenarios developed by Moody's Analytics (“Moody's”).

Management utilizes five different Moody's scenarios so as to incorporate uncertainties related to the economic environment. These scenarios, which range from more benign to more severe economic outlooks, include a “most likely outcome” (the “Baseline” scenario) and four less likely scenarios referred to as the “Upside” and “Downside” scenarios. Each scenario is assigned a weighting with a majority of the weighting placed on the Baseline scenario and lower weights placed on both the Upside and Downside scenarios. The weighting assigned by management is based on the economic outlook and available information at the reporting date. The model projects economic variables under each scenario based on detailed statistical analyses. The Company has identified and selected key variables that most closely correlated to its historical credit performance, which include: Gross domestic product, unemployment, and three collateral indices: the Commercial Property Price Index, the Commercial Property Price Apartment Index and the Case-Shiller Home Price Index.

Table of Contents

NORTHFIELD BANCORP, INC.

Notes to Unaudited Consolidated Financial Statements - (Continued)

Allowance for Individually Evaluated Loans

The Company measures specific reserves for individual loans that do not share common risk characteristics with other loans, consisting of all loans previously modified as TDRs (prior to the adoption of ASU 2022-02) and non-accrual loans with an outstanding balance of $ 500,000 or greater. Loans individually evaluated for impairment are assessed to determine whether the loan’s carrying value is not in excess of the estimated fair value of the collateral less cost to sell, if the loan is collateral-dependent, or the present value of the expected future cash flows, if the loan is not collateral-dependent. Management performs an evaluation of each impaired loan and generally obtains updated appraisals as part of the evaluation. In addition, management adjusts estimated fair values down to appropriately consider recent market conditions, our willingness to accept a lower sales price to effect a quick sale, and costs to dispose of any supporting collateral. Determining the estimated fair value of underlying collateral (and related costs to sell) can be difficult in illiquid real estate markets and is subject to significant assumptions and estimates. Management employs an independent third-party management firm that specializes in appraisal preparation and review to ascertain the reasonableness of updated appraisals. Projecting the expected cash flows for modified loans which are not collateral-dependent is inherently subjective and requires, among other things, an evaluation of the borrower’s current and projected financial condition. Actual results may be significantly different than our projections and our established allowance for credit losses on these loans, which could have a material effect on our financial results. Individually impaired loans that have no impairment losses are not considered for collective allowances described earlier. At September 30, 2024 and December 31, 2023, the ACL for loans individually evaluated for impairment was $ 1.3 million and $ 45,200 , respectively.

Allowance for Credit Losses – Off-Balance Sheet Exposures

An ACL for off-balance-sheet exposures represents an estimate of expected credit losses arising from off-balance sheet exposures such as loan commitments, standby letters of credit and unused lines of credit (loans already on the books). 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. The reserve for off-balance sheet exposures is determined using the Current Expected Credit Losses (“CECL”) reserve factor in the related funded loan segment, adjusted for an average historical funding rate. The allowance for credit losses for off-balance sheet credit exposures is recorded in other liabilities on the consolidated balance sheets and the corresponding provision is included in other non-interest expense.

The table below summarizes the allowance for credit losses for off-balance sheet credit exposures as of, and for, the three and nine months ended September 30, 2024, and September 30, 2023 (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Balance at beginning of period	$	422	$	241	$	236	$	791


Provision (benefit) for credit losses	151		160		337		( 390 )
Balance at end of period	$	573	$	401	$	573	$	401

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NORTHFIELD BANCORP, INC.

Notes to Unaudited Consolidated Financial Statements - (Continued)

The following tables set forth activity in our allowance for credit losses on loans, by loan type, as of, and for the three and nine months ended September 30, 2024, and September 30, 2023 (in thousands):


	Three Months Ended September 30, 2024
	Real Estate
	Commercial (1)		One-to-Four Family		Home Equity and Lines of Credit		Construction and Land		Commercial and Industrial		Other		Total Loans (excluding PCD)		PCD		Total
Allowance for credit losses:
Beginning balance	$	19,306	$	2,292	$	2,562	$	108	$	7,564	$	3	$	31,835	$	2,945	$	34,780
Charge-offs	—		—		—		—		( 2,355 )		—		( 2,355 )		—		( 2,355 )
Recoveries	14		—		92		—		124		—		230		—		230
Provisions (credit)	693		( 194 )		( 357 )		( 2 )		2,424		( 1 )		2,563		( 21 )		2,542
Ending balance	$	20,013	$	2,098	$	2,297	$	106	$	7,757	$	2	$	32,273	$	2,924	$	35,197


	Three Months Ended September 30, 2023
	Real Estate
	Commercial (1)		One-to-Four Family		Home Equity and Lines of Credit		Construction and Land		Commercial and Industrial		Other		Total Loans (excluding PCD)		PCD		Total
Allowance for credit losses:
Beginning balance	$	24,733	$	3,814	$	1,278	$	301	$	7,295	$	7	$	37,428	$	3,726	$	41,154
Charge-offs	—		—		—		—		( 2,904 )		—		( 2,904 )		—		( 2,904 )
Recoveries	14		—		—		—		20		—		34		8		42
Provisions (credit)	( 409 )		( 243 )		77		( 2 )		1,391		—		814		( 626 )		188
Ending balance	$	24,338	$	3,571	$	1,355	$	299	$	5,802	$	7	$	35,372	$	3,108	$	38,480

(1) Commercial includes commercial real estate loans collateralized by owner-occupied, non-owner occupied, and multifamily properties.

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NORTHFIELD BANCORP, INC.

Notes to Unaudited Consolidated Financial Statements - (Continued)


	Nine Months Ended September 30, 2024
	Real Estate
	Commercial (1)		One-to-Four Family		Home Equity and Lines of Credit		Construction and Land		Commercial and Industrial		Other		Total Loans (excluding PCD)		PCD		Total
Allowance for credit losses:
Beginning balance	$	23,255	$	3,285	$	1,705	$	149	$	6,050	$	6	$	34,450	$	3,085	$	37,535
Charge-offs	( 136 )		—		—		—		( 4,842 )		—		( 4,978 )		—		( 4,978 )
Recoveries	42		9		92		—		158		—		301		—		301
Provisions (credit)	( 3,148 )		( 1,196 )		500		( 43 )		6,391		( 4 )		2,500		( 161 )		2,339
Ending balance	$	20,013	$	2,098	$	2,297	$	106	$	7,757	$	2	$	32,273	$	2,924	$	35,197


	Nine Months Ended September 30, 2023
	Real Estate
	Commercial (1)		One-to-Four Family		Home Equity and Lines of Credit		Construction and Land		Commercial and Industrial		Other		Total Loans (excluding PCD)		PCD		Total
Allowance for credit losses:
Beginning balance	$	29,485	$	3,936	$	866	$	324	$	4,114	$	9	$	38,734	$	3,883	$	42,617
Charge-offs	—		—		—		—		( 5,315 )		—		( 5,315 )		( 8 )		( 5,323 )
Recoveries	48		—		1		—		47		—		96		8		104
Provisions (credit)	( 5,195 )		( 365 )		488		( 25 )		6,956		( 2 )		1,857		( 775 )		1,082
Ending balance	$	24,338	$	3,571	$	1,355	$	299	$	5,802	$	7	$	35,372	$	3,108	$	38,480

(1) Commercial includes commercial real estate loans collateralized by owner-occupied, non-owner occupied, and multifamily properties.

The allowance for credit losses on loans decreased to $ 35.2 million at September 30, 2024, compared to $ 37.5 million as of December 31, 2023, primarily due to a decrease in loan balances and an improvement in the economic forecast within our CECL model. The decrease was partially offset by increases in quantitative reserves in the commercial and industrial and home equity and lines of credit loan portfolios due to an increase in non-performing loans in these categories and loan balances.

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NORTHFIELD BANCORP, INC.

Notes to Unaudited Consolidated Financial Statements - (Continued)

The following tables detail the amount of loans receivable held-for-investment, net of deferred loan fees and costs, that are evaluated, individually and collectively, for impairment, and the related portion of the allowance for credit losses that is allocated to each loan portfolio segment, at September 30, 2024 and December 31, 2023 (in thousands):


	September 30, 2024
	Real Estate
	Commercial (1)		One-to-Four Family		Home Equity and Lines of Credit		Construction and Land		Commercial and Industrial		Other		Total Loans (excluding PCD)		PCD		Total
Allowance for credit losses:
Ending balance: individually evaluated for impairment	$	5	$	—	$	3	$	—	$	1,268	$	—	$	1,276	$	—	$	1,276
Ending balance: collectively evaluated for impairment	20,008		2,098		2,294		106		6,489		2		30,997		—		30,997
Ending balance: PCD loans evaluated for impairment (2)	—		—		—		—		—		—		—		2,924		2,924
Loans, net:
Ending balance	$	3,519,117	$	149,682	$	171,946	$	33,024	$	174,413	$	1,660	$	4,049,842	$	9,264	$	4,059,106
Ending balance: individually evaluated for impairment	7,036		569		21		—		12,575		—		20,201		—		20,201
Ending balance: collectively evaluated for impairment	3,512,081		149,113		171,925		33,024		161,678		1,660		4,029,481		—		4,029,481
Ending balance: PCD loans evaluated for impairment (2)	—		—		—		—		—		—		—		9,264		9,264
PPP loans not evaluated for impairment (3)	—		—		—		—		160		—		160		—		160


	December 31, 2023
	Real Estate
	Commercial (1)		One-to-Four Family		Home Equity and Lines of Credit		Construction and Land		Commercial and Industrial		Other		Total Loans (excluding PCD)		PCD		Total
Allowance for credit losses:
Ending balance: individually evaluated for impairment	$	25	$	—	$	3	$	—	$	17	$	—	$	45	$	—	$	45
Ending balance: collectively evaluated for impairment	23,230		3,285		1,702		149		6,033		6		34,405		—		34,405
Ending balance: PCD loans evaluated for impairment (2)	—		—		—		—		—		—		—		3,085		3,085
Loans, net:
Ending balance	$	3,680,591	$	160,824	$	163,520	$	30,967	$	155,268	$	2,585	$	4,193,755	$	9,899	$	4,203,654
Ending balance: individually evaluated for impairment	8,608		609		23		—		84		—		9,324		—		9,324
Ending balance: collectively evaluated for impairment	3,671,983		160,215		163,497		30,967		154,900		2,585		4,184,147		—		4,184,147
Ending balance: PCD loans evaluated for impairment (2)	—		—		—		—		—		—		—		9,899		9,899
PPP loans not evaluated for impairment (3)	—		—		—		—		284		—		284		—		284

(1) Commercial includes commercial real estate loans collateralized by owner-occupied, non-owner occupied, and multifamily properties.

(2) Upon adoption of CECL, the Company elected to maintain pools of PCD loans that were previously accounted for under ASC 310-30, and will continue to evaluate PCD loans under this guidance.

(3) PPP loans are guaranteed by the SBA and therefore excluded from the allowance for credit losses.

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NORTHFIELD BANCORP, INC.

Notes to Unaudited Consolidated Financial Statements - (Continued)

Note 7 – Deposits

Deposit account balances are summarized as follows (in thousands):


	September 30, 2024		December 31, 2023
Non-interest-bearing checking	$	681,741	$	694,903
Negotiable orders of withdrawal (“NOW”) and interest-bearing checking	1,230,176		1,231,943
Savings and money market	1,176,867		1,277,866
Certificates of deposit	786,785		673,723
Total deposits	$	3,875,569	$	3,878,435

Interest expense on deposit accounts is summarized for the periods indicated (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
NOW and interest-bearing checking, savings, and money market	$	12,717	$	8,865	$	38,231	$	19,194
Certificates of deposit	7,587		4,749		22,010		12,724
Total interest expense on deposit accounts	$	20,304	$	13,614	$	60,241	$	31,918

Note 8 – Subordinated Debt

On June 17, 2022, the Company issued $ 62.0 million in aggregate principal amount of fixed-to-floating subordinated notes (the “Notes”) to certain institutional investors. The Notes mature on June 30, 2032, unless redeemed earlier. The Notes initially bear interest, payable semi-annually in arrears, at a fixed rate of 5.00 % per annum until June 30, 2027. Beginning June 30, 2027 and until maturity or redemption, the interest rate applicable to the outstanding principal amount of the Notes due will reset quarterly to an interest rate per annum equal to the then current three-month Secured Overnight Financing Rate plus 200 basis points, payable quarterly in arrears. The Company has the option to redeem the Notes, at par and in whole or in part, beginning on June 30, 2027 and to redeem the Notes at any time in whole upon certain other events. Any redemption of the Notes will be subject to prior regulatory approval to the extent required. Debt issuance costs totaled $ 1.1 million and are being amortized to maturity. At September 30, 2024 and December 31, 2023, subordinated debt totaled $ 61.4 million and $ 61.2 million, respectively, which included $ 614,000 and $ 781,000 , respe ctively, of unamortized debt issuance costs. The Company recognized amortization expense of $ 56,000 and $ 167,000 f or the three and nine months ended September 30, 2024, respectively. The Company recognized amortization expense of $ 56,000 and $ 167,000 for the three and nine months ended September 30, 2023, respectively.

Note 9 – Equity Incentive Plans

The following table is a summary of the Company’s stock options outstanding as of September 30, 2024, and changes therein during the nine months then ended.


	Number of Stock Options	Weighted Average Grant Date Fair Value		Weighted Average Exercise Price		Weighted Average Contractual Life (years)
Outstanding and Exercisable - December 31, 2023	1,544,306	$	4.03	$	14.05	1.01

Forfeited or expired	( 843,203 )	3.97		13.18		—

Outstanding and Exercisable - September 30, 2024	701,103	4.11		15.09		0.88

During the first and second quarters of 2024, the Company granted to directors and employees, under the 2019 Equity Incentive Plan, 196,554 restricted stock awards with a total grant date fair value of $ 2.6 million. Of these grants, 40,708 vest one year from the date of grant and 155,846 vest in equal installments over a three-year period beginning one year from the date of grant. The Company also issued 43,672 performance-based restricted stock units to its executive officers with a total grant date fair value of $ 581,000 . Vesting of the performance-based restricted stock units will be based on achievement of certain levels of Core Return on Average Assets and will cliff vest after a three-year measurement period ending on January 26, 2027. At the end of the performance period, the number of actual shares to be awarded may vary between 0 % and 225 % of target amounts.

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NORTHFIELD BANCORP, INC.

Notes to Unaudited Consolidated Financial Statements - (Continued)

The following is a summary of the status of the Company’s restricted stock awards and performance-based restricted stock units at September 30, 2024, and changes therein during the nine months then ended.


	Restricted Stock Awards	Weighted Average Grant Date Fair Value		Performance Stock Awards	Weighted Average Grant Date Fair Value
Non-vested at December 31, 2023	289,160	$	14.40	74,923	$	14.09
Granted	196,554	13.24		43,672	13.31
Vested	( 134,484 )	14.49		( 14,794 )	12.36
Forfeited	( 12,714 )	13.65		( 10,193 )	12.36
Non-vested at September 30, 2024	338,516	13.71		93,608	14.19

Expected future stock award expense related to the non-vested restricted share awards as of September 30, 2024, was $ 2.9 million over a weighted average period of 1.5 years. Expected future stock award expense related to the non-vested performance share awards as of September 30, 2024, was $ 449,000 over a weighted average period of 1.6 years.

During the three months ended September 30, 2024 and September 30, 2023, the Company recorded $ 717,000 and $ 577,000 , respectively, of stock-based compensation related to the above plan. During the nine months ended September 30, 2024 and September 30, 2023, the Company recorded $ 1.6 million and $ 1.8 million, respectively, of stock-based compensation related to the above plan.

Note 10 – Fair Value Measurements

The following tables present the assets reported on the consolidated balance sheets at their estimated fair value as of September 30, 2024, and December 31, 2023, by level within the fair value hierarchy as required by the Fair Value Measurements and Disclosures Topic of the FASB ASC. Financial assets and liabilities are classified in their entirety based on the level of input that is significant to the fair value measurement. The fair value hierarchy is as follows:

• Level 1 Inputs – Unadjusted quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date.

• Level 2 Inputs – Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (for example, interest rates, volatilities, prepayment speeds, loss severities, credit risks and default rates) or inputs that are derived principally from or corroborated by observable market data by correlations or other means.

• Level 3 Inputs – Significant unobservable inputs that reflect the Company’s own assumptions that market participants would use in pricing the assets or liabilities.

The methods of determining the fair value of assets and liabilities presented in this note are consistent with our methodologies disclosed in Note 16 to the Consolidated Financial Statements of the Company’s 2023 Annual Report on Form 10-K.

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NORTHFIELD BANCORP, INC.

Notes to Unaudited Consolidated Financial Statements - (Continued)


	Fair Value Measurements at September 30, 2024 Using:
	Carrying Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(in thousands)
Measured on a recurring basis:
Assets:
Investment securities:
Debt securities available-for-sale:

U.S. Government agency	$	74,901	$	—	$	74,901	$	—
Mortgage-backed securities:
Pass-through certificates:
GSE	277,649		—		277,649		—
REMICs:
GSE	591,761		—		591,761		—

Total mortgage-backed securities	869,410		—		869,410		—
Other debt securities:

Municipal bonds	684		—		684		—
Corporate bonds	118,491		—		118,491		—

	119,175		—		119,175		—
Total debt securities available-for-sale	1,063,486		—		1,063,486		—
Trading securities	13,759		13,759		—		—
Equity securities (1)	699		699		—		—
Total	$	1,077,944	$	14,458	$	1,063,486	$	—
Measured on a non-recurring basis:
Assets:
Loans individually evaluated for impairment:
Real estate loans:
Commercial real estate	$	2,033	$	—	$	—	$	2,033


Multifamily	1,738		—		—		1,738
Home equity and lines of credit	18		—		—		18
Total individually evaluated real estate loans	3,789		—		—		3,789
Commercial and industrial loans	11,307		—		—		11,307

Total	$	15,096	$	—	$	—	$	15,096

(1) Excludes investment measured at net asset value of $ 10.0 million at September 30, 2024, which has not been classified in the fair value hierarchy.

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NORTHFIELD BANCORP, INC.

Notes to Unaudited Consolidated Financial Statements - (Continued)


	Fair Value Measurements at December 31, 2023 Using:
	Carrying Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(in thousands)
Measured on a recurring basis:
Assets:
Investment securities:
Debt securities available-for-sale:
U.S. Treasuries	$	44,379	$	44,379	$	—	$	—
U.S. Government agency securities	73,908		—		73,908		—
Mortgage-backed securities:
Pass-through certificates:
GSE	337,540		—		337,540		—
REMICs:
GSE	213,100		—		213,100		—

Total mortgage-backed securities	550,640		—		550,640		—
Other debt securities:

Municipal bonds	763		—		763		—
Corporate bonds	125,774		—		125,774		—

	126,537		—		126,537		—
Total debt securities available-for-sale	795,464		44,379		751,085		—
Trading securities	12,549		12,549		—		—
Equity securities (1)	330		330		—		—
Total	$	808,343	$	57,258	$	751,085	$	—
Measured on a non-recurring basis:
Assets:
Loans individually evaluated for impairment:
Real estate loans:
Commercial real estate	$	2,291	$	—	$	—	$	2,291

Multifamily	1,906		—		—		1,906
Home equity and lines of credit	21		—		—		21
Total impaired real estate loans	4,218		—		—		4,218
Commercial and industrial loans	59		—		—		59

Total	$	4,277	$	—	$	—	$	4,277

(1) Excludes investment measured at net asset value of $ 10.3 million at December 31, 2023, which has not been classified in the fair value hierarchy.

The following table presents qualitative information for Level 3 assets measured at fair value on a non-recurring basis at September 30, 2024 and December 31, 2023 (dollars in thousands):

Fair Value

Valuation Methodology

Unobservable
Inputs

Range of Inputs

September 30, 2024

December 31, 2023

September 30, 2024

December 31, 2023

Individually evaluated loans

15,096

4,277

Appraisals

Discount for costs to sell

7.0 %

Discount for quick sale

10.0 %

Discounted cash flows

Interest rates

4.88 % to 7.50 %

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NORTHFIELD BANCORP, INC.

Notes to Unaudited Consolidated Financial Statements - (Continued)

The valuation techniques described below were used to measure fair value of financial instruments in the tables below on a recurring basis and a non-recurring basis at September 30, 2024, and December 31, 2023.

Debt Securities Available for Sale: The estimated fair values for mortgage-backed securities, corporate, and other debt securities are obtained from an independent nationally recognized third-party pricing service. The estimated fair values are derived primarily from cash flow models, which include assumptions for interest rates, credit losses, and prepayment speeds. Broker/dealer quotes are utilized as well, when such quotes are available and deemed representative of the market. The significant inputs utilized in the cash flow models are based on market data obtained from sources independent of the Company (Observable Inputs), and are therefore classified as Level 2 within the fair value hierarchy. There were no transfers of securities between Level 1 and Level 2 during the nine months ended September 30, 2024 or September 30, 2023.

Trading Securities: Fair values are derived from quoted market prices in active markets. The assets consist of publicly traded mutual funds.

Equity Securities: Fair values of equity securities consisting of publicly traded mutual funds are derived from quoted market prices in active markets.

Loans Individually Evaluated for Impairment: At September 30, 2024 and December 31, 2023, the Company had loans individually evaluated for impairment (excluding PCD loans) with outstanding principal balances of $ 19.0 million and $ 6.0 million, respectively, which were recorded at their estimated fair value of $ 15.1 million and $ 4.3 million, respectively. The Company recorded a net increase in the specific reserve for impaired loans of $ 1.2 million and $ 7,100 for the nine months ended September 30, 2024 and September 30, 2023, respectively. Net charge-offs of $ 4.7 million and $ 5.2 million were recorded for the nine months ended September 30, 2024 and September 30, 2023, respectively, utilizing Level 3 inputs. For purposes of estimating the fair value of impaired loans, management utilizes independent appraisals, if the loan is collateral-dependent, adjusted downward by management, as necessary, for changes in relevant valuation factors subsequent to the appraisal date, or the present value of expected future cash flows for non-collateral dependent loans and TDRs.

Other Real Estate Owned: At September 30, 2024 and December 31, 2023, the Company had no assets acquired through foreclosure.

In addition, the Company may be required, from time to time, to measure the fair value of certain other financial assets on a nonrecurring basis in accordance with U.S. GAAP. The adjustments to fair value usually result from the application of lower-of-cost-or-market accounting or write downs of individual assets.

Fair Value of Financial Instruments:

The FASB ASC Topic for Financial Instruments requires disclosure of the fair value of financial assets and financial liabilities, including those financial assets and financial liabilities that are not measured and reported at fair value on a recurring or non-recurring basis. The methodologies for estimating the fair value of financial assets and financial liabilities that are measured at fair value on a recurring or non-recurring basis are discussed above. The following methods and assumptions were used to estimate the fair value of other financial assets and financial liabilities not already discussed above:

(a) Cash and Cash Equivalents

Cash and cash equivalents are short-term in nature with original maturities of three months or less; the carrying amount approximates fair value. Certificates of deposit having original terms of six-months or less; the carrying value generally approximates fair value. Certificates of deposit with an original maturity of six months or greater; the fair value is derived from discounted cash flows.

(b) Debt Securities (Held-to-Maturity)

The estimated fair values for substantially all of our securities are obtained from an independent nationally recognized pricing service. The independent pricing service utilizes market prices of same or similar securities whenever such prices are available. Prices involving distressed sellers are not utilized in determining fair value. Where necessary, the independent third-party pricing service estimates fair value using models employing techniques such as discounted cash flow analysis. The assumptions used in these models typically include assumptions for interest rates, credit losses, and prepayments, utilizing market observable data where available.

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NORTHFIELD BANCORP, INC.

Notes to Unaudited Consolidated Financial Statements - (Continued)

The Company uses net asset value as a practical expedient to record its investment in a private SBA Loan Fund since the shares in the fund are not publicly traded, do not have a readily determinable fair value and the net asset value per share is calculated in a manner consistent with the measurement principles of an investment company.

(d) Federal Home Loan Bank of New York Stock

Federal Home Loan Bank of New York ( “ FHLBNY”) stock is carried at cost since this is the amount for which it could be redeemed. Due to restrictions placed on the transferability of FHLBNY stock it is not practical to determine the fair value as there is no active market for this stock.

(e) Loans (Held-for-Investment)

Fair values are estimated for portfolios of loans with similar financial characteristics. Loans are segregated by type such as originated and purchased, and further segregated by residential mortgage, construction, land, multifamily, commercial and consumer. Each loan category is further segmented into amortizing and non-amortizing and fixed and adjustable-rate interest terms and by performing and non-performing categories. The fair value of loans is estimated using a discounted cash flow analysis. The discount rates used to determine fair value use interest rate spreads that reflect factors such as liquidity, credit, and non-performance risk of the loans.

(f) Loans (Held-for-Sale)

Held-for-sale loans are carried at the lower of aggregate cost or estimated fair value, less costs to sell, and therefore fair value is equal to carrying value.

(g) Deposits

The fair value of deposits with no stated maturity, such as interest and non-interest bearing demand deposits, savings, NOW and money market accounts, is equal to the amount payable on demand. The fair value of certificates of deposit is based on the discounted value of contractual cash flows. The discount rate is estimated using the rates currently offered for deposits of similar remaining maturities.

(h) Commitments to Extend Credit and Standby Letters of Credit

The fair value of commitments to extend credit and standby letters of credit is estimated using the fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the present creditworthiness of the counterparties. For fixed-rate loan commitments, fair value also considers the difference between current levels of interest rates and the committed rates. The fair value of off-balance sheet commitments is insignificant and therefore not included in the following table.

(i) Borrowings

The fair value of borrowed funds is estimated by discounting future cash flows based on rates currently available for debt with similar terms and remaining maturity.

(j) Advance Payments by Borrowers for Taxes and Insurance

Advance payments by borrowers for taxes and insurance have no stated maturity; the fair value is equal to the amount currently payable.

(k) Derivatives

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

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NORTHFIELD BANCORP, INC.

Notes to Unaudited Consolidated Financial Statements - (Continued)

The estimated fair values of the Company’s significant financial instruments at September 30, 2024 and December 31, 2023, are presented in the following tables (in thousands):


	September 30, 2024
			Estimated Fair Value
	Carrying Value		Level 1		Level 2		Level 3		Total
Financial assets:
Cash and cash equivalents	$	232,926	$	232,926	$	—	$	—	$	232,926
Trading securities	13,759		13,759		—		—		13,759
Debt securities available-for-sale	1,063,486		—		1,063,486		—		1,063,486
Debt securities held-to-maturity	9,681		—		9,519		—		9,519
Equity securities (1)	699		699		—		—		699
FHLBNY stock	37,269		N/A		N/A		N/A		N/A
Loans held-for-sale	4,897		—		—		4,897		4,897
Net loans held-for-investment	4,023,909		—		—		3,840,026		3,840,026
Derivative assets	4,271		—		4,271		—		4,271
Financial liabilities:
Deposits	$	3,875,569	$	—	$	3,876,514	$	—	$	3,876,514
FHLB advances and other borrowings (including securities sold under agreements to repurchase)	990,871		—		988,739		—		988,739
Subordinated debentures, net of issuance costs	61,386		—		45,659		—		45,659
Advance payments by borrowers for taxes and insurance	22,492		—		22,492		—		22,492
Derivative liabilities	4,273		—		4,273		—		4,273

(1) Excludes investment measured at net asset value of $ 10.0 million at September 30, 2024, which has not been classified in the fair value hierarchy.


	December 31, 2023
			Estimated Fair Value
	Carrying Value		Level 1		Level 2		Level 3		Total
Financial assets:
Cash and cash equivalents	$	229,506	$	229,506	$	—	$	—	$	229,506
Trading securities	12,549		12,549		—		—		12,549
Debt securities available-for-sale	795,464		44,379		751,085		—		795,464
Debt securities held-to-maturity	9,866		—		9,586		—		9,586
Equity securities (1)	330		330		—		—		330
FHLBNY stock, at cost	39,667		N/A		N/A		N/A		N/A

Net loans held-for-investment	4,166,119		—		—		3,887,033		3,887,033
Derivative assets	4,903		—		4,903		—		4,903
Financial liabilities:
Deposits	$	3,878,435	$	—	$	3,879,286	$	—	$	3,879,286
FHLB advances and other borrowings (including securities sold under agreements to repurchase)	859,272		—		844,766		—		844,766
Subordinated debentures, net of issuance costs	61,219		—		45,531		—		45,531
Advance payments by borrowers for taxes and insurance	25,102		—		25,102		—		25,102
Derivative liabilities	4,905		—		4,905		—		4,905

(1) Excludes investment measured at net asset value of $ 10.3 million at December 31, 2023, which has not been classified in the fair value hierarchy.

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NORTHFIELD BANCORP, INC.

Notes to Unaudited Consolidated Financial Statements - (Continued)

Limitations

Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument. These estimates do not reflect any premium or discount that could result from offering for sale at one time the Company’s entire holdings of a particular financial instrument. Because no market exists for a significant portion of the Company’s financial instruments, fair value estimates are based on judgments regarding future expected losses, current economic conditions, risk characteristics of various financial instruments, and other factors. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect the estimates.

Fair value estimates are based on existing on-and off-balance sheet financial instruments without attempting to estimate the value of anticipated future business and the value of assets and liabilities that are not considered financial instruments. In addition, the tax ramifications related to the realization of the unrealized gains and losses can have a significant effect on fair value estimates and have not been considered in the estimates.

Note 11 – Earnings Per Share

Basic earnings per share is computed by dividing net income available to common stockholders by the weighted average number of shares outstanding during the period. For purposes of calculating basic earnings per share, weighted average common shares outstanding excludes unallocated employee stock ownership plan (“ESOP”) shares that have not been committed for release and unvested restricted stock and performance-based restricted stock units.

Diluted earnings per share is computed using the same method as basic earnings per share, but reflects the potential dilution that could occur if stock options were exercised and converted into common stock and unvested shares of restricted stock and performance-based restricted stock units vested. These potentially dilutive shares are then included in the weighted average number of shares outstanding for the period using the treasury stock method. When applying the treasury stock method, the assumed proceeds from option exercises and the average unamortized compensation costs related to unvested shares of restricted stock, performance-based restricted stock units and stock options were added. This sum was then divided by the average stock price for the period to calculate assumed shares repurchased. The excess of the number of shares issuable over the number of shares assumed to be repurchased is added to basic weighted average common shares to calculate diluted earnings per share.

The following is a summary of the Company’s earnings per share calculations and reconciliation of basic to diluted earnings per share for the periods indicated (in thousands, except per share data):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Net income available to common stockholders	$	6,523	$	8,181	$	18,694	$	29,447

Weighted average shares outstanding-basic	41,028,213		42,866,246		41,794,149		43,848,873
Effect of non-vested restricted stock and stock, performance-based restricted stock units and options outstanding	60,424		51,928		35,081		78,477
Weighted average shares outstanding-diluted	41,088,637		42,918,174		41,829,230		43,927,350
Earnings per share-basic	$	0.16	$	0.19	$	0.45	$	0.67
Earnings per share-diluted	$	0.16	$	0.19	$	0.45	$	0.67
Anti-dilutive shares	706,143		1,707,261		1,496,292		1,492,290

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NORTHFIELD BANCORP, INC.

Notes to Unaudited Consolidated Financial Statements - (Continued)

Note 12 – Leases

The Company’s leases primarily relate to real estate property for branches and office space with terms extending from one month up to 30.8 years. At September 30, 2024, all of the Company’s leases are classified as operating leases, which are required to be recognized on the consolidated balance sheets as a right-of-use asset and a corresponding lease liability.

The Company determines if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use assets and operating lease liabilities on the consolidated balance sheets. Right-of-use assets represent the right to use an underlying asset for the lease term and lease liabilities represent the obligation to make lease payments arising from the lease. Operating lease right-of-use assets and liabilities are recorded at the present value of lease payments over the lease term. As the Company's leases do not provide an implicit rate, the Company uses its incremental borrowing rate, at lease inception, over a similar term in determining the present value of lease payments. Certain leases include options to renew, with one or more renewal terms ranging from five to ten years . If the exercise of a renewal option is considered to be reasonably certain, the Company includes the extended term in the calculation of the right-of-use asset and lease liability.

At September 30, 2024, the Company’s operating lease right-of-use assets and operating lease liabilities included on the consolidated balance sheet were $ 28.9 million and $ 33.5 million, respectively. At December 31, 2023, the Company’s operating lease right-of-use assets and operating lease liabilities included on the consolidated balance sheet were $ 30.2 million and $ 35.2 million, respectively. Operating lease expense is recognized on a straight-line basis over the lease term, while variable lease payments are recognized as incurred. Variable lease payments include common area maintenance charges, real estate taxes, repairs and maintenance costs and utilities. Operating and variable lease expenses are recorded in occupancy expense on the consolidated statements of comprehensive income.

Supplemental lease information at or for the three and nine months ended September 30, 2024, and September 30, 2023 is as follows (dollars in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024			2023

Operating lease cost	$	1,452	$	1,471	$	4,382		$	4,482
Variable lease cost	787		1,067		2,751			2,909

Net lease cost	$	2,239	$	2,538	$	7,133		$	7,391
Cash paid for amounts included in measurement of operating lease liabilities	$	1,597	$	1,632	$	4,797		$	4,853
Right-of-use assets obtained in exchange for new operating lease liabilities	$	795	$	582	$	2,227		$	645
Weighted average remaining lease term					10.78 years			11.10 years
Weighted average discount rate					3.68		%	3.59		%

The following table summarizes lease payment obligations for each of the next five years and thereafter in addition to a reconcilement to the Company's current lease liability (in thousands):


Year	Amount
2024	$	1,609
2025	6,199
2026	5,440
2027	4,483
2028	4,221
Thereafter	20,011
Total lease payments	41,963
Less: imputed interest	( 8,434 )
Present value of lease liabilities	$	33,529

As of September 30, 2024, the Company had not entered into any leases that have not yet commenced.

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NORTHFIELD BANCORP, INC.

Notes to Unaudited Consolidated Financial Statements - (Continued)

Note 13 – Derivatives

The Company has interest rate derivatives resulting from a service provided to certain qualified borrowers in a loan-related transaction and, therefore, are not used to manage interest rate risk in the Company’s assets or liabilities. The interest rate swap agreement which the Company executed with the commercial borrower is collateralized by the borrower’s commercial real estate financed by the Company. The collateral exceeds the maximum potential amount of future payments under the credit derivative. As these interest rate swaps do not meet the hedge accounting requirements, changes in the fair value of both the customer swaps and the offsetting swaps are recognized directly in earnings.

At September 30, 2024, the Company had twelve interest rate swaps with a notional amount of $ 78.9 million. At December 31, 2023, the Company had ten interest rate swaps with a notional amount of $ 72.7 million. The Company recorded fee income related to these swaps of $ 173,000 for the three and nine months ended September 30, 2024, respectively. The Company recorded fee income related to these swaps of $ 20,000 and $ 251,000 for the three and nine months ended September 30, 2023, respectively.

The table below presents the fair value of the derivatives as well as their location on the consolidated balance sheets (in thousands):


	Fair Value
Balance Sheet Location	September 30, 2024		December 31, 2023
Other assets	$	4,271	$	4,903
Other liabilities	4,273		4,905

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Cautionary Statement Regarding Forward-Looking Statements

This Quarterly Report contains 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; and

• estimates of our risks and future costs and benefits.

These forward-looking statements are based on current beliefs and expectations of our management and are inherently 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 and/or recessionary pressures, employment prospects, real estate values, 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;

• inflation and 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 our ability to originate loans;

• adverse changes in the securities or credit markets;

• changes in laws, tax policies, or government regulations or policies affecting financial institutions, changes in regulatory fees, assessments, and capital requirements;

• changes in the quality and/or composition of our loan and securities portfolios, changes in prepayment speeds, and changes in 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;

• technological changes that may be more difficult or expensive to implement than expected;

• changes in our organization, compensation, 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 ability of third-party providers to perform their obligations to us;

• the effects of natural disasters, climate change, extreme weather events and increases in flood insurance premiums;

• 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;

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• 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 infectious disease outbreaks such as COVID-19, and the significant impact that such pandemics may have on our growth, operations, earnings and asset quality;

• 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, 2023, included in the Company’s Annual Report on Form 10-K, as supplemented by this report, contains a summary of significant accounting policies. Various elements of these accounting policies, by their nature, are inherently 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 and judgments regarding the valuation allowance against deferred tax assets 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 the critical accounting policies of the Company, 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, 2023.

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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, 2023.

Net income was $18.7 million for the nine months ended September 30, 2024, as compared to $29.4 million for the nine months ended September 30, 2023. Net income for the nine months ended September 30, 2024, was down from the comparative prior year period primarily due to a decrease in net interest income, which was negatively impacted by higher funding costs, partially offset by improved interest and non-interest income. Basic and diluted earnings per common share were $0.45 for the nine months ended September 30, 2024, compared to basic and diluted earnings per common share of $0.67 for the nine months ended September 30, 2023. For the nine months ended September 30, 2024, our return on average assets was 0.43%, as compared to 0.71% for the nine months ended September 30, 2023. For the nine months ended September 30, 2024, our return on average stockholders’ equity was 3.59% as compared to 5.69% for the nine months ended September 30, 2023. For the nine months ended September 30, 2024, net income included $795,000, or $0.02 per share, of additional tax expense related to options that expired in June 2024, and $683,000, or $0.01 per share after tax, of severance expense related to modest layoffs and staffing realignments. For the nine months ended September 30, 2023, net income included $440,000, or $0.01 per share after tax, of severance expense.

Comparison of Financial Condition at September 30, 2024 and December 31, 2023

Total assets increased by $132.5 million, or 2.4%, to $5.73 billion at September 30, 2024, from $5.60 billion at December 31, 2023. The increase was primarily due to increases in available-for-sale debt securities of $268.0 million, or 33.7%, and cash and cash equivalents of $3.4 million, or 1.5%, partially offset by a decrease in loans receivable of $139.7 million, or 3.3%.

Cash and cash equivalents increased by $3.4 million, or 1.5%, to $232.9 million at September 30, 2024, from $229.5 million at December 31, 2023. 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 $268.0 million, or 33.7%, to $1.06 billion at September 30, 2024, from $795.5 million at December 31, 2023. The increase was primarily attributable to purchases of securities, partially offset by paydowns, maturities and calls. At September 30, 2024, $869.4 million 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 $74.9 million in U.S. Government agency securities, $118.5 million in corporate bonds, substantially all of which were investment grade, and $684,000 in municipal bonds at September 30, 2024. Unrealized losses, net of tax, on available-for-sale debt securities and held-to-maturity securities approximated $19.6 million and $219,000, respectively, at September 30, 2024, and $32.5 million and $279,000, respectively, at December 31, 2023. The decrease in unrealized losses was the result of the impact of the 50 basis point decrease in interest rates declared by the Federal Reserve. The effective duration of the securities portfolio at September 30, 2024 was 1.65 years.

Equity securities were $10.7 million at September 30, 2024 and $10.6 million at December 31, 2023. Equity securities are primarily comprised of an investment in a Small Business Administration Loan Fund. This investment is utilized by the Bank as part of its Community Reinvestment Act program.

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Loans held-for-investment, net, decreased by $139.7 million, or 3.3%, to $4.06 billion at September 30, 2024, from $4.20 billion at December 31, 2023, primarily due to decreases in multifamily, commercial, and one-to-four family residential real estate loans, partially offset by increases in home equity and lines of credit, construction and land, and commercial and industrial loans. The decrease in loan balances reflects the Company remaining strategically focused on both managing the concentration of its commercial and multifamily real estate loan portfolios and disciplined loan pricing, as well as lower customer demand in the recent elevated interest rate environment. Multifamily loans decreased $110.1 million, or 4.0%, to $2.64 billion at September 30, 2024, from $2.75 billion at December 31, 2023, commercial real estate loans decreased $51.4 million, or 5.5%, to $878.2 million at September 30, 2024, from $929.6 million at December 31, 2023, one-to-four family residential loans decreased $11.1 million, or 6.9%, to $149.7 million at September 30, 2024, from $160.8 million at December 31, 2023, and other loans decreased $925,000, or 35.8%, to $1.7 million at September 30, 2024, from $2.6 million at December 31, 2023. Partially offsetting these decreases were increases in commercial and industrial loans of $19.1 million, or 12.3%, to $174.4 million at September 30, 2024, from $155.3 million at December 31, 2023, home equity and lines of credit of $8.4 million, or 5.2%, to $171.9 million at September 30, 2024, from $163.5 million at December 31, 2023, and construction and land loans of $2.1 million, or 6.6%, to $33.0 million at September 30, 2024, from $31.0 million at December 31, 2023.

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, 2024 and December 31, 2023:


	September 30, 2024				December 31, 2023
	Amount		% of Total		Amount		% of Total
Real estate loans:
Multifamily	$	2,640,944	65.06	%	$	2,750,996	65.44	%
Commercial mortgage	878,173		21.63		929,595		22.11
One-to-four family residential mortgage	149,682		3.69		160,824		3.83
Home equity and lines of credit	171,946		4.24		163,520		3.89
Construction and land	33,024		0.81		30,967		0.74
Total real estate loans	3,873,769		95.43	%	4,035,902		96.01	%
Commercial and industrial loans	174,413		4.30		155,268		3.69

Other loans	1,660		0.04		2,585		0.06
Total commercial and industrial, PPP, and other loans	176,073		4.34	%	157,853		3.75	%
Loans held-for-investment, net (excluding purchased credit-deteriorated (“PCD”) loans	4,049,842		99.77		4,193,755		99.76
PCD loans	9,264		0.23		9,899		0.24
Total loans held-for-investment, net	$	4,059,106	100.00	%	$	4,203,654	100.00	%

The following table summarizes commercial mortgage real estate loans by property type and owner-occupied and non-owner occupied status as a percentage of the total commercial mortgage real estate portfolio as of September 30, 2024:

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	September 30, 2024
	Concentration by Property Type				Percentage of Total
	Amount		% of Total		Owner-Occupied		Non-Owner Occupied
Office buildings	$	183,548	20.9	%	8.6	%	12.3	%
Mixed use (majority of space is non-residential)	170,104		19.4		2.7		16.7
Retail	147,478		16.8		2.5		14.3
Warehousing	114,659		13.1		11.6		1.5
Manufacturing	63,118		7.2		4.8		2.4
Accommodations (hotel/motel)	45,192		5.1		—		5.1
Healthcare facilities	38,927		4.4		3.0		1.4
Services	38,904		4.4		2.8		1.6
Schools/daycare	12,815		1.5		1.1		0.4
Recreational	8,841		1.0		0.9		0.1
Restaurants	8,514		1.0		0.3		0.7
Other	46,073		5.2		2.4		2.8
Total commercial real estate loans	$	878,173	100.0	%	40.7	%	59.3	%

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, and loan modifications. The following table presents the ranges in the LTVs of our commercial mortgage loans at September 30, 2024:


LTV Range %	Number of Loans	Amount
		(Dollars in thousands)
0 - 25	190	$	69,719
>25 - 50	259	316,934
>50 - 60	104	188,968
>60 - 70	91	238,912
>70 - 80	23	61,269
>80 - 90	2	2,188
>90	2	183
Total commercial real estate loans	671	$	878,173

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, 2024:


Geographic Region	Amount		Percent
	(Dollars in thousands)
New York	$	471,739	54	%
New Jersey	387,836		44	%
Pennsylvania and Other	18,598		2	%
Total commercial real estate loans	$	878,173	100	%

As of September 30, 2024, non-owner occupied commercial real estate loans (as defined by regulatory guidance) to total risk-based capital was estimated at approximately 447%. Management believes that the Bank maintains appropriate risk management practices including risk assessments, board-approved underwriting policies and related procedures, which include 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.

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Our real estate portfolio includes credit risk exposure to loans collateralized by office buildings and multifamily properties in New York State subject to some form of rent regulation limiting rent increases for rent stabilized multifamily properties. At September 30, 2024, office-related loans represented $183.6 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 59%. Approximately 41% were owner-occupied. The geographic locations of the properties collateralizing our office-related loans are: 50.7% in New York, 47.8% in New Jersey, and 1.5% in Pennsylvania. At September 30, 2024, our largest office-related loan had a principal balance of $90.0 million (with a net active principal balance for the Bank of $29.9 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, 2024, multifamily loans that have some form of rent stabilization or rent control totaled approximately $447.5 million, or approximately 11% 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 51%. At September 30, 2024, our largest rent-regulated loan had a principal balance of $16.9 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”.

Purchased credit-deteriorated (“PCD”) loans totaled $9.3 million and $9.9 million at September 30, 2024 and December 31, 2023, 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 $327,000 and $1.1 million attributable to PCD loans for the three and nine months ended September 30, 2024, respectively, as compared to $325,000 and $1.0 million for the three and nine months ended September 30, 2023, respectively. PCD loans had an allowance for credit losses of approximately $2.9 million at September 30, 2024.

The allowance for credit losses on loans decreased to $35.2 million at September 30, 2024, compared to $37.5 million as of December 31, 2023, primarily due to a decrease in loan balances and an improvement in the economic forecast within our CECL model. The decrease was partially offset by increases in quantitative reserves in the commercial and industrial and home equity and lines of credit loan portfolios due to an increase in non-performing loans in these categories and loan balances.

Total liabilities increased $132.3 million, or 2.7%, to $5.03 billion at September 30, 2024, from $4.90 billion at December 31, 2023. The increase was primarily attributable to an increase in borrowings of $131.6 million, partially offset by a decrease in total deposits of $2.9 million. Deposits decreased $2.9 million, or 0.1%, to $3.88 billion at September 30, 2024 as compared to December 31, 2023. Brokered deposits decreased by $17.9 million, or 17.9%, due to maturities that were replaced by borrowings. 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 $15.0 million, or 0.4%. The increase in deposits, excluding brokered deposits, was primarily attributable to increases of $80.9 million in time deposits, partially offset by decreases of $14.9 million in transaction accounts, $14.7 million in savings accounts, and $36.3 million in money market accounts. Growth in time deposits was attributable to the current interest rate environment and offering competitive interest rates to attract deposits. Estimated gross uninsured deposits at September 30, 2024 were $1.71 billion. This total includes fully collateralized uninsured governmental deposits and intercompany deposits of $859.3 million, leaving estimated uninsured deposits of approximately $852.2 million, or 22.0%, of total deposits. At December 31, 2023, estimated uninsured deposits totaled $869.9 million, or 22.4% of total deposits.

Borrowed funds increased to $1.05 billion at September 30, 2024, from $920.5 million at December 31, 2023. The increase in borrowings for the period was primarily due to a $205.5 million increase in borrowings under the Federal Reserve Bank Term Funding Program, which included favorable terms and conditions as compared to FHLB advances. In January 2024, the Company borrowed $300.0 million from the Federal Reserve Bank through the Bank Term Funding Program at favorable terms and conditions and invested the proceeds in higher-yielding interest-bearing deposits in other financial institutions and investment securities. 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.

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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, 2024 (dollars in thousands):


Year	Amount (1)		Weighted Average Rate
2024	$	25,000	4.71%
2025	483,184		4.00%
2026	148,000		4.36%
2027	173,000		3.19%
2028	154,288		3.96%

	$	327,288	3.92%

(1) Borrowings maturing in 2025 include $300.0 million of FRB borrowings that can be repaid without any penalty .

Total stockholders’ equity increased by $119,000 to $699.6 million at September 30, 2024, from $699.4 million at December 31, 2023. The increase was attributable to net income of $18.7 million for the nine months ended September 30, 2024, a $14.1 million decrease in accumulated other comprehensive loss, associated with an increase in the estimated fair value of our debt securities available-for-sale portfolio due to the increase in market interest rates, and a $1.9 million increase in equity award activity, partially offset by $18.4 million in stock repurchases and $16.5 million in dividend payments. On April 24, 2024, the Board of Directors of the Company approved a $5.0 million stock repurchase program, which was completed in May 2024, and on June 14, 2024, the Board of Directors of the Company approved a $10.0 million stock repurchase program. During the nine months ended September 30, 2024, the Company repurchased 1.8 million of its common stock outstanding at an average price of $10.03 for a total of $18.1 million pursuant to the approved stock repurchase programs. As of September 30, 2024, the Company had no remaining capacity under its current repurchase program.

Comparison of Operating Results for the Nine Months Ended September 30, 2024 and 2023

Net Income . Net income was $18.7 million and $29.4 million for the nine months ended September 30, 2024 and September 30, 2023, respectively. Significant variances from the comparable prior year period are as follows: a $10.9 million decrease in net interest income, a $1.3 million increase in the provision for credit losses on loans, a $1.5 million increase in non-interest income, a $3.2 million increase in non-interest expense, and a $3.1 million decrease in income tax expense.

Interest Income . Interest income increased $23.9 million, or 15.5%, to $178.2 million for the nine months ended September 30, 2024, from $154.3 million for the nine months ended September 30, 2023, primarily due to a 47 basis point increase in the yield on interest-earning assets due to the recent rising rate environment and a $156.1 million, or 2.9%, increase in the average balance of interest-earning assets. The increase in the average balance of interest-earning assets was primarily due to increases in the average balance of interest-earning deposits in financial institutions of $111.7 million, the average balance of other securities of $91.6 million, and the average balance of mortgage-backed securities of $88.5 million, partially offset by a decrease in the average balance of loans of $133.4 million. The Company accreted interest income related to PCD loans of $1.1 million for the nine months ended September 30, 2024, as compared to $1.0 million for the nine months ended September 30, 2023. Interest income for the nine months ended September 30, 2024, included loan prepayment income of $648,000 as compared to $1.3 million for the nine months ended September 30, 2023.

Interest Expense . Interest expense increased $34.8 million, or 59.4%, to $93.4 million for the nine months ended September 30, 2024, as compared to $58.6 million for the nine months ended September 30, 2023. The increase was primarily due to an increase in interest expense on deposits of $28.3 million, or 88.7%, and, to a lesser extent, an increase in interest expense on borrowings of $6.5 million, or 26.8%. The increase in interest expense on deposits was attributable to a 114 basis point increase in the cost of interest-bearing deposits from 1.42% to 2.56% for the nine months ended September 30, 2024, due to the recent rising market interest rates and a shift in the composition of the deposit portfolio towards higher-costing certificates of deposit, and a $127.1 million, or 4.2%, increase in the average balance of interest-bearing deposits. The increase in interest expense on borrowings was attributable to a 31 basis point increase in the average cost of borrowings from 3.58% to 3.89%, and a $149.8 million, or 16.6%, increase in the average balance of borrowings.

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Net Interest Income . Net interest income for the nine months ended September 30, 2024, decreased $10.9 million, or 11.4%, to $84.8 million, from $95.7 million for the nine months ended September 30, 2023, primarily due to a 34 basis point decrease in net interest margin to 2.07% from 2.41% for the nine months ended September 30, 2023. The decrease in net interest margin was primarily due to interest-bearing liabilities repricing at a faster rate than interest-earning assets. The cost of interest-bearing liabilities increased by 96 basis points to 2.93% for the nine months ended September 30, 2024, from 1.97% for the nine months ended September 30, 2023, driven by a 114 basis point increase in the cost of interest-bearing deposits from 1.42% to 2.56% for the nine months ended September 30, 2024, and a 31 basis point increase in the cost of borrowings from 3.58% to 3.89% due to rising market interest rates and a shift in the composition of the deposit portfolio towards higher-costing certificates of deposit and a greater reliance on borrowings. The increase in the cost of interest-bearing liabilities was partially offset by an increase in the yield on interest-earning assets, which increased by 47 basis points to 4.35% for the nine months ended September 30, 2024, from 3.88% for the nine months ended September 30, 2023, due to an increase in yields on all classes of interest-earning assets due to the higher interest rate environment. The net interest margin was also negatively affected by approximately 12 basis points due to a low risk leverage strategy in the first quarter of 2024. In January 2024, the Company borrowed $300.0 million from the Federal Reserve Bank through the Bank Term Funding Program at favorable terms and conditions and invested the proceeds in higher-yielding interest-bearing deposits in other financial institutions and investment securities.

Provision for Credit Losses . The provision for credit losses on loans increased by $1.3 million to $2.3 million for the nine months ended September 30, 2024, compared to $1.1 million for the nine months ended September 30, 2023, primarily due to an increase in the specific reserve component of the allowance for credit losses, which was partially offset by a decrease in the general reserve component of the allowance for credit losses. The increase in the specific reserve was related to a single commercial and industrial relationship totaling $12.5 million that experienced credit deterioration and was placed on non-accrual status during the current quarter, which has a specific reserve of $1.3 million and incurred a charge-off of $878,000. The decline in the general reserve component of the allowance for credit losses resulted from a decline in loan balances and an improvement in the macroeconomic forecast for the current period within our CECL model, partially offset by an increase in reserves related to changes in model assumptions, including the slowing of prepayment speeds, and an increase in reserves in the commercial and industrial and home equity and lines of credit portfolios related to an increase in non-performing loans in these portfolios and higher loan balances. Net charge-offs were $4.7 million for the nine months ended September 30, 2024, primarily due to $3.9 million in net charge-offs on small business unsecured commercial and industrial loans, as compared to net charge-offs of $5.2 million for the nine months ended September 30, 2023, primarily due to $5.2 million in net charge-offs on small business unsecured commercial and industrial loans. Management continues to closely monitor the small business unsecured commercial and industrial loan portfolio, which totaled $31.0 million at September 30, 2024.

Non-interest Income . Non-interest income increased by $1.5 million, or 18.7%, to $9.8 million for the nine months ended September 30, 2024, compared to $8.3 million for the nine months ended September 30, 2023. The increase was primarily due to increases of $790,000 in fees and service charges for customer services, related to an increase in overdraft fees and service charges on deposit accounts, $260,000 in income on bank owned life insurance, and $874,000 in gains on trading securities, net. Partially offsetting the increases was a $303,000 decrease in other income, primarily due to lower swap fee income. Gains on trading securities in the nine months ended September 30, 2024, were $1.6 million, as compared to $723,000 in the nine months ended September 30, 2023. The trading portfolio is utilized to fund the Company’s deferred compensation obligation to certain employees and directors of the plan. The participants of this plan, at their election, defer a portion of their compensation. Gains and losses on trading securities have no effect on net income since participants benefit from, and bear the full risk of changes in the trading securities market values. Therefore, the Company records an equal and offsetting amount in compensation expense, reflecting the change in the Company’s obligations under the plan.

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Non-interest Expense . Non-interest expense increased $3.2 million, or 5.2%, to $65.7 million for the nine months ended September 30, 2024, compared to $62.5 million for the nine months ended September 30, 2023. The increase was primarily due to a $3.3 million increase in employee compensation and benefits, primarily attributable to higher salary expense, related to annual merit increases and higher medical expense, and an increase of $874,000 in deferred compensation expense, which is described above, and had no effect on net income. Employee compensation and benefits expense also includes severance expense of $683,000 for the nine months ended September 30, 2024, as compared to $440,000 for the nine months ended September 30, 2023. During the second quarter of 2024, due to current economic conditions, the Company implemented a workforce reduction plan which included modest layoffs and staffing realignments. The annual estimated cost savings of this plan is $2.0 million, pre-tax. Partially offsetting the increase was a $461,000 decrease in stock compensation expense related to performance stock awards not expected to vest. Additionally, non-interest expense included a $727,000 increase in credit loss expense/(benefit) for off-balance sheet exposure due to a provision of $337,000 recorded during the nine months ended September 30, 2024, as compared to a benefit of $390,000 for the comparative prior year period. The benefit in the prior year period was attributable to a decrease in the pipeline of loans committed and awaiting closing. Partially offsetting the increases was a $552,000 decrease in advertising expense due to a change in marketing strategy and the timing of specific deposit and lending campaigns.

Income Tax Expense . The Company recorded income tax expense of $7.9 million for the nine months ended September 30, 2024, compared to $11.0 million for the nine months ended September 30, 2023, with the decrease due to lower taxable income partially offset by a higher effective tax rate. The effective tax rate for the nine months ended September 30, 2024, was 29.7% compared to 27.2% for the nine months ended September 30, 2023. In June 2024, options granted in 2014 expired and resulted in additional tax expense of $795,000, contributing to the higher effective tax rate for the nine months ended September 30, 2024.

During the quarter the Company entered into an agreement to sell and vacate one of its branches in New York with a closing date of December 27, 2024. The Company expects to record a gain on sale of property of approximately $3.6 million in the fourth quarter of 2024.

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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, 2024						September 30, 2023
	Average Outstanding Balance		Interest		Average Yield/ Rate (1)		Average Outstanding Balance		Interest		Average Yield/ Rate (1)
Interest-earning assets:
Loans (2)	$	4,127,409	$	138,030	4.47	%	$	4,260,827	$	135,220	4.24	%
Mortgage-backed securities (3)	791,850		20,246		3.42		703,320		11,170		2.12
Other securities (3)	332,831		10,031		4.03		241,280		3,593		1.99
Federal Home Loan Bank of New York stock	38,781		2,819		9.71		41,093		2,125		6.91
Interest-earning deposits in financial institutions	184,420		7,060		5.11		72,683		2,225		4.09
Total interest-earning assets	5,475,291		178,186		4.35		5,319,203		154,333		3.88
Non-interest-earning assets	269,180						244,319
Total assets	$	5,744,471					$	5,563,522

Interest-bearing liabilities:
Savings, NOW, and money market accounts	$	2,457,320	38,231		2.08	%	$	2,443,400	19,194		1.05	%
Certificates of deposit	685,510		22,010		4.29		572,283		12,724		2.97
Total interest-bearing deposits	3,142,830		60,241		2.56		3,015,683		31,918		1.42
Borrowed funds	1,052,589		30,653		3.89		902,802		24,182		3.58
Subordinated debt	61,294		2,492		5.43		61,164		2,484		5.43
Total interest-bearing liabilities	4,256,713		93,386		2.93		3,979,649		58,584		1.97
Non-interest bearing deposits	691,406						788,991
Accrued expenses and other liabilities	101,639						102,765
Total liabilities	5,049,758						4,871,405
Stockholders' equity	694,713						692,117
Total liabilities and stockholders' equity	$	5,744,471					$	5,563,522

Net interest income			$	84,800					$	95,749
Net interest rate spread (4)					1.42	%					1.91	%
Net interest-earning assets (5)	$	1,218,578					$	1,339,554
Net interest margin (6)					2.07	%					2.41	%
Average interest-earning assets to interest-bearing liabilities					128.63	%					133.66	%

(1) Average yields and rates are annualized.

(2) Includes non-accruing loans.

(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.

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Comparison of Operating Results for the Three Months Ended September 30, 2024 and 2023

Net Income. Net income was $6.5 million and $8.2 million for the quarters ended September 30, 2024 and September 30, 2023, respectively. Significant variances from the comparable prior year quarter are as follows: a $1.5 million decrease in net interest income, a $2.4 increase in the provision for credit losses on loans, a $1.5 million increase in non-interest income, a $189,000 decrease in non-interest expense, and a $513,000 decrease in income tax expense.

Interest Income . Interest income increased $6.6 million, or 12.5%, to $59.3 million for the quarter ended September 30, 2024, from $52.7 million for the quarter September 30, 2023, primarily due to a 38 basis point increase in the yield on interest-earning assets due to the rising rate environment and a $155.1 million, or 3.0%, increase in the average balance of interest-earning assets. The increase in the average balance of interest-earning assets was due to increases in the average balance of mortgage-backed securities of $240.3 million, the average balance of interest-earning deposits in financial institutions of $26.8 million, and the average balance of other securities of $64.0 million, partially offset by decreases in the average balance of loans outstanding of $172.8 million and the average balance of Federal Home Loan Bank of New York stock of $3.2 million. Interest income for the quarter ended September 30, 2024, included loan prepayment income of $87,000, as compared to $183,000 for the quarter ended September 30, 2023. The Company accreted interest income related to PCD loans of $327,000 for the quarter ended September 30, 2024, as compared to $325,000 for the quarter ended September 30, 2023.

Interest Expense . Interest expense increased $8.0 million, or 34.9%, to $31.1 million for the quarter ended September 30, 2024, from $23.0 million for the quarter ended September 30, 2023. The increase was attributed to an increase in interest expense on deposits of $6.7 million, or 49.1%, and to a lesser extent, an increase in interest expense on borrowings of $1.4 million, or 15.8%. The increase in interest expense on deposits was primarily attributable to a 77 basis point increase in the cost of interest-bearing deposits to 2.59% for the quarter ended September 30, 2024, from 1.82% for the quarter ended September 30, 2023, due to rising market interest rates and a shift in the composition of the deposit portfolio towards higher-yielding certificates of deposit and a $158.4 million, or 5.3%, increase in the average balance of interest-bearing deposits. The increase in interest expense on borrowings was primarily due to a 30 basis point increase in the cost of borrowings from 3.63% for the quarter ended September 30, 2023, to 3.93% for the quarter ended September 30, 2024, and a $68.4 million, or 7.28%, increase in the average balance of borrowed funds.

Net Interest Income . Net interest income for the quarter ended September 30, 2024, decreased $1.5 million, or 4.9%, to $28.2 million, from $29.7 million for the quarter ended September 30, 2023, primarily due to a 17 basis point decrease in net interest margin to 2.08% for the quarter ended September 30, 2024, from 2.25% for the quarter ended September 30, 2023. The decrease in net interest margin was primarily due to the cost of interest-bearing liabilities increasing faster than the repricing of interest-earning assets. The cost of interest-bearing liabilities increased by 64 basis points to 2.95% for the quarter ended September 30, 2024, from 2.31% for the quarter ended September 30, 2023, driven primarily by a 77 basis point increase in the cost of interest-bearing deposits from 1.82% to 2.59%, and a 30 basis point increase in the cost of borrowings from 3.63% to 3.93%. The increase in the cost of interest-bearing liabilities was partially offset by an increase in the yield on interest-earning assets, which increased by 38 basis points to 4.38% for the quarter ended September 30, 2024, from 4.00% for the quarter ended September 30, 2023.

Provision for Credit Losses . The provision for credit losses on loans increased by $2.4 million to $2.5 million for the quarter ended September 30, 2024, from a provision of $188,000 for the quarter ended September 30, 2023, primarily due to an increase in the specific reserve component of the allowance for credit losses, which was partially offset by a decrease in the general reserve component of the allowance for credit losses. The increase in the specific reserve was related to a single commercial and industrial relationship that experienced credit deterioration and was placed on non-accrual status during the current quarter, which has a specific reserve of $1.3 million and incurred a charge-off of $878,000. The decline in the general reserve component of the allowance for credit losses resulted from a decline in loan balances and an improvement in the macroeconomic forecast for the current period within our CECL model, partially offset by an increase in reserves related to changes in model assumptions, including the slowing of prepayment speeds, and an increase in reserves in the commercial and industrial portfolio related to an increase in non-performing loans and higher loan balances. Net charge-offs were $2.1 million for the quarter ended September 30, 2024, and included $1.4 million in net charge-offs on small business unsecured loans, as compared to net charge-offs of $2.9 million for the quarter ended September 30, 2023, due to $2.9 million in net charge-offs on small business unsecured commercial and industrial loans.

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Non-interest Income . Non-interest income increased by $1.5 million, or 68.7%, to $3.6 million for the quarter ended September 30, 2024, from $2.1 million for the quarter ended September 30, 2023, primarily due to a $294,000 increase in fees and service charges, primarily related to higher overdraft fees, a $1.0 million increase in gains on trading securities, net, and a $185,000 increase in other income, primarily due to higher swap fee income. For the quarter ended September 30, 2024, gains on trading securities, net, were $710,000, compared to losses of $295,000 in the quarter ended September 30, 2023. Gains and losses on trading securities have no effect on net income since participants benefit from, and bear the full risk of, changes in the trading securities market values. Therefore, the Company records an equal and offsetting amount in compensation expense, reflecting the change in the Company’s obligations under its deferred compensation plan.

Non-interest Expense . Non-interest expense decreased by $189,000, or 0.9%, to $20.4 million for the quarter ended September 30, 2024, from $20.6 million for the quarter ended September 30, 2023. The decrease was primarily due to decreases of $386,000 in occupancy expense, attributable to lower real estate taxes, common area maintenance and electricity costs, $214,000 in data processing costs, attributable to a decrease in ongoing core processing costs related to a prior technology-related contract renewed at favorable terms, and $132,000 in advertising expense. Partially offsetting the decreases was a $504,000 increase in compensation and employee benefits, which included a $1.0 million increase in expense related to the Company's deferred compensation plan, which is described above, and had no effect on net income, that was offset by lower medical expense.

Income Tax Expense . The Company recorded income tax expense of $2.4 million for the quarter ended September 30, 2024, compared to $2.9 million for the quarter ended September 30, 2023, with the decrease due to lower taxable income. The effective tax rate for the quarter ended September 30, 2024 was 26.6%, compared to 26.0% for the quarter ended September 30, 2023.

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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, 2024						September 30, 2023
	Average Outstanding Balance		Interest		Average Yield/ Rate (1)		Average Outstanding Balance		Interest		Average Yield/ Rate (1)
Interest-earning assets:
Loans (2)	$	4,079,974	$	46,016	4.49	%	$	4,252,752	$	46,213	4.31	%
Mortgage-backed securities (3)	901,042		8,493		3.75		660,753		3,664		2.20
Other securities (3)	273,312		2,684		3.91		209,341		1,095		2.08
Federal Home Loan Bank of New York stock	38,044		914		9.56		41,278		933		8.97
Interest-earning deposits in financial institutions	99,837		1,211		4.83		73,005		831		4.52
Total interest-earning assets	5,392,209		59,318		4.38		5,237,129		52,736		4.00
Non-interest-earning assets	275,342						248,315
Total assets	$	5,667,551					$	5,485,444

Interest-bearing liabilities:
Savings, NOW, and money market accounts	$	2,417,725	12,717		2.09	%	$	2,408,218	8,865		1.46	%
Certificates of deposit	700,763		7,587		4.31		551,904		4,749		3.41
Total interest-bearing deposits	3,118,488		20,304		2.59		2,960,122		13,614		1.82
Borrowed funds	1,008,338		9,949		3.93		939,922		8,593		3.63
Subordinated debt	61,350		836		5.42		61,127		837		5.43
Total interest-bearing liabilities	4,188,176		31,089		2.95		3,961,171		23,044		2.31
Non-interest bearing deposits	683,283						739,266
Accrued expenses and other liabilities	102,233						100,103
Total liabilities	4,973,692						4,800,540
Stockholders' equity	693,859						684,904
Total liabilities and stockholders' equity	$	5,667,551					$	5,485,444

Net interest income			$	28,229					$	29,692
Net interest rate spread (4)					1.42	%					1.69	%
Net interest-earning assets (5)	$	1,204,033					$	1,275,958
Net interest margin (6)					2.08	%					2.25	%
Average interest-earning assets to interest-bearing liabilities					128.75	%					132.21	%

(1) Average yields and rates are annualized.

(2) Includes non-accruing loans.

(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.

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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 ($9.3 million at September 30, 2024 and $9.9 million at December 31, 2023, respectively) as accruing, even though they may be contractually past due. At September 30, 2024, 2.1% of PCD loans were past due 30 to 89 days, and 24.6% were past due 90 days or more, as compared to 2.9% and 27.1%, respectively, at December 31, 2023.

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, 2024 and December 31, 2023 (dollars in thousands):


	September 30, 2024			December 31, 2023
Non-accrual loans:
Held-for-investment
Real estate loans:
Multifamily	$	2,651		$	2,709
Commercial mortgage	4,426			6,491
One-to-four family residential	66			104

Home equity and lines of credit	1,123			499
Commercial and industrial	14,617			305
Other	6			7
Total non-accrual loans held-for-investment	22,889			10,115



Loans delinquent 90 days or more and still accruing:
Held-for-investment
Real estate loans:
Multifamily	—			201
Commercial mortgage	1,161			—
One-to-four family residential	304			406
Home equity and lines of credit	343			711
Commercial and industrial	835			—

Total loans delinquent 90 days or more and still accruing held-for-investment	2,643			1,318
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	30,429			11,433

Total non-performing assets	$	30,429		$	11,433
Non-performing loans to total loans	0.75		%	0.27		%
Non-performing assets to total assets	0.53		%	0.20		%

Accruing loans 30 to 89 days delinquent	$	16,057		$	8,683

At September 30, 2024, total non-performing loans included $13.4 million of modified loans to borrowers experiencing financial difficulty and $3.2 million of troubled debt restructuring (“TDR”) loans that existed prior to adoption of Accounting Standards Update (“ASU”) 2022-02 on January 1, 2023. At December 31, 2023, total non-performing loans included $236,000 of modified loans to borrowers experiencing financial difficulty and $3.3 million of troubled debt TDR loans that existed prior to the adoption of ASU 2022-02.

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The Company's non-performing loans at September 30, 2024 totaled $30.4 million, or 0.75%, of total loans, and include $4.9 million of loans held-for-sale, as compared to non-performing loans of $11.4 million, or 0.27%, at December 31, 2023. The $19.0 million increase in non-performing loans was primarily attributable to an increase in non-performing commercial and industrial loans of $15.6 million and an increase of $3.5 million in non-performing commercial real estate loans. One commercial and industrial relationship with a carrying balance of $12.5 million at September 30, 2024, experienced credit deterioration and was placed on non-accrual status during the third quarter of 2024. The Company anticipated the receipt of $10.0 million on October 31, 2024, which was not received. The loan is currently in the collection process which includes all legal remedies. The loan was individually evaluated for impairment, including the assets of the borrower and its guarantors, which resulted in a charge-off of $878,000 and a specific reserve provision of $1.3 million. Additionally, management evaluated the collateral from the Company and assets subject to personal guarantees and, based on current estimates, believes there is adequate collateral and assets to support the current value of the loan. Another commercial and industrial relationship with an outstanding balance of $750,000 is in the process of maturity extension. Additionally, there was an increase in non-performing unsecured small business loans. Unsecured small business loans totaled $31.0 million and $37.4 million at September 30, 2024 and December 31, 2023, respectively. Management continues to closely monitor the small business unsecured commercial and industrial loan portfolio.

The increase in non-performing commercial real estate loans was primarily attributable to one loan with a balance of $4.4 million, which was put on non-accrual status during the first quarter of 2024. Based on the results of the impairment analysis for this loan, no impairment reserve was necessary as the loan is adequately covered by collateral (a private residence and retail property, both located in New Jersey), with aggregate appraised values totaling $8.7 million. The loan was transferred to held-for-sale as of September 30, 2024.

Other Real Estate Owned

At September 30, 2024 and December 31, 2023, 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 $16.1 million and $8.7 million at September 30, 2024 and December 31, 2023, respectively. The following table sets forth delinquencies for accruing loans by type and by amount at September 30, 2024 and December 31, 2023 (dollars in thousands):


	September 30, 2024		December 31, 2023
Held-for-investment
Real estate loans:
Multifamily	$	2,259	$	740
Commercial mortgage	5,689		1,010
One-to-four family residential	2,286		3,339
Home equity and lines of credit	1,369		817

Commercial and industrial loans	4,450		2,767

Other loans	4		10
Total delinquent accruing loans held-for-investment	$	16,057	$	8,683

The increase in multifamily delinquent loans was primarily due to two relationships totaling $1.5 million that made payments and became current subsequent to September 30, 2024. The increase in commercial real estate delinquent loans was primarily due to two participation loans totaling $5.6 million that matured and the lead bank is in the process of extending their maturity and are expected to become current in the fourth quarter of 2024. The increase in commercial and industrial delinquent loans was primarily due to two loans to one borrower totaling $1.5 million which are in the process of collection, and, to a lesser extent, an increase in delinquencies in unsecured small business loans.

Subsequent to the quarter end, $1.1 million of home equity and lines of credit loans, $1.5 million of one-to-four family residential loans, and $1.5 million of commercial and industrial loans became current.

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Rent-Regulated Multifamily Loans

Our multifamily loan portfolio at September 30, 2024 totaled $2.64 billion, or 65% of our total loan portfolio, of which $447.5 million, or 11%, 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	$	286,728	39.1	%	$	1,166	$	16,603	51.0%	1.57x	$	1,709	$	534	$	782	$	874
>0-10	4,745		0.7		1,582		2,128		51.4	1.46	—		—		—		—
>10-20	18,681		2.5		1,437		2,865		49.2	1.59	—		—		—		—
>20-30	19,585		2.7		2,176		5,512		54.1	1.64	—		—		—		—
>30-40	15,183		2.1		1,265		3,088		48.3	1.63	—		—		—		—
>40-50	22,208		3.0		1,306		2,740		48.2	1.84	—		—		—		—
>50-60	9,452		1.3		1,575		2,341		39.9	2.03	—		—		—		—
>60-70	19,201		2.6		3,200		11,339		53.0	1.46	—		—		—		—
>70-80	22,405		3.1		2,489		4,914		48.0	1.53	—		—		—		—
>80-90	20,820		2.8		1,157		3,148		46.6	1.71	—		—		—		—
>90-100	295,256		40.1		1,779		16,909		52.6	1.65	—		2,117		1,204		4,482
Total	$	734,264	100.0	%	$	1,454	$	16,909	51.2%	1.62x	$	1,709	$	2,651	$	1,986	$	5,356

The table below sets forth our New York rent-regulated loans by county (dollars in thousands):


County	Balance		LTV *	DSCR *
Bronx	$	118,400	51.7%	1.64x
Kings	191,745		51.5%	1.66
Nassau	2,176		36.2%	1.88
New York	49,871		47.3%	1.64
Queens	38,864		44.3%	1.81
Richmond	28,790		60.6%	1.64
Westchester	17,689		61.8%	1.37
Total	$	447,535	51.4%	1.65x

* Weighted Average

None of the loans that are rent-regulated in New York are interest-only. During the remainder of 2024, one loan with an aggregate principal balance of $1.8 million will re-price.

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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 FRB. On March 12, 2023, the Board of Governors of the Federal Reserve System created the Bank Term Funding Program (“BTFP”), which aimed to enhance liquidity by allowing institutions to pledge certain securities at par value, and a pay a borrowing rate of ten basis points over the one-year overnight index swap rate. The BTFP was available to eligible U.S. federally insured depository institutions, with advances having a term of up to one year and no prepayment penalties. As of September 30, 2024, the Company had borrowed $300.0 million under the BTFP. The BTFP ceased making new advances on March 11, 2024. The Bank’s total short-term borrowed funds, excluding lease obligations, floating rate advances and an overnight line of credit, were $983 million at September 30, 2024, and had a weighted average interest rate of 3.92%. A total of $483.2 million of these borrowings will mature in less than one year. Short-term borrowed funds, excluding floating rate advances, were $853.1 million at December 31, 2023.

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 of approximately $1.27 billion utilizing unencumbered securities of $571.5 million, loans of $699.3 million, and encumbered securities of $93,000 at September 30, 2024. Additionally, the Bank has remaining borrowing capacity utilizing encumbered securities through the FRB Discount Window of $25.0 million. The Bank expects to have sufficient funds available to meet current commitments in the normal course of business.

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, 2024 were $1.71 billion. This total includes fully collateralized uninsured governmental deposits and intercompany deposits of $859.3 million, leaving estimated net uninsured deposits of approximately $852.2 million, or 22.0%, of total deposits. At December 31, 2023, estimated net uninsured deposits totaled $869.9 million, or 22.4% 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, 2024, Northfield Bancorp, Inc. (standalone) had liquid assets of $28.4 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.

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At September 30, 2024, and December 31, 2023, 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
As of September 30, 2024:
CBLR	12.26%	12.03%	9.00%	9.00%
As of December 31, 2023:
CBLR	12.80%	12.58%	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, 2024, the reserve for commitments to fund unused lines of credit recorded in accrued expenses and other liabilities was $573,000.

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, 2023.

Accounting Pronouncements Not Yet Adopted

ASU No. 2023-07. In November 2023, the FASB issued ASU No. 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures”. The amendments in this ASU require improved reportable segment information on an annual and interim basis, primarily through enhanced disclosures about significant segment expenses. This update will be effective for financial statements issued for fiscal years beginning after December 15, 2023, and interim periods for fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company operates one operating segment; therefore, we do not anticipate any impact to the consolidated financial statements.

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 the 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. Early adoption is permitted. The Company is currently evaluating the impact of this standard on the consolidated financial statements.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Management of Market Risk

General . A majority of our assets and liabilities are monetary in nature. Consequently, our most significant form of market risk is interest rate risk. Our assets, consisting primarily of mortgage-related securities and loans, generally have longer maturities than our liabilities, which consist primarily of deposits and borrowings. As a result, a principal part of our business strategy involves managing interest rate risk and limiting the exposure of our net interest income to changes in market interest rates. Accordingly, our Board of Directors has established a Management Asset-Liability Committee, comprised of our Senior Vice President (“SVP”) & Chief Investment Officer and Treasurer, who chairs this Committee, our President & Chief Executive Officer, our Executive Vice President (“EVP”) & Chief Risk Officer, our EVP & Chief Financial Officer, our EVP & Chief Lending Officer, our EVP & Chief Branch Administration, Deposit Operations & Business Development Officer, and our SVP & Director of Marketing, and other officers and staff as necessary or appropriate. This committee is responsible for, among other things, evaluating the interest rate risk inherent in our assets and liabilities, for recommending to the risk management committee of our Board of Directors the level of risk that is appropriate given our business strategy, operating environment, capital, liquidity and performance objectives, and for managing this risk consistent with the guidelines approved by the Board of Directors.

We seek to manage our interest rate risk in order to minimize the exposure of our earnings and capital to changes in interest rates. As part of our ongoing asset-liability management, we currently use the following strategies to manage our interest rate risk:

• originating multifamily loans and commercial real estate loans that generally have shorter maturities than one-to-four family residential real estate loans and have higher interest rates that generally reset from five to ten years;

• investing in investment grade corporate securities and mortgage-backed securities; and

• obtaining general financing through lower-cost core deposits, brokered deposits, and longer-term FHLB advances and repurchase agreements.

Shortening the average term of our interest-earning assets by increasing our investments in shorter-term assets, as well as originating loans with variable interest rates, helps to match the maturities and interest rates of our assets and liabilities better, thereby reducing the exposure of our net interest income to changes in market interest rates.

Net Portfolio Value Analysis . We compute amounts by which the net present value of our assets and liabilities (net portfolio value or “NPV”), would change in the event market interest rates change over an assumed range of rates. Our simulation model uses a discounted cash flow analysis to measure the interest rate sensitivity of our NPV. Depending on current market interest rates, we estimate the economic value of these assets and liabilities under the assumption that interest rates experience an instantaneous and sustained increase or decrease of 100, 200, 300, or 400 basis points, which is based on the current interest rate environment. A basis point equals one-hundredth of one percent, and 100 basis points equals one percent. An increase in interest rates from 3% to 4% would mean, for example, a 100 basis point increase in the “Change in Interest Rates” column below.

Net Interest Income Analysis. In addition to NPV calculations, we analyze our sensitivity to changes in interest rates through our net interest income model. Net interest income is the difference between the interest income we earn on our interest-earning assets, such as loans and securities, and the interest we pay on our interest-bearing liabilities, such as deposits and borrowings. In our model, we estimate what our net interest income would be for a twelve-month period. Depending on current market interest rates we then calculate what the net interest income would be for the same period under the assumption that interest rates experience an instantaneous and sustained increase or decrease of 100, 200, 300, or 400 basis points, which is based on the current interest rate environment.

The following tables set forth, as of September 30, 2024 and December 31, 2023, our calculation of the estimated changes in our NPV, NPV ratio, and percent change in net interest income that would result from the designated instantaneous and sustained changes in interest rates (dollars in thousands). Computations of prospective effects of hypothetical interest rate changes are based on numerous assumptions, including relative levels of market interest rates, loan prepayments and deposit repricing characteristics, including decay rates, and correlations to movements in interest rates, and should not be relied on as indicative of actual results.

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	At September 30, 2024
Change in Interest Rates (basis points)	Estimated Present Value of Assets		Estimated Present Value of Liabilities		Estimated NPV		Estimated Change In NPV		Estimated Change in NPV %		Estimated NPV/Present Value of Assets Ratio		Next 12 Months Net Interest Income Percent Change		Months 13-24 Net Interest Income Percent Change
+400	$	5,120,762	$	4,421,625	$	699,137	$	(67,431)	(8.80)	%	13.65	%	(13.17)	%	1.77	%
+300	5,212,181		4,497,772		714,409		(52,159)		(6.80)		13.71		(8.94)		2.01
+200	5,313,011		4,577,510		735,501		(31,067)		(4.05)		13.84		(4.32)		3.10
+100	5,414,456		4,661,226		753,230		(13,338)		(1.74)		13.91		(0.85)		2.88
—	5,515,951		4,749,383		766,568		—		—		13.90		—		—
(100)	5,629,284		4,831,372		797,912		31,344		4.09		14.17		1.39		(2.87)
(200)	5,736,088		4,917,944		818,144		51,576		6.73		14.26		1.59		(7.92)
(300)	5,849,428		5,009,372		840,056		73,488		9.59		14.36		2.59		(10.65)
(400)	6,031,620		5,114,810		916,810		150,242		19.60		15.20		2.07		(11.68)


	At December 31, 2023
Change in Interest Rates (basis points)	Estimated Present Value of Assets		Estimated Present Value of Liabilities		Estimated NPV		Estimated Change In NPV		Estimated Change in NPV %		Estimated NPV/Present Value of Assets Ratio		Next 12 Months Net Interest Income Percent Change		Months 13-24 Net Interest Income Percent Change
+400	$	4,845,088	$	4,222,267	$	622,821	$	(139,446)	(18.29)	%	12.85	%	(20.93)	%	(5.16)	%
+300	4,945,428		4,292,831		652,597		(109,670)		(14.39)		13.20		(15.79)		(4.31)
+200	5,060,164		4,366,834		693,330		(68,937)		(9.04)		13.70		(9.91)		(1.91)
+100	5,174,386		4,444,681		729,705		(32,562)		(4.27)		14.10		(4.52)		(0.49)
—	5,289,153		4,526,886		762,267		—		—		14.41		—		—
(100)	5,410,037		4,618,015		792,022		29,755		3.90		14.64		2.73		(1.32)
(200)	5,531,944		4,714,497		817,447		55,180		7.24		14.78		4.51		(4.34)
(300)	5,653,051		4,818,672		834,379		72,112		9.46		14.76		4.39		(9.12)
(400)	5,815,435		4,954,580		860,855		98,588		12.93		14.80		4.19		(9.12)

At September 30, 2024, in the event of a 400 basis point decrease in interest rates, we would experience an 19.60% increase in estimated net portfolio value, a 2.07% increase in net interest income in year one, and a 11.68% decrease in net interest income in year two. In the event of a 400 basis point increase in interest rates, we would experience a 8.80% decrease in estimated net portfolio value, a 13.17% decrease in net interest income in year one and an 1.77% increase in net interest income in year two. Our policies provide that, in the event of a 200 basis point decrease or less in interest rates, our net present value ratio should decrease by no more than 300 basis points and 10%, and in the event of a 400 basis point increase or less, our net present value should decrease by no more than 475 basis points and 35%. In the event of a 200 basis point decrease or less, our projected net interest income should decrease by no more than 10% in year one and 20% in year two, and in the event of a 400 basis point increase or less, our projected net interest income should decrease by no more than 39% in year one and 26% in year two. At September 30, 2024 and December 31, 2023, we were in compliance with all Board-approved policies with respect to interest rate risk management.

Certain shortcomings are inherent in the methodologies used in determining interest rate risk through changes in net portfolio value and net interest income. Our model requires us to make certain assumptions that may or may not reflect the manner in which actual yields and costs respond to changes in market interest rates. However, we also apply consistent parallel yield curve shifts (in both directions) to determine possible changes in net interest income if the theoretical yield curve shifts occurred gradually. Net interest income analysis also adjusts the asset and liability repricing analysis based on changes in prepayment rates resulting from the parallel yield curve shifts. In addition, the net portfolio value and net interest income information presented assume that the composition of our interest-sensitive assets and liabilities existing at the beginning of a period remains constant over the period being measured and assume that a particular change in interest rates is reflected uniformly across the yield curve regardless of the duration or repricing of specific assets and liabilities. Accordingly, although interest rate risk calculations provide an indication of our interest rate risk exposure at a particular point in time, such measurements are not intended to and do not provide a precise forecast of the effect of changes in market interest rates on our net portfolio value or net interest income and will differ from actual results.

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ITEM 4. CONTROLS AND PROCEDURES

An evaluation was performed under the supervision and with the participation of the Company’s management, including the President and Chief Executive Officer and the Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended) as of September 30, 2024. Based on that evaluation, the Company’s management, including the President and Chief Executive Officer and the Chief Financial Officer, concluded that the Company’s disclosure controls and procedures were effective.

During the three months ended September 30, 2024, there were no changes in the Company’s internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II

ITEM 1. LEGAL PROCEEDINGS

The Company and subsidiaries are subject to various legal actions arising in the normal course of business. In the opinion of management, the resolution of these legal actions is not expected to have a material adverse effect on the Company’s consolidated financial condition or results of operations.

ITEM 1A. RISK FACTORS

During the quarter ended September 30, 2024, there have been no material changes to the risk factors as previously disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, as filed with the Securities and Exchange Commission, except as previously disclosed in our other filings with the Securities and Exchange Commission.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES, USE OF PROCEEDS, AND ISSUER PURCHASES OF EQUITY SECURITIES

(a) Unregistered Sale of Equity Securities . There were no sales of unregistered securities during the period covered by this report.

(b) Use of Proceeds . Not applicable.

On April 24, 2024, the Board of Directors of the Company approved a $5.0 million stock repurchase program which was completed in May 2024, and on June 14, 2024, the Board of Directors of the Company approved a new $10.0 million stock repurchase program which was completed in August 2024. The programs permit the Company's shares of common stock to be repurchased in open market or private transactions, through block trades, and pursuant to any trading plan that may be adopted in accordance with Rule 10b5-1 of the Securities and Exchange Commission. The timing of the repurchases depends on certain factors, including but not limited to, market conditions and prices, the Company’s liquidity and capital requirements, and alternative uses of capital. Any repurchased shares are held as treasury stock and available for general corporate purposes. The repurchases can be suspended, terminated or modified at any time for any reason, including market conditions, the cost of repurchasing shares, the availability of alternative investment opportunities, liquidity, and other factors deemed appropriate.

The following table reports information regarding purchases of the Company’s common stock during the three months ended September 30, 2024.


Period	Total Number of Shares Purchased	Average Price Paid per Share (1)		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs (in thousands)
July 1, 2024 to July 31, 2024	280,759	$	11.18	280,759	$	3,191
August 1, 2024 to August 31, 2024	279,924	11.40		279,924	—
September 1, 2024 to September 30, 2024	—	—		—	—
Total	560,683	11.29		560,683

(1) Average price paid does not reflect excise tax paid on share repurchases

In addition to the repurchases disclosed above, participants in the Company's stock-based incentive plans may have shares withheld to cover income taxes upon the vesting of restricted stock awards. Shares withheld to cover income taxes upon the vesting of restricted stock awards are repurchased pursuant to the terms of the applicable plan and not under the Company's stock repurchase program. Shares repurchased pursuant to these plans during the three months ended three months ended September 30, 2024 were as follows:


Period	Total Number of Shares Purchased	Average Price Paid per Share
July 1, 2024 to July 31, 2024	—	$	—
August 1, 2024 to August 31, 2024	738	12.03
September 1, 2024 to September 30, 2024	—	—
Total	738	12.03

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ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

During the three months ended September 30, 2024, no directors or executive officers of the Company adopted or terminated any contract, instruction or written plan for the purchase or sale of the Company securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) and/or any “Rule 10b5-1 trading arrangement.”

ITEM 6. EXHIBITS

The following exhibits required by Item 601 of Regulation S-K are included with this Quarterly Report on Form 10-Q.


Exhibit Number						Description
31.1						Certification of Steven M. Klein, Chairman, President and Chief Executive Officer, Pursuant to Rule 13a-14(a) and Rule 15d-14(a). (1)
31.2						Certification of William R. Jacobs, Executive Vice President and Chief Financial Officer, Pursuant to Rule 13a-14(a) and Rule 15d-14(a). (1)
32						Certification of Steven M. Klein, Chairman, President and Chief Executive Officer, and William R. Jacobs, Executive Vice President and Chief Financial Officer, Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (1)
101.INS						XBRL (Extensible Business Reporting Language) Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH						Inline XBRL Taxonomy Extension Schema Document.
101.CAL						Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF						Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB						Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE						Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104						Cover page information from the Company's Quarterly Report on Form 10-Q filed November 12, 2024, formatted in Inline XBRL.

(1) Filed herewith.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

NORTHFIELD BANCORP, INC.

(Registrant)

Date: November 12, 2024


/s/ Steven M. Klein
Steven M. Klein
Chairman, President and Chief Executive Officer


/s/ William R. Jacobs
William R. Jacobs
Executive Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)

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Part I Item 1. Financial Statements Note 1 Consolidated Financial Statements Note 2 Debt Securities Available-for-sale Note 3 Debt Securities Held-to-maturity Note 4 Equity Securities Note 5 Loans Note 6 Allowance For Credit Losses ( Acl ) on Loans Note 7 Deposits Note 8 Subordinated Debt Note 9 Equity Incentive Plans Note 10 Fair Value Measurements Note 11 Earnings Per Share Note 12 Leases Note 13 Derivatives Item 2. Management S Discussion and Analysis Of Financial Condition and Results Of Operations Item 3. Quantitative and Qualitative Disclosures About Market Risk Item 4. Controls and Procedures Part II Item 1. Legal Proceedings Item 1A. Risk Factors Item 2. Unregistered Sales Of Equity Securities, Use Of Proceeds, and Issuer Purchases Of Equity Securities Item 3. Defaults Upon Senior Securities Item 4. Mine Safety Disclosures Item 5. Other Information Item 6. Exhibits

Exhibits

31.1 Certification of Steven M. Klein, Chairman, President and Chief Executive Officer, Pursuant to Rule 13a-14(a) and Rule 15d-14(a).(1) 31.2 Certification of William R. Jacobs, Executive Vice President and Chief Financial Officer, Pursuant to Rule 13a-14(a) and Rule 15d-14(a).(1) 32 Certification of Steven M. Klein, Chairman, President and Chief Executive Officer, and William R. Jacobs, Executive Vice President and Chief Financial Officer, Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.(1)

NFBK 10-Q Quarter ended Sept. 30, 2024

Exhibits