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What changed in Northfield Bancorp, Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Northfield Bancorp, Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+473 added−519 removedSource: 10-K (2024-02-29) vs 10-K (2023-03-01)

Top changes in Northfield Bancorp, Inc.'s 2023 10-K

473 paragraphs added · 519 removed · 368 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

185 edited+31 added−53 removed128 unchanged
Biggest changeSuch required compliance programs are intended to supplement pre-existing compliance requirements that apply to financial institutions under the Bank Secrecy Act and the Office of Foreign Assets Control regulations; and • The Gramm-Leach-Bliley Act, which places limitations on the sharing of consumer financial information by financial institutions with unaffiliated third parties and requires all financial institutions offering products or services to retail customers to provide such customers with the financial institution’s privacy policy and allow such customers the opportunity to “opt out” of the sharing of certain personal financial information with unaffiliated third parties.
Biggest changeThe operations of Northfield Bank also are subject to the: • Truth in Savings Act and Regulation DD, which requires disclosures of deposit terms to consumers; • Regulation CC, which relates to the availability of deposit funds to consumers; • Right to Financial Privacy Act, which imposes a duty to maintain confidentiality of consumer financial records and prescribes procedures for complying with administrative subpoenas of financial records; • Electronic Funds Transfer Act, which governs automatic deposits to and withdrawals from deposit accounts and customers’ rights and liabilities arising from the use of automated teller machines and other electronic banking services; • The Bank Secrecy Act and USA PATRIOT Act, which require savings associations to, among other things, establish anti-money laundering compliance programs, customer identification programs, and customer due diligence policies and controls to ensure the detection and prevention of money laundering and terrorist financing; • Regulations of the Office of Foreign Assets Control, which enforce economic and trade sanctions against targeted foreign countries and regimes, individuals, and organizations; and • The Gramm-Leach-Bliley Act, which places limitations on the sharing of consumer financial information by financial institutions with unaffiliated third parties and requires all financial institutions offering products or services to retail customers to provide such customers with the financial institution’s privacy policy and allow such customers the opportunity to “opt out” of the sharing of certain personal financial information with unaffiliated third parties.
Adjustable-rate loan originations are generally tied to a specifically identified market rate index. We also originate, to a lesser extent, 10- to 15-year fixed-rate, fully amortizing loans.
Adjustable-rate loan originations are generally tied to a specifically identified market rate index. We also originate, to a lesser extent, 10- to 15-year fixed-rate, fully amortizing loans.
Employee Engagement . We partner with various third parties to measure employee engagement and satisfaction, and through efforts of our internal employee engagement team, develop action plans for continued improvement. We have introduced virtual town hall meetings for all employees, opening the lines of communications and answering employee questions and concerns.
We partner with various third parties to measure employee engagement and satisfaction, and through efforts of our internal employee engagement team, develop action plans for continued improvement. We have introduced virtual town hall meetings for all employees, opening the lines of communications and answering employee questions and concerns.
Capital Requirements 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.
Capital Requirements 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 ratio of 8.0%, and a 4.0% Tier 1 capital to total assets leverage ratio.
Under the applicable regulations, an institution is deemed to be “well capitalized” if it has a total risk-based capital ratio of 10.0% or greater, a Tier 1 risk-based capital ratio of 8.0% or greater, a leverage ratio of 5.0% or greater and a common equity Tier 1 ratio of 6.5% or greater.
Under the applicable regulations, an institution is deemed to be “well capitalized” if it has a total risk-based capital ratio of 10.0% or greater, a Tier 1 risk-based capital ratio of 8.0% or greater, a leverage ratio of 5.0% or greater, and a common equity Tier 1 capital ratio of 6.5% or greater.
An institution is deemed to be “significantly undercapitalized” if it has a total risk-based capital ratio of less than 6.0%, a Tier 1 risk-based capital ratio of less than 4.0%, a leverage ratio of less than 3.0% or a common equity Tier 1 ratio of less than 3.0%.
An institution is deemed to be “significantly undercapitalized” if it has a total risk-based capital ratio of less than 6.0%, a Tier 1 risk-based capital ratio of less than 4.0%, a leverage ratio of less than 3.0%, or a common equity Tier 1 capital ratio of less than 3.0%.
The guidance also provides for prior consultation with supervisory staff for material increases in the amount of a company’s common stock dividend. The ability of a holding company to pay dividends may also be restricted if a subsidiary bank becomes undercapitalized.
The guidance also provides for prior consultation with supervisory staff for material increases in the amount of a holding company’s common stock dividend. The ability of a holding company to pay dividends may also be restricted if a subsidiary bank becomes undercapitalized.
Change in Control Regulations Under the Change in Bank Control Act, no person may acquire control of a savings and loan holding company, such as Northfield Bancorp, Inc., unless the FRB has been given 60 days prior written notice and has not issued a notice disapproving the proposed acquisition, taking into consideration certain factors, including the financial and managerial resources of the acquirer and the competitive effects of the acquisition.
Change in Bank Control Act and Regulations Under the Change in Bank Control Act, no person may acquire control of a savings and loan holding company, such as Northfield Bancorp, Inc., unless the FRB has been given 60 days prior written notice and has not issued a notice disapproving the proposed acquisition, taking into consideration certain factors, including the financial and managerial resources of the acquirer and the competitive effects of the acquisition.
A federal savings institution must file an application with the OCC for approval of the capital distribution if: • the total capital distributions for the applicable calendar year exceeds the sum of the institution’s net income for that year to date plus the institution’s retained net income for the preceding two years that is still available for dividend; • the institution would not be at least adequately capitalized following the distribution; • the distribution would violate any applicable statute, regulation, agreement or written regulatory condition; or • the institution is not eligible for expedited review of its filings (i.e., generally, institutions that do not have safety and soundness, compliance and Community Reinvestment Act ratings in the top two categories or fail a capital requirement).
A federal savings association must file an application with the OCC for approval of the capital distribution if: • the total capital distributions for the applicable calendar year exceeds the sum of the institution’s net income for that year to date plus the institution’s retained net income for the preceding two years that is still available for dividend; • the institution would not be at least adequately capitalized following the distribution; • the distribution would violate any applicable statute, regulation, written agreement or regulatory condition; or • the institution is not eligible for expedited review of its filings (i.e., generally, institutions that do not have safety and soundness, compliance and Community Reinvestment Act ratings in the top two categories or that fail a capital requirement).
If an “undercapitalized” institution fails to submit an acceptable capital plan, it is treated as “significantly undercapitalized.” “Significantly undercapitalized” institutions must comply with one or more additional restrictions including, but not limited to, an order by the OCC to sell sufficient voting stock to become adequately capitalized, requirements to reduce total assets, cease receipt of deposits from correspondent banks or dismiss officers or directors and restrictions on interest rates paid on deposits, compensation of executive officers and capital distributions by the parent holding company.
If an “undercapitalized” institution fails to submit an acceptable capital restoration plan, it is treated as “significantly undercapitalized.” “Significantly undercapitalized” institutions must comply with one or more additional restrictions including, but not limited to: an order by the OCC to sell sufficient voting stock to become adequately capitalized; requirements to reduce total assets, cease receipt of deposits from correspondent banks or dismiss officers or directors; and restrictions on interest rates paid on deposits, compensation of executive officers and capital distributions by the parent holding company.
Regulatory guidance provides for prior regulatory review of capital distributions in certain circumstances such as where the company’s net income for the past four quarters, net of dividends previously paid over that period, is insufficient to fully fund the dividend or the company’s overall rate of earnings retention is inconsistent with the company’s capital needs and overall financial condition.
Regulatory guidance provides for prior regulatory review of capital distributions in certain circumstances such as where the holding company’s net income for the past four quarters, net of dividends previously paid over that period, is insufficient to fully fund the dividend or the holding company’s overall rate of earnings retention is inconsistent with the company’s capital needs and overall financial condition.
We also originate one-to-four family residential real estate loans (non-owner occupied investment properties), construction and land loans, commercial and industrial loans, and home equity loans and lines of credit. Loan Originations, Purchases and Sales, Participations, and Servicing. All loans we originate are underwritten pursuant to our policies and procedures or are properly approved as exceptions to our policies and procedures.
We also originate one-to-four family residential real estate loans (non-owner occupied investment properties), construction and land loans, commercial and industrial loans, and home equity loans and lines of credit. Loan Originations, Purchases and Sales, Participations, and Servicing. All loans we originate are underwritten pursuant to our policies and procedures or are approved as exceptions to our policies and procedures.
The business activities of savings and loan holding companies are generally limited to those activities permissible for bank holding companies under Section 4(c)(8) of the Bank Holding Company Act, subject to the prior approval of the Federal Reserve Board, and certain additional activities authorized by Federal Reserve Board regulations, unless the holding company has elected “financial holding company” status.
The business activities of savings and loan holding companies are generally limited to those activities permissible for bank holding companies under Section 4(c)(8) of the Bank Holding Company Act, subject to the prior approval of the Federal Reserve Board, and certain additional activities authorized by FRB regulations, unless the holding company has elected “financial holding company” status.
On a regular basis, we promote the health and wellness of our employees by encouraging work-life balance, offering flexible work schedules, and encouraging and sponsoring various wellness programs. 24 Subsidiary Activities Northfield-Bancorp, Inc. owns 100% of Northfield Investments, Inc., an inactive New Jersey investment company, and 100% of Northfield Bank.
On a regular basis, we promote the health and wellness of our employees by encouraging work-life balance, offering flexible work schedules, and encouraging and sponsoring various wellness programs. Subsidiary Activities Northfield-Bancorp, Inc. owns 100% of Northfield Investments, Inc., an inactive New Jersey investment company, and 100% of Northfield Bank.
Deposits traditionally have been our primary source of funds for our securities and lending activities. We also borrow from the FHLBNY and other financial institutions to supplement cash flow needs, to manage the maturities of liabilities for interest rate and investment risk management purposes, and to manage our cost of funds.
Deposits traditionally have been our primary source of funds for our securities and lending activities. We also borrow from the FHLBNY, the FRB and other financial institutions to supplement cash flow needs, to manage the maturities of liabilities for interest rate and investment risk management purposes, and to manage our cost of funds.
Management of Northfield Bank does not know of any practice, condition, or violation that may lead to termination of the Northfield Bank’s deposit insurance. 29 Federal Home Loan Bank System Northfield Bank is a member of the FHLBNY, and therefore is a member of the FHLB System, which consists of 11 regional FHLBs.
Management of Northfield Bank does not know of any practice, condition, or violation that may lead to termination of the Northfield Bank’s deposit insurance. Federal Home Loan Bank System Northfield Bank is a member of the FHLBNY, and therefore is a member of the FHLB System, which consists of 11 regional FHLBs.
Insurance of deposits may be terminated by the FDIC upon a finding that an institution has engaged in unsafe or unsound practices, is in an unsafe or unsound condition to continue operations, or has violated any applicable law, regulation, rule, order or condition imposed in writing.
Insurance of deposits may be terminated by the FDIC upon a finding that an institution has engaged in unsafe or unsound practices, is in an unsafe or unsound condition to continue operations, or has violated any applicable law, regulation, order or condition imposed in writing.
Northfield Bank’s investment policy does not permit investment in common stock of other entities including GSEs, other than our required investment in the common stock of the FHLBNY or as permitted for community reinvestment purposes or to fund Northfield Bank’s deferred compensation plan.
Northfield Bank’s investment policy does not permit investment in common stock of other entities including GSEs, other than our required investment in the common stock of the FHLBNY, as permitted for community reinvestment act purposes or to fund Northfield Bank’s deferred compensation plan.
The regulations provide that a capital restoration plan must be filed with the OCC within 45 days of the date a savings institution receives notice that it is “undercapitalized,” “significantly undercapitalized” or “critically undercapitalized.” Any holding company for the savings institution required to submit a capital restoration plan must guarantee the lesser of an amount equal to 5.0% of the savings institution’s assets at the time it was notified or deemed to be undercapitalized by the OCC, or the amount necessary to restore the savings institution to adequately capitalized status.
The regulations provide that a capital restoration plan must be filed with the OCC within 45 days of the date a federal savings association receives notice that it is “undercapitalized,” “significantly undercapitalized” or “critically undercapitalized.” Any holding company for the savings institution required to submit a capital restoration plan must guarantee the lesser of an amount equal to 5.0% of the savings institution’s assets at the time it was notified or deemed to be undercapitalized by the OCC, or the amount necessary to restore the savings institution to adequately capitalized status.
Loans-to-One-Borrower We generally may not make a loan or extend credit to a single or related group of borrowers in excess of 15% of Northfield Bank’s unimpaired capital and unimpaired surplus.
Loans-to-One-Borrower We generally may not make a loan or extend credit to a single or related group of borrowers in excess of 15% of Northfield Bank’s capital and surplus.
Bureau of Labor Statistics: Unemployment Rate at December 31, 2022 2021 2020 2019 2018 Hunterdon County, NJ 2.3 % 3.5 % 5.5 % 2.7 % 2.8 % Middlesex County, NJ 2.7 4.3 6.6 3.0 3.1 Mercer County, NJ 2.5 3.8 6.0 3.1 3.1 Union County, NJ 3.3 5.3 7.8 3.7 3.7 Richmond County, NY 5.0 7.1 9.4 3.0 3.9 Kings County, NY 5.5 8.1 11.3 3.2 4.0 National Average 3.5 3.9 6.7 3.5 3.6 The following table sets forth median household income at December 31, 2022 and 2021, for the communities we serve, as published by the U.S.
Bureau of Labor Statistics: Unemployment Rate at December 31, 2023 2022 2021 2020 2019 Hunterdon County, NJ 3.5 % 2.3 % 3.5 % 5.5 % 2.7 % Middlesex County, NJ 4.1 2.7 4.3 6.6 3.0 Mercer County, NJ 3.7 2.5 3.8 6.0 3.1 Union County, NJ 4.7 3.3 5.3 7.8 3.7 Richmond County, NY 4.6 5.0 7.1 9.4 3.0 Kings County, NY 5.4 5.5 8.1 11.3 3.2 National Average 3.7 3.5 3.9 6.7 3.5 The following table sets forth median household income at December 31, 2023 and 2022, for the communities we serve and the national average, as published by the U.S.
The previously referenced final rule that establishes an elective “community bank leverage ratio” provides that a qualifying institution whose Tier 1 capital equals or exceeds the specified community bank leverage ratio and opts into that framework will be considered to be “well capitalized” for purposes of prompt corrective action. Capital Distributions Federal regulations restrict “capital distributions” by savings institutions.
The previously referenced final rule that establishes an elective “community bank leverage ratio” provides that a qualifying institution whose Tier 1 capital equals or exceeds the specified community bank leverage ratio and opts into that framework will be considered to be “well capitalized” for purposes of prompt corrective action. Capital Distributions Federal regulations restrict “capital distributions” by federal savings associations.
At December 31, 2022, the total federal pre-base year bad debt reserve of Northfield Bank was approximately $5.9 million. Corporate Dividends-Received Deduction . Northfield Bancorp, Inc. may exclude from its federal taxable income 100% of dividends received from Northfield Bank as a wholly-owned subsidiary by filing consolidated tax returns.
At December 31, 2023, the total federal pre-base year bad debt reserve of Northfield Bank was approximately $5.9 million. Corporate Dividends-Received Deduction . Northfield Bancorp, Inc. may exclude from its federal taxable income 100% of dividends received from Northfield Bank as a wholly-owned subsidiary by filing consolidated tax returns.
Consolidated regulatory capital requirements identical to those applicable to the subsidiary depository institutions (including the community bank leverage ratio alternative) also apply to savings and loan holding companies. Northfield Bancorp, Inc. exceeded the FRB’s consolidated capital requirements as of December 31, 2022. Federal law applies the FRB's “source of strength” doctrine to savings and loan holding companies.
Consolidated regulatory capital requirements identical to those applicable to the subsidiary depository institutions (including the community bank leverage ratio alternative) also apply to savings and loan holding companies. Northfield Bancorp, Inc. exceeded the FRB’s consolidated capital requirements as of December 31, 2023. Federal law applies the FRB's “source of strength” doctrine to savings and loan holding companies.
The difference between the unpaid principal balance of the pool and the new amortized cost basis is the noncredit premium or discount which will be amortized into interest income over the remaining life of the pool. Changes to the allowance for credit losses after adoption are recorded through provision expense.
The difference between the unpaid principal balance of the pool and the new amortized cost basis is the noncredit premium or discount, which will be amortized into interest income over the remaining life of the pool. Changes to the allowance for credit losses are recorded through provision expense.
Northfield Bank recaptured its post December 31, 1987, bad-debt reserve balance over the six-year period ended December 31, 2004. Northfield Bancorp, Inc. is required to use the specific charge-off method to account for tax bad debt deductions. 32 Taxable Distributions and Recapture .
Northfield Bank recaptured its post December 31, 1987, bad-debt reserve balance over the six-year period ended December 31, 2004. Northfield Bancorp, Inc. is required to use the specific charge-off method to account for tax bad debt deductions. 29 Taxable Distributions and Recapture .
The FHLB System provides a central credit facility primarily for member institutions. Members of the FHLB are required to acquire and hold a specified amount of shares of FHLB capital stock. Northfield Bank was in compliance with this requirement at December 31, 2022.
The FHLB System provides a central credit facility primarily for member institutions. Members of the FHLB are required to acquire and hold a specified amount of shares of FHLB capital stock. Northfield Bank was in compliance with this requirement at December 31, 2023.
A savings institution that is a subsidiary of a holding company, which is the case with Northfield Bank, must file a notice with the FRB at least 30 days before the Board of Directors declares any dividend and receives FRB non-objection to the payment of the dividend.
A savings institution that is a subsidiary of a holding company, which is the case with Northfield Bank, must file a notice with the FRB at least 30 days before the Board of Directors declares any dividend and receive FRB non-objection to the payment of the dividend.
At December 31, 2022, all participation loans were performing in accordance with their terms. Loan Approval Procedures and Authority . Our lending activities follow written, non-discriminatory, underwriting standards approved by our Board of Directors.
At December 31, 2023, all participation loans were performing in accordance with their terms. Loan Approval Procedures and Authority . Our lending activities follow written, non-discriminatory, underwriting standards approved by our Board of Directors.
An additional amount may be loaned, equal to 10% of unimpaired capital and unimpaired surplus, if the loan is secured by readily marketable collateral, which is defined to include certain financial instruments and bullion, but generally does not include real estate. As of December 31, 2022, we were in compliance with our loans-to-one-borrower limitations.
An additional amount may be loaned, equal to 10% of capital and surplus, if the loan is secured by readily marketable collateral, which is defined to include certain financial instruments and bullion, but generally does not include real estate. As of December 31, 2023, we were in compliance with our loans-to-one-borrower limitations.
The buildings covered by Local Law 97 will be required to file a report with the Department of Buildings by May 1, 2025 detailing their annual greenhouse gas emissions and then by May 1 of every year after.
The buildings covered by Local Law 97 will be required to file a report with the Department of Buildings by May 1, 2025 detailing their annual greenhouse gas emissions and then by May 1 of every year thereafter.
This regulation and supervision establishes a comprehensive framework of activities in which an institution may engage and is intended primarily for the protection of the FDIC’s Deposit Insurance Fund and depositors, and not for the protection of security holders.
This regulation and supervision establish a comprehensive framework of activities in which an institution may engage and is intended primarily for the protection of the FDIC’s Deposit Insurance Fund and depositors, and not for the protection of security holders.
An institution is considered to be “critically undercapitalized” if it has a ratio of tangible equity (as defined in the regulations) to total assets that is equal to or less than 2.0%.
An institution is deemed to be “critically undercapitalized” if it has a ratio of tangible equity (as defined in the regulations) to total assets that is equal to or less than 2.0%.
As of December 31, 2022, 2021, and 2020, we also had a trading portfolio with a fair value of $10.8 million, $13.5 million and $12.3 million, respectively, consisting of mutual funds quoted in actively traded markets. These securities are utilized to fund non-qualified deferred compensation obligations.
As of December 31, 2023, 2022, and 2021, we also had a trading portfolio with a fair value of $12.5 million, $10.8 million and $13.5 million, respectively, consisting of mutual funds quoted in actively traded markets. These securities are utilized to fund non-qualified deferred compensation obligations.
Our largest construction and land loan had a principal balance of $3.8 million, and is secured by a proposed three-story, 72-unit apartment building in Staten Island, New York. At December 31, 2022, this loan was performing in accordance with its original contractual terms.
Our largest construction and land loan had a principal balance of $8.8 million, and is secured by a proposed three-story, 72-unit apartment building in Staten Island, New York. At December 31, 2023, this loan was performing in accordance with its original contractual terms.
Regulation W also provides that transactions with affiliates, including covered transactions, must be on terms and under circumstances, including credit standards, that are substantially the same or at least as favorable to the institution as those prevailing at the time for comparable transactions with non-affiliated companies.
Regulation W also provides that transactions with affiliates, including covered transactions, must be on terms and under circumstances, including credit standards, that are substantially the same or at least as favorable to the association as those prevailing at the time for comparable transactions with or involving non-affiliated companies.
The maximum penalties that can be assessed are generally based on the type and severity of the violation, unsafe and unsound practice or other action, and are adjusted annually for inflation. Deposit Insurance Northfield Bank is a member of the Deposit Insurance Fund, which is administered by the FDIC.
The maximum penalties that can be assessed are generally based on the type and severity of the violation, unsafe and unsound practice or breach, and are adjusted annually for inflation. Deposit Insurance Northfield Bank is a member of the Deposit Insurance Fund, which is administered by the FDIC.
The FRB has issued regulations implementing the “source of strength” policy that requires holding companies act as a source of strength to their subsidiary depository institutions by providing capital, liquidity, and other support in times of financial stress. 31 The FRB has issued a policy statement regarding the payment of dividends and the repurchase of shares of common stock by bank and savings and loan holding companies.
The FRB has issued regulations implementing the “source of strength” policy that require holding companies to act as a source of strength to their subsidiary depository institutions by providing capital, liquidity, and other support in times of financial stress. 28 The FRB has issued a policy statement regarding the payment of dividends and the repurchase of shares of common stock by bank and savings and loan holding companies.
Our home equity loans typically are fully amortizing with fixed terms up to 25 years. Home equity loans and lines of credit generally are underwritten with the same criteria we historically used to underwrite fixed-rate, one-to-four family residential real estate loans.
Our home equity loans typically are fully amortizing with fixed terms up to 25 years. Home equity loans and lines of credit generally are underwritten with the same criteria we use to underwrite fixed-rate, one-to-four family residential real estate loans.
Home equity lines of credit are adjustable-rate loans tied to the prime rate as published in The Wall Street Journal adjusted for a margin, and have a maximum term of 25 years during which time the borrower is required to make principal payments based on a 30-year amortization. Home equity lines generally have interest rate floors and ceilings.
Home equity lines of credit are adjustable-rate loans tied to the Prime Rate as published in The Wall Street Journal adjusted for a margin, and have a maximum term of 25 years during which time the borrower is required to make principal payments based on a 30-year amortization.
From time-to-time, we may sell or purchase participation interests in individual loans (in addition to loans we acquire in assisted transactions, mergers or acquisitions, and pool purchases). We underwrite our participation interest in the loans that we are purchasing according to our own underwriting criteria and procedures.
From time-to-time, we may sell or purchase participation interests in individual loans (in addition to loans we acquire in assisted transactions, mergers or acquisitions, and pool purchases). We underwrite our participation interest in the loans that we purchase according to our underwriting criteria and procedures.
At December 31, 2022, our largest loan of this type (excluding purchased loan pools, discussed below) had a principal balance of $5.4 million and was collateralized by 42 condominiums within a complex in Union County, New Jersey. The loan was performing in accordance with its original contractual terms.
At December 31, 2023, our largest loan of this type (excluding purchased loan pools, discussed below) had a principal balance of $5.3 million and was collateralized by 42 condominiums within a complex in Union County, New Jersey. The loan was performing in accordance with its original contractual terms.
Deposit accounts in Northfield Bank are insured up to a maximum of $250,000 for each separately insured depositor by the FDIC. The FDIC assesses insured depository institutions to maintain the Deposit Insurance Fund. Under the FDIC’s risk-based assessment system, institutions deemed less risky pay lower assessments.
Deposit accounts in Northfield Bank are insured up to a maximum of $250,000 per account ownership category for each separately insured depositor by the FDIC. The FDIC assesses insured depository institutions to maintain the Deposit Insurance Fund. Under the FDIC’s risk-based assessment system, institutions deemed less risky pay lower assessments.
This loan was performing in accordance with its original contractual terms. At December 31, 2022, our largest outstanding home equity loan was $1.8 million and was performing in accordance with its original contractual terms. We offer home equity loans and home equity lines of credit that are secured by the borrower’s primary residence or second home.
This loan was performing in accordance with its original contractual terms. At December 31, 2023, our largest outstanding home equity loan was $1.7 million and was performing in accordance with its original contractual terms. We offer home equity loans and home equity lines of credit that are secured by the borrower’s primary residence or second home.
Eligible institutions may opt into and out of the community bank ratio framework on their quarterly call report. Northfield Bank elected to opt into the new framework effective March 31, 2020. As of December 31, 2022, Northfield Bancorp, Inc. and Northfield Bank exceeded all capital adequacy requirements to which they were subject.
Eligible institutions may opt into and out of the community bank leverage ratio framework on their quarterly call report. Northfield Bank elected to opt into the framework effective March 31, 2020. As of December 31, 2023, Northfield Bancorp, Inc. and Northfield Bank exceeded all capital adequacy requirements to which they were subject.
See Note 16 of the Notes to the Consolidated Financial Statements for further discussion about Regulatory Requirements. 27 Prompt Corrective Regulatory Action Federal law requires, among other things, that federal bank regulators take “prompt corrective action” with respect to institutions that do not meet minimum capital requirements.
See Note 15 of the Notes to the consolidated financial statements for further discussion about Regulatory Requirements. 24 Prompt Corrective Regulatory Action Federal law requires, among other things, that federal bank regulators take “prompt corrective action” with respect to institutions that do not meet minimum capital requirements.
For purposes of the regulations, capital distributions generally include cash dividends and other transactions charged to the capital account of a savings institution.
For purposes of the regulations, capital distributions generally include cash dividends and other transactions charged to the capital account of a savings association.
The MTA surcharge rate for 2022 was 30.0%, and will remain at 30.0% until otherwise adjusted. New York City Taxation.
The MTA surcharge rate for 2023 was 30.0%, and will remain at 30.0% until otherwise adjusted. New York City Taxation.
An institution is “adequately capitalized” if it has a total risk-based capital ratio of 8.0% or greater, a Tier 1 risk-based capital ratio of 6.0% or greater, a leverage ratio of 4.0% or greater and a common equity Tier 1 ratio of 4.5% or greater.
An institution is deemed to be “adequately capitalized” if it has a total risk-based capital ratio of 8.0% or greater, a Tier 1 risk-based capital ratio of 6.0% or greater, a leverage ratio of 4.0% or greater, and a common equity Tier 1 capital ratio of 4.5% or greater.
At December 31, 2022, the average home equity loan and line of credit balance was approximately $67,000 although we originate these types of loans in amounts substantially greater than this average. At December 31, 2022, our largest home equity line of credit had an outstanding balance of approximately $2.0 million.
At December 31, 2023, the average home equity loan and line of credit balance was approximately $68,000 although we originate these types of loans in amounts substantially greater than this average. At December 31, 2023, our largest home equity line of credit had an outstanding balance of approximately $2.0 million.
Loans are only removed from existing pools if they are written off, paid off, or sold. Upon adoption of CECL, the allowance for credit losses was determined for each pool and added to the pool's carrying amount to establish a new amortized cost basis.
Loans are only removed from existing pools if they are written off, paid off, or sold. Under CECL, the allowance for credit losses was determined for each pool and added to the pool's carrying amount to establish a new amortized cost basis.
We sponsor a 401(k) plan, which provides eligible employees the opportunity to invest a portion of their pre-tax and after-tax base salary, up to regulatory limits, in professionally managed investment options, and self-directed brokerage accounts. Over time, we match up to 50% of employee contributions up to the first 6% of compensation, as defined, based on years of service.
We sponsor a 401(k) plan, which provides eligible employees the opportunity to invest a portion of their base salary, up to regulatory limits, in professionally managed investment options, and self-directed brokerage accounts. We match up to 50% of employee contributions up to the first 6% of compensation, as defined, based on years of service.
An institution is “undercapitalized” if it has a total risk-based capital ratio of less than 8.0%, a Tier 1 risk-based capital ratio of less than 6.0%, a leverage ratio of less than 4.0% or a common equity Tier 1 ratio of less than 4.5%.
An institution is deemed to be “undercapitalized” if it has a total risk-based capital ratio of less than 8.0%, a Tier 1 risk-based capital ratio of less than 6.0%, a leverage ratio of less than 4.0%, or a common equity Tier 1 capital ratio of less than 4.5%.
Applications or notices may be denied if the institution will be undercapitalized after the proposed dividend, the proposed dividend raises safety and soundness concerns or the proposed dividend would violate a law, regulation enforcement order, or regulatory condition. 28 In the event that a savings institution’s capital falls below its regulatory requirements or it is notified by the regulatory agency that it is in need of more than normal supervision, its ability to make capital distributions would be restricted.
Applications or notices may be denied if the institution will be undercapitalized after the proposed dividend, the proposed dividend raises safety and soundness concerns or the proposed dividend would violate a law, regulation, written agreement, or regulatory condition. 25 In the event that a savings institution’s capital falls below its regulatory requirements or it is notified by the regulatory agency that it is in need of more than normal supervision, its ability to make capital distributions would be restricted.
In addition, savings institutions are prohibited by law from lending to any affiliate that is engaged in activities that are not permissible for bank holding companies and no savings institution may purchase the securities of any affiliate other than a subsidiary.
In addition, savings associations are prohibited by law from lending to any affiliate that is engaged in activities that are not permissible for bank holding companies, and no savings association may purchase the securities of any affiliate other than a subsidiary.
As of December 31, 2022, the average balance of one-to-four family residential real estate loans was approximately $322,000, although we have originated these types of loan in amounts substantially greater than this average.
As of December 31, 2023, the average balance of one-to-four family residential real estate loans was approximately $477,000, although we have originated these types of loan in amounts substantially greater than this average.
As of December 31, 2022, we maintained 77.8% of our portfolio assets in qualified thrift investments and, therefore, we met the QTL test. 26 Standards for Safety and Soundness Federal law requires each federal banking agency to prescribe for insured depository institutions under its jurisdiction standards relating to, among other things, internal controls, information systems and internal audit systems, loan documentation, credit underwriting, interest rate risk exposure, asset growth, employee compensation, and other operational and managerial standards as the agency deems appropriate.
As of December 31, 2023, we maintained 75.6% of our portfolio assets in qualified thrift investments and, therefore, we met the QTL test. 23 Standards for Safety and Soundness Federal law requires each federal banking agency to prescribe for insured depository institutions under its jurisdiction standards relating to, among other things, internal controls, information systems and internal audit systems, loan documentation, credit underwriting, interest rate risk exposure, asset growth, employee compensation, and other operational and managerial standards as the agency deems appropriate.
We also maintain the Northfield Bank Employee Stock Ownership Plan (the “ESOP”) for eligible employees. The ESOP is a tax-qualified plan invested in our common stock. The ESOP provides employees with the opportunity to receive a funded retirement benefit based on the value of our common stock, and years of service, as defined, and is 100% funded by Northfield Bank.
We also maintain the Northfield Bank Employee Stock Ownership Plan (the “ESOP”) for eligible employees. The ESOP is a tax-qualified plan invested in our common stock. The ESOP provides employees with the opportunity to receive a retirement benefit based on the value of our common stock, and is 100% funded by Northfield Bank. Employee Engagement .
In addition, any proposed capital distribution could be prohibited if the regulatory agency determines that the distribution would constitute an unsafe or unsound practice. Transactions with Related Parties A savings institution’s authority to engage in transactions with related parties or “affiliates” is limited by Sections 23A and 23B of the Federal Reserve Act and its implementing regulation, FRB Regulation W.
In addition, any proposed capital distribution could be prohibited if the regulatory agency determines that the distribution would constitute an unsafe or unsound practice. Transactions with Affiliates A federal savings association’s authority to engage in transactions with its “affiliates” is limited by Sections 23A and 23B of the Federal Reserve Act and its implementing regulation, Regulation W.
Certain covered transactions with affiliates, such as loans to or guarantees issued on behalf of affiliates, are required to be secured by specified amounts of collateral. Purchasing low quality assets from affiliates is generally prohibited.
Certain “covered transactions” with affiliates, such as loans to or guarantees issued on behalf of affiliates, are required to be secured by specified amounts of collateral. Purchasing low quality assets from affiliates is generally prohibited.
At December 31, 2022, our largest multifamily real estate loan had a principal balance of $31.1 million, was secured by a garden-style apartment complex located in Essex County, New Jersey, and was performing in accordance with its original contractual terms.
At December 31, 2023, our largest multifamily real estate loan had a principal balance of $30.5 million, was secured by a garden-style apartment complex located in Essex County, New Jersey, and was performing in accordance with its original contractual terms.
We record an impairment loss associated with TDRs, if any, based on the present value of expected future cash flows discounted at the original loan’s effective interest rate or the underlying collateral value, less estimated cost to sell, if the loan is collateral dependent.
We recorded an impairment loss associated with a TDR, if any, based on the present value of expected future cash flows discounted at the original loan’s effective interest rate or the underlying collateral value, less estimated cost to sell, if the loan is collateral dependent.
We accept brokered deposits when it is deemed cost effective. At December 31, 2022 and 2021, we had brokered deposits totaling $390.0 million and $31.0 million, respectively.
We accept brokered deposits when it is deemed cost effective. At December 31, 2023 and 2022, we had brokered deposits totaling $100.0 million and $390.0 million, respectively.
Uninsured deposits were estimated at $1.54 billion and $1.64 billion at December 31, 2022, and December 31, 2021, respectively. As of those dates we had no deposits that were uninsured for any reason other than being in excess of the $250,000 limit for federal deposit insurance.
Total uninsured deposits at December 31, 2022 were estimated at $1.54 billion. As of those dates we had no deposits that were uninsured for any reason other than being in excess of the $250,000 limit for federal deposit insurance.
One Year or Less More than One Year through Five Years More than Five Years through Ten Years More than Ten Years Total Amortized Cost Weighted Average Yield Amortized Cost Weighted Average Yield Amortized Cost Weighted Average Yield Amortized Cost Weighted Average Yield Amortized Cost Fair Value Weighted Average Yield (Dollars in thousands) Securities available-for-sale: U.S.
Weighted average yield is based on amortized cost. 18 One Year or Less More than One Year through Five Years More than Five Years through Ten Years More than Ten Years Total Amortized Cost Weighted Average Yield Amortized Cost Weighted Average Yield Amortized Cost Weighted Average Yield Amortized Cost Weighted Average Yield Amortized Cost Fair Value Weighted Average Yield (Dollars in thousands) Securities available-for-sale: U.S.
At December 31, 2022, our largest commercial real estate loan had a principal balance of $80.0 million (net active principal balance of $26.7 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 December 31, 2023, our largest commercial real estate loan had a principal balance of $90.0 million (net active principal balance of $30.0 million as we have a 33.3% participation interest), was secured by an office facility located in Staten Island, New York, and was performing in accordance with its original contractual terms.
Northfield Bank conducts business from its operations center located in Woodbridge, New Jersey, its home office located in Staten Island, New York, and its 37 additional branch offices located in New York and New Jersey. The branch offices are located in Staten Island, Brooklyn, and the New Jersey counties of Hunterdon, Mercer, Middlesex, and Union.
Northfield Bank conducts business from its operations center located in Woodbridge, New Jersey, its home main office located at a branch in Staten Island, New York, and its 38 additional branch offices located in New York and New Jersey. The branch offices are located in Staten Island, Brooklyn, and the New Jersey counties of Hunterdon, Mercer, Middlesex, and Union.
Multifamily Real Estate Loans . Loans secured by multifamily properties totaled approximately $2.82 billion, or 66.6% of our total loan portfolio, at December 31, 2022. We include in this category properties having more than four residential units and a business or businesses where the majority of space is utilized for residential purposes, which we refer to as mixed-use.
Multifamily Real Estate Loans . Loans secured by multifamily properties totaled approximately $2.75 billion, or 65.4% of our total loan portfolio, at December 31, 2023. We include in this category properties having more than four residential units and a business or businesses where the majority of space is utilized for residential purposes, which we refer to as mixed-use.
We face intense competition in our market areas both in making loans and attracting deposits. Our market areas have a high concentration of financial institutions, including large money center and regional banks, non-traditional banks, community banks, and credit unions. We face additional competition for deposits from money market funds, brokerage firms, mutual funds, and insurance companies.
Our market areas have a high concentration of financial institutions, including large money center and regional banks, non-traditional banks, community banks, and credit unions. We face additional competition for deposits from money market funds, brokerage firms, mutual funds, and insurance companies.
Government, including policies of the U.S. Treasury and the Federal Reserve Board (the “FRB”); • the ability of third-party providers to perform their obligations to us; • the effects of any U.S.
Government, including policies of the U.S. Treasury and the Federal Reserve Board (the “FRB”); • the ability of third-party providers to perform their obligations to us; • the impact of any failure by the U.S.
Credit losses are charged to the allowance for credit losses and recoveries are credited to it. Additions to the allowance for credit losses are provided by charges against income based on various factors, which, in our judgment, deserve current recognition in estimating probable losses. Credit losses are charged-off in the period the loans, or portion thereof, are deemed uncollectible.
Additions to the allowance for credit losses are provided by charges against income based on various factors, which, in our judgment, deserve current recognition in estimating current estimated credit losses. Credit losses are charged-off in the period the loans, or portion thereof, are deemed uncollectible.
At December 31, 2021, PCD loans consisted of approximately 16% one-to-four family residential loans, 25% commercial real estate loans, 48% commercial and industrial loans, and 11% in construction and land and home equity loans. 11 Non-Performing and Problem Assets When a loan is between 10 to 15 days delinquent, we generally send the borrower a late charge notice.
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. Non-Performing and Problem Assets When a loan is between 10 to 15 days delinquent, we generally send the borrower a late charge notice.
The following tables set forth the allowance for credit losses allocated by loan category and the percent of loans in each category to total loans at the dates indicated.
The following table sets forth the allowance for credit losses allocated by loan category and the percent of loans in each category to total loans at the dates indicated.
For liquidity and other financial reasons, Northfield Bank will also purchase investment securities, including mortgage-backed securities and corporate bonds, and to a lesser extent deposit funds in other financial institutions, including the Federal Reserve Bank of New York, and the Federal Home Loan Bank (“FHLB”) of New York (“FHLBNY”).
Northfield Bank also purchases investment securities, including mortgage-backed securities and corporate bonds, and, to a lesser extent, deposit funds in other financial institutions, including the Federal Reserve Bank of New York, and the Federal Home Loan Bank (“FHLB”) of New York (“FHLBNY”).
At December 31, 2022, we had 1,195 multifamily real estate loans, with an average loan balance of approximately $2.4 million, although there are a large number of loans with balances substantially greater than this average.
At December 31, 2023, we had 1,186 multifamily real estate loans, with an average loan balance of approximately $2.3 million, although there are a large number of loans with balances substantially greater than this average.
At December 31, 2022, our commercial real estate loan portfolio consisted of 726 loans with an average loan balance of approximately $1.2 million, although there are a large number of loans with balances substantially greater than this average.
At December 31, 2023, our commercial real estate loan portfolio consisted of 710 loans with an average loan balance of approximately $1.3 million, although there are a large number of loans with balances substantially greater than this average.
As of December 31, 2022, we had 921 commercial and industrial loans with an average loan balance of approximately $168,000, although we originate these types of loans in amounts substantially greater than this average.
As of December 31, 2023, we had 863 commercial and industrial loans with an average loan balance of approximately $180,000, although we originate these types of loans in amounts substantially greater than this average.
(5) Includes PCD and acquired loans held-for-investment (and related allowance for credit losses). (6) The Company adopted the CECL accounting standard effective January 1, 2021, and recorded a $10.4 million increase to its allowance for credit losses, including reserves of $6.8 million related to PCD loans. Ratios prior to December 31, 2021 do not reflect the adoption of CECL.
(4) Includes PCD and acquired loans held-for-investment (and related allowance for credit losses). (5) The Company adopted the CECL accounting standard effective January 1, 2021, and recorded a $10.4 million increase to its allowance for credit losses, including reserves of $6.8 million related to PCD loans.
Community Reinvestment Act and Fair Lending Laws Savings institutions have a responsibility under the Community Reinvestment Act and related regulations to help meet the credit needs of their communities, including low- and moderate-income neighborhoods.
Community Reinvestment Act and Fair Lending Laws Federal savings associations have a responsibility under the Community Reinvestment Act and its implementing regulations to help meet the credit needs of their communities, including low- and moderate-income neighborhoods.
(4) Excluding PPP loans (which are fully government guaranteed and do not carry any provision for losses) of $5.1 million, $40.5 million, and $100.0 million (originated) at December 31, 2022, 2021 and 2020, respectively, the allowance for credit losses to total loans held for investment, net, totaled 1.01%, 1.03% and 1.00%, respectively, at December 31, 2022, 2021, and 2020.
(3) Excluding PPP loans (which are fully government guaranteed and do not carry any provision for losses) of $284,000, $5.1 million, and $40.5 million (originated) at December 31, 2023, 2022 and 2021, respectively, the allowance for credit losses to total loans held for investment, net, totaled 0.89%, 1.01% and 1.03%, respectively, at December 31, 2023, 2022, and 2021.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeDeterioration in economic conditions, including as a result of inflation or recession, changes in interest rates, or disruptions to the global supply chain, could result in the following consequences, any of which could have a material adverse effect on our business, financial condition, liquidity and results of operations: • demand for our products and services may decline; • loan delinquencies, problem assets, and foreclosures may increase; • collateral for loans, especially real estate, may decline in value, (including due to the inability to complete construction projects due to disruption in the supply chain) in turn reducing customers’ future borrowing power, and reducing the value of assets and collateral associated with existing loans; • we may increase our allowance for credit losses; • the value of our securities portfolio may decline; or • the net worth and liquidity of loan guarantors may decline, impairing their ability to honor commitments to us. 39 Moreover, a significant decline in general economic conditions, caused by inflation, changes in interest rates, recession, acts of terrorism, an outbreak of hostilities or other international or domestic events, tax reform, unemployment, an epidemic or pandemic or other factors beyond our control could further affect these local economic conditions and could further negatively affect the financial results of our banking operations.
Biggest changeDeterioration in economic conditions, including as a result of inflation or recession, changes in interest rates, or disruptions to the global supply chain, could result in the following consequences, any of which could have a material adverse effect on our business, financial condition, liquidity and results of operations: • demand for our products and services may decline; • loan delinquencies, problem assets, and foreclosures may increase; • collateral for loans, especially real estate, may decline in value, (including due to the inability to complete construction projects due to disruption in the supply chain) in turn reducing customers’ future borrowing power, and reducing the value of assets and collateral associated with existing loans; • we may increase our allowance for credit losses; • the value of our securities portfolio may decline; or • the net worth and liquidity of loan guarantors may decline, impairing their ability to honor commitments to us.
These reasons, historical issues at the largest mortgage loan servicers, and the legal and regulatory responses have impacted the foreclosure process and completion time of foreclosures for residential mortgage lenders. This may result in a material adverse effect on collateral values and our ability to minimize our losses. We are subject to environmental liability risk associated with lending activities.
These reasons, historical issues at the largest mortgage loan servicers, and the legal and regulatory responses have impacted the foreclosure process and completion time of foreclosures for residential mortgage lenders. This may result in a material adverse effect on collateral values and our ability to minimize our losses. 32 We are subject to environmental liability risk associated with lending activities.
Private parties may also have the ability to challenge an institution’s performance under fair lending laws in private class action litigation. Such actions could have a material adverse effect on our business, financial condition and results of operations. 36 The FRB may require us to commit capital resources to support Northfield Bank.
Private parties may also have the ability to challenge an institution’s performance under fair lending laws in private class action litigation. Such actions could have a material adverse effect on our business, financial condition and results of operations. The FRB may require us to commit capital resources to support Northfield Bank.
As information security risks and cyber threats continue to evolve, we may be required to expend additional resources to continue to enhance our information security measures and/or to investigate and remediate any information security vulnerabilities. 42 Because the nature of the financial services business involves a high volume of transactions, we face significant operational risks, including fraud and other financial crimes.
As information security risks and cyber threats continue to evolve, we may be required to expend additional resources to continue to enhance our information security measures and/or to investigate and remediate any information security vulnerabilities. Because the nature of the financial services business involves a high volume of transactions, we face significant operational risks, including fraud and other financial crimes.
Those borrowers might not be able to repay their loans, and the collateral for such loans may decline significantly in value. 43 Other Risks Related to Our Business Changes in our accounting policies or in accounting standards could materially affect how we report our financial condition and results of operations.
Those borrowers might not be able to repay their loans, and the collateral for such loans may decline significantly in value. Other Risks Related to Our Business Changes in our accounting policies or in accounting standards could materially affect how we report our financial condition and results of operations.
Restrictions on Northfield Bank’s rights as creditor could result in increased credit losses on our loans and mortgage-backed securities, or increased expense in pursuing our remedies as a creditor. Non-compliance with the USA PATRIOT Act, Bank Secrecy Act, or other laws and regulations could result in fines or sanctions.
Restrictions on Northfield Bank’s rights as creditor could result in increased credit losses on our loans and mortgage-backed securities, or increased expense in pursuing our remedies as a creditor. 33 Non-compliance with the USA PATRIOT Act, Bank Secrecy Act, or other laws and regulations could result in fines or sanctions.
Our continued ability to compete effectively depends on our ability to attract new employees and to retain and motivate our existing employees. 41 Risks associated with system failures, interruptions, or breaches of security could affect our earnings negatively. Information technology systems are critical to our business.
Our continued ability to compete effectively depends on our ability to attract new employees and to retain and motivate our existing employees. Risks associated with system failures, interruptions, or breaches of security could affect our earnings negatively. Information technology systems are critical to our business.
We could also be required to apply a new or revised standard retroactively, resulting in our restating prior period financial statements in material amounts. We hold certain intangible assets that could be classified as impaired in the future.
We could also be required to apply a new or revised standard retroactively, resulting in our restating prior period financial statements in material amounts. 41 We hold certain intangible assets that could be classified as impaired in the future.
In addition, if loans that are collateralized by real estate become troubled and the value of the real estate has been significantly impaired, then we may not be able to recover the full contractual amount of principal and interest that we anticipated at the time we originated the loan, which could cause us to increase our provision for credit losses and adversely affect our operating results and financial condition. 34 Our New York State multifamily loan portfolio could be adversely impacted by changes in legislation or regulation.
In addition, if loans that are collateralized by real estate become troubled and the value of the real estate has been significantly impaired, then we may not be able to recover the full contractual amount of principal and interest that we anticipated at the time we originated the loan, which could cause us to increase our provision for credit losses and adversely affect our operating results and financial condition. 31 Our New York State multifamily loan portfolio could be adversely impacted by changes in legislation or regulation.
A significant decline in asset valuations or cash flows may also cause us not to realize expected benefits. Our inability to tailor our retail delivery model to respond to consumer preferences in banking may negatively affect earnings.
A significant decline in asset valuations or cash flows may also cause us not to realize expected benefits. 35 Our inability to tailor our retail delivery model to respond to consumer preferences in banking may negatively affect earnings.
Achieving our growth targets depends, in part, on our ability to attract customers that currently bank at other financial institutions in our market, thereby increasing our share of the market, implement new lines of business or offer new products and services within existing lines of business, identify favorable loan and investment opportunities, and acquire other banks and non-bank entities.
Achieving our growth targets depends, in part, on our ability to attract customers that currently bank at other financial institutions in our market, thereby increasing our share of the market, implement new lines of business or offer new products and services, identify favorable loan and investment opportunities, and acquire other banks and non-bank entities.
If these assets are considered to be either partially or fully impaired in the future, our earnings and the book values of these assets would decrease. At December 31, 2022, we had $41.0 million in goodwill which we are required to test on a periodic basis.
If these assets are considered to be either partially or fully impaired in the future, our earnings and the book values of these assets would decrease. At December 31, 2023, we had $41.0 million in goodwill which we are required to test on a periodic basis.
In addition, any compromise of our systems could deter customers from using our products and services. Although we rely on security systems to provide security and authentication necessary to effect the secure transmission of data, these precautions may not protect our systems from compromises or breaches of security.
In addition, any compromise of our systems could deter customers from using our products and services. Although we rely on security systems to provide security and authentication necessary to affect the secure transmission of data, these precautions may not protect our systems from compromises or breaches of security.
We continue to analyze the impact of this regulation on our investment portfolio, and whether any changes are required to our investment strategies that could negatively affect our earnings. 44 We may be adversely affected by recent changes in tax laws.
We continue to analyze the impact of this regulation on our investment portfolio, and whether any changes are required to our investment strategies that could negatively affect our earnings. 42 We may be adversely affected by recent changes in tax laws.
We seek acquisition partners that offer us either significant market presence or the potential to expand our market footprint and improve profitability through economies of scale or expanded services. Acquiring other banks, businesses, or branches may have an adverse effect on our financial results and may involve various other risks commonly associated with acquisitions.
We seek acquisition partners that offer us either significant market presence or the potential to expand our market footprint and improve profitability through economies of scale or expanded services. Acquiring other banks, non-bank entities, businesses, or branches may have an adverse effect on our financial results and may involve various other risks commonly associated with acquisitions.
Risks Related to Interest Rates The reversal of the historically low interest rate environment may adversely affect our net interest income and profitability. The FRB decreased benchmark interest rates significantly, to near zero, in response to the COVID-19 pandemic. The FRB has reversed its policy of near zero interest rates given its concerns over inflation.
Risks Related to Interest Rates The reversal of the historically low interest rate environment has adversely affected and may continue to adversely affect our net interest income and profitability. The FRB decreased benchmark interest rates to near zero in response to the COVID-19 pandemic. The FRB has reversed its policy of near zero interest rates given its concerns over inflation.
However, a loan that does not exceed $2 million (including a group of loans to one borrower) that is for commercial, corporate, business, or agricultural purposes is included in our qualified thrift investments. As of December 31, 2022, we maintained 77.8% of our portfolio assets in qualified thrift investments.
However, a loan that does not exceed $2 million (including a group of loans to one borrower) that is for commercial, corporate, business, or agricultural purposes is included in our qualified thrift investments. As of December 31, 2023, we maintained 75.6% of our portfolio assets in qualified thrift investments.
At December 31, 2022, our simulation model indicated that our net portfolio value (the net present value of our interest-earning assets and interest-bearing liabilities) would decrease by 10.98% if there was an instantaneous parallel 200 basis point increase in market interest rates.
At December 31, 2023, our simulation model indicated that our net portfolio value (the net present value of our interest-earning assets and interest-bearing liabilities) would decrease by 9.04% if there was an instantaneous parallel 200 basis point increase in market interest rates.
The judicial foreclosure process is protracted, especially in New Jersey, where foreclosure timelines remain among the longest in the nation, which delays our ability to resolve non-performing loans through the sale of the underlying collateral.
The foreclosure process may adversely impact the Bank’s recoveries on non-performing loans. The judicial foreclosure process is protracted, especially in New Jersey, where foreclosure timelines remain among the longest in the nation, which delays our ability to resolve non-performing loans through the sale of the underlying collateral.
Based on these factors we have a concentration in multifamily and commercial real estate lending, as such loans represent approximately 455.8% of Northfield Bank's capital as of December 31, 2022.
Based on these factors we have a concentration in multifamily and commercial real estate lending, as such loans represent approximately 456.2% of Northfield Bank's capital as of December 31, 2023.
An increase in our allowance for credit losses on loans or loan charge-offs as a result of these regulatory reviews may have a material adverse effect on our financial condition and results of operations.
An increase in our allowance for credit losses on loans or loan charge-offs as a result of these regulatory reviews may have a material adverse effect on our financial condition and results of operations. In addition, any future credit deterioration could require us to increase our allowance for credit losses.
In this case, our operating margins and profitability would be adversely affected. Our success depends on hiring and retaining certain key personnel. Our performance largely depends on the talents and efforts of highly skilled individuals. We rely on key personnel to manage and operate our business, including major revenue generating functions such as loan and deposit generation.
Our success depends on hiring and retaining certain key personnel. Our performance largely depends on the talents and efforts of highly skilled individuals. We rely on key personnel to manage and operate our business, including major revenue generating functions such as loan and deposit generation.
Market interest rates have risen in response to the FRB’s recent rate increases. As discussed below, the increase in market interest rates is expected to have an adverse effect on our net interest income and profitability. Changes in market interest rates in an increasing rate environment could adversely affect our financial condition and results of operations.
As discussed below, the increase in market interest rates has already had and is expected to further have an adverse effect on our net interest income and profitability. 37 Changes in market interest rates in an increasing rate environment could adversely affect our financial condition and results of operations.
Because of the QTL requirement, we may be limited in our ability to change our asset mix and increase the yield on our earning assets by growing our commercial loan portfolio. 37 In addition, if we continue to grow our commercial real estate loan portfolio and our residential mortgage loan portfolio decreases, it is possible that in order to maintain our QTL status, we may have to buy mortgage-backed securities or other qualifying assets at times when the terms of such investments may not be attractive.
In addition, if we continue to grow our commercial real estate loan portfolio and our residential mortgage loan portfolio decreases, it is possible that in order to maintain our QTL status, we may have to buy mortgage-backed securities or other qualifying assets at times when the terms of such investments may not be attractive.
These loans may have delinquency or charge-off levels above our recent historical experience, which could adversely affect our future performance. If our allowance for credit losses is not sufficient to cover actual credit losses, our earnings and capital could decrease.
As a result, it may be difficult to predict the future performance of newly originated loans. These loans may have delinquency or charge-off levels above our recent historical experience, which could adversely affect our future performance. If our allowance for credit losses is not sufficient to cover actual credit losses, our earnings and capital could decrease.
At December 31, 2022, $3.72 billion, or 88.0%, of our loan portfolio held-for-investment, net, consisted of multifamily and other commercial real estate loans.
At December 31, 2023, $3.68 billion, or 87.6%, of our loan portfolio held-for-investment, net, consisted of multifamily and other commercial real estate loans.
Conversely, should market interest rates fall below current levels, our net interest margin could also be affected negatively if competitive pressures keep us from further reducing rates on our deposits, while the yields on our assets decrease more rapidly through loan prepayments and interest rate adjustments. 40 Increases in interest rates also may decrease loan demand and/or may make it more difficult for borrowers to repay adjustable-rate loans.
Conversely, should market interest rates fall below current levels, our net interest margin could also be affected negatively if competitive pressures keep us from further reducing rates on our deposits, while the yields on our assets decrease more rapidly through loan prepayments and interest rate adjustments.
The application of these more stringent capital requirements, among other things, could result in lower returns on equity, require the raising of additional capital, and result in regulatory actions if we were to be unable to comply with such requirements.
These limitations established a maximum percentage of eligible retained income that can be utilized for such actions. 34 The application of these more stringent capital requirements, among other things, could result in lower returns on equity, require the raising of additional capital, and result in regulatory actions if we were to be unable to comply with such requirements.
A deterioration in economic conditions in the United States and our markets could result in an increase in loan delinquencies and non-performing assets, decreases in loan collateral values and a decrease in demand for our products and services, all of which, in turn, would adversely affect our business, financial condition and results of operations.
A deterioration in economic conditions in the United States and our markets could result in an increase in loan delinquencies and non-performing assets, decreases in loan collateral values and a decrease in demand for our products and services, all of which, in turn, would adversely affect our business, financial condition and results of operations. 36 Our stock price may be negatively impacted by unrelated bank failures and negative depositor confidence in depository institutions.
If rates increase rapidly, we would likely have to increase the rates we pay on our deposits and borrowed funds more quickly than interest rates earned on our loans and investments, resulting in a negative effect on interest spreads and net interest income which would negatively affect our profitability.
As rates increased rapidly in recent periods, we have increased the rates we pay on our deposits and borrowed funds more quickly than interest rates earned on our loans and investments, resulting in a negative effect on interest spreads and net interest income which has negatively affected our profitability.
These include: • integrating personnel with diverse business backgrounds; • converting customers to new systems; • combining different corporate cultures and operating systems; and • retaining key employees. 38 Loans that were acquired as part of our acquisitions of other depository institutions were not underwritten or originated in accordance with our credit standards, including environmental matters, and we did not have long-standing relationships with many of these borrowers at the time of acquisition.
Loans that were acquired as part of our acquisitions of other depository institutions were not underwritten or originated in accordance with our credit standards, including environmental matters, and we did not have long-standing relationships with many of these borrowers at the time of acquisition.
However, as with any risk management framework, there are inherent limitations to our risk management strategies as there may exist, or develop in the future, risks that we have not appropriately anticipated or identified. If our risk management framework proves ineffective, we could suffer unexpected losses and our business and results of operations could be materially adversely affected.
However, as with any risk management framework, there are inherent limitations to our risk management strategies as there may exist, or develop in the future, risks that we have not appropriately anticipated or identified.
Our heavy reliance on information technology systems (both internal and third-party) exposes us to operational risks which include the risk of malfeasance by employees or persons outside of our organization, errors relating to transaction processing and technology, systems failures or interruptions, failures to properly implement systems upgrades, breaches of our internal control systems and compliance requirements, and business continuation and disaster recovery.
Our heavy reliance on information technology systems (both internal and third-party) exposes us to operational risks which include the risk of malfeasance by employees or persons outside of our organization, errors relating to transaction processing and technology, systems failures or interruptions, failures to properly implement systems upgrades, breaches of our internal control systems and compliance requirements, and business continuation and disaster recovery. 39 Information security risks have generally increased in recent years because of the proliferation of new technologies, the use of the Internet and telecommunications technologies to conduct financial and other transactions, and the increased sophistication and activities of perpetrators of cyber-attacks and mobile phishing.
The benefits of this strategy would depend on our ability to realize expected expense reductions; however, if we are not able to implement this successfully, we may experience significant customer attrition. If our municipal banking deposits were lost within a short period of time, this could negatively impact our liquidity and earnings.
The benefits of this strategy would depend on our ability to realize expected expense reductions; however, if we are not able to implement this successfully, we may experience significant customer attrition.
Decreases in interest rates often result in increased prepayments of loans and mortgage-related securities as borrowers refinance their loans to reduce borrowings costs.
We are subject to reinvestment risk associated with changes in interest rates. Changes in interest rates may affect the average life of loans and mortgage-related securities. Decreases in interest rates often result in increased prepayments of loans and mortgage-related securities as borrowers refinance their loans to reduce borrowings costs.
An institution may become subject to limitations on paying dividends, engaging in share repurchases, and paying discretionary bonuses if its capital level falls below the buffer amount. These limitations established a maximum percentage of eligible retained income that can be utilized for such actions.
An institution may become subject to limitations on paying dividends, engaging in share repurchases, and paying discretionary bonuses if its capital level falls below the buffer amount.
The declines in market value could result in other-than-temporary impairments of these assets, which would lead to accounting charges that could have a material adverse effect on our net income and capital levels. During the year ended December 31, 2022, we incurred losses of $70.2 million related to net changes in unrealized holding losses in the available-for-sale investment securities portfolio.
The declines in market value could result in other-than-temporary impairments of these assets, which would lead to accounting charges that could have a material adverse effect on our net income and capital levels.
If a significant amount of these deposits were withdrawn in a short period of time, it could have a negative impact on our short-term liquidity and have an adverse impact on our earnings. Further, depending on market conditions, we may be required to pay higher rates on deposits or borrowings to replace such deposits.
If a significant amount of these deposits were withdrawn within a short period of time, it could have a negative impact on our short-term liquidity or if the cost to replace such funds was more expensive, it could have an adverse impact on our earnings.
Risks Related to Competitive Matters Strong traditional and non-traditional competition within our market areas may limit our growth and profitability. We face intense competition in making loans and attracting deposits.
Further, unless and until U.S. political, credit and financial market conditions have been sufficiently resolved or stabilized, it may increase our future borrowing costs. Risks Related to Competitive Matters Strong traditional and non-traditional competition within our market areas may limit our growth and profitability. We face intense competition in making loans and attracting deposits.
Risks Related to Operational Matters Our funding sources may prove insufficient to replace deposits and support our future growth. We must maintain sufficient funds to respond to the needs of depositors and borrowers.
Risks Related to Operational Matters Our funding sources may prove insufficient to replace deposits at maturity and support our future growth. A lack of liquidity could adversely affect our financial condition and results of operations and result in regulatory limits being placed on us. We maintain sufficient funds to respond to the needs of depositors and borrowers.
Accordingly, we would not have a significant payment history pattern with which to judge future collectability. Further, newly originated loans have not been subjected to unfavorable economic conditions. As a result, it may be difficult to predict the future performance of newly originated loans.
Increasing loan originations would likely require us to lend to borrowers with which we have limited experience. Accordingly, we would not have a significant payment history pattern with which to judge future collectability. Further, newly originated loans have not been subjected to unfavorable economic conditions.
Additionally, increases in interest rates may increase capitalization rates utilized in valuing income-producing properties. This can result in lower appraised values, which can limit the ability of borrowers to refinance existing debt and may result in higher charge-offs of our non-performing collateral dependent loans.
This can result in lower appraised values, which can limit the ability of borrowers to refinance existing debt and may result in higher charge-offs of our non-performing collateral dependent loans. Our balance sheet composition is weighted towards assets with longer durations, which expose us to risks upon changes in interest rates.
Uncertainties associated with increased loan originations may result in errors in judging collectability, which may lead to additional provisions for credit losses or charge-offs, which would negatively affect our financial condition and results of operations. Increasing loan originations would likely require us to lend to borrowers with which we have limited experience.
At December 31, 2023, the Company has approximately $457.8 million of New York multifamily loans that have some form of rent stabilization or rent control. Uncertainties associated with increased loan originations may result in errors in judging collectability, which may lead to additional provisions for credit losses or charge-offs, which would negatively affect our financial condition and results of operations.
The COVID-19 pandemic and the related adverse local and national economic consequences, could have a material, adverse effect on our business, financial condition, liquidity, and results of operations. ITEM 1B. UNRESOLVED STAFF COMMENTS There are no unresolved staff comments. 45
The extent of such impact will depend on future developments, which are highly uncertain, including the advent of new variants and any measures to combat the pandemic by governmental authorities. The COVID-19 pandemic and the related adverse local and national economic consequences, could have a material, adverse effect on our business, financial condition, liquidity, and results of operations. ITEM 1B.
Our financial flexibility will be severely constrained if we are unable to maintain our access to funding or if adequate financing is not available to accommodate future growth at acceptable interest rates. If we are required to rely more heavily on more expensive funding sources to support future growth, our revenues may not increase proportionately to cover our costs.
Adverse operating results or changes in industry conditions could lead to difficulty or an inability to access these additional funding sources. 38 Our financial flexibility will be severely constrained if we are unable to maintain our access to funding or if adequate financing is not available to accommodate future growth at acceptable interest rates.
Given the ongoing and dynamic nature of current economic circumstances, it is difficult to predict the full impact of the COVID-19 pandemic on our business.
The economic impact of the COVID-19 outbreak could continue to affect our financial condition and results of operations. The COVID-19 pandemic has adversely impacted the global and national economy and certain industries and geographies in which the Company operates. Given its dynamic nature, it is difficult to predict the full impact of the COVID-19 pandemic on our business.
As a part of our liquidity management, we use a number of funding sources in addition to core deposit growth and repayments and maturities of loans and investments. These additional sources consist primarily of FHLB advances, proceeds from the sale of loans, federal funds purchased, and brokered certificates of deposit.
Additionally, deposit balances can decrease if customers identify alternative investments opportunities. Accordingly, as a part of our liquidity management, we may use a number of funding sources in addition to deposits and repayments and maturities of loans and investments.
Removed
Effective January 1, 2021, the Company adopted Accounting Standards Update (“ASU”), F inancial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”) or “CECL ”, which makes significant changes to the accounting for credit losses on financial instruments presented on an amortized cost basis, such as our loans held for investment, and disclosures about them.
Added
Because of the QTL requirement, we may be limited in our ability to change our asset mix and increase the yield on our earning assets by growing our commercial loan portfolio.
Removed
The CECL model requires an estimate of expected credit losses, measured over the contractual life of an instrument, which considers reasonable and supportable forecasts of future economic conditions in addition to information about past events and current conditions.
Added
These include: • integrating personnel with diverse business backgrounds; • converting customers to new systems; • combining different corporate cultures and operating systems; and • retaining key employees.
Removed
The standard provides significant flexibility and requires a high degree of judgment with regards to pooling financial assets with similar risk characteristics and adjusting the relevant historical loss information and economic conditions in order to develop an estimate of expected lifetime losses.
Added
Moreover, a significant decline in general economic conditions, caused by inflation, changes in interest rates, recession, acts of terrorism, an outbreak of hostilities or other international or domestic events, tax reform, unemployment, an epidemic or pandemic or other factors beyond our control could further affect these local economic conditions and could further negatively affect the financial results of our banking operations.
Removed
Providing for losses over the life of our loan portfolio is a change to the previous method of providing allowances for loan losses that are probable and incurred.
Added
Further, if we are unable to adequately manage our liquidity, deposits, capital levels and interest rate risk, which have come under greater scrutiny in light of recent bank failures, it may have a material adverse effect on our financial condition and results of operations.
Removed
This change may require us to increase our allowance for credit losses in future periods, and greatly increases the types of data we need to collect and review to determine the appropriate level of the allowance for credit losses.
Added
On March 9, 2023, Silvergate Bank, La Jolla, California, announced its decision to voluntarily liquidate its assets and wind down operations. On March 10, 2023, Silicon Valley Bank, Santa Clara, California, was closed by the California Department of Financial Protection and Innovation.
Removed
It may also result in even small changes to future forecasts having a significant impact on the allowance, which could make the allowance more volatile. Any requirement to increase our allowance for credit losses on loans could have a material adverse effect on our financial condition and results of operations.
Added
On March 12, 2023, Signature Bank, New York, New York, was closed by the New York State Department of Financial Services, and on May 1, 2023, First Republic Bank, San Francisco, California, was closed by the California Department of Financial Protection and Innovation.
Removed
In addition, any future credit deterioration could require us to increase our allowance for credit losses. 35 The foreclosure process may adversely impact the Bank’s recoveries on non-performing loans.
Added
These banks also had elevated levels of uninsured deposits, which may be less likely to remain at the bank over time and less stable as a source of funding than insured deposits. These failures led to volatility and declines in the market for bank stocks and questions about depositor confidence in depository institutions.
Removed
As of December 31, 2022, we held $604.7 million of municipal deposits, which represented approximately 14.6% of total deposits. These deposits may be more volatile than other deposits.
Added
These events have led to a greater focus by institutions, investors and regulators on the on-balance sheet liquidity of and funding sources for financial institutions, the composition of its deposits, including the amount of uninsured deposits, the amount of accumulated other comprehensive loss, capital levels and interest rate risk management.
Removed
In addition, the effect of rising rates could be compounded if deposit customers move funds from transaction and savings accounts to higher rate money market or certificate of deposit accounts.
Added
If we are unable to adequately manage our liquidity, deposits, capital levels and interest rate risk, it may have a material adverse effect on our financial condition and results of operations.
Removed
Our balance sheet composition is weighted towards assets with longer durations, which expose us to risks upon changes in interest rates. We are subject to reinvestment risk associated with changes in interest rates. Changes in interest rates may affect the average life of loans and mortgage-related securities.
Added
The failure to address the federal debt ceiling in a timely manner, downgrades of the U.S. credit rating and uncertain credit and financial market conditions may affect the stability of securities issued or guaranteed by the federal government, which may affect the valuation or liquidity of our investment securities portfolio and increase future borrowing costs.
Removed
During the year ended December 31, 2022, we incurred losses of $70.2 million related to net changes in unrealized holding losses in the available-for-sale investment securities portfolio.
Added
As a result of uncertain political, credit and financial market conditions, including the potential consequences of the federal government defaulting on its obligations for a period of time due to federal debt ceiling limitations or other unresolved political issues, investments in financial instruments issued or guaranteed by the federal government pose credit default and liquidity risks.
Removed
As we continue to grow, we are likely to become more dependent on these sources. Adverse operating results or changes in industry conditions could lead to difficulty or an inability to access these additional funding sources.
Added
Given that future deterioration in the U.S. credit and financial markets is a possibility, losses or significant deterioration in the fair value of our U.S. government issued or guaranteed investments may occur. At December 31, 2023, we had approximately $44.4 million, $73.9 million, $125.8 million and $550.6 million invested in U.S. Treasuries, U.S.
Removed
Information security risks have generally increased in recent years because of the proliferation of new technologies, the use of the Internet and telecommunications technologies to conduct financial and other transactions, and the increased sophistication and activities of perpetrators of cyber-attacks and mobile phishing.
Added
Government agency securities, corporate bonds and residential mortgage-backed securities issued or guaranteed by government-sponsored enterprises, respectively. Downgrades to the U.S. credit rating could affect the stability of securities issued or guaranteed by the federal government and the valuation or liquidity of our portfolio of such investment securities, and could result in our counterparties requiring additional collateral for our borrowings.
Removed
We will be required to transition from the use of the LIBOR interest rate index in the future. We have certain loans and investment securities indexed to the London Interbank Offered Rate (“LIBOR”). The LIBOR index will be discontinued for U.S. Dollar settings effective June 30, 2023.
Added
Market interest rates have risen significantly in response to the FRB’s recent rate increases.
Removed
The language in our LIBOR-based contracts and financial instruments has developed over time and may have various events that trigger when a successor rate to the designated rate would be selected.
Added
In addition, as a result of rising interest rates, we have experienced a shift in deposits from lower-cost transaction and savings accounts to higher-cost certificates of deposit. However, the rates we earn on our loans did not increase as rapidly during the year ended December 31, 2023.
Removed
If a trigger is satisfied, contracts and financial instruments may give the calculation agent discretion over the substitute index or indices for the calculation of interest rates to be selected.
Added
Increases in interest rates may decrease loan demand and/or may make it more difficult for borrowers to repay when loans reprice. Additionally, increases in interest rates may increase capitalization rates utilized in valuing income-producing properties.
Removed
The implementation of a substitute index or indices for the calculation of interest rates under our loan agreements with our borrowers may result in our incurring expenses in effecting the transition, may result in reduced loan balances if borrowers do not accept the substitute index or indices, and may result in disputes or litigation with customers over the appropriateness or comparability to LIBOR of the substitute index or indices, which could have an adverse effect on our results of operations.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThe branch offices are located in the New York counties of Richmond, and Kings and the New Jersey counties of Hunterdon, Mercer, Middlesex, and Union. The net book value of our premises, land, and equipment was $24.8 million at December 31, 2022.
Biggest changeThe branch offices are located in the New York counties of Richmond, and Kings and the New Jersey counties of Hunterdon, Mercer, Middlesex, and Union. The net book value of our premises, land, and equipment was $24.8 million at December 31, 2023.
ITEM 2. PROPERTIES The Company operates from its corporate offices located at 581 Main Street, Woodbridge, New Jersey, its home office in Staten Island, New York, and its additional 37 branch offices located in New York and New Jersey.
ITEM 2. PROPERTIES The Company operates from its corporate offices located at 581 Main Street, Woodbridge, New Jersey, its home office in Staten Island, New York, and its additional 38 branch offices located in New York and New Jersey.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeITEM 3. LEGAL PROCEEDINGS In the normal course of business, we may be party to various outstanding legal proceedings and claims. In the opinion of management, our consolidated financial statements are not likely to be materially affected by the outcome of such legal proceedings and claims as of December 31, 2022. ITEM 4.
Biggest changeITEM 3. LEGAL PROCEEDINGS In the normal course of business, we may be party to various outstanding legal proceedings and claims. In the opinion of management, our consolidated financial statements are not likely to be materially affected by the outcome of such legal proceedings and claims as of December 31, 2023. ITEM 4.
MINE SAFETY DISCLOSURES Not applicable. 46 PART II
MINE SAFETY DISCLOSURES Not applicable. 45 PART II

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeItem 4. Mine Safety Disclosures 46 Part II. Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 47 Item 6. [Reserved] 48 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 49 Item 7A. Quantitative and Qualitative Disclosures about Market Risk 71 Item 8.
Biggest changeItem 4. Mine Safety Disclosures 45 Part II. Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 46 Item 6. [Reserved] 47 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 48 Item 7A. Quantitative and Qualitative Disclosures about Market Risk 68 Item 8.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeAs of Index 12/31/2017 12/31/2018 12/31/2019 12/31/2020 12/31/2021 12/31/2022 Northfield Bancorp, Inc. 100.00 81.44 104.81 79.28 107.16 108.09 NASDAQ Composite Index 100.00 97.16 132.81 192.47 235.15 158.65 S&P Composite 1500 Thrifts & Mortgage Finance Index 100.00 81.15 110.27 104.12 128.42 106.34 KBW NASDAQ Bank Index 100.00 82.29 112.01 100.46 138.97 109.23 Source: S&P Global Market Intelligence, a division of S&P Global Inc. 47 Issuer Purchases of Equity Securities On June 16, 2022, the Company's Board of Directors approved a $45.0 million stock repurchase program, under which the Company anticipates repurchasing shares in accordance with Rule 10b5-1 of the Securities and Exchange Commission.
Biggest changeSmallCap Bank Index 100.00 125.46 113.94 158.62 139.85 140.55 KBW NASDAQ Bank Index 100.00 136.13 122.09 168.88 132.75 131.57 Source: S&P Global Market Intelligence, a division of S&P Global Inc. 46 Issuer Purchases of Equity Securities On June 16, 2022, the Company's Board of Directors approved a $45.0 million stock repurchase program, which was suspended on March 16, 2023 and reinstated and completed in May 2023.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES Our shares of common stock are traded on the NASDAQ Global Select Market under the symbol “NFBK.” The approximate number of holders of record of Northfield Bancorp, Inc.’s common stock as of February 24, 2023, was 3,842.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES Our shares of common stock are traded on the NASDAQ Global Select Market under the symbol “NFBK.” The approximate number of holders of record of Northfield Bancorp, Inc.’s common stock as of February 26, 2024, was 3,711.
Stock Performance Graph Set forth below is a stock performance graph comparing (a) the cumulative total return on the Northfield Bancorp, Inc.’s common stock for the period December 31, 2017, through December 31, 2022, (b) the cumulative total return of the stocks included in the NASDAQ Composite Index over such period, (c) the cumulative total return on stocks included in the S&P Composite 1500 Thrifts & Mortgage Finance Index over such period and, (d) the cumulative total return on stocks included in the KBW NASDAQ Bank Index over such period.
Stock Performance Graph Set forth below is a stock performance graph comparing (a) the cumulative total return on the Northfield Bancorp, Inc.’s common stock for the period December 31, 2018, through December 31, 2023, (b) the cumulative total return of the stocks included in the NASDAQ Composite Index over such period, (c) the cumulative total return on stocks included in the S&P U.S.
Period (a) Total Number of Shares Purchased (b) Average Price Paid per Share (c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (d) Maximum Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs (in thousands) October 1, 2022 to October 31, 2022 176,487 $ 14.64 176,487 $ 28,380 November 1, 2022 to November 30, 2022 9,032 15.56 9,032 28,239 December 1, 2022 to December 31, 2022 371,340 15.61 371,340 22,443 Total 556,859 556,859
Period (a) Total Number of Shares Purchased (b) Average Price Paid per Share (c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (d) Maximum Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs (in thousands) October 1, 2023 to October 31, 2023 — $ — — $ — November 1, 2023 to November 30, 2023 319,476 9.77 319,476 4,380 December 1, 2023 to December 31, 2023 111,045 11.76 111,045 3,074 Total 430,521 430,521
During the year ended December 31, 2022, the Company repurchased 2,092,157 shares of its common stock outstanding at an average price of $14.72 for a total of $30.8 million pursuant to the approved stock repurchase plan. At December 31, 2022, the maximum dollar value of shares remaining for repurchase under the plan was $22.4 million.
During the years ended December 31, 2023 and 2022, the Company repurchased 3,074,332 shares of its common stock outstanding at an average price of $11.99 per share for a total cost of $36.9 million, and 2,092,157 shares of its common stock outstanding at an average price of $14.72 per share for a total cost of $38.0 million, respectively, pursuant to the approved stock repurchase plans.
The following table reports information regarding purchases of the Company’s common stock during the three months ended December 31, 2022.
At December 31, 2023, the maximum dollar value of shares remaining for repurchase under the plan was $3.1 million. The following table reports information regarding purchases of the Company’s common stock during the three months ended December 31, 2023.
Cumulative return assumes the reinvestment of dividends, and is expressed in dollars based on an assumed investment of $100. In prior years, the Company compared its price performance to the NASDAQ Composite Index, SNL U.S. Thrift Index, and the SNL U.S.
SmallCap Banks Index over such period and, (d) the cumulative total return on stocks included in the KBW NASDAQ Bank Index over such period. Cumulative return assumes the reinvestment of dividends, and is expressed in dollars based on an assumed investment of $100.
Removed
Bank NASDAQ Index; however, the SNL Indexes are no longer published and have been replaced with the S&P Composite 1500 Thrifts & Mortgage Finance Index and the KBW NASDAQ Bank Index.
Added
Previously, the Company compared its price performance to the NASDAQ Composite Index, S&P Composite 1500 Thrifts & Mortgage Finance Index and the KBW NASDAQ Bank Index. In March 2023, S&P Global revised their Global Industry Classification Standard and the S&P Composite 1500 Thrifts & Mortgage Finance Index was discontinued. It was deemed that the S&P U.S.
Added
SmallCap Banks Index was an appropriate index to use in its place as Northfield Bancorp is a member of this index. As of Index 12/31/2018 12/31/2019 12/31/2020 12/31/2021 12/31/2022 12/31/2023 Northfield Bancorp, Inc. 100.00 128.69 97.34 131.58 132.72 111.26 NASDAQ Composite Index 100.00 136.69 198.10 242.03 163.28 236.17 S&P U.S.
Added
On June 1, 2023, the Board of Directors of the Company approved a $10.0 million stock repurchase program which was completed in August 2023. On November 7, 2023, the Board of Directors of the Company approved a $7.5 million stock repurchase program. The stock repurchase program is administered in accordance with Rule 10b5-1 of the Securities and Exchange Commission.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeThe following table details non-performing assets consisting of non-performing loans held-for-investment and non-performing loans held-for-sale at December 31, 2022 and 2021 (in thousands): December 31, 2022 2021 Non-accrual loans: Held-for-investment $ 6,548 $ 4,403 Non-accruing loans subject to restructuring agreements: Held-for-investment 3,265 3,219 Total non-accruing loans held-for-investment 9,813 7,622 Loans 90 days or more past due and still accruing: Held-for-investment 425 384 Total non-performing loans 10,238 8,006 Other real estate owned — 100 Total non-performing assets $ 10,238 $ 8,106 Loans subject to restructuring agreements and still accruing $ 3,751 $ 5,820 Accruing loans 30 to 89 days delinquent $ 3,644 $ 1,166 The following table details non-performing loans by loan type at December 31, 2022 and 2021 (in thousands): December 31, 2022 2021 Held-for-investment Real estate loans: Multifamily $ 3,285 $ 1,882 Commercial 5,184 5,117 One-to-four family residential 118 314 Home equity and lines of credit 262 281 Commercial and industrial 964 28 Total non-accrual loans held-for-investment 9,813 7,622 Loans delinquent 90 days or more and still accruing: Real estate loans: Multifamily $ 233 $ — Commercial 8 147 One-to-four family residential 155 165 Commercial and industrial 24 72 Other 5 — Total loans delinquent 90 days or more and still accruing held-for-investment 425 384 Total non-performing loans $ 10,238 $ 8,006 Other real estate owned — 100 Total non-performing assets $ 10,238 $ 8,106 64 At December 31, 2022, the Company had no assets acquired through foreclosure.
Biggest changeThe following table details non-performing loans by loan type at December 31, 2023 and 2022 (in thousands): December 31, 2023 2022 Held-for-investment Real estate loans: Multifamily $ 2,709 $ 3,285 Commercial 6,491 5,184 One-to-four family residential 104 118 Home equity and lines of credit 499 262 Commercial and industrial 305 964 Other 7 — Total non-accrual loans held-for-investment 10,115 9,813 Loans delinquent 90 days or more and still accruing: Real estate loans: Multifamily $ 201 $ 233 Commercial — 8 One-to-four family residential 406 155 Home equity and lines of credit 711 — Commercial and industrial — 24 Other — 5 Total loans delinquent 90 days or more and still accruing held-for-investment 1,318 425 Total non-performing assets $ 11,433 $ 10,238 At December 31, 2023 and 2022, the Company had no assets acquired through foreclosure.
We also maintain an allowance for estimated losses on off-balance sheet credit risks related to loan commitments and standby letters of credit. The reserve for off-balance sheet exposures is determined using the CECL reserve factor in the related funded loan segment, adjusted for an average historical funding rate.
Allowance for Off-Balance Sheet Credit Exposures We also maintain an allowance for estimated losses on off-balance sheet credit risks related to loan commitments and standby letters of credit. The reserve for off-balance sheet exposures is determined using the CECL reserve factor in the related funded loan segment, adjusted for an average historical funding rate.
The volume column shows the effects attributable to changes in volume (changes in volume multiplied by prior rate). The total column represents the sum of the prior columns.
The rate column shows the effects attributable to changes in rate (changes in rate multiplied by prior volume). The volume column shows the effects attributable to changes in volume (changes in volume multiplied by prior rate). The total column represents the sum of the prior columns.
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 of 100, 200, 300, or 400 basis points, or a decrease of 100 and 200 basis points, which is based on the current interest rate environment.
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 of 100, 200, 300, or 400 basis points, or a decrease of 100, 200, 300, or 400 basis points, which is based on the current interest rate environment.
We regularly adjust our investments in liquid assets based on our assessment of: • expected loan demand; • expected deposit flows; • yields available on interest-earning deposits and securities; and • the objectives of our asset/liability management program. Our most liquid assets are cash and cash equivalents, corporate bonds, and unpledged mortgage-related securities issued or guaranteed by the U.S.
We regularly adjust our investments in liquid assets based on our assessment of: • expected loan demand; • expected deposit flows; • yields available on interest-earning deposits and securities; and • the objectives of our asset/liability management program. 66 Our most liquid assets are cash and cash equivalents, corporate bonds, and unpledged mortgage-related securities issued or guaranteed by the U.S.
We have a detailed contingency funding plan that is reviewed and reported to the Board Risk Committee at least quarterly. This plan includes monitoring cash on a daily basis to determine the liquidity needs of Northfield Bank. Additionally, management performs a stress test on Northfield Bank’s retail deposits and wholesale funding sources in several scenarios on a quarterly basis.
We have a detailed contingency funding plan that is reviewed and reported to the Risk Committee at least quarterly. This plan includes monitoring cash on a daily basis to determine the liquidity needs of Northfield Bank. Additionally, management performs a stress test on Northfield Bank’s retail deposits and wholesale funding sources in several scenarios on a quarterly basis.
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 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 historical loss experience and comparable peer data loss history.
(11) Includes originated loans held-for-investment, PCD/PCI loans and acquired loans (and related allowance for credit losses). (12) Excluding PPP loans of $5.1 million, which are fully government guaranteed and do not carry any provision for losses, the allowance for credit losses to total loans held for investment, net, totaled 1.01% at December 31, 2022.
(11) Includes originated loans held-for-investment, PCD loans and acquired loans (and related allowance for credit losses). (12) Excluding PPP loans of $5.1 million, which are fully government guaranteed and do not carry any provision for losses, the allowance for credit losses to total loans held for investment, net, totaled 1.01% at December 31, 2022.
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.
Each scenario is weighted 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.
Individually impaired loans that have no impairment losses are not considered for collective allowances described earlier. We have a concentration of loans secured by real property located in New York City, New Jersey, and, to a lesser extent, eastern Pennsylvania.
Individually impaired loans that have no impairment losses are not considered for collective allowances described earlier. We have a concentration of loans secured by real property located in New York, New Jersey, and, to a lesser extent, eastern Pennsylvania.
Our Board Risk Committee is responsible for establishing and monitoring our liquidity targets and strategies in order to ensure that sufficient liquidity exists for meeting the borrowing needs and withdrawals of deposits by our customers as well as unanticipated contingencies.
Our Risk Committee is responsible for establishing and monitoring our liquidity targets and strategies in order to ensure that sufficient liquidity exists for meeting the borrowing needs and withdrawals of deposits by our customers as well as unanticipated contingencies.
(9) Non-performing loans consist of non-accruing loans and loans 90 days or more past due and still accruing (excluding PCD/PCI loans), included in total loans held-for-investment, net, and non-performing loans held-for-sale, included in loans held-for-sale. (10) Includes originated loans held-for-investment, PCD/PCI loans, acquired loans, and loans held-for-sale.
(9) Non-performing loans consist of non-accruing loans and loans 90 days or more past due and still accruing (excluding PCD loans), included in total loans held-for-investment, net, and non-performing loans held-for-sale, included in loans held-for-sale. (10) Includes originated loans held-for-investment, PCD loans, acquired loans, and loans held-for-sale.
(2) The year ended December 31, 2021, includes: (i) $4.0 million, after tax, of net interest income generated from accelerated accretion of fees related to the forgiveness of PPP loans; (ii) $1.4 million, after tax, of accretable income related to the payoff of PCD loans; (iii) $1.0 million, after tax, in gains on loans sold; and (iv) $677,000 of tax-exempt income from bank-owned life insurance proceeds in excess of the cash surrender value of the policies.
(3) The year ended December 31, 2021, includes: (i) $4.0 million, after tax, of net interest income generated from accelerated accretion of fees related to the forgiveness of PPP loans; (ii) $1.4 million, after tax, of accretable income related to the payoff of PCD loans; (iii) $1.0 million, after tax, in gains on loans sold; and (iv) $677,000 of tax-exempt income from bank-owned life insurance proceeds in excess of the cash surrender value of the policies.
(8) The year ended December 31, 2022, includes $1.3 million, pre-tax, of net interest income generated from accelerated accretion of fees related to the forgiveness of PPP loans.
The year ended December 31, 2022, includes $1.3 million, pre-tax, of net interest income generated from accelerated accretion of fees related to the forgiveness of PPP loans.
Any one or a combination of these events may adversely affect our loan portfolio resulting in delinquencies, increased loan losses, and increased loan loss provisions.
Any one or a combination of these events may adversely affect our loan portfolio resulting in delinquencies, increased credit losses, and increased credit loss provisions.
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.
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, borrowings under the BTFP, and repurchase agreements.
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, ability to pay dividends, and profitability.
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.
Northfield Bancorp, Inc. is a separate legal entity from Northfield Bank and must provide for its own liquidity to fund dividend payments, stock repurchases, and other corporate items. The Company’s primary source of liquidity is the receipt of dividend payments from the Bank in accordance with applicable regulatory requirements. At December 31, 2022, Northfield Bancorp, Inc.
Northfield Bancorp, Inc. is a separate legal entity from Northfield Bank and must provide for its own liquidity to fund dividend payments, stock repurchases, and other corporate items. The Company’s primary source of liquidity is the receipt of dividend payments from the Bank in accordance with applicable regulatory requirements. At December 31, 2023, Northfield Bancorp, Inc.
The following table details the five Moody's scenarios utilized in determining the allowance for credit losses on loans at December 31, 2022, and weightings of each scenario: Model Scenario Moody's Scenario Description Weight S0 Upside - 4th Percentile 4% S1 Upside - 10th Percentile 10% S3 Downside - 90th Percentile 10% S4 Downside - 96th Percentile 4% Baseline Baseline Scenario 72% If we placed 100% weighting on the baseline scenario, the quantitative allowance for credit losses would have been approximately $1.5 million lower.
The following table details the five Moody's scenarios utilized in determining the allowance for credit losses on loans at December 31, 2023, and weightings of each scenario: Model Scenario Moody's Scenario Description Weight S0 Upside - 4th Percentile 4% S1 Upside - 10th Percentile 10% S3 Downside - 90th Percentile 10% S4 Downside - 96th Percentile 4% Baseline Baseline Scenario 72% If we placed 100% weighting on the baseline scenario, the quantitative allowance for credit losses at December 31, 2023 would have been approximately $1.4 million lower.
If these deposits do not remain with us, we will be required to seek other sources of funds, including loan sales, securities sales, other deposit products, including replacement certificates of deposit, securities sold under agreements to repurchase (repurchase agreements), and advances from the FHLBNY and other borrowing sources.
If these deposits do not remain with us, we will be required to seek other sources of funds, including loan sales, securities sales, other deposit products, including replacement or brokered certificates of deposit, securities sold under agreements to repurchase (repurchase agreements), and advances from the FHLBNY and other borrowing sources.
For the year ended December 31, 2022, losses on trading securities were $2.2 million, as compared to gains of $1.7 million for the year ended December 31, 2021. The trading portfolio is utilized to fund the Company’s deferred compensation obligation to certain employees and directors of the Company's deferred compensation plan (the “Plan”).
For the year ended December 31, 2023, gains on trading securities were $1.7 million, as compared to losses of $2.2 million for the year ended December 31, 2022. The trading portfolio is utilized to fund the Company’s deferred compensation obligation to certain employees and directors of the Company's deferred compensation plan (the “Plan”).
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 of 100, 200, 300, or 400 basis points, or a decrease of 100 and 200 basis points, which is based on the current interest rate environment. 68 The following tables set forth, as of December 31, 2022 and December 31, 2021, 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).
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 of 100, 200, 300, or 400 basis points, or a decrease of 100 and 200 basis points, which is based on the current interest rate environment. 64 The following tables set forth, as of December 31, 2023 and December 31, 2022, 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).
Generally, non-performing loans are charged down to the appraised value of collateral less costs to sell for collateral-dependent loans and to the present value of the expected future cash flows for non-collateral dependent loans, which reduces the ratio of the allowance for loan losses to non-performing loans.
Generally, non-performing loans are charged down to the appraised value of collateral less costs to sell for collateral-dependent loans and to the present value of the expected future cash flows for non-collateral dependent loans, which reduces the ratio of the allowance for credit losses to non-performing loans.
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.
This committee is responsible for, among other things, evaluating the interest rate risk inherent in our assets and liabilities, for recommending to the Risk Committee of our Board of Directors (“Risk Committee”) 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.
Management believes that the Bank has implemented 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 the Bank’s commercial real estate portfolio under severe, adverse economic conditions.
Management believes that Northfield Bank (the “Bank”) has implemented 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.
(unconsolidated) had liquid assets of $40.0 million. Northfield Bank and Northfield Bancorp, Inc. are both subject to various regulatory capital requirements, including a risk-based capital measure. The risk-based capital guidelines include both a definition of capital and a framework for calculating risk-weighted assets by assigning assets and off-balance sheet items to broad risk categories.
(unconsolidated) had liquid assets of $29.2 million. Northfield Bank and Northfield Bancorp, Inc. are both subject to various regulatory capital requirements, including a risk-based capital measure. The risk-based capital guidelines include both a definition of capital and a framework for calculating risk-weighted assets by assigning assets and off-balance sheet items to broad risk categories.
The stress scenarios include deposit attrition of up to 50%, and selling our securities available-for-sale portfolio at a discount of 20% to its current estimated fair value. Northfield Bank continues to maintain significant liquidity under all stress scenarios.
The stress scenarios include deposit attrition of up to 50%, and selling our securities available-for-sale portfolio at a discount of 20% to its current estimated fair value and its impact on capital levels. Northfield Bank continues to maintain significant liquidity under all stress scenarios.
At December 31, 2022 and December 31, 2021, we were in compliance with all Board-approved policies with respect to interest rate risk management. 69 Certain shortcomings are inherent in the methodologies used in determining interest rate risk through changes in net portfolio value and net interest income.
At December 31, 2023 and December 31, 2022, we were in compliance with all Board-approved policies with respect to interest rate risk management. 65 Certain shortcomings are inherent in the methodologies used in determining interest rate risk through changes in net portfolio value and net interest income.
At December 31, 2022, both Northfield Bank and Northfield Bancorp, Inc. exceeded all regulatory capital requirements and are considered “well capitalized” under regulatory guidelines. See “Item 1. Business - Supervision and Regulation” and Note 16 of the Notes to the Consolidated Financial Statements. Off-Balance Sheet Arrangements and Aggregate Contractual Obligations Commitments.
At December 31, 2023, both Northfield Bank and Northfield Bancorp, Inc. exceeded all regulatory capital requirements and are considered “well capitalized” under regulatory guidelines. See “Item 1. Business - Supervision and Regulation” and Note 15 of the Notes to the consolidated financial statements. 67 Off-Balance Sheet Arrangements and Aggregate Contractual Obligations Commitments.
We also have the ability to obtain additional funding from the FHLB and Federal Reserve Bank utilizing unencumbered and unpledged securities and multifamily loans. Any amount pledged for such deposits under the line of credit reduces the Company's available borrowing amount under the FHLB advance agreement.
We also have the ability to obtain additional funding from the FHLB and Federal Reserve Bank, utilizing unencumbered and unpledged securities and multifamily loans if a need for additional funds arises. Any amount pledged for such deposits under the line of credit reduces the Company's available borrowing amount under the FHLB advance agreement.
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 16% 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 38% in year one and 26% in year two.
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.
NPV at December 31, 2022 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 $ 4,850,423 $ 4,057,885 $ 792,538 $ (227,578) (22.31) % 16.34 % (25.83) % (11.03) % +300 4,967,247 4,126,616 840,631 (179,485) (17.59) % 16.92 % (19.51) % (8.90) % +200 5,106,889 4,198,831 908,058 (112,058) (10.98) % 17.78 % (12.01) % (4.41) % +100 5,244,669 4,274,947 969,722 (50,394) (4.94) % 18.49 % (5.33) % (1.19) % — 5,375,689 4,355,573 1,020,116 — — % 18.98 % — % — % (100) 5,503,211 4,464,131 1,039,080 18,964 1.86 % 18.88 % 0.76 % (3.80) % (200) 5,626,336 4,586,245 1,040,091 19,975 1.96 % 18.49 % 0.00 % (8.91) % The table above indicates that at December 31, 2022, in the event of a 200 basis point decrease in interest rates, we would experience a 1.96% increase in estimated net portfolio value, a 0% change in net interest income in year one, and an 8.91% decrease in net income in year two.
NPV at December 31, 2022 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 $ 4,850,423 $ 4,057,885 $ 792,538 $ (227,578) (22.31) % 16.34 % (25.83) % (11.03) % +300 4,967,247 4,126,616 840,631 (179,485) (17.59) % 16.92 % (19.51) % (8.90) % +200 5,106,889 4,198,831 908,058 (112,058) (10.98) % 17.78 % (12.01) % (4.41) % +100 5,244,669 4,274,947 969,722 (50,394) (4.94) % 18.49 % (5.33) % (1.19) % — 5,375,689 4,355,573 1,020,116 — — % 18.98 % — % — % (100) 5,503,211 4,464,131 1,039,080 18,964 1.86 % 18.88 % 0.76 % (3.80) % (200) 5,626,336 4,586,245 1,040,091 19,975 1.96 % 18.49 % 0.00 % (8.91) % (300) 5,749,256 4,717,723 1,031,533 11,417 1.12 % 17.94 % (0.29) % (11.15) % (400) 5,912,105 4,859,064 1,053,041 32,925 3.23 % 17.81 % (0.63) % (13.15) % The table above indicates that at December 31, 2022, in the event of a 400 basis point decrease in interest rates, we would experience a 3.23% increase in estimated net portfolio value, a 0.63% decrease in net interest income in year one and a 13.15% decrease in net income in year two.
At December 31, 2022, three of the non-accruing TDRs totaling $547,000 were not performing in accordance with their restructured terms. Two of the loans totaling $477,000 are collateralized by real estate with an appraised value of $2.4 million. A third loan in the amount of $70,000 is an unsecured commercial and industrial loan which has a provision against it.
At December 31, 2022, three of the non-accruing TDRs totaling $547,000 were not performing in accordance with their restructured terms. Two of the loans totaling $477,000 were collateralized by real estate with an appraised value of $2.4 million. A third loan in the amount of $70,000 was an unsecured commercial and industrial loan, which had a specific reserve against it.
Conversely, if we removed the upside scenarios and reallocated the weights from S0 to S4 and S1 to S3, the allowance for credit losses would increase approximately $3.6 million. These forecasts revert to our long-term historical average loss rate after a 24 month forecasting period.
Conversely, if we removed the upside scenarios and reallocated the weights from S0 to S4 and S1 to S3, the allowance for credit losses would have increased approximately $2.7 million. These forecasts revert to our long-term historical average loss rate after a 24 month forecasting period.
At the same time, net charge-offs have remained low at 0.02% of average loans outstanding for the year ended December 31, 2022, as compared to 0.07% for the year ended December 31, 2021, and 0.11% for the year ended December 31, 2020. 63 Non-performing Assets and Delinquent Loans.
At the same time, net charge-offs have remained low at 0.15% of average loans outstanding for the year ended December 31, 2023, as compared to 0.02% for the year ended December 31, 2022, and 0.07% for the year ended December 31, 2021. 59 Non-performing Assets and Delinquent Loans.
At December 31, 2022, 6.8% of PCD loans were past due 30 to 89 days, and 23.0% were past due 90 days or more, as compared to 10.5% and 19.2%, respectively, at December 31, 2021. Loans General. Maintaining loan quality historically has been, and will continue to be, a key element of our business strategy.
At December 31, 2023, 2.9% of PCD loans were past due 30 to 89 days, and 27.1% were past due 90 days or more, as compared to 6.8% and 23.0%, respectively, at December 31, 2022. Loans General. Maintaining loan quality historically has been, and will continue to be, a key element of our business strategy.
We employ conservative underwriting standards for new loan originations and maintain sound credit administration practices while the loans are outstanding. In addition, substantially all of our loans are secured, predominantly by real estate. At December 31, 2022, our non-performing loans totaled $10.2 million, or 0.24%, of total loans.
We employ conservative underwriting standards for new loan originations and maintain sound credit administration practices while the loans are outstanding. In addition, substantially all of our loans are secured, predominantly by real estate. At December 31, 2023, our non-performing loans totaled $11.4 million, or 0.27%, of total loans.
Comparison of Operating Results for the Years Ended December 31, 2022 and 2021 Net Income. Net income was $61.1 million and $70.7 million for the years ended December 31, 2022 and December 31, 2021, respectively.
Comparison of Operating Results for the Years Ended December 31, 2023 and 2022 Net Income. Net income was $37.7 million and $61.1 million for the years ended December 31, 2023 and December 31, 2022, respectively.
Changes in these estimates could significantly impact the allowance for credit losses on loans. 53 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 TDRs and non-accrual loans with an outstanding balance of $500,000 or greater.
Changes in these estimates could significantly impact the allowance for credit losses on loans. 52 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 designated as TDRs prior to the adoption of ASU 2022-02 and non-accrual loans with an outstanding balance of $500,000 or greater.
Significant variances from the prior year are as follows: a $2.7 million increase in net interest income, a $10.7 million increase in the provision for credit losses on loans, a $6.5 million decrease in non-interest income, a $2.2 million decrease in non-interest expense, and a $2.7 million decrease in income tax expense.
Significant variances from the prior year are as follows: a $33.6 million decrease in net interest income, a $3.1 million decrease in the provision for credit losses on loans, a $3.9 million increase in non-interest income, a $6.5 million increase in non-interest expense, and a $9.6 million decrease in income tax expense.
Excluding PPP loans of $40.5 million, the allowance for credit losses to total loans held for investment, net, totaled 1.03% at December 31, 2021. Excluding originated PPP loans of $100.0 million, the allowance for loan losses to total loans held for investment, net, totaled 1.00% at December 31, 2020.
Excluding PPP loans of $40.5 million, the allowance for credit losses to total loans held for investment, net, totaled 1.03% at December 31, 2021.
During the year ended December 31, 2022, the Company recorded net charge-offs of $838,000, as compared to net charge-offs of $2.8 million for the year ended December 31, 2021, and net charge-offs of $3.8 million for the year ended December 31, 2020. Charge-offs in 2022 and 2021 were primarily related to PCD loans and unsecured commercial and industrial loans.
During the year ended December 31, 2023, the Company recorded net charge-offs of $6.4 million, as compared to net charge-offs of $838,000 for the year ended December 31, 2022, and net charge-offs of $2.8 million for the year ended December 31, 2021. Charge-offs in 2023 were primarily related to small business unsecured commercial and industrial loans.
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. 52 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.
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 recorded income tax expense of $23.7 million for the year ended December 31, 2022, compared to $26.5 million for the year ended December 31, 2021, with the decrease due to lower taxable income. The effective tax rate for the year ended December 31, 2022 was 28.0%, compared to 27.3% for the year ended December 31, 2021.
The Company recorded income tax expense of $14.1 million for the year ended December 31, 2023, compared to $23.7 million for the year ended December 31, 2022, with the decrease due to lower taxable income. The effective tax rate for the year ended December 31, 2023, was 27.2%, compared to 28.0% for the year ended December 31, 2022.
Such commitments are subject to the same credit policies and approval process applicable to loans we originate. In addition, we routinely enter into commitments to sell mortgage loans; such amounts are not significant to our operations. For additional information, see Note 15 of the Notes to the Consolidated Financial Statements.
Such commitments are subject to the same credit policies and approval process applicable to loans we originate. In addition, we routinely enter into commitments to sell mortgage loans. Such amounts are not significant to our operations. For additional information, see Note 14 of the Notes to the consolidated financial statements. Recent Accounting Pronouncements Not Yet Adopted ASU No. 2023-07 .
Overview Net income was $61.1 million, or $1.32 per diluted common share, and $70.7 million, or $1.45 per diluted common share, for the years ended December 31, 2022 and December 31, 2021, respectively.
Overview Net income was $37.7 million, or $0.86 per diluted common share, and $61.1 million, or $1.32 per diluted common share, for the years ended December 31, 2023 and December 31, 2022, respectively.
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 SVP & Chief Credit Officer and our SVP & Director of Marketing, and other officers and staff as necessary or appropriate.
Accordingly, our Board of Directors has established a Management Asset-Liability Committee (“MALCO”), comprised of our SVP & Chief Investment Officer and Treasurer, who chairs this Committee, our President & Chief Executive Officer, our 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.
Significant variances from the prior year are as follows: a $2.7 million increase in net interest income, a $10.7 million increase in the provision for credit losses on loans, a $6.5 million decrease in non-interest income, and a $2.2 million decrease in non-interest expense. Interest Income.
Significant variances from the prior year are as follows: a $33.6 million decrease in net interest income, a $3.1 million decrease in the provision for credit losses on loans, a $3.9 million increase in non-interest income, a $6.5 million increase in non-interest expense, and a $9.6 million decrease in income tax expense. 55 Interest Income.
At December 31, 2021, the Company had 25 loans classified as individually impaired and recorded $30,200 of specific reserves on four of the 25 impaired loans. 66 The following table sets forth activity in our allowance for credit losses, by loan type, at December 31, for the years indicated (in thousands): Real estate loans Commercial (1) One-to-four Family Residential Construction and Land Home Equity and Lines of Credit Commercial and Industrial Other PCI/ PCD Total Allowance for Credit Losses 2019 $ 25,094 $ 180 $ 536 $ 317 $ 1,640 $ 151 $ 789 $ 28,707 Provision/(benefit) for loan losses 11,710 22 678 (84) 283 41 92 12,742 Recoveries 414 5 — 27 13 6 — 465 Charge-offs (4,213) — — — (94) — — (4,307) 2020 33,005 207 1,214 260 1,842 198 881 37,607 Impact of CECL Adjustment (1,949) 5,233 (921) 419 947 (188) 6,812 10,353 Balance at January 1, 2021 31,056 5,440 293 679 2,789 10 7,693 47,960 (Benefit)/provision for credit losses (4,331) (1,903) (124) (145) 991 (3) (669) (6,184) Recoveries 60 29 — 26 39 5 119 278 Charge-offs — (21) — — (646) (3) (2,411) (3,081) 2021 26,785 3,545 169 560 3,173 9 4,732 38,973 Provision/(benefit) for credit losses 2,876 359 155 287 1,243 (12) (426) 4,482 Recoveries 102 32 — 19 144 12 178 487 Charge-offs (278) — — — (446) — (601) (1,325) 2022 $ 29,485 $ 3,936 $ 324 $ 866 $ 4,114 $ 9 $ 3,883 $ 42,617 (1) Commercial includes commercial real estate loans collateralized by owner-occupied, non-owner occupied, and multifamily properties.
At December 31, 2022, the Company had 20 loans classified as individually impaired and recorded $38,200 of specific reserves on four of the 20 impaired loans. 62 The following table sets forth activity in our allowance for credit losses, by loan type, at December 31, for the years indicated (in thousands): Real estate loans Commercial (1) One-to-four Family Residential Construction and Land Home Equity and Lines of Credit Commercial and Industrial Other PCD Total Allowance for Credit Losses 2020 $ 33,005 $ 207 $ 1,214 $ 260 $ 1,842 $ 198 $ 881 $ 37,607 Impact of CECL Adjustment (1,949) 5,233 (921) 419 947 (188) 6,812 10,353 Balance at January 1, 2021 31,056 5,440 293 679 2,789 10 7,693 47,960 (Benefit)/provision for credit losses (4,331) (1,903) (124) (145) 991 (3) (669) (6,184) Recoveries 60 29 — 26 39 5 119 278 Charge-offs — (21) — — (646) (3) (2,411) (3,081) 2021 26,785 3,545 169 560 3,173 9 4,732 38,973 Provision/(benefit) for credit losses 2,876 359 155 287 1,243 (12) (426) 4,482 Recoveries 102 32 — 19 144 12 178 487 Charge-offs (278) — — — (446) — (601) (1,325) 2022 29,485 3,936 324 866 4,114 9 3,883 42,617 (Benefit)/provision for credit losses (6,301) (651) (175) 838 8,445 (3) (800) 1,353 Recoveries 71 — — 1 63 — 10 145 Charge-offs — — — — (6,572) — (8) (6,580) 2023 $ 23,255 $ 3,285 $ 149 $ 1,705 $ 6,050 $ 6 $ 3,085 $ 37,535 (1) Commercial includes commercial real estate loans collateralized by owner-occupied, non-owner occupied, and multifamily properties.
The table below sets forth the amounts and categories of TDRs as of December 31, 2022, and December 31, 2021 (in thousands): At December 31, 2022 2021 Non-Accruing Accruing Non-Accruing Accruing Real estate loans: Commercial $ 3,069 $ 3,034 $ 3,219 $ 3,508 One-to-four family residential — 666 — 1,562 Multifamily 126 — — 603 Home equity and lines of credit — 27 — 38 Commercial and industrial loans 70 24 — 109 $ 3,265 $ 3,751 $ 3,219 $ 5,820 Performing in accordance with restructured terms 83.2 % 94.8 % 88.6 % 97.5 % 65 Allowance for Credit Losses On January 1, 2021, the Company adopted the CECL standard and as a result of the adoption recorded a $10.4 million increase to its allowance for credit losses on loans, including $6.8 million related to PCD loans.
The following table details the amounts and categories of the loans subject to restructuring agreements by loan type as of December 31, 2022 (in thousands): At December 31, 2022 Non-Accruing Accruing Real estate loans: Commercial $ 3,069 $ 3,034 One-to-four family residential — 666 Multifamily 126 — Home equity and lines of credit — 27 Commercial and industrial loans 70 24 $ 3,265 $ 3,751 Performing in accordance with restructured terms 83.2 % 94.8 % 61 Allowance for Credit Losses On January 1, 2021, the Company adopted the CECL standard and as a result of the adoption recorded a $10.4 million increase to its allowance for credit losses on loans, including $6.8 million related to PCD loans.
Specific reserves on loans individually evaluated for impairment increased by $8,000, or 26.5%, from $30,200 at December 31, 2021, to $38,200 at December 31, 2022. At December 31, 2022, the Company had 20 loans classified as individually impaired and recorded $38,200 of specific reserves on four of the 20 impaired loans.
Specific reserves on loans individually evaluated for impairment increased by $7,000 to $45,200 at December 31, 2023 from $38,200 at December 31, 2022. At December 31, 2023, the Company had 19 loans classified as individually impaired and recorded $45,200 of specific reserves on four of the 19 impaired loans.
(2) Represents remaining borrowing potential. 70 At December 31, 2022, we had $37.5 million in outstanding loan commitments. In addition, we had $288.4 million in unused lines of credit to borrowers. Certificates of deposit due within one year of December 31, 2022 totaled $685.3 million, or 16.5% of total deposits.
(2) Represents remaining borrowing potential. At December 31, 2023, we had $7.0 million in outstanding loan commitments. In addition, we had $292.7 million in unused lines of credit to borrowers. Certificates of deposit due within one year of December 31, 2023 totaled $635.8 million, or 16.4% of total deposits.
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.
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.
During the year ended December 31, 2022, the Company repurchased approximately 2.1 million of its common stock outstanding at an average price of $14.72 for a total of $30.8 million pursuant to approved stock repurchase plans. As of December 31, 2022, the Company had approximately $22.4 million in remaining capacity under its current stock repurchase program.
During the year ended December 31, 2023, the Company repurchased approximately 3.1 million of its common stock outstanding at an average price of $11.99 for a total of $36.9 million pursuant to the approved stock repurchase plans. As of December 31, 2023, the Company had approximately $3.1 million in remaining capacity under its current repurchase program.
At December 31, 2022 2021 2020 (Dollars in thousands) Selected Financial Condition Data: Total assets $ 5,601,293 $ 5,430,542 $ 5,514,544 Cash and cash equivalents 45,799 91,068 87,544 Trading securities 10,751 13,461 12,291 Debt securities available-for-sale, at estimated fair value 952,173 1,208,237 1,264,805 Debt securities held-to-maturity, at amortized cost 10,760 5,283 7,234 Equity securities 10,443 5,342 253 Loans held-for-sale — — 19,895 Loans held-for-investment, net 4,243,693 3,806,617 3,823,238 Allowance for credit losses (42,617) (38,973) (37,607) Net loans held-for-investment 4,201,076 3,767,644 3,785,631 Bank-owned life insurance 167,912 164,500 161,924 FHLBNY stock, at cost 30,382 22,336 28,641 Operating lease right-of-use assets 34,288 33,943 36,741 Other real estate owned — 100 — Deposits 4,150,219 4,169,334 4,076,551 Borrowed funds 583,859 421,755 591,789 Subordinated debentures, net of issuance costs 60,996 — — Operating lease liabilities 39,790 39,851 42,734 Total liabilities 4,899,903 4,690,659 4,760,563 Total stockholders’ equity $ 701,390 $ 739,883 $ 753,981 Years Ended December 31, 2022 2021 2020 (Dollars in thousands, except share data) Selected Operating Data: Interest income $ 179,688 $ 172,298 $ 168,145 Interest expense 21,382 16,649 38,337 Net interest income before provision/(benefit) for credit losses 158,306 155,649 129,808 Provision/(benefit) for credit losses 4,482 (6,184) 12,742 Net interest income after provision/(benefit) for credit losses 153,824 161,833 117,066 Non-interest income 7,983 14,453 11,472 Non-interest expense 76,948 79,159 78,513 Income before income taxes 84,859 97,127 50,025 Income tax expense 23,740 26,473 13,037 Net income $ 61,119 $ 70,654 $ 36,988 Net income per common share - basic $ 1.32 $ 1.46 $ 0.76 Net income per common share - diluted $ 1.32 $ 1.45 $ 0.76 Weighted average basic shares outstanding 46,234,122 48,416,495 48,721,504 Weighted average diluted shares outstanding 46,438,119 48,754,263 48,785,963 50 At or For the Years Ended December 31, 2022 2021 2020 Selected Financial Ratios and Other Data: Performance Ratios: Return on assets (ratio of net income to average total assets) (1) (2) (3) 1.09 % 1.29 % 0.70 % Return on equity (ratio of net income to average equity) (1) (2) (3) 8.57 9.42 5.07 Interest rate spread (4) 2.82 2.89 2.40 Net interest margin (5) 2.97 3.01 2.61 Dividend payout ratio (6) 39.48 34.39 58.06 Efficiency ratio (7) (8) 46.27 46.54 55.57 Non-interest expense to average total assets 1.38 1.44 1.49 Average interest-earning assets to average interest-bearing liabilities 137.82 135.63 126.98 Average equity to average total assets 12.75 13.69 13.86 Asset Quality Ratios: Non-performing assets to total assets 0.18 0.15 0.54 Non-performing loans to total loans (9) (10) 0.24 0.21 0.77 Allowance for credit losses to non-performing loans held-for-investment 416.26 486.80 390.56 Allowance for credit losses to total non-performing loans 416.26 486.80 127.38 Allowance for credit losses to total loans held-for-investment, net (11) (12) 1.00 1.02 0.98 Capital Ratio: Tier 1 capital (to adjusted assets) (13) 12.64 12.93 12.73 Other Data: Number of full service offices 38 38 38 Full time equivalent employees 400 385 378 (1) The year ended December 31, 2022, includes $925,000, after tax, of net interest income generated from accelerated accretion of fees related to the forgiveness of PPP loans and $326,000, after-tax, in gains on loans sold.
At December 31, 2023 2022 2021 (Dollars in thousands) Selected Financial Condition Data: Total assets $ 5,598,396 $ 5,601,293 $ 5,430,542 Cash and cash equivalents 229,506 45,799 91,068 Trading securities 12,549 10,751 13,461 Debt securities available-for-sale, at estimated fair value 795,464 952,173 1,208,237 Debt securities held-to-maturity, at amortized cost 9,866 10,760 5,283 Equity securities 10,629 10,443 5,342 Loans held-for-investment, net 4,203,654 4,243,693 3,806,617 Allowance for credit losses (37,535) (42,617) (38,973) Net loans held-for-investment 4,166,119 4,201,076 3,767,644 Bank-owned life insurance 171,543 167,912 164,500 FHLBNY stock, at cost 39,667 30,382 22,336 Operating lease right-of-use assets 30,202 34,288 33,943 Other real estate owned — — 100 Deposits 3,878,435 4,150,219 4,169,334 Borrowed funds 859,272 583,859 421,755 Subordinated debentures, net of issuance costs 61,219 60,996 — Operating lease liabilities 35,205 39,790 39,851 Total liabilities 4,898,951 4,899,903 4,690,659 Total stockholders’ equity $ 699,445 $ 701,390 $ 739,883 Years Ended December 31, 2023 2022 2021 (Dollars in thousands, except share data) Selected Operating Data: Interest income $ 208,795 $ 179,688 $ 172,298 Interest expense 84,128 21,382 16,649 Net interest income before provision/(benefit) for credit losses 124,667 158,306 155,649 Provision/(benefit) for credit losses 1,353 4,482 (6,184) Net interest income after provision/(benefit) for credit losses 123,314 153,824 161,833 Non-interest income 11,896 7,983 14,453 Non-interest expense 83,450 76,948 79,159 Income before income taxes 51,760 84,859 97,127 Income tax expense 14,091 23,740 26,473 Net income $ 37,669 $ 61,119 $ 70,654 Net income per common share - basic $ 0.86 $ 1.32 $ 1.46 Net income per common share - diluted $ 0.86 $ 1.32 $ 1.45 Weighted average basic shares outstanding 43,560,844 46,234,122 48,416,495 Weighted average diluted shares outstanding 43,638,616 46,438,119 48,754,263 49 At or For the Years Ended December 31, 2023 2022 2021 Selected Financial Ratios and Other Data: Performance Ratios: Return on assets (ratio of net income to average total assets) (1) (2) (3) 0.68 % 1.09 % 1.29 % Return on equity (ratio of net income to average equity) (1) (2) (3) 5.45 8.57 9.42 Interest rate spread (4) 1.82 2.82 2.89 Net interest margin (5) 2.35 2.97 3.01 Dividend payout ratio (6) 60.51 39.48 34.39 Efficiency ratio (7) (8) 61.11 46.27 46.54 Non-interest expense to average total assets 1.50 1.38 1.44 Average interest-earning assets to average interest-bearing liabilities 133.01 137.82 135.63 Average equity to average total assets 12.44 12.75 13.69 Asset Quality Ratios: Non-performing assets to total assets 0.20 0.18 0.15 Non-performing loans to total loans (9) (10) 0.27 0.24 0.21 Allowance for credit losses to total non-performing loans 328.30 416.26 486.80 Allowance for credit losses to total loans held-for-investment, net (11) (12) 0.89 1.00 1.02 Capital Ratio: Tier 1 capital (to adjusted assets) 12.58 12.64 12.93 Other Data: Number of full service offices 39 38 38 Full time equivalent employees 401 400 385 (1) The year ended December 31, 2023, includes $317,000, after tax, of severance costs and $96,000, after tax, of gains on loans sold.
The decrease in employee compensation and benefits was due to a $3.9 million decrease in the mark to market of the Company's deferred compensation plan expense, which as discussed above has no effect on net income, as well as a decrease in medical benefit costs, partially offset by an increase in salary expense related to annual merit increases, and an increase in equity award expense related to new awards issued in the first quarter of 2022.
The increase was primarily due to a $4.5 million increase in employee compensation and benefits, primarily attributable to a $3.9 million increase in the mark to market of the Company's deferred compensation plan expense, which as discussed above has no effect on net income, coupled with an increase in equity award expense related to awards issued in the first quarter of 2023, annual merit increases, and severance expense of $440,000, partially offset by a decrease in the accrual for incentive compensation.
The decrease in credit loss expense for off-balance sheet credit exposures was due to a benefit of $1.1 million recorded in the year ended December 31, 2022, compared to a provision of $307,000 for the prior year, attributed to a decrease in the pipeline of loans approved and awaiting closing.
There was a $506,000 decrease in the credit loss benefit for off-balance sheet credit exposures due to a benefit of $555,000 recorded during the year ended December 31, 2023, compared to a benefit of $1.1 million for the prior year, attributed to a larger decrease in the pipeline of loans committed and awaiting closing in the prior year as compared to the current year.
The decrease was attributable to a $50.4 million decrease in accumulated other comprehensive income associated with a decline in the estimated fair value of our debt securities available-for-sale portfolio, due to the higher interest rate environment, $24.1 million in dividend payments, and $30.8 million in stock repurchases, partially offset by net income of $61.1 million for the year ended December 31, 2022, and a $5.7 million increase in equity award activity. 49 Selected Financial Data The summary information presented below at the dates or for each of the years presented is derived in part from our consolidated financial statements.
The decrease was attributable to $36.9 million in stock repurchases and $22.8 million in dividend payments, partially offset by net income of $37.7 million for the year ended December 31, 2023, a $15.9 million reduction in accumulated other comprehensive loss due to an increase in the fair value of our debt securities available-for-sale portfolio, and a $4.2 million increase in equity award activity. 48 Selected Financial Data The summary information presented below at the dates or for each of the years presented is derived in part from our consolidated financial statements.
(6) Dividend payout ratio is calculated as total dividends declared for the year divided by net income for the year. (7) The efficiency ratio represents non-interest expense divided by the sum of net interest income and non-interest income.
(6) Dividend payout ratio is calculated as total dividends declared for the year divided by net income for the year. (7) The efficiency ratio represents non-interest expense divided by the sum of net interest income and non-interest income. (8) The year ended December 31, 2023, includes $440,000 pre-tax, of severance costs.
As of December 31, 2022, our non-owner occupied commercial real estate concentration (as defined by regulatory guidance) to total risk-based capital was approximately 455.8%.
As of December 31, 2023, non-owner occupied commercial real estate loans (as defined by regulatory guidance) to total risk-based capital was estimated at approximately 456%.
The allowance for credit losses on loans has been determined in accordance with U.S. GAAP. We are responsible for the timely and periodic determination of the amount of the allowance required.
The allowance for credit losses on loans has been determined in accordance with U.S. GAAP. We are responsible for the timely and periodic determination of the amount of the allowance required. We believe that our allowance for credit losses is adequate to cover losses. Management performs a quarterly evaluation of the adequacy of the allowance for credit losses on loans.
Because management's estimates of the allowance for credit losses on loans involve a high degree of judgement, the subjectivity of the assumptions used and the potential for changes in the forecasted economic environment that could result in changes to the amount of the allowance recorded, there is uncertainty inherent in such estimates.
Because of the of the high degree of judgment involved in management's estimates of the allowance for credit losses, the subjectivity of assumptions used, and the potential for changes in the forecasted economic environment, there is inherent uncertainty in such estimates.
(5) Net interest margin represents net interest income divided by average total interest-earning assets. 62 Rate/Volume Analysis The following table presents the effects of changing rates and volumes on our net interest income for the years indicated. The rate column shows the effects attributable to changes in rate (changes in rate multiplied by prior volume).
(4) Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities. (5) Net interest margin represents net interest income divided by average total interest-earning assets. 58 Rate/Volume Analysis The following table presents the effects of changing rates and volumes on our net interest income for the years indicated.
In the event of a 400 basis point increase in interest rates, we would experience a 13.48% decrease in estimated net portfolio value, a 14.49% increase in net interest income in year one and a 4.48% increase in net interest income in year two.
In the event of a 400 basis point increase in interest rates, we would experience an 18.29% decrease in estimated net portfolio value, a 20.93% decrease in net interest income in year one and a 5.16% decrease in net interest income in year two.
The increase in the average balance of interest-earning assets was due primarily to increases in the average balance of loans outstanding of $214.9 million and the average balance of other securities of $133.9 million, partially offset by decreases in the average balance of mortgage-backed securities of $111.6 million, the average balance of FHLBNY stock of $2.9 million, and the average balance of interest-earning deposits in financial institutions of $79.1 million.
The decrease in the average balance of interest-earning assets was due to decreases in the average balance of mortgage-backed securities of $181.5 million and the average balance of other securities of $46.7 million, partially offset by increases in the average balance of loans outstanding of $171.2 million, the average balance of FHLBNY stock of $18.1 million, and the average balance of interest-earning deposits in financial institutions of $12.5 million.
The Company also holds loans held-for-investment subject to restructuring agreements that are on accrual status, which totaled $3.8 million and $5.8 million at December 31, 2022 and December 31, 2021, respectively. At December 31, 2022, $3.6 million, or 98.4% of the $3.8 million of accruing loans subject to restructuring agreements, were performing in accordance with their restructured terms.
The Company also held loans subject to TDR agreements that were on accrual status totaling $3.8 million at December 31, 2022. At December 31, 2022, $3.6 million, or 94.8%, of the $3.8 million of accruing loans subject to TDR agreements were performing in accordance with their restructured terms.
The decrease was attributable to a $50.4 million decrease in accumulated other comprehensive income associated with a decline in the estimated fair value of our debt securities available-for-sale portfolio, $24.1 million in dividend payments, and $30.8 million in stock repurchases, partially offset by net income of $61.1 million for year ended December 31, 2022, and a $5.7 million increase in equity award activity.
The decrease was attributable to $36.9 million in stock repurchases and $22.8 million in dividend payments, partially offset by net income of $37.7 million for the year ended December 31, 2023, a $15.9 million reduction in accumulated other comprehensive loss due to an increase in the fair value of our debt securities available-for-sale portfolio, and a $4.2 million increase in equity award activity.
The Company had the following primary sources of liquidity at December 31, 2022 (in thousands): Cash and cash equivalents (1) $ 31,269 Corporate bonds (2) $ 168,032 Multifamily loans (2) $ 1,573,615 Mortgage-backed securities (issued or guaranteed by the U.S. Government, Fannie Mae, or Freddie Mac) (2) $ 191,821 (1) Excludes $14.5 million of cash at Northfield Bank.
The Company had the following primary sources of liquidity at December 31, 2023 (in thousands): Cash and cash equivalents (1) $ 215,617 Corporate bonds (2) $ 110,914 Multifamily loans (2) $ 930,990 Mortgage-backed securities (issued or guaranteed by the U.S. Government, Fannie Mae, or Freddie Mac) (2) $ 382,787 (1) Excludes $13.9 million of cash at Northfield Bank.
For the Years Ended December 31, 2022 2021 2020 Average Outstanding Balance Interest Average Yield/ Rate Average Outstanding Balance Interest Average Yield/ Rate Average Outstanding Balance Interest Average Yield/ Rate (Dollars in thousands) Interest-earning assets: Loans (1) $ 4,077,175 $ 160,911 3.95 % $ 3,862,243 $ 158,217 4.10 % $ 3,622,777 $ 146,570 4.05 % Mortgage-backed securities (2) 863,897 12,461 1.44 975,518 10,640 1.09 1,015,338 16,572 1.63 Other securities (2) 285,385 4,325 1.52 151,495 1,965 1.30 131,832 2,871 2.18 FHLBNY stock 22,541 1,174 5.21 25,420 1,279 5.03 29,992 1,825 6.08 Interest-earning deposits 85,485 817 0.96 164,553 197 0.12 168,011 307 0.18 Total interest-earning assets 5,334,483 179,688 3.37 5,179,229 172,298 3.33 4,967,950 168,145 3.38 Non-interest-earning assets 259,891 299,664 296,128 Total assets $ 5,594,374 $ 5,478,893 $ 5,264,078 Interest-bearing liabilities: Savings, NOW, and money market accounts $ 2,898,048 $ 3,610 0.12 % $ 2,811,552 $ 3,031 0.11 % $ 2,356,634 $ 10,241 0.43 % Certificates of deposit 525,557 6,679 1.27 505,472 3,176 0.63 910,444 14,989 1.65 Total interest-bearing deposits 3,423,605 10,289 0.30 3,317,024 6,207 0.19 3,267,078 25,230 0.77 Borrowings 413,697 9,296 2.25 501,523 10,442 2.08 645,305 13,107 2.03 Subordinated debt 33,436 1,797 5.37 — — — — — — Total interest-bearing liabilities 3,870,738 21,382 0.55 3,818,547 16,649 0.44 3,912,383 38,337 0.98 Non-interest-bearing deposits 907,603 812,805 529,138 Accrued expenses and other liabilities 102,807 97,385 93,210 Total liabilities 4,881,148 4,728,737 4,534,731 Stockholders’ equity 713,226 750,156 729,347 Total liabilities and stockholders’ equity $ 5,594,374 $ 5,478,893 $ 5,264,078 Net interest income $ 158,306 $ 155,649 $ 129,808 Net interest rate spread (3) 2.82 % 2.89 % 2.40 % Net interest-earning assets (4) $ 1,463,745 $ 1,360,682 $ 1,055,567 Net interest margin (5) 2.97 % 3.01 % 2.61 % Average interest-earning assets to interest-bearing liabilities 137.82 % 135.63 % 126.98 % (1) Includes non-accruing loans.
For the Years Ended December 31, 2023 2022 2021 Average Outstanding Balance Interest Average Yield/ Rate Average Outstanding Balance Interest Average Yield/ Rate Average Outstanding Balance Interest Average Yield/ Rate (Dollars in thousands) Interest-earning assets: Loans (1) $ 4,248,355 $ 181,638 4.28 % $ 4,077,175 $ 160,911 3.95 % $ 3,862,243 $ 158,217 4.10 % Mortgage-backed securities (2) 682,416 14,708 2.16 863,897 12,461 1.44 975,518 10,640 1.09 Other securities (2) 238,722 5,087 2.13 285,385 4,325 1.52 151,495 1,965 1.30 FHLBNY stock 40,684 3,113 7.65 22,541 1,174 5.21 25,420 1,279 5.03 Interest-earning deposits 97,975 4,249 4.34 85,485 817 0.96 164,553 197 0.12 Total interest-earning assets 5,308,152 208,795 3.93 5,334,483 179,688 3.37 5,179,229 172,298 3.33 Non-interest-earning assets 247,050 259,891 299,664 Total assets $ 5,555,202 $ 5,594,374 $ 5,478,893 Interest-bearing liabilities: Savings, NOW, and money market accounts $ 2,463,455 $ 30,408 1.23 % $ 2,898,048 $ 3,610 0.12 % $ 2,811,552 $ 3,031 0.11 % Certificates of deposit 571,041 18,345 3.21 525,557 6,679 1.27 505,472 3,176 0.63 Total interest-bearing deposits 3,034,496 48,753 1.61 3,423,605 10,289 0.30 3,317,024 6,207 0.19 Borrowings 895,229 32,055 3.58 413,697 9,296 2.25 501,523 10,442 2.08 Subordinated debt 61,169 3,320 5.43 33,436 1,797 5.37 — — — Total interest-bearing liabilities 3,990,894 84,128 2.11 3,870,738 21,382 0.55 3,818,547 16,649 0.44 Non-interest-bearing deposits 770,939 907,603 812,805 Accrued expenses and other liabilities 102,563 102,807 97,385 Total liabilities 4,864,396 4,881,148 4,728,737 Stockholders’ equity 690,806 713,226 750,156 Total liabilities and stockholders’ equity $ 5,555,202 $ 5,594,374 $ 5,478,893 Net interest income $ 124,667 $ 158,306 $ 155,649 Net interest rate spread (3) 1.82 % 2.82 % 2.89 % Net interest-earning assets (4) $ 1,317,258 $ 1,463,745 $ 1,360,682 Net interest margin (5) 2.35 % 2.97 % 3.01 % Average interest-earning assets to interest-bearing liabilities 133.01 % 137.82 % 135.63 % (1) Includes non-accruing loans.
(2) Securities available-for-sale are reported at amortized cost. (3) Net interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average rate of interest-bearing liabilities. (4) Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.
Interest income on loans includes amortization of deferred loan fees, net of deferred loan costs, which was not material. (2) Securities available-for-sale are reported at amortized cost. (3) Net interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average rate of interest-bearing liabilities.
The allowance for credit losses to non-performing loans decreased from 486.60% at December 31, 2021 to 416.26% at December 31, 2022. This decrease was primarily attributable to an increase in non-performing loans of $2.2 million, from $8.1 million at December 31, 2021 to $10.2 million at December 31, 2022.
This decrease was primarily attributable to a decrease of $5.1 million, or 11.9%, in the allowance for credit losses as well as an increase in non-performing loans of $1.2 million, from $10.2 million at December 31, 2022 to $11.4 million at December 31, 2023.
Equity securities increased by $5.1 million to $10.4 million at December 31, 2022, from $5.3 million at December 31, 2021, due to an increase in the market value of our investment in a Small Business Administration Loan Fund. This investment is utilized by the Bank as part of its Community Reinvestment Act program.
Equity securities were $10.6 million at December 31, 2023 and $10.4 million at December 31, 2022. 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.
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.
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. During 2023, management believed it was prudent to increase balance sheet liquidity given general market volatility and uncertainty.
Allowance for Collectively Evaluated Loans Held-for-Investment The Company estimates the collective reserve using 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.
(1) a collective reserve for estimated expected credit losses for pools of loans that share common risk characteristics and (2) an individual reserve for loans that do not share risk characteristics, consisting of collateral-dependent and, prior to January 1, 2023, TDR loans. 51 Allowance for Collectively Evaluated Loans Held-for-Investment The Company estimates the collective reserve using 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.
Bank-owned life insurance increased $3.4 million, or 2.1%, to $167.9 million at December 31, 2022, as compared to $164.5 million at December 31, 2021. The increase resulted from income earned on bank-owned life insurance for the year ended December 31, 2022.
The increase resulted from income earned on bank-owned life insurance for the year ended December 31, 2023. FHLBNY stock increased by $9.3 million, or 30.6%, to $39.7 million at December 31, 2023, from $30.4 million at December 31, 2022.
The cost of interest-bearing liabilities increased by 11 basis points to 0.55% for the year ended December 31, 2022, from 0.44% for the year ended December 31, 2021, driven by both higher cost of deposits and borrowed funds, reflective of the rising rate environment.
The cost of interest-bearing liabilities increased by 156 basis points to 2.11% for the year ended December 31, 2023, from 0.55% for the year ended December 31, 2022, driven primarily by both higher costs of deposits (and a greater percentage of deposits consisting of higher-costing certificates of deposit) and borrowed funds.
This quarterly process is performed by the accounting department, in conjunction with the credit administration department, and approved by the Allowance Committee. The Chief Financial Officer performs a final review of the calculation. All supporting documentation with regard to the evaluation process is maintained by the accounting department.
The Chief Financial Officer performs a final review of the calculation. All supporting documentation with regard to the evaluation process is maintained by the accounting department. Each quarter a summary of the allowance for credit losses is presented by the Chief Financial Officer to the Audit Committee of the Board of Directors.
Year Ended December 31, Year Ended December 31, 2022 vs. 2021 2021 vs. 2020 Total Total Increase (Decrease) Due to Increase Increase (Decrease) Due to Increase Volume Rate (Decrease) Volume Rate (Decrease) (Dollars in thousands) Interest-earning assets: Loans $ 4,493 $ (1,799) $ 2,694 $ 9,790 $ 1,857 $ 11,647 Mortgage-backed securities (1,001) 2,822 1,821 (627) (5,305) (5,932) Other securities 1,982 378 2,360 529 (1,435) (906) FHLBNY stock (152) 47 (105) (256) (290) (546) Interest-earning deposits (46) 666 620 (6) (104) (110) Total interest-earning assets 5,276 2,114 7,390 9,430 (5,277) 4,153 Interest-bearing liabilities: Savings, NOW and money market accounts 96 483 579 2,490 (9,700) (7,210) Certificates of deposit 110 3,393 3,503 (2,099) (9,714) (11,813) Total deposits 206 3,876 4,082 391 (19,414) (19,023) Borrowings (854) 1,505 651 (3,003) 338 (2,665) Total interest-bearing liabilities (648) 5,381 4,733 (2,612) (19,076) (21,688) Change in net interest income $ 5,924 $ (3,267) $ 2,657 $ 12,042 $ 13,799 $ 25,841 Asset Quality PCD Loans (Held-for-Investment) Based on a detailed review of PCD loans and experience in loan workouts, management believes it has a reasonable expectation about the amount and timing of future cash flows and accordingly has classified PCD loans of $11.5 million at December 31, 2022 and $15.8 million at December 31, 2021 as accruing, even though they may be contractually past due.
Year Ended December 31, Year Ended December 31, 2023 vs. 2022 2022 vs. 2021 Total Total Increase (Decrease) Due to Increase Increase (Decrease) Due to Increase Volume Rate (Decrease) Volume Rate (Decrease) (Dollars in thousands) Interest-earning assets: Loans $ 6,944 $ 13,783 $ 20,727 $ 4,493 $ (1,799) $ 2,694 Mortgage-backed securities (1,661) 3,908 2,247 (1,001) 2,822 1,821 Other securities (514) 1,276 762 1,982 378 2,360 FHLBNY stock 1,225 714 1,939 (152) 47 (105) Interest-earning deposits 136 3,296 3,432 (46) 666 620 Total interest-earning assets 6,130 22,977 29,107 5,276 2,114 7,390 Interest-bearing liabilities: Savings, NOW and money market accounts (459) 27,257 26,798 96 483 579 Certificates of deposit 625 11,041 11,666 110 3,393 3,503 Total deposits 166 38,298 38,464 206 3,876 4,082 Borrowings 16,963 7,319 24,282 (854) 1,505 651 Total interest-bearing liabilities 17,129 45,617 62,746 (648) 5,381 4,733 Change in net interest income $ (10,999) $ (22,640) $ (33,639) $ 5,924 $ (3,267) $ 2,657 Asset Quality PCD Loans (Held-for-Investment) Based on a detailed review of PCD loans and experience in loan workouts, management believes it has a reasonable expectation about the amount and timing of future cash flows and accordingly has classified PCD loans of $9.9 million at December 31, 2023 and $11.5 million at December 31, 2022 as accruing, even though they may be contractually past due.
Liquidity and Capital Resources Liquidity is the ability to fund assets and meet obligations as they come due. Our primary sources of funds consist of deposit inflows, loan repayments, borrowings through repurchase agreements, advances from money center banks and the FHLBNY, and repayments, maturities and sales of securities.
Our primary sources of funds consist of deposit inflows, loan repayments, borrowings through repurchase agreements, advances from money center banks, the FHLBNY, the Federal Reserve Bank, and repayments, maturities and sales of securities.
Our assets, consisting primarily of mortgage-related securities and loans, generally have longer maturities than our liabilities, which consist primarily of deposits and wholesale 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.
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.

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