NOTABLE ITEMS FOR THE QUARTER INCLUDE:
- DILUTED EARNINGS PER SHARE WERE $0.22 FOR THE CURRENT QUARTER AS COMPARED TO $0.26 FOR THE TRAILING QUARTER, AND $0.34 FOR THE SECOND QUARTER OF 2022.
- NET INTEREST MARGIN DECREASED BY 29 BASIS POINTS TO 2.34% FOR THE CURRENT QUARTER AS COMPARED TO 2.63% FOR THE TRAILING QUARTER, AND BY 69 BASIS POINTS COMPARED TO 3.03% FOR THE SECOND QUARTER OF 2022.
- LOANS HELD-FOR-INVESTMENT INCREASED BY $32.1 MILLION, OR 3.0% ANNUALIZED, FROM MARCH 31, 2023, PRIMARILY IN MULTIFAMILY AND COMMERCIAL REAL ESTATE.
- CREDIT QUALITY REMAINS STRONG WITH NON-PERFORMING LOANS TO TOTAL LOANS AT 0.24% AS COMPARED TO 0.22% AT MARCH 31, 2023.
- TOTAL DEPOSITS (EXCLUDING BROKERED) DECREASED FOR THE CURRENT QUARTER BY $102.5 MILLION, OR 2.8%:
- COST OF DEPOSITS WAS 113 BASIS POINTS FOR THE CURRENT QUARTER AS COMPARED TO 79 BASIS POINTS FOR THE TRAILING QUARTER.
- DIVERSIFIED DEPOSIT BASE (EXCLUDING BROKERED DEPOSITS) AT JUNE 30, 2023:
- RETAIL DEPOSITS APPROXIMATE 55%
- BUSINESS DEPOSITS APPROXIMATE 28%
- GOVERNMENTAL DEPOSITS APPROXIMATE 17%
- AVERAGE DEPOSIT BALANCE IS $36,000
- ADDITIONAL COLLATERALIZED BORROWING CAPACITY ESTIMATED AT APPROXIMATELY $1.3 BILLION.
- THE COMPANY REINSTATED SHARE REPURCHASES ON MAY 1, 2023, AND ON JUNE 1, 2023, AUTHORIZED A NEW $10.0 MILLION SHARE REPURCHASE PROGRAM. THE COMPANY REPURCHASED 1.3 MILLION SHARES FOR A COST OF $13.3 MILLION DURING THE QUARTER.
- NORTHFIELD BANK RECENTLY EXECUTED A LEASE AGREEMENT FOR A NEW BRANCH IN ELIZABETH, NJ, EXPECTED TO OPEN IN THE FALL OF 2023.
- CASH DIVIDEND DECLARED OF $0.13 PER SHARE OF COMMON STOCK, PAYABLE AUGUST 23, 2023, TO STOCKHOLDERS OF RECORD AS OF AUGUST 9, 2023.
WOODBRIDGE, N.J., , July 26, 2023 (GLOBE NEWSWIRE) -- NORTHFIELD BANCORP, INC. (NFBK, Financial) (the “Company”), the holding company for Northfield Bank, reported net income of $9.6 million, or $0.22 per diluted share (including severance cost of $440,000, or $0.01, per share), for the three months ended June 30, 2023, as compared to $11.7 million, or $0.26 per diluted share, for the three months ended March 31, 2023, and $15.9 million, or $0.34 per diluted share, for the three months ended June 30, 2022. For the six months ended June 30, 2023, net income totaled $21.3 million, or $0.48 per diluted share (including severance cost of $440,000, or $0.01, per share), compared to $30.0 million, or $0.64 per diluted share, for the six months ended June 30, 2022. The decrease in net income for both the current quarter and six months ended June 30, 2023, as compared to the trailing quarter and comparable prior year periods, was primarily the result of a decrease in net interest income which was negatively impacted by higher funding costs.
Commenting on the quarter, Steven M. Klein, the Company’s Chairman, President and Chief Executive Officer stated, “The Northfield team continued to successfully manage through the challenges presented by elevated market interest rates and an inverted yield curve. During the quarter we remained focused on managing our cost of funds and net interest margin, while meeting the lending and deposit needs of our customers.” Mr. Klein continued, “We delivered solid financial performance during the quarter by prudently increasing our loan portfolio, maintaining strong asset quality, and managing our cost of deposits. While significant risks remain, including recession uncertainty, as well as inflation and interest rate movements, we will continue to prudently manage our strong capital and liquidity and focus on our Locally Grown approach to community commercial banking.”
Mr. Klein further noted, “I am pleased to announce that the Board of Directors has declared a cash dividend of $0.13 per common share, payable August 23, 2023, to stockholders of record on August 9, 2023.”
Results of Operations
Comparison of Operating Results for the Six Months Ended June 30, 2023 and 2022
Net income was $21.3 million and $30.0 million for the six months ended June 30, 2023 and June 30, 2022, respectively. Significant variances from the comparable prior year period are as follows: a $10.9 million decrease in net interest income, a $3.7 million increase in non-interest income, a $4.5 million increase in non-interest expense, and a $3.3 million decrease in income tax expense.
Net interest income for the six months ended June 30, 2023, decreased $10.9 million, or 14.2%, to $66.1 million, from $77.0 million for the six months ended June 30, 2022. The decrease in net interest income was primarily attributable to a $28.8 million increase in interest expense on deposits, borrowings and subordinated debt, partially offset by a $17.9 million increase in interest income. The increase in interest income was primarily due to a $103.9 million, or 2.0%, increase in the average balance of interest-earning assets coupled with a 61 basis point increase in yields on interest-earning assets due to the rising rate environment and a greater percentage of assets consisting of higher-yielding loans. The increase in the average balance of interest-earning assets was due to increases in the average balance of loans outstanding of $344.1 million and the average balance of Federal Home Loan Bank of New York (“FHLBNY”) stock of $19.6 million, partially offset by decreases in the average balance of mortgage-backed securities of $193.9 million, the average balance of interest-earning deposits in financial institutions of $46.4 million, and the average balance of other securities of $19.5 million. The increase in interest expense on deposits, borrowings and subordinated debt was largely driven by a $199.1 million, or 5.3%, increase in the average balance of interest-bearing liabilities, including increases of $486.2 million and $56.4 million, in average borrowed funds and subordinated debt, respectively, partially offset by a $343.4 million decrease in average interest-bearing deposits coupled with the impact of rising market interest rates.
Net interest margin decreased by 47 basis point to 2.48% from 2.95% for the six months ended June 30, 2022. The decrease in net interest margin was primarily due to the cost of interest-bearing liabilities increasing faster than the repricing of interest-earning assets. The cost of interest-bearing liabilities increased by 144 basis points to 1.80% for the six months ended June 30, 2023, from 0.36% for the six months ended June 30, 2022, driven primarily by a 149 basis point increase in the cost of borrowings from 2.07% to 3.56% for the six months ended June 30, 2023. Additionally, the cost of interest-bearing deposits increased by 106 basis points from 0.15% to 1.21% for the six months ended June 30, 2023, due to rising market interest rates and a shift in the composition of the deposit portfolio towards higher-costing certificates of deposit. The increase in the cost of interest-bearing liabilities was partially offset by an increase in yields on interest-earning assets which increased 61 basis points to 3.82% for the six months ended June 30, 2023, from 3.21% for the six months ended June 30, 2022. The Company accreted interest income related to purchased credit-deteriorated (“PCD”) loans of $678,000 for the six months ended June 30, 2023, as compared to $729,000 for the six months ended June 30, 2022. Fees recognized from Paycheck Protection Program (“PPP”) loans totaled $29,000 for the six months ended June 30, 2023, as compared to $1.1 million for the six months ended June 30, 2022. Net interest income for the six months ended June 30, 2023, included loan prepayment income of $1.2 million as compared to $2.6 million for the six months ended June 30, 2022.
The provision for credit losses on loans increased by $342,000 to $894,000 for the six months ended June 30, 2023, compared to $552,000 for the six months ended June 30, 2022. The increase in the provision for credit losses for the current period, as compared to the comparable prior year period, was primarily the result of a weakening macroeconomic outlook, higher net charge-offs, and an increase in reserves for commercial and industrial loans primarily due to a $13.8 million loan that is current and collateralized by receivables and business assets being downgraded to substandard, partially offset by a decrease in non-economic qualitative loss factors in the multifamily and commercial real estate portfolios and decreased loan growth. Net charge-offs were $2.4 million for the six months ended June 30, 2023, as compared to net charge-offs of $494,000 for the six months ended June 30, 2022, the increase being due to charge-offs on small business unsecured commercial and industrial loans. Management continues to monitor the small business unsecured commercial and industrial loan portfolio which totaled $41.4 million at June 30, 2023.
Non-interest income increased by $3.7 million, or 148.1%, to $6.1 million for the six months ended June 30, 2023, from $2.5 million for the six months ended June 30, 2022, due primarily to a $3.4 million increase in mark to market gains on trading securities, net, and a $478,000 increase in other income, which was primarily an increase in swap fee income. For the six months ended June 30, 2023, gains on trading securities were $1.0 million, as compared to losses of $2.4 million for the six months ended June 30, 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”). The participants of this Plan, at their election, defer a portion of their compensation. Gains and losses on trading securities have a minimal effect on net income since participants benefit from, and bear the full risk of, changes in the trading securities market values. Therefore, the Company records an equal and offsetting amount in compensation expense, reflecting the change in the Company’s obligations under the Plan. Partially offsetting the increases was a decrease of $281,000 in net realized gains on available-for-sale debt securities.
Non-interest expense increased $4.5 million, or 12.0%, to $41.9 million for the six months ended June 30, 2023, compared to $37.4 million for the six months ended June 30, 2022. The increase was primarily due to a $4.5 million increase in employee compensation and benefits, attributable to a $3.4 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. During the second quarter of 2023, due to current economic conditions, the Company implemented a workforce reduction plan which included modest layoffs and the elimination of, and/or not filling, certain open positions. The annual estimated cost savings of this plan is $1.4 million, pre-tax. Data processing expense increased by $839,000, due to continued investments in technology, increased transaction costs related to an increase in the number of customer accounts and related volume of transactions, and higher pricing effective January 2023. Advertising expense increased by $583,000 due to the timing of certain programs and new promotions on deposit products. FDIC insurance expense increased by $460,000 due to higher assessments. Partially offsetting the increases was a decrease of $1.2 million in credit loss (benefit)/expense for off-balance sheet credit exposures, and a $274,000 decrease in other operating expense. The decrease in credit loss expense for off-balance sheet credit exposures was due to a benefit of $550,000 recorded during the six months ended June 30, 2023, compared to a provision of $628,000 for the prior year period, attributed to a decrease in the pipeline of loans committed and awaiting closing.
The Company recorded income tax expense of $8.1 million for the six months ended June 30, 2023, compared to $11.5 million for the six months ended June 30, 2022, with the decrease due to lower taxable income. The effective tax rate for the six months ended June 30, 2023, was 27.7% compared to 27.6% for the six months ended June 30, 2022.
Comparison of Operating Results for the Three Months Ended June 30, 2023 and 2022
Net income was $9.6 million and $15.9 million for the quarters ended June 30, 2023 and June 30, 2022, respectively. Significant variances from the comparable prior year quarter are as follows: an $8.9 million decrease in net interest income, a $2.1 million increase in non-interest income, a $2.1 million increase in non-interest expense, and a $2.5 million decrease in income tax expense.
Net interest income for the quarter ended June 30, 2023, decreased $8.9 million, or 22.3%, to $31.2 million, from $40.1 million for the quarter ended June 30, 2022. The decrease in net interest income was primarily attributable to a $17.1 million increase in interest expense on deposits, borrowings and subordinated debt, partially offset by an $8.2 million increase in interest income. The increase in interest income was primarily due to an increase in average interest-earning assets of $33.8 million, or 0.6%, coupled with a 59 basis point increase in yields on interest-earning assets due to the rising rate environment and a greater percentage of assets consisting of higher-yielding loans. The increase in the average balance of interest-earning assets was primarily due to increases in the average balance of loans outstanding of $292.1 million and the average balance of FHLBNY stock of $23.2 million, partially offset by decreases in the average balance of mortgage-backed securities of $196.1 million, the average balance of other securities of $58.6 million, and the average balance of interest-earning deposits in financial institutions of $26.9 million. The increase in interest expense on deposits, borrowings and subordinated debt was largely driven by a $172.0 million, or 4.5%, increase in the average balance of interest-bearing liabilities, including increases of $626.6 million and $51.5 million, in average borrowed funds and subordinated debt, respectively, partially offset by a $506.1 million decrease in average interest-bearing deposits coupled with the impact of rising market interest rates.
Net interest margin decreased by 69 basis points to 2.34% for the quarter ended June 30, 2023, from 3.03% for the quarter ended June 30, 2022, primarily due to the cost of interest-bearing liabilities increasing faster than the repricing of interest-earning assets. The cost of interest-bearing liabilities increased by 170 basis points to 2.05% for the quarter ended June 30, 2023, from 0.35% for the quarter ended June 30, 2022, driven primarily by a 164 basis point increase in the cost of borrowings from 2.04% to 3.68% for the quarter ended June 30, 2023. Additionally, the cost of interest-bearing deposits increased by 127 basis points from 0.16% to 1.43% for the quarter ended June 30, 2023, due to rising market interest rates and a shift in the composition of the deposit portfolio towards higher-yielding certificates of deposit. The increase in the cost of interest-bearing liabilities was partially offset by an increase in yields on interest-earning assets which increased by 59 basis points to 3.88% for the quarter ended June 30, 2023, from 3.29% for the quarter ended June 30, 2022. Net interest income for the quarter ended June 30, 2023, included loan prepayment income of $194,000, as compared to $1.5 million for the quarter ended June 30, 2022. The Company accreted interest income related to PCD loans of $337,000 for the quarter ended June 30, 2023, as compared to $339,000 for quarter ended June 30, 2022. Fees recognized from PPP loans totaled $24,000 for the quarter ended June 30, 2023, as compared to $432,000 for the quarter ended June 30, 2022.
The provision for credit losses on loans decreased by $119,000 to a provision of $30,000 for the quarter ended June 30, 2023, from a provision of $149,000 for the quarter ended June 30, 2022. The decrease in the current quarter provision for credit losses was primarily due to minimal loan growth and a decrease in non-economic qualitative loss factors in the multifamily and commercial real estate portfolios, partially offset by a worsening macroeconomic outlook and an increase in reserves for commercial and industrial loans, primarily due to a $13.8 million loan that is current and collateralized by receivables and business assets being downgraded to substandard. Net charge-offs were $313,000 for the quarter ended June 30, 2023, compared to net charge-offs of $392,000 for the quarter ended June 30, 2022.
Non-interest income increased by $2.1 million, or 268.1%, to $2.8 million for the quarter ended June 30, 2023, from $765,000 for the quarter ended June 30, 2022, primarily due to a $2.1 million increase in gains on trading securities. For the quarter ended June 30, 2023, gains on trading securities, net, were $506,000, compared to losses of $1.6 million in the comparative prior year quarter. Gains and losses on trading securities have a minimal effect on net income since participants benefit from, and bear the full risk of, changes in the trading securities market values.
Non-interest expense increased by $2.1 million, or 11.0%, to $20.8 million for the quarter ended June 30, 2023, from $18.7 million for the quarter ended June 30, 2022. The increase was primarily due to a $2.9 million increase in compensation and employee benefits, primarily attributable to a $2.1 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, and, to a lesser extent, an increase in salary expense related to annual merit increases and severance expense of $440,000. Data processing expense increased by $309,000 due to continued investments in technology. Advertising expense increased by $169,000 due to the timing of certain programs and new promotions on demand deposit products. FDIC insurance expense increased by $213,000 due to higher assessments. Partially offsetting the increases was a $1.0 million decrease in the credit loss (benefit)/expense for off-balance sheet exposures, and a $461,000 decrease in professional fees. The decrease in credit loss (benefit)/expense for off-balance sheet credit exposures was due to a benefit of $661,000 recorded during the quarter ended June 30, 2023, compared to a provision of $349,000 for the prior year period, attributed to a decrease in the pipeline of loans committed and awaiting closing. The decrease in professional fees was due to higher audit and recruiting fees in the prior year.
The Company recorded income tax expense of $3.6 million for the quarter ended June 30, 2023, compared to $6.1 million for the quarter ended June 30, 2022, with the decrease due to lower taxable income. The effective tax rate for the quarter ended June 30, 2023 was 27.4%, compared to 27.8% for the quarter ended June 30, 2022.
Comparison of Operating Results for the Three Months Ended June 30, 2023 and March 31, 2023
Net income was $9.6 million and $11.7 million for the quarters ended June 30, 2023, and March 31, 2023, respectively. Significant variances from the prior quarter are as follows: a $3.7 million decrease in net interest income, an $834,000 decrease in the provision for credit losses on loans, a $516,000 decrease in non-interest income, a $353,000 decrease in non-interest expense and a $916,000 decrease in income tax expense.
Net interest income for the quarter ended June 30, 2023, decreased by $3.7 million, or 10.7%, to $31.2 million, from $34.9 million for the quarter ended March 31, 2023. The decrease in net interest income was primarily attributable to a $5.5 million increase in interest expense on deposits and borrowings, partially offset by a $1.7 million increase in interest income. The increase in interest income was primarily due to a 12 basis point increase in yields on interest-earning assets, partially offset by a $43.5 million, or 0.8%, decrease in the average balance of interest-earning assets. The decrease in the average balance of interest-earning assets was primarily due to decreases in the average balance of mortgage-backed securities of $43.3 million, the average balance of other securities of $36.7 million, and the average balance of interest-earning deposits in financial institutions of $9.4 million, partially offset by increases in the average balance of loans outstanding of $40.1 million and the average balance of FHLBNY stock of $5.8 million. The increase in interest expense on deposits and borrowings was largely driven by a $33.0 million, or 0.8%, increase in the average balance of interest-bearing liabilities, including an increase of $240.7 million in average borrowed funds, coupled with the impact of rising market interest rates, partially offset by a $207.8 million decrease in average interest-bearing deposits .
Net interest margin decreased by 29 basis points to 2.34% from 2.63% for the quarter ended March 31, 2023. The decrease was primarily due to the increase in the cost of interest-bearing liabilities outpacing the increase in yields on interest-earning assets. The cost of interest-bearing liabilities increased by 52 basis point to 2.05% for the quarter ended June 30, 2023, from 1.53% for the quarter ended March 31, 2023, driven by both higher costs of deposits and borrowed funds, reflective of the rising interest rate environment, and was partially offset by higher yields on interest-earning assets, which increased by 12 basis points to 3.88% for the quarter ended June 30, 2023, from 3.76% for the quarter ended March 31, 2023, due to rising market interest rates and a greater percentage of assets consisting of higher-yielding loans. Net interest income for the quarter ended June 30, 2023, included loan prepayment income of $194,000 as compared to $961,000 for the quarter ended March 31, 2023. The Company accreted interest income related to PCD loans of $337,000 for the quarter ended June 30, 2023, as compared to $341,000 for the quarter ended March 31, 2023.
The provision for credit losses on loans decreased by $834,000 to $30,000 for the quarter ended June 30, 2023, from $864,000 for the quarter ended March 31, 2023. The decrease in the provision was primarily attributable to lower net charge-offs, and a decrease in non-economic qualitative loss factors in the multifamily and commercial real estate portfolios, partially offset by an increase in reserves for commercial and industrial loans. Net charge-offs were $313,000 for the quarter ended June 30, 2023, as compared to net charge-offs of $2.0 million for the quarter ended March 31, 2023.
Non-interest income decreased by $516,000, or 15.5%, to $2.8 million for the quarter ended June 30, 2023, from $3.3 million for the quarter ended March 31, 2023. The decrease was primarily due to a $474,000 decrease in other income caused by higher swap fee income in the prior quarter, and a $71,000 decrease in fees and service charges for customer services, partially offset by an increase of $35,000 in gains on sales of loans for the current quarter.
Non-interest expense decreased by $353,000, or 1.7%, to $20.8 million for the quarter ended June 30, 2023, from $21.1 million for the quarter ended March 31, 2023. The decrease was primarily due to a $772,000 decrease in the credit loss (benefit)/expense for off-balance sheet exposures due to a benefit of $661,000 recorded during the quarter ended June 30, 2023, compared to a provision of $111,000 for the quarter ended March 31, 2023, a decrease in advertising expense of $274,000, a decrease in professional fees of $203,000, a decrease in data processing costs of $172,000, and a decrease in occupancy expense of $128,000. Partially offsetting the decreases was a $1.3 million increase in compensation and employee benefits, primarily related to annual merit increases which were effective February 27, 2023, and severance expense of $440,000.
The Company recorded income tax expense of $3.6 million for the quarter ended June 30, 2023, compared to $4.5 million for the quarter ended March 31, 2023 with the decrease due to lower taxable income. The effective tax rate for the quarter ended June 30, 2023 was 27.4%, compared to 27.9% for the quarter ended and March 31, 2023.
Financial Condition
Total assets decreased by $60.5 million, or 1.1%, to $5.54 billion at June 30, 2023, from $5.60 billion at December 31, 2022. The decrease was primarily due to a decrease in available-for-sale debt securities of $149.9 million, or 15.7%, partially offset by increases in cash and cash equivalents of $43.3 million, or 94.6%, loans receivable of $31.3 million, or 0.7%, FHLBNY stock of $10.0 million, or 32.9%, and other assets of $3.1 million, or 5.7%.
As of June 30, 2023, our non-owner occupied commercial real estate loans (as defined by regulatory guidance) to total risk-based capital was estimated by us at approximately 469%. 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. 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.
Cash and cash equivalents increased by $43.3 million, or 94.6%, to $89.1 million at June 30, 2023, from $45.8 million at December 31, 2022, primarily due to an increase in Federal Reserve Bank of New York (“FRB”) balances driven by excess cash from borrowings. 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. For the six months ended June 30, 2023, Management believed it was prudent to increase balance sheet liquidity given general market volatility and uncertainty.
Loans held-for-investment, net, increased by $30.3 million, or 0.7%, to $4.27 billion at June 30, 2023 from $4.24 billion at December 31, 2022, primarily due to an increase in commercial real estate loans, partially offset by decreases in multifamily loans and commercial and industrial loans. The Company continues to focus on the credit needs of its customers, and to a lesser extent, the development of new business given the uncertain economic environment. Commercial real estate loans increased $43.7 million, or 4.9%, to $943.0 million at June 30, 2023 from $899.2 million at December 31, 2022, home equity loans increased $6.0 million, or 3.9%, to $158.5 million at June 30, 2023 from $152.6 million at December 31, 2022, and construction and land loans increased $4.5 million, or 18.1%, to $29.4 million at June 30, 2023 from $24.9 million at December 31, 2022. The increases were partially offset by decreases in multifamily loans of $9.8 million, or 0.3%, to $2.81 billion at June 30, 2023 from $2.82 billion at December 31, 2022, one-to-four family residential loans of $3.2 million, or 1.8%, to $170.8 million at June 30, 2023 from $173.9 million at December 31, 2022, and commercial and industrial loans of $11.4 million, or 7.4%, to $143.3 million at June 30, 2023 from $154.7 million at December 31, 2022.
At June 30, 2023, office-related loans represented $213.3 million, or approximately 5% of our total loan portfolio, with an average balance of $1.7 million (although we have originated these type of loans in amounts substantially greater than this average) and a weighted average loan-to-value ratio of 58%. Approximately 46% were owner-occupied. The geographic locations of the properties collateralizing our office-related loans are as follows: 53.2% in New York, 46.5% in New Jersey and 0.3% in Pennsylvania. At June 30, 2023, our largest office-related loan had a principal balance of $85.0 million (with a net active principal balance for the Bank of $28.3 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.
PCD loans totaled $11.5 million at June 30, 2023 and December 31, 2022, respectively. The majority of the remaining PCD loan balance consists of loans acquired as part of a Federal Deposit Insurance Corporation-assisted transaction. The Company accreted interest income of $337,000 and $678,000 attributable to PCD loans for the three and six months ended June 30, 2023, respectively, as compared to $339,000 and $729,000 for the three and six months ended June 30, 2022, respectively. PCD loans had an allowance for credit losses of approximately $3.7 million at June 30, 2023.
Loan balances are summarized as follows (dollars in thousands):
| June 30, 2023 | March 31, 2023 | December 31, 2022 | ||||||
| Real estate loans: | ||||||||
| Multifamily | $ | 2,814,809 | $ | 2,800,079 | $ | 2,824,579 | ||
| Commercial mortgage | 942,980 | 919,503 | 899,249 | |||||
| One-to-four family residential mortgage | 170,767 | 175,640 | 173,946 | |||||
| Home equity and lines of credit | 158,517 | 155,683 | 152,555 | |||||
| Construction and land | 29,444 | 25,508 | 24,932 | |||||
| Total real estate loans | 4,116,517 | 4,076,413 | 4,075,261 | |||||
| Commercial and industrial loans | 142,948 | 146,751 | 149,557 | |||||
| PPP loans | 366 | 5,081 | 5,143 | |||||
| Other loans | 2,663 | 2,095 | 2,230 | |||||
| Total commercial and industrial, PPP, and other loans | 145,977 | 153,927 | 156,930 | |||||
| Loans held-for-investment, net (excluding PCD) | 4,262,494 | 4,230,340 | 4,232,191 | |||||
| PCD loans | 11,548 | 11,591 | 11,502 | |||||
| Total loans held-for-investment, net | $ | 4,274,042 | $ | 4,241,931 | $ | 4,243,693 | ||
The Company’s available-for-sale debt securities portfolio decreased by $149.9 million, or 15.7%, to $802.3 million at June 30, 2023, from $952.2 million at December 31, 2022. The decrease was primarily attributable to paydowns, maturities and calls. At June 30, 2023, $614.6 million of the portfolio consisted of residential mortgage-backed securities issued or guaranteed by Fannie Mae, Freddie Mac, or Ginnie Mae. In addition, the Company held $72.1 million in U.S. Government agency securities and $115.6 million in corporate bonds, all of which were considered investment grade at June 30, 2023. Unrealized losses, net of tax, on available-for-sale debt securities and held-to-maturity securities approximated $45.3 million and $326,000, respectively, at June 30, 2023, and $48.6 million and $332,000, respectively, at December 31, 2022.
Equity securities were $10.7 million at June 30, 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.
Total liabilities decreased $45.7 million, or 0.9%, to $4.85 billion at June 30, 2023, from $4.90 billion at December 31, 2022. The decrease was primarily attributable to a decrease in total deposits of $385.8 million, partially offset by an increase in FHLB advances and other borrowings of $339.7 million. The Company routinely utilizes brokered deposits and borrowed funds to manage interest rate risk, the cost of interest bearing liabilities, and funding needs related to loan originations and deposit activity.
Deposits decreased $385.8 million, or 9.3%, to $3.76 billion at June 30, 2023, as compared to $4.15 billion at December 31, 2022. Brokered deposits decreased by $218.6 million, or 56.0%. Deposits, excluding brokered deposits, decreased $167.2 million, or 4.4%. The decrease in deposits, excluding brokered deposits, was attributable to decreases of $114.5 million in transaction accounts and $198.6 million in money market accounts. These decreases were partially offset by increases of $132.8 million in time deposits and $13.0 million in savings accounts. Estimated uninsured deposits (excluding fully collateralized uninsured governmental deposits of $617.4 million) were approximately $827.8 million, or 22%, of total deposits as of June 30, 2023.
Deposit account balances are summarized as follows (dollars in thousands):
| June 30, 2023 | March 31, 2023 | December 31, 2022 | ||||||
| Transaction: | ||||||||
| Non-interest bearing checking | $ | 754,498 | $ | 804,784 | $ | 852,660 | ||
| Negotiable orders of withdrawal and interest-bearing checking | 1,116,000 | 1,109,364 | 1,132,290 | |||||
| Total transaction | 1,870,498 | 1,914,148 | 1,984,950 | |||||
| Savings and money market: | ||||||||
| Savings | 930,198 | 926,541 | 917,180 | |||||
| Money market | 309,475 | 398,730 | 508,067 | |||||
| Total savings | 1,239,673 | 1,325,271 | 1,425,247 | |||||
| Certificates of deposit: | ||||||||
| Brokered deposits | 171,448 | 152,049 | 390,035 | |||||
| $250,000 and under | 420,518 | 327,341 | 293,200 | |||||
| Over $250,000 | 62,266 | 128,688 | 56,787 | |||||
| Total certificates of deposit | 654,232 | 608,078 | 740,022 | |||||
| Total deposits | $ | 3,764,403 | $ | 3,847,497 | $ | 4,150,219 | ||
Included in the table above are business and municipal deposit account balances as follows (dollars in thousands):
| June 30, 2023 | March 31, 2023 | December 31, 2022 | ||||||
| Business customers | $ | 993,298 | $ | 1,071,469 | $ | 1,146,803 | ||
| Municipal (governmental) customers | $ | 595,322 | $ | 609,662 | $ | 604,717 | ||
Borrowed funds increased to $984.6 million at June 30, 2023, from $644.9 million at December 31, 2022. The increase in borrowings for the period was due to an increase in FHLB and FRB borrowings of $339.7 million, including $134.5 million of borrowings under the Federal Reserve Bank Term Funding Program which included favorable terms and conditions as compared to FHLB advances. Management utilizes borrowings to mitigate interest rate risk, for short-term liquidity, and to a lesser extent from time to time, as part of leverage strategies. During the six months ended June 30, 2023, the Company increased borrowings to pay off higher-rate brokered certificates of deposit, and, to a lesser extent, fund deposit outflows of non-brokered deposits.
The following table sets forth borrowing maturities (excluding overnight borrowings and subordinated debt) and the weighted average rate by year at June 30, 2023 (dollars in thousands):
| Year | Amount (1) | Weighted Average Rate | ||
| 2023 | $65,000 | 3.88% | ||
| 2024 | 194,500 | 3.98% | ||
| 2025 | 182,500 | 2.59% | ||
| 2026 | 148,000 | 4.36% | ||
| 2027 | 173,000 | 3.19% | ||
| Thereafter | 154,288 | 3.96% | ||
| $917,288 | 3.61% | |||
| (1) Borrowings maturing in 2023 and 2024 include $40.0 million and $94.5 million, respectively, of FRB borrowings that can be repaid without any penalty. | ||||
Total stockholders’ equity decreased by $14.7 million to $686.6 million at June 30, 2023, from $701.4 million at December 31, 2022. The decrease was attributable to $29.3 million in stock repurchases and $11.7 million in dividend payments, partially offset by net income of $21.3 million for the six months ended June 30, 2023, a $3.3 million increase in accumulated other comprehensive income associated with an increase in the estimated fair value of our debt securities available-for-sale portfolio, and a $1.7 million increase in equity award activity. During the six months ended June 30, 2023, the Company repurchased approximately 2.4 million of its common stock outstanding at an average price of $12.42 for a total of $29.3 million pursuant to approved stock repurchase plans. As of June 30, 2023, the Company had approximately $3.2 million in remaining capacity under its current repurchase program.
The Company's most liquid assets are cash and cash equivalents, corporate bonds, and unpledged mortgage-related securities issued or guaranteed by the U.S. Government, Fannie Mae, or Freddie Mac, that we can either borrow against or sell. We also have the ability to surrender bank-owned life insurance contracts. The surrender of these contracts would subject the Company to income taxes and penalties for increases in the cash surrender values over the original premium payments. We also have the ability to obtain additional funding from the FHLB and Federal Reserve Bank of New York utilizing unencumbered and unpledged securities and multifamily loans. The Company expects to have sufficient funds available to meet current commitments in the normal course of business.
The Company had the following primary sources of liquidity at June 30, 2023 (dollars in thousands):
