Mark DeFazio, President and Chief Executive Officer, commented,
“The commercial bank continues to report strong underlying business fundamentals and financial performance. Our net interest income increased 6% quarter over quarter and 12% year to date supported by continued strength and growth in our net interest margin. We continue to deliver on deposit growth despite the challenging operating environment. Importantly, our year to date results highlight our ability to manage in a dynamic environment and we expect our financial results to benefit from the recent reduction in the Fed Funds target rate and any additional monetary policy easing in the future.
“We remain laser focused on the exit from the GPG vertical and continue to make investments in the buildout of our risk management framework and personnel. We have reserved $10 million to resolve an investigation with a state agency connected to a fintech client we last worked with in 2020. With matters such as this behind us, as well as a full exit from GPG, we believe that the Bank is well positioned to deliver financial outperformance relative to our peers.”
Balance Sheet
Total cash and cash equivalents were $318.5 million at September 30, 2024, an increase of $73.8 million, or 30.2%, from June 30, 2024 and an increase of $141.1 million, or 79.6%, from September 30, 2023. The increase from June 30, 2024, primarily reflects a $100.2 million increase in deposits. The increase from September 30, 2023, primarily reflects a $748.3 million increase in deposits, partially offset by an increase in the loan book of $542.6 million and a $105.1 million decrease in wholesale funding.
Total loans, net of deferred fees and unamortized costs, were $5.9 billion at September 30, 2024, an increase of $58.2 million, or 1.0%, from June 30, 2024, and an increase of $542.6 million, or 10.1%, from September 30, 2023. Loan production was $460.6 million for the third quarter of 2024 compared to $290.8 million for the prior linked quarter and $333.5 million for the prior year period. The increase in total loans from June 30, 2024 was due primarily to an increase of $116.7 million in commercial real estate (“CRE”) loans (including owner-occupied), partially offset by a decrease of $51.0 million of multi-family loans. The increase in total loans from September 30, 2023 was due primarily to an increase of $460.0 million in CRE loans (including owner-occupied) and $92.9 million in commercial and industrial loans.
Total deposits were $6.3 billion at September 30, 2024, an increase of $100.2 million, or 1.6%, from June 30, 2024, and an increase of $748.3 million, or 13.6%, from September 30, 2023. The increase from June 30, 2024 was due primarily to an increase of $133.4 million in property manager deposits and $105.6 million in retail deposits, partially offset by a $122.0 million decrease in GPG deposits. The increase in deposits from September 30, 2023, was due to broad based increases across most of the Bank’s various deposit verticals.
At September 30, 2024, cash on deposit with the Federal Reserve Bank of New York and available secured funding capacity totaled $3.1 billion. The Company and the Bank each met all the requirements to be considered “well capitalized” under applicable regulatory guidelines. Total non-owner-occupied commercial real estate loans were 353.3% of total risk-based capital at September 30, 2024, compared to 358.4% and 374.8% at June 30, 2024 and September 30, 2023, respectively.