DIME COMMUNITY BANCSHARES: NY / Management’s Discussion and Analysis of Financial Position and Results of Operations (Form 10-K)

In this Annual Report on Form 10-K, unless otherwise mentioned, the terms the
"Company", "we", "us" and "our" refer to Dime Community Bancshares, Inc. and our
wholly-owned subsidiary, Dime Community Bank (the "Bank"). We use the term
"Holding Company" to refer solely to Dime Community Bancshares, Inc. and not to
our consolidated subsidiary.

The following discussion and analysis covers changes in our results of
operations and financial condition from 2019 to 2020. A discussion and analysis
of changes in our results of operations and financial condition
from 2018 to 2019 may be found in "Item 7 - Management's Discussion and Analysis
of Financial Condition and Results of Operations" in our   Annual Report on Form
10-K   for the year ended December 31, 2019, which was filed with the U.S.
Securities and Exchange Commission on March 11, 2020.

Safe Harbor Statement of the Securities Litigation Reform Act

This report may contain statements relating to our future results (including
certain projections and business trends) that are considered "forward-looking
statements" as defined in the Private Securities Litigation Reform Act of 1995
(the "PSLRA"). Such forward-looking statements, in addition to historical
information, which involve risk and uncertainties, are based on the beliefs,
assumptions and expectations of our management. Words such as "expects,"
"believes," "should," "plans," "anticipates," "will," "potential," "could,"
"intend," "may," "outlook," "predict," "project," "would," "estimated,"
"assumes," "likely," and variations of such similar expressions are intended to
identify such forward-looking statements. Examples of forward-looking statements
include, but are not limited to, possible or assumed estimates with respect to
the financial condition, expected or anticipated revenue, and results of
operations and our business, including earnings growth; revenue growth in retail
banking, lending and other areas; origination volume in the consumer, commercial
and other lending businesses; current and future capital management programs;
non-interest income levels, including fees from the title insurance subsidiary
and banking services as well as product sales; tangible capital generation;
market share; expense levels; and other business operations and strategies. We
claim the protection of the safe harbor for forward-looking statements contained
in the PSLRA.

Factors that could cause future results to vary from current management
expectations include, but are not limited to, changing economic conditions;
legislative and regulatory changes, including increases in FDIC insurance rates;
monetary and fiscal policies of the federal government; changes in tax policies;
rates and regulations of federal, state and local tax authorities; changes in
interest rates; deposit flows; the cost of funds; demand for loan products;
demand for financial services; competition; our ability to successfully
integrate acquired entities; changes in the quality and composition of our loan
and investment portfolios; changes in management's business strategies; changes
in accounting principles, policies or guidelines; changes in real estate values;
expanded regulatory requirements, which could adversely affect operating
results; and other factors discussed elsewhere in this report including factors
set forth under Item 1A., Risk Factors, and in quarterly and other reports filed
by us with the Securities and Exchange Commission. The forward-looking
statements are made as of the date of this report, and we assume no obligation
to update the forward-looking statements or to update the reasons why actual
results could differ from those projected in the forward-looking statements.

Overview

Who we are and how we generate income

Dime Community Bancshares, Inc., a New York corporation previously known as
"Bridge Bancorp, Inc.," is a bank holding company formed in 1989. On a
parent-only basis, the Holding Company has had minimal results of operations.
The Holding Company is dependent on dividends from its wholly-owned subsidiary,
Dime Community Bank, which was previously known as "BNB Bank," its own earnings,
additional capital raised, and borrowings as sources of funds. The information
in this report reflects principally the financial condition and results of
operations of the Bank. The Bank's results of operations are primarily dependent
on its net interest income, which is the difference between interest income on
loans and investments and interest expense on deposits and borrowings. The Bank
also generates non-interest income, such as fee income on deposit accounts and
merchant credit and debit card processing programs, loan swap fees, investment
services, income from its title insurance subsidiary, and net gains on sales of
securities and loans. The level of non-interest expenses, such as salaries and
benefits, occupancy and equipment costs, other general and administrative
expenses,

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expenses from the Bank's title insurance subsidiary, and income tax expense,
further affects our net income. We believe the Merger created the opportunity
for the resulting company to leverage complementary and diversified revenue
streams and to potentially have superior future earnings and prospects compared
to our current earnings and prospects on a stand-alone basis. Certain
reclassifications have been made to prior year amounts and the related
discussion and analysis to conform to the current year presentation. These
reclassifications did not have an impact on net income or total stockholders'
equity.

Highlights of the year and the quarter (before the completion of the Merger on February 1, 2021)

Fourth quarter 2020 net income of $ 9.0 million, or $ 0.45 by diluted? share, including merger and acceleration costs related to the

  Merger.



The net result for the 2020 financial year amounts to $ 42.0 million, or $ 2.11 by diluted? share, compared to $ 51.7 million, or $ 2.59 per diluted share, for the entire year

2019. Including:

o Pre-tax merger costs of $ 4.5 million, or $ 0.21 per diluted share, in the

last six months of 2020.

o Pre-tax inventory acceleration costs of $ 4.2 million, or $ 0.21 by diluted

share, in the fourth quarter of 2020.

? Net interest income increased to $ 160.8 million for 2020, compared to $ 142.2

million in 2019.

? The net interest margin in tax equivalent was 2.99% for 2020 and 3.31% in 2019.

? Total assets of $ 6.4 billion at December 31, 2020, an augmentation of $ 1.5 billion,

or 30.7%, more December 31, 2019.

Total loans held for investment purposes at December 31, 2020 of 4.6 billion dollars, included ? of PPP loans totaling $ 844.7 million, an augmentation of $ 917.1 million, or 24.9%,

more than December 31, 2019.

? Total deposits of $ 5.5 billion at December 31, 2020, an augmentation of $ 1.7

billion, or 43.9%, compared to December 31, 2019.

? Provision for credit losses of $ 11.5 million for 2020, compared to $ 5.7 million

in 2019.

? The allowance for credit losses was 0.96% of loans in the December 31, 2020,

against 0.89% at December 31, 2019.

Cash dividends of $ 19.2 million were paid in 2020, representing $ 0.96 through ? share. A cash dividend of $ 4.8 million, or $ 0.24 per share, was declared in

January 2021 and paid in February 2021 for the fourth quarter.

Challenges and opportunities

The COVID-19 pandemic has caused us to modify our business practices, including
employee travel and employee work locations, as many employees are working
remotely. Various state governments and federal agencies are requiring lenders
to provide forbearance and other relief to borrowers, such as waiving late
payment and other fees. Given the ongoing and dynamic nature of the
circumstances, it is difficult to predict the challenges our business will face
and the full impact of the COVID-19 outbreak on our business.

We continue to face challenges associated with ever-increasing banking
regulations and the current low interest rate environment. A prolonged inverted
or flat yield curve presents a challenge to a bank, like us, that derives most
of its revenue from net interest margin. A sustained decrease in market interest
rates could adversely affect our earnings. When interest rates decline,
borrowers tend to refinance higher-rate, fixed-rate loans at lower rates. In
addition, the majority of our loans are at variable interest rates, which would
adjust to lower rates. In response to the COVID-19 outbreak, the Federal Reserve
has reduced the benchmark federal funds rate to a target range of 0% to 0.25%
during the 2020 first quarter. We took this opportunity to lower our funding
costs and stabilize our net interest margin.

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We established five strategic objectives to achieve our vision: (1) acquire new
customers in growth markets; (2) build new sales and marketing disciplines; (3)
deepen customer relationships; (4) expand use of automation; and (5) improve
talent management. We believe there remain opportunities to grow our franchise
and that continued investments to generate core funding, quality loans and new
sources of revenue remain keys to continue creating long-term shareholder value.
Our ability to attract, retain, train and cultivate employees at all levels of
our Company remains significant to meeting our corporate objectives. In
particular, we are focused on expanding and retaining our loan team as we
continue to grow the loan portfolio. We have capitalized on opportunities
presented by the market and diligently seek opportunities to grow and strengthen
the franchise. We recognize the potential risks of the current economic
environment and will monitor the impact of market events as we evaluate loans
and investments and consider growth initiatives. Our management and Board of
Directors have built a solid foundation for growth, and we are positioned to
adapt to anticipated changes in the industry resulting from new regulations
and
legislative initiatives.

Paycheck Protection Program
We are an active participant in the SBA PPP for small business customers.  As of
December 31, 2020, we originated over 4,200 loans totaling approximately $980
million. The top industries were construction, professional, manufacturing,
health care, accommodation/food, and administrative. The mean and median PPP
loan amounts were $229 thousand and $70 thousand, respectively.

The following table shows the outstanding balance and loan size range of our PPP loans in December 31, 2020:


(Dollars in thousands)    Number of     Outstanding
Range of Loan Size          Loans         Balance
$150 and Below                2,618   $     124,461
Between $150 and $350           539         122,600
Between $350 and $2,000         463         359,307
Over $2,000                      66         238,284
Total                         3,686   $     844,652



Substantially all of the PPP loans we originated have a two-year term and a 1%
interest rate. Subsequent CARES Act changes extended the maturities of these
loans to potentially five years at the borrower's option. Any changes are
expected to be made at the end of the interest only phase and are expected
to coincide with the forgiveness process. The SBA pays us fees ranging from 1%
to 5% per loan depending on the loan principal amount. Fee income from
processing PPP loans is amortized as a yield adjustment over the life of the
loan. PPP loans are expected to be fully guaranteed by the SBA.

Prior to the commencement of the PPP program, in the 2020 first quarter we
funded 80 loans totaling $4.2 million with an average loan size of $53 thousand.
These streamlined loans were our initial response to the COVID-19 pandemic to
quickly provide customers with small loans to bridge short term cash flow. We
terminated this program and focused our efforts on developing a process to
accept PPP loans when the PPP program commenced on April 3, 2020. As of December
31, 2020, $3.2 million of these loans remain outstanding.

COVID-19 loan moratoriums and forbearance programs

We are supporting our customers who may experience financial difficulty due to
COVID-19 through loan moratoriums and forbearance programs. We began offering
90-day payment modifications on a case-by-case basis to those customers whose
income was adversely impacted by COVID-19. The loan modifications in this
program primarily consist of three-month deferrals of interest and principal
payments. Extensions may be granted on a case by case basis. As of December 31,
2020, approximately 500 loans totaling $635 million were granted payment
moratoriums during 2020. These deferrals are not considered TDRs based on the
CARES Act and/or the interagency guidance. As of January 21, 2021, $76.1 million
in moratoriums were outstanding.

The sectors that we have identified as the most affected by the COVID-19 pandemic based on the potential risk to cash flow are hotels, restaurants, passenger transportation, recreation, museums and catering.

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Community support

We continue to support our communities during the COVID-19 pandemic by pledging
a total of $1.8 million to support COVID-19 affected communities, including $500
thousand in grants to non-profit partners working on the COVID-19 relief effort
in our footprint. These grants are focused on organizations working to address
meeting the basic needs of the vulnerable populations, providing emergency food,
and health services. We have partnered with local governments to help coordinate
emergency relief.  The PPP loans we funded also benefitted hundreds of
non-profit partners. A portion of the fees generated by the PPP will be set
aside to increase funding for local organizations.

Important events

Merger agreement with Dime Community Bancshares, Inc.

On July 1, 2020, the Company entered into an Agreement and Plan of Merger (the
"Merger Agreement") with Legacy Dime. Pursuant to the Merger Agreement, on
February 1, 2021, Legacy Dime merged with and into Bridge, with Bridge as the
surviving corporation under the name "Dime Community Bancshares, Inc."

At the Effective Time, each outstanding share of Legacy Dime common stock, par
value $0.01 per share, was converted into the right to receive 0.6480 shares of
the Company's common stock, par value $0.01 per share.

At the Effective Time of the Merger, each outstanding share of Dime Preferred
Stock was converted into the right to receive one share of a newly created
series of Company preferred stock having the same powers, preferences and rights
as the Dime Preferred Stock.

Immediately following the Merger, Dime Community Bank, a New York-chartered
commercial bank and a wholly-owned subsidiary of Legacy Dime, merged with and
into BNB Bank, a New York-chartered commercial bank and a wholly-owned
subsidiary of the Company, with BNB Bank as the surviving bank, under the name
"Dime Community Bank."

In connection with the Merger, the Company assumed $115.0 million in aggregate
principal amount of the 4.50% Fixed-to-Floating Rate Subordinated Debentures due
2027 of Legacy Dime.

Critical accounting policies

Note 1 of the Notes to the Consolidated Financial Statements for the year ended
December 31, 2020 contains a summary of significant accounting policies. Various
elements of our accounting policies, by their nature, are inherently subject to
estimation techniques, valuation assumptions and other subjective assessments.
Our policy with respect to the methodologies used to determine the allowance for
credit losses is our most critical accounting policy. This policy is important
to the presentation of the financial condition and results of operations, and it
involves a higher degree of complexity and requires management to make difficult
and subjective judgments, which often require assumptions or estimates about
highly uncertain matters. The use of different judgments, assumptions and
estimates could result in material differences in the results of operations or
financial condition.

The following is a description of this critical accounting policy and an explanation of the methods and assumptions underlying its application.

Provision for credit losses

On January 1, 2020, we adopted the current expected credit loss model ("CECL" or
the "CECL Standard"), which requires that loans held for investment be accounted
for under the current expected credit losses model. Although the CARES Act
provided the option to delay the adoption of the current expected credit loss
model until the earlier of December 31, 2020 or the termination of the current
national emergency declaration related to the COVID-19 outbreak, we implemented
the CECL Standard in the first quarter of 2020 as previously planned. The
allowance for credit losses is established and maintained through a provision
for credit losses based on expected losses inherent in our loan portfolio.
Management evaluates the adequacy of the allowance on a quarterly basis.
Management monitors its entire loan portfolio regularly, with consideration
given to detailed analysis of classified loans, repayment patterns, past loss
experience, various types of

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credit concentrations, current economic conditions and reasonable and supportable forecasts. Additions to the provision are charged to expenditure and realized losses, net of recoveries, are charged to the provision.

The credit loss estimation process involves procedures to appropriately consider
the unique characteristics of our loan portfolio segments. These segments are
further disaggregated into loan risk ratings, the level at which credit risk is
monitored. When computing allowance levels, credit loss assumptions are
estimated using a model that categorizes loan pools based on expected loss
history, delinquency status and other credit trends and risk characteristics,
including current conditions and reasonable and supportable forecasts about the
future. Determining the appropriateness of the allowance is complex and requires
judgment by management about the effect of matters that are inherently
uncertain. In future periods, evaluations of the overall loan portfolio, in
light of the factors and forecasts then prevailing, may result in significant
changes in the allowance and provision for credit losses in those future
periods.

Credit quality is assessed and monitored by evaluating various attributes and
the results of those evaluations are utilized in our process for estimation of
expected credit losses.  The allowance level is influenced by loan volumes, loan
risk rating migration, historic loss experience and other conditions influencing
loss expectations, such as reasonable and supportable forecasts of economic
conditions. The methodology for estimating the amount of expected credit losses
reported in the allowance for credit losses has two basic components: (1) an
asset-specific component involving individual loans that do not share risk
characteristics with other loans and the measurement of expected credit losses
for such individual loans; and (2) a pooled component for estimated expected
credit losses for pools of loans that share similar risk characteristics.

Loans that do not share similar credit risk characteristics

For a loan that does not share risk characteristics with other loans, expected
credit loss is measured based on net realizable value, that is, the difference
between the discounted value of the expected future cash flows, based on the
original effective interest rate, and the amortized cost basis of the loan. For
these loans, we recognize expected credit loss equal to the amount by which the
net realizable value of the loan is less than the amortized cost basis of the
loan (which is net of previous charge-offs), except when the loan is collateral
dependent, that is, when the borrower is experiencing financial difficulty and
repayment is expected to be provided substantially through the operation or sale
of the collateral. In these cases, expected credit loss is measured as the
difference between the amortized cost basis of the loan and the fair value of
the collateral. The fair value of the collateral is adjusted for the estimated
costs to sell the loan if repayment or satisfaction of a loan is dependent on
the sale (rather than only on the operation) of the collateral.

The fair value of real estate collateral is determined based on recent appraised
values. Appraisals are performed by certified general appraisers (for commercial
properties) or certified residential appraisers (for residential properties)
whose qualifications and licenses have been reviewed and verified by us. All
appraisals undergo a second review process to ensure that the methodology
employed and the values derived are reasonable. Generally, collateral values for
real estate loans for which measurement of expected losses is dependent on
collateral values are updated every twelve months. Non-real estate collateral
may be valued using an appraisal, net book value per the borrower's financial
statements, or aging reports, adjusted or discounted based on management's
historical knowledge, changes in market conditions from the time of the
valuation, and management's expertise and knowledge of the borrower and its
business. Once the expected credit loss amount is determined, an allowance is
provided for equal to the calculated expected credit loss and included in the
allowance for credit losses. Pursuant to our policy, credit losses must be
charged-off in the period the loans, or portions thereof, are deemed
uncollectable.

Loans that share similar credit risk characteristics

In estimating the component of the allowance for credit losses for loans that
share similar risk characteristics with other loans, such loans are segmented
into loan types. Loans are designated into loan pools with similar risk
characteristics based on product type in conjunction with other homogeneous
characteristics.  Loan types include commercial real estate mortgages, owner and
non-owner occupied; multi-family mortgage loans; residential real estate
mortgages and home equity loans; commercial, industrial and agricultural loans,
real estate construction and land loans; and consumer loans.

In determining the allowance for credit losses, we derive an estimated credit
loss assumption from a model that categorizes loan pools based on loan type and
further segmented by risk rating. This model is known as Probability of
Default/Loss Given Default, utilizing a Transition Matrix approach. This model
calculates an expected loss percentage for each loan

                                   Page -27-

pool by considering the probability of default, based upon the historical
transition or migration of loans from performing (various pass ratings) to
criticized, and classified risk ratings to default by risk rating buckets using
life-of-loan analysis runout periods for all loan segments, and the historical
severity of loss, based on the aggregate net lifetime losses (loss given
default) per loan pool. The default trigger, which is defined as the earlier of
ninety days past-due or non-accrual status, and severity factors used to
calculate the allowance for credit losses for loans in pools that share similar
risk characteristics with other loans, are adjusted for differences between the
historical period used to calculate historical default and loss severity rates
and expected conditions over the remaining lives of the loans in the portfolio.
 These factors include: (1) lending policies and procedures; (2) international,
national, regional and local economic business conditions and developments that
affect the collectability of the portfolio, including the condition of various
markets; (3) the nature and volume of the loan portfolio including the terms of
the loans; (4) the experience, ability, and depth of the lending management and
other relevant staff; (5) the volume and severity of past due and adversely
classified or graded loans and the volume of non-accrual loans; (6) the quality
of our loan review system; (7) the value of underlying collateral for
collateralized loans; (8) the existence and effect of any concentrations of
credit, and changes in the level of such concentrations; and (9) the effect of
external factors such as competition and legal and regulatory requirements on
the level of estimated credit losses in the existing portfolio. Such factors are
used to adjust the historical probabilities of default and severity of loss for
current conditions that are not reflective of the model results. In addition,
the economic factor includes management's expectation of future conditions based
on a reasonable and supportable forecast of the economy. To the extent the lives
of the loans in the portfolio extend beyond the period for which a reasonable
and supportable forecast can be made (currently two years), the Bank immediately
reverts back to the historical rates of default and severity of loss. Management
believes that this transition approach to the Probability of Default/Loss Given
Default is a relevant calculation of expected credit losses as there is
sufficient volume as well as movement in the risk ratings due to the initial
grading system as well as timely updates to risk ratings when necessary. Credit
risk ratings are based on management's evaluation of a credit's cash flow,
collateral, guarantor support, financial disclosures, industry trends and
strength of borrowers' management.

The adequacy of the allowance is analyzed quarterly, with any adjustment to a
level deemed appropriate by the Credit Risk Management Committee ("CRMC"), based
on its risk assessment of the entire portfolio. Each quarter, members of the
CRMC meet with the Credit Risk Committee of our Board of Directors to review
credit risk trends and the adequacy of the allowance for credit losses. Based on
the CRMC's review of the classified loans, delinquency and charge-off trends,
current economic conditions, reasonable and supportable forecasts, and the
overall allowance levels as they relate to the entire loan portfolio at December
31, 2020 and December 31, 2019, we believe the allowance for credit losses has
been established at levels sufficient to cover the expected losses inherent in
our loan portfolio. Future additions or reductions to the allowance may be
necessary based on changes in economic, market or other conditions. Changes in
estimates could result in a material change in the allowance. In addition,
various regulatory agencies, as an integral part of the examination process,
periodically review the allowance for credit losses. Such agencies may require
us to recognize adjustments to the allowance based on their judgments of the
information available to them at the time of their examination.

For more information on the allowance for credit losses, refer to Note 4 of the Notes to the Consolidated Financial Statements.

Net revenue

Net income for the year ended December 31, 2020 was $42.0 million and $2.11 per
diluted share as compared to $51.7 million and $2.59 per diluted share for
the same period in 2019. Changes in net income for the year ended December 31,
2020 compared to December 31, 2019 include: (i) an $18.6 million, or 13.1%,
increase in net interest income; (ii) a $5.8 million, or 101.8%, increase in the
provision for credit losses; (iii) a $5.7 million, or 22.4%, decrease in
non-interest

                                   Page -28-

Income; (iv) a $ 17.1 million, or 17.8%, increase in non-interest charges; and (v) a $ 0.4 million, or 2.7%, reduction in the tax charge.

Net interest income

Net interest income, the main contributor to profits, is the difference between income on interest-bearing assets and expenditure on interest-bearing liabilities. Net interest income depends on the volume of interest-bearing assets and interest-bearing liabilities and the interest rates earned or paid on them.

The following table presents certain information relating to our average
consolidated balance sheets and our consolidated statements of income for the
periods indicated and reflects the average yield on assets and average cost of
liabilities for those periods on a tax-equivalent basis based on the U.S.
federal statutory tax rate. Such yields and costs are derived by dividing income
or expense by the average balance of assets or liabilities, respectively, for
the periods shown. Average balances are derived from daily average balances and
include non-accrual loans. The yields and costs include fees and costs, which
are considered adjustments to yields. Interest on non-accrual loans has been
included only to the extent reflected in the consolidated statements of income.
For purposes of this table, the average balances for investments in debt and
equity securities exclude unrealized appreciation/depreciation due to the
application of FASB Accounting Standards Codification ("ASC") 320,
"Investments - Debt and Equity Securities".

                                   Page -29-


                                                                                Year Ended December 31,
                                                   2020                                   2019                                   2018
                                                                Average                                Average                                Average
                                      Average                   Yield/       Average                   Yield/       Average                   Yield/
(Dollars in thousands)                Balance      Interest      Cost        Balance      Interest      Cost        Balance      Interest      Cost
Interest-earning assets:
Loans, net (1)(2)                   $ 4,341,647    $ 169,611       3.91 %  $ 3,410,773    $ 158,492       4.65 %  $ 3,167,933    $ 144,568       4.56 %
Mortgage-backed securities, CMOs
and other asset-backed
securities                              470,306        9,329       1.98        651,262       16,182       2.48        679,805       16,591       2.44
Taxable securities                      149,156        4,158       2.79        138,625        4,477       3.23        168,326        5,413       3.22
Tax-exempt securities (2)                22,999          841       3.66         33,393        1,215       3.64         62,595        1,932       3.09
Deposits with banks                     404,272          673       0.17    

75,600 1,697 2.24 52 143 1,076 2.06 Total remunerated assets (2)

                                   5,388,380      184,612       3.43      4,309,653      182,063       4.22      4,130,802      169,580       4.11
Non-interest-earning assets:
Cash and due from banks                  91,736                                 81,850                                 76,730
Other assets                            391,911                                326,963                                285,546
Total assets                        $ 5,872,027                            $ 4,718,466                            $ 4,493,078

Interest-bearing liabilities:
Savings, NOW and money market
deposits                            $ 2,527,785    $  10,435       0.41 %  $ 2,109,891    $  23,687       1.12 %  $ 1,922,515    $  15,928       0.83 %
Certificates of deposit of
$100,000 or more                        217,624        3,346       1.54        208,875        4,270       2.04        184,438        3,007       1.63
Other time deposits                      86,113        1,198       1.39         78,800        1,502       1.91        107,153        1,801       1.68
Federal funds purchased and
repurchase agreements                     8,595           79       0.92         41,077          767       1.87         69,604        1,200       1.72
FHLB advances                           284,718        3,992       1.40        245,283        4,573       1.86        324,653        5,729       1.76
Subordinated debentures                  78,985        4,401       5.57         78,845        4,539       5.76         78,706        4,539       5.77
Total interest-bearing
liabilities                           3,203,820       23,451       0.73      2,762,771       39,338       1.42      2,687,069       32,204       1.20
Non-interest-bearing
liabilities:
Demand deposits                       2,020,575                              1,392,606                              1,310,857
Other liabilities                       138,665                                 86,130                                 42,392
Total liabilities                     5,363,060                              4,241,507                              4,040,318
Stockholders' equity                    508,967                                476,959                                452,760
Total liabilities and
stockholders' equity                $ 5,872,027                            $ 4,718,466                            $ 4,493,078

Net interest income/net interest
rate spread (2) (3)                                  161,161       2.70 %                   142,725       2.80 %                   137,376       2.91 %
Net interest-earning assets         $ 2,184,560                            $ 1,546,882                            $ 1,443,733
Net interest margin (2) (4)                                        2.99 %                                 3.31 %                                 3.33 %
Tax-equivalent adjustment                              (380)     (0.01)    
                  (522)     (0.01)                       (596)     (0.02)
Net interest income                                $ 160,781                              $ 142,203                              $ 136,780
Net interest margin (4)                                            2.98 %                                 3.30 %                                 3.31 %

Ratio of interest-earning assets
to interest-bearing liabilities                                  168.19 %                               155.99 %                               153.73 %


(1) The amounts are net of deferred origination costs / (costs) and the provision for credit

losses and include loans held for sale.

(2) Presented in tax equivalent based on the we federal statutory tax

rate of 21%.

The net interest rate differential represents the difference between the return on (3) average interest-bearing assets and the cost of average interest-bearing assets

Liabilities.

(4) The net interest margin represents the net interest income divided by the average

    interest-earning assets.




                                   Page -30-

Rate/Volume Analysis

Net interest income can be analyzed in terms of the impact of changes in rates
and volumes. The following table illustrates the extent to which changes in
interest rates and in the volume of average interest-earning assets and
interest-bearing liabilities have affected our interest income and interest
expense during the periods indicated. Information is provided in each category
with respect to (i) changes attributable to changes in volume (changes in volume
multiplied by prior rate); (ii) changes attributable to changes in rates
(changes in rates multiplied by prior volume); and (iii) the net changes. For
purposes of this table, changes that are not due solely to volume or rate
changes have been allocated to these categories based on the
respective percentage changes in average volume and rate. Due to the numerous
simultaneous volume and rate changes during the periods analyzed, it is not
possible to precisely allocate changes between volume and rates. In addition,
average interest-earning assets include non-accrual loans.


                                                                       Year 

Finished the 31st of December,

                                                        2020 Over 2019                          2019 Over 2018
                                                        Changes Due To                          Changes Due To
                                                                           Net                                     Net
(In thousands)                                Volume         Rate         Change       Volume        Rate        Change
Interest income on interest-earning
assets:
Loans, net (1) (2)                           $  38,905    $ (27,786)    $   11,119    $  11,245    $   2,679    $  13,924
Mortgage-backed securities, CMOs and
other asset-backed securities                  (3,970)       (2,883)      
(6,853)        (706)          297        (409)
Taxable securities                                 323         (642)         (319)        (958)           22        (936)
Tax-exempt securities (2)                        (380)             6         (374)      (1,018)          301        (717)
Deposits with banks                              1,746       (2,770)       (1,024)          520          101          621
Total interest income on interest-earning
assets (2)                                      36,624      (34,075)       

2,549 9,083 3,400 12,483

Interest expense on interest-bearing
liabilities:
Savings, NOW and money market deposits           3,984      (17,236)      (13,252)        1,671        6,088        7,759
Certificates of deposit of $100,000 or
more                                               172       (1,096)         (924)          433          830        1,263
Other time deposits                                130         (434)         (304)        (519)          220        (299)
Federal funds purchased and repurchase
agreements                                       (419)         (269)         (688)        (526)           93        (433)
FHLB advances                                      664       (1,245)         (581)      (1,465)          309      (1,156)
Subordinated debentures                              8         (146)         (138)            8          (8)            -
Total interest expense on
interest-bearing liabilities                     4,539      (20,426)      (15,887)        (398)        7,532        7,134
Net interest income (2)                      $  32,085    $ (13,649)    $  

18,436 $ 9,481 $ (4,132) $ 5,349

(1) The amounts are net of deferred origination costs / (costs) and the provision for credit

losses and include loans held for sale.

(2) Presented in tax equivalent based on the we federal statutory tax

    rate of 21%.




Net interest income increased $18.6 million, or 13.1%, to $160.8 million for
the year ended December 31, 2020 compared to $142.2 million for the year ended
December 31, 2019. Average net interest-earning assets increased $637.7 million
to $2.2 billion for 2020 compared to $1.5 billion for 2019. The increase in
average net interest-earning assets was primarily driven by loan growth in the
commercial and industrial portfolio, and a rise in deposits with banks,
partially offset by increases in average deposits and average borrowings, and a
decrease in average investment securities. Tax-equivalent net interest margin
was 2.99% in 2020 compared to 3.31% in 2019. The decrease in tax-equivalent net
interest margin for 2020 compared to 2019 reflects the lower average yield on
our loan portfolio and significantly higher levels of cash earning low average
yields, partially offset by lower overall funding costs, due in part to federal
funds rate decreases during the third and fourth quarter of 2019 and the first
quarter of 2020. In response to the COVID-19 outbreak, the Federal Reserve has
reduced the benchmark federal funds rate to a target range of 0% to 0.25% during
the 2020 first quarter. We took this opportunity to lower our funding costs and
stabilize our net interest margin.

Total interest income increased $2.7 million, or 1.5%, to $184.2 million in 2020
compared to $181.5 million in 2019 as average interest-earning assets increased
$1.1 billion, or 25.0%, to $5.4 billion in 2020 compared to $4.3 billion in
2019. The increase in average interest-earning assets in 2020 compared to 2019
reflects growth in the commercial and industrial portfolio driven by PPP loan
originations, and a rise in deposits with banks driven by deposit growth,
partially offset by a

                                   Page -31-

decline in average investment securities. The decline in economic activity during the COVID-19 shutdown has led more of our customers to increase their deposits, which has increased our average deposits with banks in the current year.

the

tax-equivalent average yield on interest-earning assets decreased to 3.43% in
2020 compared to 4.22% in 2019. The PPP loans and excess liquidity in banks had
the effect of depressing our net interest margin in the current year.

Interest income on loans increased to $169.4 million for 2020 compared to $158.2
million for 2019, primarily due to growth in the commercial and industrial loan
portfolio, partially offset by a decrease in yield on loans. Average loans grew
by $930.9 million, or 21.4%, to $4.3 billion in 2020 compared to $3.4 billion in
2019. The tax-equivalent average yield on loans was 3.91% in 2020 compared to
4.65% in 2019. The PPP loans had the effect of decreasing the tax-equivalent
yield by 17 basis points in 2020.

Interest income on investment securities decreased to $14.1 million in 2020 from
$21.6 million in 2019. The decrease in 2020 compared to 2019 reflects a decrease
in the average balance of investment securities and a lower average yield on
investment securities. Interest income on investment securities included net
amortization of premiums on securities of $3.6 million in 2020, compared to $4.4
million in 2019. Average total investment securities decreased by $180.8
million, or 22.0%, to $642.5 million in 2020 compared to $823.3 million in 2019.
The decline in tax-equivalent average yield on total investment securities to
2.23% in 2020 compared to 2.66% in 2019 reflected the impact of the reductions
in the benchmark federal funds rate by the Federal Reserve in the third and
fourth quarter of 2019, and the first quarter of 2020, and the related decline
in market interest rates available on securities purchases.

Total interest expense decreased $15.9 million, or 40.4%, to $23.5 million in
2020 compared to $39.3 million in 2019. The decrease in interest expense between
periods was a result of the decrease in the cost of average interest-bearing
liabilities, partially offset by an increase in average deposits and average
borrowings. The average cost of interest-bearing liabilities was 0.73% in 2020
compared to 1.42% in 2019. The decrease in the cost of average interest-bearing
liabilities is primarily due to federal funds rate decreases during the third
and fourth quarter of 2019 and the first quarter of 2020. Average total
interest-bearing liabilities increased to $3.2 billion in 2020 compared to $2.8
billion in 2019 due to an increase in average deposits and average borrowings.

Average total deposits increased to $4.9 billion in 2020 compared to $3.8
billion in 2019 primarily due to increases in average demand deposits, and
average savings, NOW and money market deposits. Average demand deposits
increased to $2.0 billion in 2020 compared to $1.4 billion in 2019. The increase
in demand deposits was primarily driven by an inflow of deposits from PPP loan
customers in 2020. The average balances in savings, NOW and money market
accounts increased to $2.5 billion in 2020 compared to $2.1 billion in 2019.
Average certificates of deposit increased $16.1 million to $303.7 million in
2020 compared to 2019. The average cost of savings, NOW and money market
accounts decreased to 0.41% in 2020 compared to 1.12% in 2019. The average cost
of certificates of deposit decreased to 1.50% in 2020 compared to 2.01% in 2019.
Average public fund deposits increased to 17.5% of total average deposits during
2020 compared to 15.2% in 2019.

Average federal funds purchased and repurchase agreements declined to $8.6
million in 2020 compared to $41.1 million in 2019. The cost of average federal
funds purchased and repurchase agreements was 0.92% in 2020, compared to 1.87%
for the same period in 2019. Average FHLB advances increased to $284.7 million
in 2020, compared to $245.3 million in 2019. Average subordinated debentures
increased to $79.0 million in 2020, compared to $78.8 million in 2019.

Provision and allowance for bad debts

At December 31, 2020, our loan portfolio consists primarily of real estate loans
secured by commercial, multi-family and residential real estate properties
located in our principal lending areas of Nassau and Suffolk Counties on Long
Island and the New York City boroughs. The interest rates we charge on loans are
affected primarily by the demand for such loans, the supply of money available
for lending purposes, the rates offered by our competitors, our relationship
with the customer, and the related credit risks of the transaction. These
factors are affected by general and economic conditions including, but not
limited to, monetary policies of the federal government, including the Federal
Reserve Board, legislative policies and governmental budgetary matters.

Based on our adoption of the CECL Standard on January 1, 2020, our continuing
review of the overall loan portfolio, the current asset quality of the
portfolio, the growth in the loan portfolio, the net charge-offs, and current
and forecasted

                                   Page -32-

economic conditions, a provision for credit losses of $11.5 million was recorded
in 2020, as compared to $5.7 million in 2019. The increase in allowance for
credit losses in the first half of 2020 was primarily related to the reasonable
and supportable forecast component of the newly adopted CECL Standard which
includes the impact of COVID-19.  COVID-19 continues to have a profound impact
on economic activity. While there have been some signs of economic improvement
during the latter half of 2020, significant uncertainty remains.  Management
still believes that the economic recovery will continue during 2021 and 2022,
however, based on the aforementioned uncertainty and negative impact the virus
has had to date, the decision was made to maintain the current risk level for
the reasonable and supportable forecast component of the allowance for credit
losses as of December 31, 2020.

Net charge-offs were $1.7 million for the year ended December 31, 2020, as
compared to $4.3 million for the year ended December 31, 2019. The charge-offs
in 2020 relate primarily to one relationship that totaled $2.7 million as of
June 30, 2020. In the 2020 third quarter, a settlement agreement was entered
into resulting in $1.4 million in payments and a charge-off totaling $1.3
million. The charge-offs in 2019 relate primarily to the $3.7 million charge-off
related to one CRE loan totaling $16.3 million which was written down to the
loan's estimated fair value of $12.6 million and moved into loans held for sale
in June 2019. The ratio of allowance for credit losses to non-accrual loans was
363% and 750% at December 31, 2020 and 2019, respectively. The allowance for
credit losses totaled $44.2 million at December 31, 2020 and $32.8 million at
December 31, 2019. The allowance as a percentage of total loans was 0.96% and
0.89% at December 31, 2020 and 2019, respectively. The addition of PPP loans,
which are expected to be fully guaranteed by the SBA and have a nominal reserve
associated with them, decreased the allowance as a percentage of total loans by
20 basis points at December 31, 2020. We continue to carefully monitor the loan
portfolio as well as real estate trends in Nassau and Suffolk Counties and the
New York City boroughs.

Loans totaling $121.7 million, or 2.6%, of total loans at December 31, 2020 were
categorized as classified loans compared to $88.3 million or 2.4%, at December
31, 2019. Classified loans include loans with credit quality indicators with the
internally assigned grades of special mention, substandard and doubtful. These
loans are categorized as classified loans as we have information that indicates
the borrower may not be able to comply with the present repayment terms. These
loans are subject to increased management attention and their classification is
reviewed at least quarterly.

At December 31, 2020, $43.3 million of these classified loans were commercial
real estate ("CRE") loans. Of the $43.3 million of CRE loans, $35.9 million were
current and $7.4 million were past due. At December 31, 2020, $20.0 million of
classified loans were residential real estate loans with $15.7 million current
and $4.3 million past due. Commercial, industrial, and agricultural loans
represented $47.7 million of classified loans, with $41.2 million current and
$6.5 million past due. Taxi medallion loans represented $9.6 million of the
classified commercial, industrial and agricultural loans at December 31, 2020.
All of our taxi medallion loans are collateralized by New York City medallions
and have personal guarantees. No new originations of taxi medallion loans are
currently planned, and we expect these balances to continue to decline through
amortization and pay-offs. In January 2021, six taxi medallion loans, totaling
$2.6 million, net of charge-offs, were paid off under settlements we accepted.
The charge-offs related to the settlements were recognized in January 2021. At
December 31, 2020, there was $8.5 million of classified multi-family loans which
were current; $1.2 million of classified real estate construction and land loans
substantially all of which were current; and $1.0 million of classified consumer
loans substantially all of which were current.

CRE loans, including multi-family loans, represented $2.5 billion, or 55.1%, of
the total loan portfolio at December 31, 2020 compared to $2.4 billion, or
64.8%, at December 31, 2019. Our underwriting standards for CRE loans require an
evaluation of the cash flow of the property, the overall cash flow of the
borrower and related guarantors as well as the value of the real estate securing
the loan. In addition, our underwriting standards for CRE loans are consistent
with regulatory requirements with original loan to value ratios generally less
than or equal to 75%. We consider charge-off history, delinquency trends, cash
flow analysis, and the impact of the local economy on CRE values when evaluating
the appropriate level of the allowance for credit losses.

As of December 31, 2020, we had $20.3 million in loans which were individually
evaluated, with a specific reserve of $6.7 million. Individually evaluated loans
include $9.6 million of taxi medallion loans.  As of June 30, 2020, taxi loans
were changed from being collectively evaluated to individually evaluated.  While
our collectively evaluated taxi loans were all performing in accordance with the
terms of the renewals, the taxi industry, like many others, suffered greatly as
a result of the COVID-19 pandemic. Substantially all of our taxi borrowers
requested payment moratoriums and until such time as business fully resumes and
cash flows return to normal, we will value the taxi loans assuming they are
collateral

                                   Page -33-

dependent. As of December 31, 2019, we had individually impaired loans as
defined by FASB ASC No. 310, "Receivables" (prior to adoption of the CECL
Standard) of $27.0 million, with a specific reserve totaling $4.7 million.
Impaired loans include individually classified non-accrual loans and troubled
debt restructuring loans ("TDRs"). At December 31, 2019, impaired loans also
included $1.1 million in other impaired performing loans which were related to
borrowers with other performing TDRs. Upon adoption of the CECL Standard on
January 1, 2020, we re-evaluated our impaired loans to determine which loans
should be evaluated on a collective (pooled) basis and which loans do not share
similar risk characteristics with loans evaluated using a collective (pooled)
basis and therefore should be individually evaluated. The majority of our
impaired loans at December 31, 2019 were performing TDRs where there was no
write-off of principal as a result of the restructure and interest was at a
market rate.  We concluded the risks associated with these loans were consistent
with the other pooled loans and therefore they were appropriately evaluated on a
collective (pooled) basis under the CECL Standard.

Non-accrual loans were $12.2 million, or 0.26%, of total loans at December 31,
2020 compared to $4.4 million, or 0.12%, of total loans at December 31, 2019.
TDRs represent $346 thousand of the non-accrual loans at December 31, 2020 and
$405 thousand at December 31, 2019.

There was no other property owned at December 31, 2020 and 2019.

The following table shows the changes in the allowance for credit losses:

                                                                   Year Ended December 31,
(In thousands)                                     2020         2019         2018         2017         2016
Beginning balance                                $  32,786    $  31,418    $  31,707    $  25,904    $ 20,744
Impact of adopting CECL                              1,625            -            -            -           -
Charge-offs:
Commercial real estate mortgage loans                  (1)      (3,670)            -            -           -
Residential real estate mortgage loans                   -            -         (24)            -        (56)
Commercial, industrial and agricultural loans      (2,004)        (799)      (2,806)      (8,245)       (930)
Installment/consumer loans                             (7)         (13)         (11)         (49)         (1)
Total                                              (2,012)      (4,482)      (2,841)      (8,294)       (987)
Recoveries:
Commercial real estate mortgage loans                    -            1            -            -         109
Residential real estate mortgage loans                   3          112            3           28          96
Commercial, industrial and agricultural loans          298           25    
     747           16         386
Installment/consumer loans                               -           12            2            3           6
Total                                                  301          150          752           47         597
Net charge-offs                                    (1,711)      (4,332)      (2,089)      (8,247)       (390)
Provision for credit losses charged to
operations                                          11,500        5,700        1,800       14,050       5,550
Ending balance                                   $  44,200    $  32,786    $  31,418    $  31,707    $ 25,904
Ratio of net charge-offs during period to
average loans outstanding                           (0.04) %     (0.13) %     (0.07) %     (0.30) %    (0.02) %






                                   Page -34-

Allocation of the allowance for credit losses

The following table shows the breakdown of the total allowance for credit losses by loan classification:


                                                                                         December 31,
                                          2020                      2019                      2018                      2017                      2016
                                             Percentage                Percentage                Percentage                Percentage                Percentage
                                              of Loans                  of Loans                  of Loans                  of Loans                  of Loans
                                              to Total                  to Total                  to Total                  to Total                  to Total
(Dollars in thousands)            Amount       Loans        Amount       Loans        Amount       Loans        Amount       Loans        Amount       Loans
Commercial real estate
mortgage loans                   $  8,534          35.6 %  $ 12,150          42.7 %  $ 10,792          42.0 %  $ 11,048          41.7 %  $  9,225          42.0 %
Multi-family mortgage loans         1,736          19.5       4,829        
 22.1       2,566          17.9       4,521          19.2       6,264          20.0
Residential real estate
mortgage loans                      3,062           9.4       1,882          13.4       3,935          15.9       2,438          15.0       1,495          14.1
Commercial, industrial and
agricultural loans                 27,363          33.2      12,583        

18.5 12 722 19.8 12 838 19.9 7 837

20.2

Real estate construction and
land loans                          2,175           1.8       1,066           2.6       1,297           3.8         740           3.5         955           3.1
Installment/consumer loans          1,330           0.5         276           0.7         106           0.6         122           0.7         128           0.6
Total                            $ 44,200         100.0 %  $ 32,786         100.0 %  $ 31,418         100.0 %  $ 31,707         100.0 %  $ 25,904         100.0 %




Non-Interest Income

Total non-interest income decreased $5.7 million, or 22.4%, to $19.7 million for
the year ended December 31, 2020, compared to $25.4 million for the year ended
December 31, 2019. The decline in total non-interest income in the current year
compared to 2019 was driven by a $3.7 million decrease in loan swap fees, a $3.4
million loss on termination of swaps, a $2.9 million decrease in fair value of
loans held for sale, and a $1.1 million decrease in service charges and other
fees, partially offset by a $3.3 million increase in net securities gains, a
$2.0 million increase in gain on sale of Small Business Administration ("SBA")
loans, and a $0.6 million increase in title fees.

During the third quarter of 2020, we restructured our wholesale balance sheet,
offsetting net securities gains of $3.5 million with swap termination losses of
$3.4 million, which positively impacted our net interest margin in the fourth
quarter of 2020.

During the second quarter of 2020, an additional write-down was recognized on
one CRE mortgage loan held for sale for the decrease in the estimated fair value
of the loan by $2.6 million to $10.0 million through a valuation allowance which
was charged against non-interest income in the consolidated statements of
income.

Loan swap fees recorded on interest rate swaps decreased to $3.7 million in
2020, compared to $7.5 million in 2019. We increased the notional amount of
interest rate swaps to $1.1 billion at December 31, 2020, compared to $823.8
million at December 31, 2019. The loan swap program allows us to deliver fixed
rate exposure to our customers while we retain a floating rate asset and
generate fee income. These interest rate swap agreements do not qualify for
hedge accounting treatment, and therefore changes in fair value are reported in
non-interest income in the consolidated statements of income.

Non-interest charges

Total non-interest charges increased $ 17.1 million, or 17.8%, to $ 113.3 million
in 2020 compared to $ 96.1 million in 2019. The increase is mainly due to expenses associated with the merger and higher salaries and benefits, technology and communications, professional services and FDIC evaluation costs, partially offset by lower marketing and advertising expenses and other operating expenses in 2020.

Salaries and employee benefits increased to $67.2 million in 2020 compared to
$56.2 million in 2019. The rise in salaries and employee benefits was primarily
due to stock acceleration expense related to the Merger and higher incentive
accruals in 2020.

                                   Page -35-
Technology and communications increased to $9.7 million in 2020 compared to $7.9
million in 2019.  The rise in technology and communications expenses reflect
higher software maintenance and system services expenses as we increased our
investment in technology and expanded our use of automation in 2020.

FDIC the evaluations are passed to $ 2.0 million in 2020, compared to $ 0.6 million in 2019, mainly due to FDIC evaluation credits totaling $ 0.7 million in 2019.

Marketing and advertising decreased to $3.3 million in 2020 compared to $4.7
million in 2019. Professional services increased to $5.0 million in 2020
compared to $3.8 million in 2019. We recorded amortization of other intangible
assets of $0.7 million in 2020 and $0.8 million in 2019, related to the CNB and
FNBNY core deposit intangible assets subject to amortization.  Other operating
expenses increased to $6.8 million in 2020 compared to $7.7 million in 2019.

Income tax expense

Income tax expense decreased to $13.7 million in 2020 compared to $14.1 million
in 2019, reflecting lower income before income taxes, partially offset by a
higher effective tax rate in 2020. The effective tax rate for 2020 was 24.6%,
compared to 21.4% for 2019. The increase in our effective tax rate resulted
primarily from non-deductible salaries and merger expenses related to the
Merger.



Financial Condition

Total assets were $6.4 billion at December 31, 2020, $1.5 billion, or 30.7%,
higher than December 31, 2019. The rise in total assets in 2020 reflects
increases in loans held for investment and cash and cash equivalents, partially
offset by a decrease in securities.

Cash and cash equivalents increased $759.6 million, or 648.2%, to $876.8 million
at December 31, 2020 compared to December 31, 2019. Total securities decreased
$245.4 million to $559.4 million at December 31, 2020 compared to December 31,
2019. Total loans held for investment, net, increased $917.1 million, or 24.9%,
to $4.6 billion at December 31, 2020 compared to December 31, 2019, inclusive of
PPP loans totaling $844.7 million. Net deferred loan fees were $8.2 million at
December 31, 2020, inclusive of $15.4 million remaining unamortized net loan
fees related to PPP loans. Our focus is on our ability to grow the loan
portfolio, while maintaining interest rate risk sensitivity and maintaining
credit quality.

Total liabilities were $5.9 billion at December 31, 2020, $1.5 billion higher
than December 31, 2019. The increase in total liabilities in 2020 was mainly due
to deposit growth, primarily attributable to PPP related deposits, partially
offset by a decrease in FHLB advances.

Total deposits increased $1.7 billion, or 43.9%, to $5.5 billion at December 31,
2020 compared to December 31, 2019. The increase in total deposits in 2020 was
largely attributable to higher demand deposits and savings, NOW and money market
deposits, partially offset by a decrease in certificates of deposit. Demand
deposits increased $953.8 million, or 62.8% year-over-year, to $2.5 billion at
December 31, 2020. The rise in demand deposits in 2020 was primarily driven by
an inflow of PPP-related deposits. Savings, NOW and money market deposits
increased $740.4 million, or 37.2% year-over-year, to $2.7 billion at December
31, 2020. Certificates of deposit decreased $19.5 million, or 6.3%
year-over-year, to $288.4 million at December 31, 2020. FHLB advances decreased
$220.0 million, or 50.6% year-over-year, to $215.0 million at December 31, 2020.
The decline in FHLB advances was mainly due to our decreased reliance on
borrowings in 2020 by using deposit growth to fund our loan portfolio growth.

Total stockholders' equity was $517.8 million at December 31, 2020, an increase
of $20.7 million, or 4.2%, from December 31, 2019. We adopted the CECL Standard
on January 1, 2020, which resulted in a charge to retained earnings and
reduction to stockholders' equity of $1.5 million. The increase in stockholders'
equity was largely attributable to net income of $42.0 million, partially offset
by $19.2 million in dividends, and $4.6 million in purchases of common stock.
During the year ended December 31, 2020, there were 179,620 shares purchased
under the 2019 Stock Repurchase Program at a cost of $4.6 million.

                                   Page -36-

Loans

During 2020, despite the pandemic, we continued to experience growth in the
commercial real estate and multifamily mortgage loan portfolios, coupled with
significant growth in the commercial, industrial and agricultural loan portfolio
as a result of the PPP loans.  The concentration of loans in our primary market
areas may increase risk. Unlike larger banks that are more geographically
diversified, our loan portfolio consists primarily of real estate loans secured
by commercial, multi-family and residential real estate properties located in
our principal lending areas of Nassau and Suffolk Counties on Long Island and
the New York City boroughs. The local economic conditions on Long Island and the
New York City boroughs have a significant impact on the volume of loan
originations, the quality of loans, the ability of borrowers to repay these
loans, and the value of collateral securing these loans. A considerable decline
in general economic conditions caused by inflation, recession, unemployment or
other factors beyond our control would impact these local economic conditions
and could negatively affect the financial results of our operations.
Additionally, decreases in tenant occupancy may also have a negative effect on
the ability of borrowers to make timely repayments of their loans, which would
have an adverse impact on our earnings.

The interest rates charged by us on loans are affected primarily by the demand
for such loans, the supply of money available for lending purposes, the rates
offered by our competitors, our relationship with the customer, and the related
credit risks of the transaction. These factors are affected by general and
economic conditions including, but not limited to, monetary policies of the
federal government, including the FRB, legislative policies and governmental
budgetary matters.

We target our business lending and marketing initiatives towards promotion of
loans that primarily meet the needs of small to medium-sized businesses. These
small to medium-sized businesses generally have fewer financial resources in
terms of capital or borrowing capacity than larger entities. If general economic
conditions negatively impact these businesses, our results of operations and
financial condition may be adversely affected.

With respect to the underwriting of loans, there are certain risks, including
the risk of non-payment that are associated with each type of loan that we
market. Approximately 66.3% of our loan portfolio at December 31, 2020 was
secured by real estate. Commercial real estate loans represented 35.6% of our
loan portfolio. Multi-family mortgage loans represented 19.5% of our loan
portfolio. Residential real estate mortgage loans represented 9.4% of our loan
portfolio, including home equity lines of credit representing 1.4% and
residential mortgages representing 8.0% of our loan portfolio. Real estate
construction and land loans represented 1.8% of our loan portfolio. Risks
associated with a concentration in real estate loans include potential losses
from fluctuating values of land and improved properties. Home equity loans
represent loans originated in our geographic markets with original loan to value
ratios generally of 75% or less. Our residential mortgage portfolio included
approximately $14.7 million in interest only mortgages at December 31, 2020. The
underwriting standards for interest only mortgages are consistent with the
remainder of the loan portfolio and do not include any features that result in
negative amortization. We use conservative underwriting criteria to better
insulate us from a downturn in real estate values and economic conditions on
Long Island and the New York City boroughs that could have a significant impact
on the value of collateral securing the loans as well as the ability of
customers to repay loans.

The remainder of the loan portfolio was comprised of commercial and consumer
loans, which represented 33.7% of our loan portfolio, at December 31, 2020. The
commercial loans are made to businesses and include term loans, lines of credit,
senior secured loans to corporations, equipment financing, taxi medallion loans
and, beginning in 2020, PPP loans. The primary risks associated with commercial
loans are the cash flow of the business, the experience and quality of the
borrowers' management, the business climate, and the impact of economic factors.
The primary risks associated with consumer loans relate to the borrower, such as
the risk of a borrower's unemployment as a result of deteriorating economic
conditions or the amount and nature of a borrower's other existing indebtedness,
and the value of the collateral securing the loan if we must take possession of
the collateral.

Our policy for charging off loans is a multi-step process. A loan is considered
a potential charge-off when it is in default of either principal or interest for
a period of 90, 120 or 180 days, depending upon the loan type, as of the end of
the prior month. In addition to delinquency criteria, other triggering events
may include, but are not limited to, notice of bankruptcy by the borrower or
guarantor, death of the borrower, and deficiency balance from the sale of
collateral. These loans identified are presented for evaluation at the regular
meeting of the CRMC. A loan is charged off when a loss is reasonably assured.
The recovery of charged-off balances is actively pursued until the potential for
recovery has been exhausted, or until the expense of collection does not justify
the recovery efforts.

                                   Page -37-
Total loans grew $917.1 million, or 24.9%, to $4.6 billion at December 31, 2020
compared to $3.7 billion at December 31, 2019, with commercial, industrial, and
agricultural loans being the largest contributor of the growth. Commercial,
industrial and agricultural loans increased $847.7 million, or 124.8% in 2020 as
a result of PPP loans totaling $844.7 million at December 31, 2020. Multi-family
mortgage loans increased $87.6 million, or 10.8%, in 2020. Commercial real
estate mortgage loans increased $72.8 million, or 4.7%, during 2020. Residential
real estate mortgage loans decreased $58.5 million, or 11.9%, during 2020. Real
estate construction and land loans decreased $14.8 million, or 15.2%, in 2020.
Installment/consumer loans decreased slightly during 2020. Fixed rate loans
represented 35.5% and 21.9% of total loans at December 31, 2020 and 2019,
respectively. The increase in fixed rate loans from December 31, 2019 relates to
the PPP loans.

The following table presents the major classifications of loans at the dates
indicated:


                                                                              December 31,
(In thousands)                                      2020           2019           2018           2017           2016
Commercial real estate mortgage loans            $ 1,638,519    $ 1,565,687    $ 1,373,556    $ 1,293,906    $ 1,091,752
Multi-family mortgage loans                          899,730        812,174        585,827        595,280        518,146
Residential real estate mortgage loans               434,689        493,144        519,763        464,264        364,884
Commercial, industrial and agricultural loans      1,527,147        679,444        645,724        616,003        524,450
Real estate construction and land loans               82,479         97,311
       123,393        107,759         80,605
Installment/consumer loans                            23,019         24,836         20,509         21,041         16,368
Total loans                                        4,605,583      3,672,596      3,268,772      3,098,253      2,596,205
Net deferred loan costs and fees                     (8,180)          7,689          7,039          4,499          4,235
Total loans held for investment                    4,597,403      3,680,285
     3,275,811      3,102,752      2,600,440
Allowance for credit losses                         (44,200)       (32,786)       (31,418)       (31,707)       (25,904)
Net loans                                        $ 4,553,203    $ 3,647,499    $ 3,244,393    $ 3,071,045    $ 2,574,536



Information on the maturity date of the selected loan

The following table presents the approximate maturities and sensitivity to
changes in interest rates of certain loans, exclusive of real estate mortgage
loans and installment/consumer loans to individuals as of December 31, 2020:


                                                              After One
                                              Within One     But Within        After
(In thousands)                                   Year        Five Years      Five Years        Total
Commercial loans (1)                         $    303,631    $ 1,081,141    $    142,375    $ 1,527,147
Construction and land loans (2)                    23,643         41,648   
      17,188         82,479
Total                                        $    327,274    $ 1,122,789    $    159,563    $ 1,609,626

Rate provisions:
Amounts with fixed interest rates            $     19,532    $   989,921    $     46,450    $ 1,055,903
Amounts with variable interest rates              307,742        132,868   
     113,113        553,723
Total                                        $    327,274    $ 1,122,789    $    159,563    $ 1,609,626

(1) The fixed rate PPP is included in the column “After one year but within five years”

loans totaling $ 844.7 million.

(2) Included in the column “After five years” are one-stage construction loans

which contain a preliminary construction period (interest only) which

automatically converts to depreciation at the end of the construction phase.


                                   Page -38-

Defaulted, unaccounted for and restructured loans and other real estate held

The following table presents a selection of information on past due, unaccounted for and restructured loans and on other real estate held:

                                                                          December 31,
(In thousands)                                         2020        2019        2018        2017       2016
Loans 90 days or more past due and still accruing    $      -    $    343    $    308    $  1,834    $ 1,027
Non-accrual loans excluding restructured loans         11,816       3,964       2,675       6,950        909
Restructured loans - non-accrual                          346         405         133           5        332
Restructured loans - performing                        22,187      26,340      16,913      16,727      2,417
Other real estate owned, net                                -           -  
      175           -          -
Total                                                $ 34,349    $ 31,052    $ 20,204    $ 25,516    $ 4,685





                                                            Year Ended December 31,
(In thousands)                                    2020      2019       2018      2017      2016
Gross interest income that has not been paid
or recorded during the year under original
terms:
Non-accrual loans                                $  167    $    47    $   36    $  110    $   17
Restructured loans                                    -          -         -         -         1

Gross interest income recorded during the
year:
Non-accrual loans                                $   93    $    48    $   39    $  282    $    1
Restructured loans                                  948      1,212       716       619       123
Commitments for additional funds                      -          -        
-         -         -




Securities
Securities decreased $245.4 million to $559.4 million at December 31, 2020
compared to December 31, 2019, including restricted securities totaling $23.4
million at December 31, 2020 and $32.9 million at December 31, 2019. The
available for sale portfolio decreased $187.9 million to $450.4 million at
December 31, 2020 compared to December 31, 2019. Securities classified as
available for sale may be sold in response to, or in anticipation of, changes in
interest rates and resulting prepayment risk, or other factors. During 2020, we
sold $149.5 million of securities available for sale compared to $46.2 million
in 2019. The decrease in securities available for sale is primarily the result
of a $149.0 million decrease in residential collateral mortgage obligations, a
$50.8 million decrease in U.S. Treasury securities and a $41.8 million decrease
in commercial collateralized mortgage obligations, partially offset by a $28.5
million increase in residential mortgage-backed, $11.1 million increase in
commercial mortgage-backed, and $11.3 million increase in Corporate bonds.
Securities held to maturity decreased $47.9 million to $85.7 million at December
31, 2020 compared to December 31, 2019. The decrease in securities held to
maturity is primarily the result of a $21.4 million decrease in residential
collateralized mortgage obligations and a $17.3 million decrease in state and
municipal obligations. Fixed rate securities represented 82.4% of total
available for sale and held to maturity securities at December 31, 2020 compared
to 88.2% at December 31, 2019.



                                   Page -39-

The following table presents the fair values, amortized costs, contractual
maturities and approximate weighted average yields of the available for sale and
held to maturity securities portfolios at December 31, 2020. Expected maturities
will differ from contractual maturities because borrowers may have the right to
call or prepay obligations with or without call or prepayment penalties. Yields
on tax-exempt obligations have been computed on a tax equivalent basis based on
the U.S. federal statutory tax rate of 21%.


                                                                                                 December 31, 2020
                                 Within                           After One But                      After Five But                            After
                                One Year                        Within Five Years                   Within Ten Years                         Ten Years                          Total
                     Estimated                           Estimated                           Estimated                            Estimated                            Estimated
(Dollars in            Fair        Amortized               Fair        Amortized               Fair        Amortized                Fair        Amortized                Fair        Amortized
thousands)             Value         Cost       Yield      Value         Cost       Yield      Value         Cost       Yield       Value         Cost       Yield       Value         Cost
Available for
sale:
U.S. Treasury
securities          $         -   $         -       - % $         -   $    

– -% $ – $ – -% $ – $

  -       - %  $         -   $         -
U.S. GSE
securities                    -             -       -             -             -       -             -             -       -              -             -       -              -             -
State and
municipal
obligations                 678           676    2.75        18,562       
17,696    2.50        16,914        16,153    2.69          5,934         5,923    1.88         42,088        40,448
U.S. GSE
residential
mortgage-backed
securities                    -             -       -             -             -       -             -             -       -        113,235       111,398    1.72        113,235       111,398
U.S. GSE
residential
collateralized
mortgage
obligations                   -             -       -             -             -       -             -             -       -        128,804       127,369    1.01        128,804       127,369
U.S. GSE
commercial
mortgage-backed
securities                3,438         3,455    3.04         9,042         8,912    2.42           770           762    2.51         11,557        11,791    1.43         24,807        24,920
U.S. GSE
commercial
collateralized
mortgage
obligations                   -             -       -             -             -       -             -             -       -         62,336        61,102    1.83         62,336        61,102
Other asset
backed securities             -             -       -             -             -       -             -             -       -         23,950        24,250    1.61         23,950        24,250
Corporate bonds               -             -       -        31,257        32,000    1.38        20,913        21,500    2.02          2,970         3,000    5.98         55,140        56,500
Total available
for sale            $     4,116   $     4,131    2.99 % $    58,861   $   

58,608 1.88% $ 38,597 $ 38,415 2.31% $ 348,786 $ 344,833 1.50% $ 450,360 $ 445,987

Held to maturity:
State and
municipal
obligations         $     1,902   $     1,885    2.97 % $    18,065        17,058    2.80 % $     5,154         4,772    3.05 %  $         -             -       - %  $    25,121   $    23,715
U.S. GSE
residential
mortgage-backed
securities                    -             -       -             -             -       -         4,412         4,244    1.54          2,087         2,028    2.22          6,499         6,272
U.S. GSE
residential
collateralized
mortgage
obligations                   -             -       -            98        
   95    3.69         2,578         2,519    1.80         16,315        15,897    2.17         18,991        18,511
U.S. GSE
commercial
mortgage-backed
securities                    -             -       -         6,080         5,778    2.35             -             -       -          7,614         7,291    3.16         13,694        13,069
U.S. GSE
commercial
collateralized
mortgage
obligations                   -             -       -           209           209    1.42             -             -       -         24,811        23,924    2.59         25,020        24,133
Total held to
maturity                  1,902         1,885    2.97        24,452       

23 140 2.68 12 144 11 535 2.22 50 827 49 140 2.52 89 325 85 700 Total securities $ 6,018 $ 6,016 2.99% $ 83,313 $ 81,748 2.10% $ 50,741 $ 49,950 2.29% $ 399,613 $ 393,973 1.63% $ 539,685 $ 531,687



Deposits and Borrowings

Borrowings, consisting of repurchase agreements, FHLB advances and subordinated
debentures, decreased $219.6 million year-over-year to $295.3 million at
December 31, 2020. Total deposits increased $1.7 billion to $5.5 billion at
December 31, 2020 compared to December 31, 2019. Individual, partnership and
corporate ("IPC deposits") account balances increased $1.3 billion and public
funds and brokered deposits increased $378.6 million. The increase in deposits
is attributable to an increase in savings, NOW and money market deposits of
$740.4 million, or 37.2%, to $2.7 billion at December 31, 2020, and an increase
in demand deposits of $953.8 million, or 62.8%, to $2.5 billion at December
31,
2020,

                                   Page -40-
partially offset by a decrease in certificates of deposit of $19.5 million, or
6.3%, to $288.4 million at December 31, 2020. Certificates of deposit of
$100,000 or more increased $1.9 million, or 0.9%, from December 31, 2019 and
other time deposits decreased $21.5 million, or 22.9%, compared to December 31,
2019.

The following table shows the remaining maturities of the Bank’s term deposits at December 31, 2020:

                                    Less than      $100,000 or
(In thousands)                       $100,000        Greater          Total
3 months or less                    $   10,986    $      24,244    $   35,230
Over 3 through 6 months                 36,522           63,698       100,220
Over 6 through 12 months                12,552           90,115       102,667
Over 12 months through 24 months         5,831           20,871        

26,702

Over 24 months through 36 months         3,414           10,844        

14 258

Over 36 months through 48 months         1,925            2,972         

4,897

Over 48 months through 60 months         1,198            3,067         4,265
Over 60 months                               -              206           206
Total                               $   72,428    $     216,017    $  288,445




Liquidity
Our liquidity management objectives are to ensure the sufficiency of funds
available to respond to the needs of depositors and borrowers, and to take
advantage of unanticipated opportunities for our growth or earnings enhancement.
Liquidity management addresses our ability to meet financial obligations that
arise in the normal course of business. Liquidity is primarily needed to meet
customer borrowing commitments and deposit withdrawals, either on demand or on
contractual maturity, to repay borrowings as they mature, to fund current and
planned expenditures and to make new loans and investments as opportunities
arise.

The Holding Company's principal sources of liquidity included cash and cash
equivalents of $0.3 million as of December 31, 2020, and dividend capabilities
from the Bank. Cash available for distribution of dividends to our shareholders
is primarily derived from dividends paid by the Bank to the Company. During
2020, the Bank paid $26.5 million in cash dividends to the Holding Company.
Prior regulatory approval is required if the total of all dividends declared by
the Bank in any calendar year exceeds the total of the Bank's net income for
that year combined with its retained net income of the preceding two years. As
of January 1, 2021, the Bank had $49.8 million of retained net income available
for dividends to the Holding Company. In the event that the Holding Company
subsequently expands its current operations, in addition to dividends from the
Bank, it will need to rely on its own earnings, additional capital raised and
other borrowings to meet liquidity needs. The Holding Company did not make any
capital contributions to the Bank during the year ended December 31, 2020.

The Bank's most liquid assets are cash and cash equivalents, securities
available for sale and securities held to maturity due within one year. The
levels of these assets are dependent on the Bank's operating, financing, lending
and investing activities during any given period. Other sources of liquidity
include loan and investment securities principal repayments and maturities,
lines of credit with other financial institutions including the FHLB and FRB,
growth in core deposits and sources of wholesale funding such as brokered
deposits. While scheduled loan amortization, maturing securities and short-term
investments are a relatively predictable source of funds, deposit flows and loan
and mortgage-backed securities prepayments are greatly influenced by general
interest rates, economic conditions and competition. The Bank adjusts its
liquidity levels as appropriate to meet funding needs such as seasonal deposit
flows, loans, and asset and liability management objectives. Historically, the
Bank has relied on its deposit base, drawn through its full-service branches
that serve its market area and local municipal deposits, as its principal source
of funding. The Bank seeks to retain existing deposits and loans and maintain
customer relationships by offering quality service and competitive interest
rates to its customers, while managing the overall cost of funds needed to
finance its strategies.

The Bank's Asset/Liability and Funds Management Policy allows for wholesale
borrowings of up to 25% of total assets. At December 31, 2020, the Bank had
aggregate lines of credit of $418.0 million with unaffiliated correspondent
banks to provide short-term credit for liquidity requirements. Of these
aggregate lines of credit, $398.0 million is available on an unsecured basis. As
of December 31, 2020, the Bank had no overnight borrowings outstanding under
these lines. As of December 31, 2019, the Bank had no overnight borrowings
outstanding under these lines. The Bank also has the ability, as a member of the
FHLB system, to borrow against unencumbered residential and commercial mortgages
owned by the

                                   Page -41-
Bank. The Bank also has a master repurchase agreement with the FHLB, which
increases its borrowing capacity. As of December 31, 2020, the Bank had no FHLB
overnight borrowings outstanding and $215.0 million outstanding in FHLB term
borrowings. As of December 31, 2019, the Bank had $195.0 million outstanding in
FHLB overnight borrowings and $240.0 million outstanding in FHLB term
borrowings. As of December 31, 2020, the Bank had securities sold under
agreements to repurchase of $1.2 million outstanding with customers and nothing
outstanding with brokers. As of December 31, 2019, the Bank had securities sold
under agreements to repurchase of $1.0 million outstanding with customers and
nothing outstanding with brokers. In addition, the Bank has approved broker
relationships for the purpose of issuing brokered deposits. As of December 31,
2020, the Bank had $64.1 million outstanding in brokered certificates of deposit
and $50.2 million outstanding in brokered money market accounts. As of December
31, 2019, the Bank had $77.3 million outstanding in brokered certificates of
deposits and $85.1 million outstanding in brokered money market accounts.

Liquidity policies are established by senior management and reviewed and
approved by the full Board of Directors at least annually. Management
continually monitors the liquidity position and believes that sufficient
liquidity exists to meet all of the Company's operating requirements. The Bank's
liquidity levels are affected by the use of short-term and wholesale borrowings
and the amount of public funds in the deposit mix. Excess short-term liquidity
is invested in overnight federal funds sold or in an interest-earning account at
the FRB.

Contractual Obligations

In the normal course of our business, we enter into certain contractual obligations.

The following table presents contractual obligations outstanding at December 31,
2020:


                                                           Less than        One to          Four to       Over Five
(In thousands)                                 Total        One Year      Three Years      Five Years       Years
Operating leases                             $   52,319    $    7,387    $      13,809    $     12,474    $   18,649
FHLB advances and repurchase agreements         216,223       216,223      
         -               -             -
Subordinated debentures                          80,000             -                -          40,000        40,000
Time deposits                                   288,445       238,117           40,960           9,162           206

Total current contractual obligations $ 636,987 $ 461,727 $

    54,769    $     61,636    $   58,855




Commitments, contingent liabilities and off-balance sheet arrangements

Some financial instruments, such as loan commitments, credit lines, letters of
credit, and overdraft protection, are issued to meet customer financing needs.
These are agreements to provide credit or to support the credit of others, as
long as conditions established in the contract are met, and usually have
expiration dates. Commitments may expire without being used. Off-balance sheet
risk to credit loss exists up to the face amount of these instruments, although
material losses are not anticipated. The same credit policies are used to make
such commitments as are used for loans, often including obtaining collateral at
exercise of the commitment. At December 31, 2020, we had $150.5 million in
outstanding loan commitments and $808.3 million in outstanding commitments for
various lines of credit including unused overdraft lines. We also had $25.5
million of standby letters of credit as of December 31, 2020. See Note 17 of the
Notes to the Consolidated Financial Statements for additional information on
loan commitments and standby letters of credit.

Capital resources

Stockholders' equity increased $20.7 million year-over-year to $517.8 million at
December 31, 2020 primarily as a result of net income, partially offset by
dividends declared and purchases of treasury stock. We adopted the CECL Standard
on January 1, 2020, which resulted in a charge to retained earnings and
reduction to stockholders' equity of $1.5 million. The

                                   Page -42-

the ratio of average equity to average total assets was 8.67% for the year ended December 31, 2020 against 10.11% for the year ended December 31, 2019.

The Company's capital strength is paralleled by the solid capital position of
the Bank, as reflected in the excess of its regulatory capital ratios over the
risk-based capital adequacy ratio levels required for classification as a "well
capitalized" institution by the FDIC (see Note 18 of the Notes to the
Consolidated Financial Statements).

We utilize cash dividends and stock repurchases to manage our capital levels. In
2020, the Company declared four quarterly cash dividends totaling $19.2 million
compared to four quarterly cash dividends of $18.4 million in 2019. The dividend
payout ratios for 2020 and 2019 were 45.66% and 35.63%, respectively.  In
February 2019, we announced the approval of a stock repurchase plan for up to
1,000,000 shares of common stock. There is no expiration date for the stock
repurchase plan. During the year ended December 31, 2020, we purchased 179,620
shares of our common stock under the repurchase plan at a cost of $4.6 million.

Our return on average equity decreased to 8.26% for the year ended December 31,
2020 from 10.84% for the year ended December 31, 2019.  Our return on average
assets decreased to 0.72% in 2020 compared to 1.10% in 2019. The year-over-year
decreases in return on average equity and return on average assets were due to
lower net income in 2020 compared to 2019.

Impact of inflation and price changes

The consolidated financial statements and notes presented herein have been
prepared in accordance with U.S. generally accepted accounting principles, which
require the measurement of financial position and operating results in terms of
historical dollars without considering changes in the relative purchasing power
of money over time due to inflation. The primary effect of inflation on our
operations is reflected in increased operating costs. Unlike most industrial
companies, virtually all of the assets and liabilities of a financial
institution are monetary in nature. As a result, changes in interest rates have
a more significant effect on the performance of a financial institution than do
the effects of changes in the general rate of inflation and changes in prices.
Changes in interest rates could adversely affect our results of operations and
financial condition. Interest rates do not necessarily move in the same
direction, or in the same magnitude, as the prices of goods and services.
Interest rates are highly sensitive to many factors, which are beyond our
control, including the influence of domestic and foreign economic conditions and
the monetary and fiscal policies of the United States government and federal
agencies, particularly the FRB.



Impact of prospective accounting standards

For a discussion of the impact of the new accounting standards, see Note 1 of the Notes to the Consolidated Financial Statements.



                                   Page -43-

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