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What changed in Amalgamated Financial Corp.'s 10-K — 2022 vs 2023

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

+444 added−452 removedSource: 10-K (2024-03-07) vs 10-K (2023-03-09)

Top changes in Amalgamated Financial Corp.'s 2023 10-K

444 paragraphs added · 452 removed · 298 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

121 edited+34 added−41 removed249 unchanged
Biggest changeActivities that the Federal Reserve has found to be so closely related to banking as to be a proper incident to the business of banking include: 16 • factoring accounts receivable; • making, acquiring, brokering or servicing loans and usual related activities; • leasing personal or real property; • operating a non-bank depository institution, such as a savings association; • trust company functions; • financial and investment advisory activities; • conducting discount securities brokerage activities; • underwriting and dealing in government obligations and money market instruments; • providing specified management consulting and counseling activities; • performing selected data processing services and support services; • acting as agent or broker in selling credit life insurance and other types of insurance in connection with credit transactions; and • performing selected insurance underwriting activities.
Biggest changeUnder the BHC Act, a bank holding company is generally permitted to engage in, or acquire direct or indirect control of more than 5% of the voting shares of any company engaged in, the following activities: • banking or managing or controlling banks; • furnishing services to or performing services for our subsidiaries; and • any activity that the Federal Reserve determines to be so closely related to banking as to be a proper incident to the business of banking. 16 Activities that the Federal Reserve has found to be so closely related to banking as to be a proper incident to the business of banking include: • factoring accounts receivable; • making, acquiring, brokering or servicing loans and usual related activities; • leasing personal or real property; • operating a non-bank depository institution, such as a savings association; • trust company functions; • financial and investment advisory activities; • conducting discount securities brokerage activities; • underwriting and dealing in government obligations and money market instruments; • providing specified management consulting and counseling activities; • performing selected data processing services and support services; • acting as agent or broker in selling credit life insurance and other types of insurance in connection with credit transactions; and • performing selected insurance underwriting activities.
An adequately capitalized institution: • has a total risk-based capital ratio of 8% or greater; and 22 • has a Tier 1 risk-based capital ratio of 6% or greater; and • has a common equity Tier 1 risk-based capital ratio of 4.5% or greater; and • has a leverage capital ratio of 4% or greater. • Undercapitalized —The institution fails to meet the required minimum level for any relevant capital measure.
An adequately capitalized institution: • has a total risk-based capital ratio of 8% or greater; and • has a Tier 1 risk-based capital ratio of 6% or greater; and • has a common equity Tier 1 risk-based capital ratio of 4.5% or greater; and • has a leverage capital ratio of 4% or greater. 22 • Undercapitalized —The institution fails to meet the required minimum level for any relevant capital measure.
The USA PATRIOT Act provides, in part, for the facilitation of information sharing among governmental entities and financial institutions for the purpose of combating terrorism and money laundering by enhancing anti-money laundering and financial transparency laws, as well as enhanced information collection tools and enforcement mechanisms for the U.S. government, including: • due diligence requirements for financial institutions that administer, maintain, or manage private bank accounts or correspondent accounts for non-U.S. persons; • requiring standards for verifying customer identification at account opening; • rules to promote cooperation among financial institutions, regulators and law enforcement entities in identifying parties that may be involved in terrorism or money laundering; • reports by nonfinancial trades and businesses filed with the Treasury Department’s Financial Crimes Enforcement Network for transactions exceeding $10,000; and • filing suspicious activities reports by brokers and dealers if they believe a customer may be violating U.S. laws and regulations.
The USA PATRIOT Act provides, in part, for the facilitation of information sharing among governmental entities and financial institutions for the purpose of combating terrorism and money laundering by enhancing anti-money laundering and financial transparency laws, as well as enhanced information collection tools and enforcement mechanisms for the U.S. government, including: • due diligence requirements for financial institutions that administer, maintain, or manage private bank accounts or correspondent accounts for non-U.S. persons; 27 • requiring standards for verifying customer identification at account opening; • rules to promote cooperation among financial institutions, regulators and law enforcement entities in identifying parties that may be involved in terrorism or money laundering; • reports by nonfinancial trades and businesses filed with the Treasury Department’s Financial Crimes Enforcement Network for transactions exceeding $10,000; and • filing suspicious activities reports by brokers and dealers if they believe a customer may be violating U.S. laws and regulations.
Insured depository institutions are also prohibited from paying management fees to any controlling persons or, with certain limited exceptions, 20 making capital distributions, including dividends, if after such transaction the institution would be less than adequately capitalized. Under New York law, we are prohibited from declaring a dividend so long as there is any impairment of our capital stock.
Insured depository institutions are also prohibited from paying management fees to any controlling persons or, with certain limited exceptions, making capital distributions, including dividends, if after such transaction the institution would be less than adequately capitalized. Under New York law, we are prohibited from declaring a dividend so long as there is any impairment of our capital stock.
Because our target customer base has historically had limited credit needs, we generate a significant amount of excess liquidity from these relationships, which we, in turn, deploy through a conservative asset allocation strategy to achieve attractive risk-adjusted returns. Deposits We gather deposits primarily through teams of bankers organized based on region and client segment.
Because our target customer base has historically had limited credit needs, we generate a significant amount of excess liquidity from these relationships, which we, in turn, deploy through a conservative asset allocation strategy to achieve attractive risk-adjusted returns. 6 Deposits We gather deposits primarily through teams of bankers organized based on region and client segment.
Under the Change in Bank Control Act, a person or company is required to file a notice with the Federal Reserve if it will, as a result of the transaction, own or control 10% or more of any class of voting securities or direct the management or policies of a bank or bank holding company and either if the bank or bank holding company has registered securities or if the acquirer would 17 be the largest holder of that class of voting securities after the acquisition.
Under the Change in Bank Control Act, a person or company is required to file a notice with the Federal Reserve if it will, as a result of the transaction, own or control 10% or more of any class of voting securities or direct the management or policies of a bank or bank holding company and either if the bank or bank holding company has registered securities or if the acquirer would be the largest holder of that class of voting securities after the acquisition.
Total base assessment after possible adjustments now ranges between 1.5 29 and 40 basis points. For established smaller institutions, like us, the total base assessment rate is calculated by using supervisory ratings as well as (i) an initial base assessment rate, (ii) an unsecured debt adjustment (which can be positive or negative), and (iii) a brokered deposit adjustment.
Total base assessment after possible adjustments now ranges between 1.5 and 40 basis points. For established smaller institutions, like us, the total base assessment rate is calculated by using supervisory ratings as well as (i) an initial base assessment rate, (ii) an unsecured debt adjustment (which can be positive or negative), and (iii) a brokered deposit adjustment.
In recent years, regulators have expressed concern over banking institutions’ compliance with anti-money laundering requirements and, in some cases, have delayed approval of their expansionary proposals. The regulators and other governmental authorities have been active in imposing “cease and desist” orders and significant money penalty sanctions against institutions found to be in violation of the anti-money laundering regulations.
In recent years, regulators have expressed concern over banking institutions’ compliance with anti-money laundering requirements and, in some cases, have delayed approval of their expansionary proposals. The regulators and other governmental authorities have been active in imposing “cease 26 and desist” orders and significant money penalty sanctions against institutions found to be in violation of the anti-money laundering regulations.
Prior to submitting a loan for approval, the loan will have gone through several rounds of underwriting 10 and credit review starting with deal screens, underwriting performed by the lending unit, a review of the underwriting by our Credit Risk Management team, submission of a formal credit application memorandum that is also reviewed by our Credit Risk Management team, and an approval to move forward by a Senior Credit Officer.
Prior to submitting a loan for approval, the loan will have gone through several rounds of underwriting and credit review starting with deal screens, underwriting performed by the lending unit, a review of the underwriting by our Credit Risk Management team, submission of a formal credit application memorandum that is also reviewed by our Credit Risk Management team, and an approval to move forward by a Senior Credit Officer.
In the CRE Guidance, the federal banking regulators (i) expressed concerns with institutions that ease CRE underwriting standards, (ii) directed financial institutions to maintain underwriting discipline and exercise risk management practices to identify, measure and monitor lending risks, and (iii) indicated that they will continue to pay special attention to CRE lending activities and concentrations.
In the 2015 CRE Guidance, the federal banking regulators (i) expressed concerns with institutions that ease CRE underwriting standards, (ii) directed financial institutions to maintain underwriting discipline and exercise risk management practices to identify, measure and monitor lending risks, and (iii) indicated that they will continue to pay special attention to CRE lending activities and concentrations.
We use an integrated core system to originate and process loan and deposit accounts, which provides us with a high degree of automation, improves customer experience and reduces costs. 12 We continuously improve our cybersecurity posture and have implemented a multi-layered defense strategy to protect customer and confidential data.
We use an integrated core system to originate and process loan and deposit accounts, which provides us with a high degree of automation, improves customer experience and reduces costs. We continuously improve our cybersecurity posture and have implemented a multi-layered defense strategy to protect customer and confidential data.
Our loan operations are also subject to federal laws applicable to credit transactions, such as: • the Truth-In-Lending Act (“TILA”) and Regulation Z, governing disclosures of credit and servicing terms to consumer borrowers and including substantial new requirements for mortgage lending and servicing, as mandated by the Dodd-Frank Act; • the Home Mortgage Disclosure Act of 1975 and Regulation C, requiring financial institutions to provide information to enable the public and public officials to determine whether a financial institution is fulfilling its obligation to help meet the housing needs of the communities it serves, and requiring collection and disclosure of data about applicant and borrower characteristics to assist in identifying possible discriminatory lending patterns and enforcing antidiscrimination statutes; • the Equal Credit Opportunity Act (“ECOA”) and Regulation B, prohibiting discrimination on the basis of race, color, religion, or other prohibited factors in any aspect of a credit transaction; • the Fair Credit Reporting Act of 1978, as amended by the Fair and Accurate Credit Transactions Act and Regulation V, as well as the rules and regulations of the FDIC governing the use of consumer reports and provision of information to credit reporting agencies, certain identity theft protections and certain credit and other disclosures; 24 • the Fair Debt Collection Practices Act and Regulation F, governing the manner in which consumer debts may be collected by collection agencies and intending to eliminate abusive, deceptive, and unfair debt collection practices; • the Real Estate Settlement Procedures Act (“RESPA”) and Regulation X, which governs aspects of residential mortgage loans, including the settlement and servicing process, dictates certain disclosures to be provided to consumers, and imposes other requirements related to compensation of service providers, insurance escrow accounts, and loss mitigation procedures; • The Secure and Fair Enforcement for Mortgage Licensing Act (“SAFE Act”) which mandates a nationwide licensing and registration system for residential mortgage loan originators.
Our loan operations are also subject to federal laws applicable to credit transactions, such as: • the Truth-In-Lending Act (“TILA”) and Regulation Z, governing disclosures of credit and servicing terms to consumer borrowers and including substantial new requirements for mortgage lending and servicing, as mandated by the Dodd-Frank Act; • the Home Mortgage Disclosure Act of 1975 and Regulation C, requiring financial institutions to provide information to enable the public and public officials to determine whether a financial institution is fulfilling its obligation to help meet the housing needs of the communities it serves, and requiring collection and disclosure of data about applicant and borrower characteristics to assist in identifying possible discriminatory lending patterns and enforcing antidiscrimination statutes; • the ECOA and Regulation B, prohibiting discrimination on the basis of race, color, religion, or other prohibited factors in any aspect of a credit transaction; • the Fair Credit Reporting Act of 1978, as amended by the Fair and Accurate Credit Transactions Act and Regulation V, as well as the rules and regulations of the FDIC governing the use of consumer reports and provision of information to credit reporting agencies, certain identity theft protections and certain credit and other disclosures; • the Fair Debt Collection Practices Act and Regulation F, governing the manner in which consumer debts may be collected by collection agencies and intending to eliminate abusive, deceptive, and unfair debt collection practices; 24 • the Real Estate Settlement Procedures Act (“RESPA”) and Regulation X, which governs aspects of residential mortgage loans, including the settlement and servicing process, dictates certain disclosures to be provided to consumers, and imposes other requirements related to compensation of service providers, insurance escrow accounts, and loss mitigation procedures; • The Secure and Fair Enforcement for Mortgage Licensing Act (“SAFE Act”) which mandates a nationwide licensing and registration system for residential mortgage loan originators.
Geographic Expansion We intend to consider strategic expansions into new markets that have a large constituency of socially responsible organizations and individuals. We demonstrated our ability to grow organically through our expansion into Washington, D.C. and through acquisition with the completed acquisition of New Resource Bank, based in San Francisco.
Geographic Expansion We intend to consider strategic expansions into new markets that have a large constituency of socially responsible organizations and individuals. We demonstrated our ability to grow organically through our expansion into Washington, D.C. and through the completed acquisition of New Resource Bank, based in San Francisco.
The non-bank competition has access to a wide array of products and services offered through the secondary market and private participants. The ability to quickly utilize the latest 5 technologies, while benefiting from lower regulatory and compliance costs, allow the non-bank competition to add new products at a fast pace.
The non-bank competition has access to a wide array of products and services offered through the secondary market and private participants. The ability to quickly utilize the latest technologies, while benefiting from lower regulatory and compliance costs, allow the non-bank competition to add new products at a fast pace.
There is an exception for loans made pursuant to a benefit or compensation program that is 28 widely available to all employees of the institution and does not give preference to insiders over other employees. Loans to executive officers are further limited to specific categories.
There is an exception for loans made pursuant to a benefit or compensation program that is widely available to all employees of the institution and does not give preference to insiders over other employees. Loans to executive officers are further limited to specific categories.
Our product line includes residential mortgage loans, commercial and industrial ("C&I") loans, commercial real estate ("CRE") loans, multifamily mortgages, consumer loans (predominantly residential solar) and a variety of commercial and consumer deposit products, including non-interest bearing accounts, interest-bearing demand products, savings accounts, money market accounts and certificates of deposit.
Our product line includes residential mortgage loans, commercial and industrial ("C&I") loans, commercial real estate ("CRE") loans, multifamily loans, consumer loans (predominantly residential solar) and a variety of commercial and consumer deposit products, including non-interest-bearing accounts, interest-bearing demand products, savings accounts, money market accounts and certificates of deposit.
In addition, the FDIC could terminate our deposit insurance if it determines that our financial condition was unsafe or unsound or that we engaged in unsafe or unsound practices that violated an applicable rule, regulation, order or condition enacted or imposed on us by our regulators.
In addition, the FDIC 20 could terminate our deposit insurance if it determines that our financial condition was unsafe or unsound or that we engaged in unsafe or unsound practices that violated an applicable rule, regulation, order or condition enacted or imposed on us by our regulators.
We also compete with local banks, some of which may offer aggressive pricing and unique terms on various types of loans. In retail banking, we primarily compete with banks that have a visible retail presence and personnel in our market areas.
We also compete with local banks, some of which may offer aggressive pricing and unique terms on various types of loans. 5 In retail banking, we primarily compete with banks that have a visible retail presence and personnel in our market areas.
The SAFE Act also prohibits individuals from engaging in the business of a residential mortgage loan originator without first obtaining and maintaining annually registration as either a federal or state licensed mortgage loan originator; • The Homeowners Protection Act (“HPA”), or the PMI Cancellation Act, provides requirements relating to private mortgage insurance (PMI) on residential mortgages, including the cancelation and termination of PMI, disclosure and notification requirements, and the requirement to return unearned premiums; • The Fair Housing Act (“FHA”) prohibits discrimination in all aspects of residential real-estate related transactions based on race or color, national origin, religion, sex, and other prohibited factors; • The Servicemembers Civil Relief Act (“SCRA”) and Military Lending Act (“MLA”), providing certain protections for servicemembers, members of the military, and their respective spouses, dependents and others; and • Section 106(c)(5) of the Housing and Urban Development Act requires making home ownership available to eligible homeowners.
The SAFE Act also prohibits individuals from engaging in the business of a residential mortgage loan originator without first obtaining and maintaining annually registration as either a federal or state licensed mortgage loan originator; • The Homeowners Protection Act (“HPA”), or the PMI Cancellation Act, provides requirements relating to private mortgage insurance (PMI) on residential mortgages, including the cancelation and termination of PMI, disclosure and notification requirements, and the requirement to return unearned premiums; • The FHA prohibits discrimination in all aspects of residential real-estate related transactions based on race or color, national origin, religion, sex, and other prohibited factors; • The Servicemembers Civil Relief Act (“SCRA”) and Military Lending Act (“MLA”), providing certain protections for servicemembers, members of the military, and their respective spouses, dependents and others; and • Section 106(c)(5) of the Housing and Urban Development Act requires making home ownership available to eligible homeowners.
There are no automatic factors that preclude a loan from being approved as we focus on the totality of the credit opportunity including the borrower’s financial strength, industry, loan structure, strategic fit, and economics.
There are no automatic factors that preclude a loan from being approved as we focus on the totality of the credit 10 opportunity including the borrower’s financial strength, industry, loan structure, strategic fit, and economics.
State laws and regulations governing financial privacy and cybersecurity include the California Consumer Privacy Act ("CCPA") and the California Privacy rights Act ("CPRA"), which amends and supplements the CCPA, with respect to certain data regarding California residents, the New York Department of Financial Services Cybersecurity Regulations, and other New York financial privacy laws and regulations.
State laws and regulations governing financial privacy and cybersecurity include the CCPA and the California Privacy Rights Act ("CPRA"), which amends and supplements the CCPA, with respect to certain data regarding California residents, the New York Department of Financial Services Cybersecurity Regulations, and other New York financial privacy laws and regulations.
These filings are made accessible as soon as reasonably 14 practicable after they have been filed electronically with the SEC. These reports are also available free of charge on the SEC's website at www.sec.gov.
These filings are made accessible as soon as reasonably practicable after they have been filed electronically with the SEC. These reports are also available free of charge on the SEC's website at www.sec.gov.
On January 30, 2020, the Federal Reserve issued a final rule (which became effective September 30, 2020) that clarified and codified the Federal Reserve’s standards for determining whether one company has control over another.
On January 30, 2020, the Federal Reserve issued a final rule (which became effective September 30, 2020) that clarified and codified the Federal Reserve’s standards for determining whether one 17 company has control over another.
As a result, we believe we have become one of the leading banks of choice for many of these groups who, in turn, contribute a significant source of low- 6 cost core deposits to the bank.
As a result, we believe we have become one of the leading banks of choice for many of these groups who, in turn, contribute a significant source of low-cost core deposits to the bank.
Notably, changes include: • expansion of coordination and information sharing efforts among the agencies tasked with administering anti-money laundering and countering the financing of terrorism requirements, including the Financial Crimes Enforcement Network (“FinCEN”), the primary federal banking regulators, federal law enforcement agencies, national security agencies, the intelligence community, and financial institutions; • providing additional penalties with respect to violations of BSA and enhancing the powers of FinCEN; • significant updates to the beneficial ownership collection rules and the creation of a registry of beneficial ownership which will track the beneficial owners of reporting companies which may be shared with law enforcement and financial institutions conducting due diligence under certain circumstances; • improvements to existing information sharing provisions that permit financial institutions to share information relating to SARs with foreign branches, subsidiaries, and affiliates (except those located in China, Russia, or certain other jurisdictions) for the purpose of combating illicit finance risks; and 26 • enhanced whistleblower protection provisions, allowing whistleblower(s) who provide original information which leads to successful enforcement of anti-money laundering laws in certain judicial or administrative actions resulting in certain monetary sanctions to receive up to 30 percent of the amount that is collected in monetary sanctions as well as increased protections; We are also subject to New York anti-money laundering laws and regulations.
Notably, changes include: • expansion of coordination and information sharing efforts among the agencies tasked with administering anti-money laundering and countering the financing of terrorism requirements, including the Financial Crimes Enforcement Network (“FinCEN”), the primary federal banking regulators, federal law enforcement agencies, national security agencies, the intelligence community, and financial institutions; • providing additional penalties with respect to violations of BSA and enhancing the powers of FinCEN; • significant updates to the beneficial ownership collection rules and the creation of a registry of beneficial ownership which will track the beneficial owners of reporting companies which may be shared with law enforcement and financial institutions conducting due diligence under certain circumstances; • improvements to existing information sharing provisions that permit financial institutions to share information relating to Suspicious Activity Reports with foreign branches, subsidiaries, and affiliates (except those located in China, Russia, or certain other jurisdictions) for the purpose of combating illicit finance risks; and • enhanced whistleblower protection provisions, allowing whistleblower(s) who provide original information which leads to successful enforcement of anti-money laundering laws in certain judicial or administrative actions resulting in certain monetary sanctions to receive up to 30 percent of the amount that is collected in monetary sanctions as well as increased protections; We are also subject to New York anti-money laundering laws and regulations.
The law requires each federal banking agency to promulgate regulations defining the following five categories in which an insured depository institution will be placed, based on the level of capital ratios: “well capitalized,” “adequately capitalized,” “undercapitalized,” “significantly undercapitalized,” or “critically undercapitalized.” As of December 31, 2022, our capital ratios exceeded the minimum ratios established for a “well capitalized” institution.
The law requires each federal banking agency to promulgate regulations defining the following five categories in which an insured depository institution will be placed, based on the level of capital ratios: “well capitalized,” “adequately capitalized,” “undercapitalized,” “significantly undercapitalized,” or “critically undercapitalized.” As of December 31, 2023, our capital ratios exceeded the minimum ratios established for a “well capitalized” institution.
Additional Tier 1 capital is primarily comprised of noncumulative perpetual preferred stock, Tier 1 minority interests and grandfathered trust preferred securities. Tier 2 capital generally includes the allowance for loan losses up to 1.25% of risk-weighted assets, qualifying preferred stock, subordinated debt and qualifying tier 2 minority interests, less any deductions in Tier 2 instruments of an unconsolidated financial institution.
Additional Tier 1 capital is primarily comprised of noncumulative perpetual preferred stock, Tier 1 minority interests and grandfathered trust preferred securities. Tier 2 capital generally includes the allowance for credit losses up to 1.25% of risk-weighted assets, qualifying preferred stock, subordinated debt and qualifying tier 2 minority interests, less any deductions in Tier 2 instruments of an unconsolidated financial institution.
Item 1. Business General Overview Amalgamated Financial Corp., a Delaware public benefit corporation (the "Company"), was formed on August 25, 2020 to serve as the holding company for Amalgamated Bank and is a bank holding company registered with the Board of Governors of the Federal Reserve under the Bank Holding Company Act of 1956, as amended.
Item 1. Business General Overview Amalgamated Financial Corp., a Delaware public benefit corporation ("we" or the "Company"), was formed on August 25, 2020 to serve as the holding company for Amalgamated Bank and is a bank holding company registered with the Board of Governors of the Federal Reserve under the Bank Holding Company Act of 1956, as amended.
Given the fluidity of health and safety concerns since the start of the pandemic in 2020, we leverage federal, state, and local guidelines and requirements, in addition to consultation with an external healthcare consulting firm to guide our health and safety protocols. Significant Subsidiaries The Company owns all of the capital stock of the Bank.
Given the fluidity of health and safety concerns since the start of the COVID-19 pandemic in 2020, we leverage federal, state, and local guidelines and requirements, in addition to consultation with an external healthcare consulting firm to guide our health and safety protocols. Significant Subsidiaries The Company owns all of the capital stock of the Bank.
The federal banking regulators previously issued guidance in December 2006, entitled “Interagency Guidance on Concentrations in CRE Lending, Sound Risk Management Practices,” which stated that an institution that is potentially exposed to significant CRE concentration risk should employ enhanced risk management practices.
The federal banking regulators also previously issued guidance in December 2006, entitled “Interagency Guidance on Concentrations in CRE Lending, Sound Risk Management Practices,” which stated that an institution that is potentially exposed to significant CRE concentration 30 risk should employ enhanced risk management practices.
In addition to maintaining a defensive cybersecurity strategy, we have a disaster recovery site in an ISO 27001-certified separate colocation data center. We conduct regular business continuity and disaster recovery exercises to ensure our contingency plans support our operational needs and recovery time objectives.
In addition to maintaining a defensive cybersecurity strategy, we have a disaster recovery site in an ISO 27001-certified separate colocation data center. We conduct regular business continuity and disaster recovery exercises to ensure our contingency plans support our operational needs.
The average tenure of our employees is approximately seven years. Health and Safety The health and safety of our employees and customers is our highest priority.
The average tenure of our employees is approximately seven years. 14 Health and Safety The health and safety of our employees and customers is our highest priority.
As a founding signatory of the United Nations Principles for Responsible Investing, a founding signatory to the United Nations Principles for Responsible Banking, and a founding member of the UN Net Zero Banking Alliance, we publicly committed to use finance as a tool to build a more sustainable planet.
As a founding signatory of the United Nations Principles for Responsible Investing, a founding signatory to the United Nations Principles for Responsible Banking, and a founding member and Steering Group member of the UN Net Zero Banking Alliance, we publicly committed to use finance as a tool to build a more sustainable planet.
Following our success in New York, a community we have now been a part of for nearly a century, we entered the Washington, D.C. market with a successful strategic expansion in 1998.
Following our success in New York, a community we have now been a part of for over a century, we entered the Washington, D.C. market with a successful strategic expansion in 1998.
In accordance with “loans-to-one-borrower” regulations promulgated by the New York State Department of Financial Services, which we refer to as NYDFS, we are generally limited to lending no more than 15% of our unimpaired capital and unimpaired surplus to any one borrower or borrowing entity.
In accordance with “loans-to-one-borrower” regulations promulgated by the New York State Department of Financial Services ("NYDFS"), we are generally limited to lending no more than 15% of our unimpaired capital and unimpaired surplus to any one borrower or borrowing entity.
Although we are no longer majority union-owned, the Amalgamated Clothing Workers of America’s successor, Workers United, an affiliate of the Service Employees International Union that represents workers in the textile, distribution, food service and gaming industries, remains a significant stockholder, holding approximately 41% of our equity as of December 31, 2022.
Although we are no longer majority union-owned, the Amalgamated Clothing Workers of America’s successor, Workers United, an affiliate of the Service Employees International Union that represents workers in the textile, distribution, food service and gaming industries, remains a significant stockholder, holding approximately 42% of our equity as of December 31, 2023.
Our deposit strategy enables us to attract commercial depositors that also borrow and invest with us. Our total deposit growth has increased at a 12.6% compound annual growth rate over the last five years. We believe our reputation within our target customer base positions us well to sustain our growth trajectory.
Our deposit strategy enables us to attract commercial depositors that also borrow and invest with us. Our total deposit growth has increased at a 10.9% compound annual growth rate over the last five years. We believe our reputation within our target customer base positions us well to sustain our growth trajectory.
Human Capital Resources Our People As of December 31, 2022, we had 409 employees, approximately 21% of whom are represented by a collective bargaining agreement. We consider our relationship with our employees to be good and have not experienced interruptions of operations due to labor disagreements.
Human Capital Resources Our People As of December 31, 2023, we had 425 employees, approximately 21% of whom are represented by a collective bargaining agreement. We consider our relationship with our employees to be good and have not experienced interruptions of operations due to labor disagreements.
To qualify for this additional 10%, we must perfect a security interest in the collateral and the collateral must have a market value at all times of at least 100% of the loan amount that exceeds 15% of our unimpaired capital and unimpaired surplus. At December 31, 2022, our regulatory limit on loans-to-one borrower was $114 million.
To qualify for this additional 10%, we must perfect a security interest in the collateral and the collateral must have a market value at all times of at least 100% of the loan amount that exceeds 15% of our unimpaired capital and unimpaired surplus. At December 31, 2023, our regulatory limit on loans-to-one borrower was approximately $123 million.
In 2021, the Bank became a supporter of the Task Force on Climate Related Financial Disclosures ("TCFD") and follows the TCFD framework across governance, strategy, risk management and targets for disclosing clear, comparable and consistent information about our risks and opportunities presented by climate change.
The Bank is a supporter of the Task Force on Climate Related Financial Disclosures ("TCFD") and follows the TCFD framework across governance, strategy, risk management and targets for disclosing clear, comparable and consistent information about our risks and opportunities presented by climate change.
Under the USA PATRIOT Act, FinCEN can send Amalgamated lists of the names of persons suspected of involvement in terrorist activities or money laundering. Amalgamated may be requested to search its records for any relationships or transactions with persons on those lists.
Under the USA PATRIOT Act, FinCEN can send Amalgamated lists of the names of persons suspected of involvement in terrorist activities or money laundering. Amalgamated may be requested to search its records for any relationships or transactions with persons on those lists. If we find any relationships or transactions, we must report those relationships or transactions to FinCEN.
The success of our deposit gathering strategy has enabled us to become a primarily core deposit-funded institution, resulting in a lower cost funding base. Core deposits, which include checking accounts, money market accounts, and savings accounts, totaled $6.37 billion as of December 31, 2022 and represented 97% of total deposits.
The success of our deposit gathering strategy has enabled us to become a primarily core deposit-funded institution, resulting in a lower cost funding base. Core deposits, which include checking accounts, money market accounts, and savings accounts, totaled $6.58 billion as of December 31, 2023 and represented 94% of total deposits.
The federal banking agencies have also adopted guidelines establishing safety and soundness standards for all insured depository institutions including our bank. The safety and soundness guidelines relate to, among other things, our internal controls, information systems, internal audit systems, loan underwriting and documentation, compensation, asset growth, and interest rate exposure.
The federal banking agencies have also adopted guidelines establishing safety and soundness standards for all insured depository institutions including our bank. The safety and soundness guidelines relate to, among other things, our internal controls, information systems, internal audit systems, credit underwriting and documentation, compensation, fees, benefits, asset quality, asset growth, earnings, and interest rate exposure.
Therefore, we have historically had a substantial amount of excess liquidity. We believe a key benefit of our differentiated business model is our flexibility to allocate our excess liquidity to achieve attractive risk-adjusted returns. Our earning asset mix today is composed of a combination of loans to target commercial customers, various types of real estate loans, and securities.
We believe a key benefit of our differentiated business model is our flexibility to allocate our excess liquidity to achieve attractive risk-adjusted returns. Our 7 earning asset mix today is composed of a combination of loans to target commercial customers, various types of real estate loans, and securities.
Approximately 70% of these loans are to buildings with at least one rent regulated unit and approximately 34% of all units in the portfolio are rent regulated. Securities Our securities portfolio primarily consists of high quality investments in mortgage-backed securities to government sponsored entities and other asset-backed securities and Property Assessed Clean Energy ("PACE") investments.
Approximately 74% of these loans are to buildings with at least one rent regulated unit. 8 Securities Our securities portfolio primarily consists of high quality investments in mortgage-backed securities to government sponsored entities, other asset-backed securities and Property Assessed Clean Energy ("PACE") investments.
For multifamily and CRE loans, our policies are to obtain an appraisal on each loan and, generally, to not exceed an LTV of 80% and 75%, respectively. Loans to One Borrower .
The LTV generally declines as the amount of the loan increases. For multifamily and CRE loans, our policies are to obtain an appraisal on each loan and, generally, to not exceed an LTV of 80% and 75%, respectively. Loans to One Borrower .
Our policy is to not lend to, or invest our own money in, (i) fossil fuel companies, (ii) companies that manufacture weapons, (iii) companies that we do not believe support the rights of workers, women, immigrants, or the LGBTQ+ community, or (iv) companies that take positions that are not aligned with our mission.
Our policy is to not lend to, or invest our own money in, (i) fossil fuel companies, (ii) companies that manufacture weapons, (iii) companies that we do not believe support the rights of workers, women, immigrants, or the lesbian, gay, bisexual, transgender, queer or questioning, and more ("LGBTQ+") community, or (iv) companies that take positions that are not aligned with our mission.
Our Management Credit Committee includes our President and Chief Executive Officer, Chief Financial Officer, Director of Commercial Banking, Chief Credit Risk Officer, Treasurer, General Counsel, Senior Credit Officers, Senior Lending Officer and Director of Commercial Real Estate. Our Management Credit Committee generally meets weekly to evaluate and approve credits brought by loan officers.
Our management Credit Committee includes our Chief Credit Risk Officer, Chief Banking Officer, Director of Commercial Banking, Treasurer, Chief Legal Officer, Senior Credit Officers, Senior Lending Officer and Director of Commercial Real Estate. Our management Credit Committee generally meets weekly to evaluate and approve credits brought by loan officers.
We align our executives’ pay with performance by linking incentive pay to financial performance and we have stock ownership requirements for senior executives. Promotions and Tenure We believe our success depends on developing and promoting our employees. From December 31, 2021 to December 31, 2022, approximately 13.5% of our workforce was promoted.
We align our executives’ pay with performance by linking incentive pay to financial performance and we have stock ownership requirements for senior executives and our Board of Directors. Promotions and Tenure We believe our success depends on developing and promoting our employees. From December 31, 2022 to December 31, 2023, approximately 7.3% of our workforce was promoted.
Department of the Treasury, is responsible for helping to ensure that U.S. entities do not engage in transactions with “enemies” of the United States, as defined by various Executive Orders and Acts of Congress.
The Office of Foreign Assets Control The Office of Foreign Assets Control (“OFAC”), which is an office in the U.S. Department of the Treasury, is responsible for helping to ensure that U.S. entities do not engage in transactions with “enemies” of the United States, as defined by various Executive Orders and Acts of Congress.
Amendments proposed in November 22, 2022 would further tailor the regulation to three tiers of companies with different defensive needs, increase governance and controls, and require more regular risk and vulnerability assessments. Transactions with Related Parties Transactions between banks and their affiliates are limited by Sections 23A and 23B of the Federal Reserve Act.
Amendments effective November 1, 2023 further tailor the regulation to three tiers of companies with different defensive needs, increase governance and controls, and require more regular risk and vulnerability assessments. 28 Transactions with Related Parties Transactions between banks and their affiliates are limited by Sections 23A and 23B of the Federal Reserve Act.
Our total deposit base is composed of 51% non-interest-bearing accounts and has an average cost of deposits of only 16 basis points for the year ended December 31, 2022.
Our total deposit base is composed of 42% non-interest-bearing accounts and has an average cost of deposits of only 117 basis points for the year ended December 31, 2023.
In 2021, we took several steps to continue our leadership in climate finance. We were one of the first U.S. banks to publish data in accordance with the Partnership for Carbon Accounting Financials ("PCAF") and were the first U.S. bank to publish a net zero climate target in accordance with and now validated by the Science Based Targets ("SBTi") methodology.
We have taken several steps to continue our leadership in climate finance. We were one of the first U.S. banks to publish data in accordance with the PCAF and were the first U.S. bank to publish a net zero climate target in accordance with and now validated by the Science Based Targets ("SBTi") methodology.
We bolstered our efforts in the Washington, D.C. market in 2012 and have generated a 12.6% compound annual deposit growth rate during the five-year period ended December 31, 2022. Additionally, following the successful acquisition of New Resource Bank, we have become a trusted commercial lender in San Francisco and have recently begun to establish ourselves in Boston.
We bolstered our efforts in the Washington, D.C. market in 2012 and have generated a 11% compound annual deposit growth rate during the five-year period ended December 31, 2023. Additionally, following the successful acquisition of New Resource Bank in 2018, we have become a trusted commercial lender in San Francisco and established ourselves in Boston.
We are committed to fostering strong client relationships and unparalleled understanding of our clients’ goals and objectives. We offer a broad range of both index and actively-managed funds spanning equity, and fixed-income strategies. As of December 31, 2022, we had $38.08 billion of assets under custody and $13.44 billion of assets under management.
We are committed to fostering strong client relationships and unparalleled understanding of our clients’ goals and objectives. We offer a broad range of both index and actively-managed funds spanning equity, and fixed-income strategies. As of December 31, 2023, we had $41.66 billion of assets under custody and $14.82 billion of assets under management.
The deduction limitation is now applied to all compensation exceeding $1.0 million, for our covered employees, regardless of how it is classified, which would have an adverse effect on income tax expense and net income.
Specifically, the pre-existing exception to the $1 million deduction limitation applicable to performance-based compensation was repealed. The deduction limitation is now applied to all compensation exceeding $1.0 million, for our covered employees, regardless of how it is classified, which would have an adverse effect on income tax expense and net income.
AREMCO calculates its annual dividend to equal or exceed 95% of the projected annual taxable income and during December of each year, the Board of Directors of AREMCO declares a dividend to be paid to stockholders in the following January.
AREMCO calculates its annual dividend to equal or exceed 95% of the projected annual taxable income and during December of each year, the Board of Directors of AREMCO declares a dividend to be paid to stockholders in the following January. For the year ending December 31, 2023, AREMCO had $9.5 million in taxable income.
CRE Guidance In December 2015, the federal banking regulators released a statement entitled “Interagency Statement on Prudent Risk Management for Commercial Real Estate Lending” (the “CRE Guidance”).
The federal banking regulators previously issued guidance in December 2015 entitled “Interagency Statement on Prudent Risk Management for Commercial Real Estate Lending” (the “2015 CRE Guidance”).
Under the direction of our Board of Directors and executive management, we are diligent in fulfilling our mission to be America’s socially responsible bank, empowering organizations and individuals to advance positive social change. Our Executive and Corporate Social Responsibility Committee has oversight of our ESG activities and communications.
Under the direction of our Board of Directors (the "Board") and executive management, we are diligent in fulfilling our mission to be America’s socially responsible bank, empowering organizations and individuals to advance positive social change.
A credit risk rating change requires a majority vote of the Loan Quality Committee and is reported to the Credit Policy Committee. After approval by Loan Quality Committee, the credit risk rating change is verified through a control process in our system. In accordance with our policy, we perform annual asset reviews of our multifamily, CRE, and C&I loans.
A credit risk rating change requires a majority vote of the Loan Quality Committee and is reported to the Credit Policy Committee. After approval by Loan Quality Committee, the credit risk rating change is processed under our internal controls procedures. In accordance with our policy, we perform annual asset reviews of our multifamily, CRE, and C&I loans.
As of December 31, 2022, approximately 59% of our employees identify as women and women hold 20 of 41 senior management positions, and 63% of our employees identify as under-represented minorities and they hold 46% of senior management positions.
As of December 31, 2023, approximately 58% of our employees identify as women and women hold 17 of 41 senior management positions, and 63% of our employees identify as under-represented minorities and they hold 46% of senior management positions.
Approximately one-third of our trust and investment management clients utilize our deposit products. The majority of our trust and investment management business consists of institutional investment clients, such as multi-employer pension funds and Taft-Hartley funds.
The majority of our trust and investment management business consists of institutional investment clients, such as multi-employer pension funds and Taft-Hartley funds.
Possible sanctions that may be imposed in the event of such noncompliance include the suspension of individual employees, limitations on the business activities for specified periods of time, revocation of registration, and other censures and fines and the potential of civil litigation.
Possible sanctions that may be imposed in the event of such noncompliance include the suspension of individual employees, limitations on the business activities for specified periods of time, revocation of registration, and other censures and fines and the potential of civil litigation. USA PATRIOT Act The USA PATRIOT Act became effective on October 26, 2001 and amended the BSA.
For the years ended December 31, 2022 and December 31, 2021, we generated $14.4 million and $13.4 million of investment and trust fees, respectively. 7 Asset Allocation Our target customer base provides us with what has historically been a stable source of low-cost core deposits, with generally limited credit needs.
For the years ended December 31, 2023 and December 31, 2022, we generated $15.2 million and $14.4 million of investment and trust fees, respectively. Asset Allocation Our target customer base provides us with what has historically been a stable source of low-cost core deposits, with generally limited credit needs. Therefore, we have historically had a substantial amount of excess liquidity.
In 2021, we were recognized for our leadership on the global stage for our work on climate change with governance positions in the United Nations ("UN") convened Net Zero Banking Alliance and the Global Partnership for Carbon Accounting Financials ("PCAF") and an advisory role for the Glasgow Finance Alliance for Net Zero. 3 Environmental, Social, and Governance Responsibility We maintain an explicit commitment to the highest Corporate Social Responsibility and ESG standards.
We hold governance positions in the United Nations ("UN") convened Net Zero Banking Alliance and the Global Partnership for Carbon Accounting Financials ("PCAF") and an advisory role for the Glasgow Finance Alliance for Net Zero. 3 Environmental, Social, and Governance Responsibility We maintain an explicit commitment to the highest corporate social responsibility and ESG standards.
Current laws, such as the USA PATRIOT Act (which amended the BSA), as described below, provide law enforcement authorities with increased access to financial information maintained by banks. Anti-money laundering obligations have been substantially strengthened as a result of the USA PATRIOT Act.
Current laws, such as the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (“USA PATRIOT Act") (which amended the BSA), as described below, provide law enforcement authorities with increased access to financial information maintained by banks. Anti-money laundering obligations have been substantially strengthened as a result of the USA PATRIOT Act.
The statutes enforced by, and regulations and policies of, these agencies affect most aspects of our business, including prescribing the permissible scope of our activities, permissible types of loans and investments, the amount of required reserves, requirements for branch offices, and various other requirements. 19 New York Law As a New York-chartered bank, New York law governs our licensing and regulation, including organizational and capital requirements, fiduciary powers, investment authority, branch offices and electronic terminals, declaration of dividends, changes of control and mergers, out of state activities, interstate branching and banking, debt offerings, borrowing limits, limits on loans to one obligor, liquidation, sale of shares or options in Amalgamated to its directors, officers, employees and others, the purchase by Amalgamated of its own shares, and the issuance of capital notes or debentures.
New York Law As a New York-chartered bank, New York law governs our licensing and regulation, including organizational and capital requirements, fiduciary powers, investment authority, branch offices and electronic terminals, declaration of dividends, changes of control and mergers, out of state activities, interstate branching and banking, debt offerings, borrowing limits, limits on loans to one obligor, liquidation, sale of shares or options in Amalgamated to its directors, officers, employees and others, the purchase by Amalgamated of its own shares, and the issuance of capital notes or debentures.
One of our service employees at our headquarters, responsible for mechanical and technical repairs, is covered by the 2016 Independent Office Agreement between us and Local 32BJ, Service Employees International Union, the agreement of which was amended and extended through December 31, 2023.
Four of our service employees at our headquarters, responsible for mechanical and technical repairs, are covered by the 2016 Independent Office Agreement between us and Local 32BJ, Service Employees International Union, the agreement of which was amended and extended through December 31, 2023. We are still operating under the prior agreement while the updated agreement is being finalized.
As of December 31, 2022, women held 20 of 41 senior management positions (which is defined as Senior Vice President and above) and five of 12 executive management positions (which is defined as Executive Vice President and above). Additionally, eight of our 12 Board members identify as women or people of color or LGBTQ+.
As of December 31, 2023, women held 17 of 41 senior management positions (which is defined as Senior Vice President and above) and five of 11 executive management positions (which is defined as Executive Vice President and above). Additionally, nine of our 13, or 69%, of Board members identify as women and/or people of color and/or LGBTQ+.
These requirements are essentially the same as those that apply to the Bank and are described below under “Amalgamated Bank—Capital and Related Requirements” Subject to our capital requirements and certain other restrictions, including the consent of the Federal Reserve, we are able to borrow money to make a capital contribution to the Bank, and these loans may be repaid from dividends paid from the Bank to the Company. 18 The Company’s ability to pay dividends to its stockholders may be affected by both general corporate law considerations and policies of the Federal Reserve applicable to bank holding companies.
These requirements are essentially the same as those that apply to the Bank and are described below under “Amalgamated Bank—Capital and Related Requirements” Subject to our capital requirements and certain other restrictions, including the consent of the Federal Reserve, we are able to borrow money to make a capital contribution to the Bank, and these loans may be repaid from dividends paid from the Bank to the Company.
The program must comply with the anti-money laundering provisions of the Bank Secrecy Act (“BSA”). Financial institutions are prohibited from entering into specified financial transactions and account relationships and must meet enhanced standards for due diligence and “knowing your customer” in their dealings with foreign financial institutions, foreign customers and other high risk customers.
Financial institutions are prohibited from entering into specified financial transactions and account relationships and must meet enhanced standards for due diligence and “knowing your customer” in their dealings with foreign financial institutions, foreign customers and other high risk customers.
Bank regulators take into account compliance with consumer protection laws when considering approval of expansionary proposals. Anti-Money Laundering Regulation As a financial institution, we must maintain anti-money laundering programs that include established internal policies, procedures and controls, a designated compliance officer, an ongoing employee training program, and testing of the program by an independent audit function.
Anti-Money Laundering Regulation As a financial institution, we must maintain anti-money laundering programs that include established internal policies, procedures and controls, a designated compliance officer, an ongoing employee training program, and testing of the program by an independent audit function.
Our Loan Quality Committee is our executive and senior management governing body for monitoring loans that have classified or criticized regulatory risk ratings, or as determined by our Chief Credit Risk Officer or Senior Credit Officers. Criticized loans are special mention loans as they show potential weakness that if not addressed by management may lead to performance and collectability issues.
Our Loan Quality Committee is our executive and senior management governing body for monitoring loans that have classified or criticized regulatory risk ratings, or as determined by our Chief Credit Risk Officer or Senior Credit Officers. Criticized loans are special mention loans as they show potential weakness that may result in the deterioration of future repayment.
The guidance listed adapted versions of the key principles from the Guidance on Sound Incentive Compensation Policies as minimum requirements and advised these banks that incentive compensation arrangements must be subject to effective risk management, oversight, and control.
The guidance listed adapted versions of the key principles from the Guidance on Sound Incentive Compensation Policies as minimum requirements and advised these banks that incentive compensation arrangements must be subject to effective risk management, oversight, and control. In addition, the Tax Cuts and Jobs Act of 2017 contains certain provisions affecting performance-based compensation.
Our Code of Business Conduct and Ethics and Diversity, Equity and Inclusion Plan, under the leadership of the Director of Diversity and Inclusion, support diversity and inclusion efforts for hiring, training, and workplace culture. As of December 31, 2022, 59% of our employees identify as women and 63% of our employees identify as people of color.
Our Code of Business Conduct and Ethics and Diversity, Equity and Inclusion ("DEI") Plan, informs our efforts for hiring, training, and workplace culture. As of December 31, 2023, 58% of our employees identify as women and 63% of our employees identify as people of color.
The vast majority of our commercial deposits are derived from socially responsible organizations. Trust and Investment Management We have been providing institutional trust, custody and investment management services since 1973. This business has become an integral contributor to our franchise and is complementary to our commercial banking business, as they each help support and grow the other.
Trust and Investment Management We have been providing institutional trust, custody and investment management services since 1973. This business has become an integral contributor to our franchise and is complementary to our commercial banking business, as they each help support and grow the other. Approximately one-third of our trust and investment management clients utilize our deposit products.
As of December 31, 2022, approximately 21% of our employees are unionized under a collective bargaining agreement. Employees are aware of our stance in supporting organized labor and workers’ rights. In 2019, we became the first U.S. bank to raise our minimum wage to $20 per hour.
Employees are aware of our stance 4 in supporting organized labor and workers’ rights. In 2019, we became the first U.S. bank to raise our minimum wage to $20 per hour.
To increase diverse representation in our workforce, particularly in senior management, we have established placement goals for minorities and women where warranted and expanded recruitment at career fairs with diverse candidates.
To increase diverse representation in our workforce, particularly in senior management, we have established placement goals for minorities and women where warranted and expanded recruitment at career fairs with diverse candidates.The Company promotes equity in employee hiring, retention and promotion, professional development and training, and community outreach.
In October 2016, the NYDFS also announced a renewed focus on employee incentive arrangements and issued guidance to New York State-regulated banks to ensure that these arrangements do not encourage inappropriate practices.
The scope and content of the federal banking agencies’ policies on incentive compensation are continuing to develop and are likely to continue evolving. 29 In October 2016, the NYDFS also announced a renewed focus on employee incentive arrangements and issued guidance to New York State-regulated banks to ensure that these arrangements do not encourage inappropriate practices.
Final regulations have not been adopted as of December 31, 2022. If adopted, these or other similar regulations would impose limitations on the manner in which we may structure compensation for our executives and other employees. The scope and content of the federal banking agencies’ policies on incentive compensation are continuing to develop and are likely to continue evolving.
Final regulations have not been adopted as of December 31, 2023. If adopted, these or other similar regulations would impose limitations on the manner in which we may structure compensation for our executives and other employees.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeFor example, our business is subject to joint federal bank agency rules, the Gramm-Leach-Bliley Act, the NYDFS cybersecurity regulations, the California Consumer Privacy Act, and the California Privacy Rights Act which, among other things: (i) impose certain limitations on our ability to share nonpublic personal information about our customers with nonaffiliated third parties; (ii) require that we provide certain disclosures to customers and others about our information collection, sharing and security practices and afford customers the right to “opt out” of any information sharing by us with nonaffiliated third parties (with certain exceptions); (iii) limit retention of customer data; (iv) require notification of certain data breaches; and (v) require that we develop, implement and maintain a written comprehensive information security program containing appropriate safeguards based on our size and complexity, the nature and scope of our activities, and the sensitivity of customer information we process, as well as plans for responding to data security breaches.
Biggest changeFor example, our business is subject to joint federal bank agency rules, the GLBA, the NYDFS cybersecurity regulations, the CCPA, and the CPRA which, among other things: (i) impose certain limitations on our ability to share nonpublic personal information about our customers with nonaffiliated third parties; (ii) require that we provide certain disclosures to customers and others about our information collection, sharing and security practices and afford customers the right to “opt out” of any information sharing by us with nonaffiliated third parties (with certain exceptions); (iii) limit retention of customer data; (iv) require notification of certain data breaches be provided to consumers and, in some circumstances, regulators; (v) require notification of extortion payments and ransomware deployments; (vi) require enhanced governance of cyber risk, including risk assessments at least annually and whenever a change in the business or technology causes a material change to our cyber risk; and (vii) require that we develop, implement and maintain a written comprehensive information security program containing appropriate safeguards based on our size and complexity, the nature and scope of our activities, and the sensitivity of customer information we process, as well as plans for responding to data security breaches.
The weakening of these standards for any reason, such as an attempt to attract higher yielding loans, a lack of discipline or diligence by our employees in underwriting and monitoring loans, the inability of our employees to adequately adapt policies and 34 procedures to changes in economic or any other conditions affecting borrowers and the quality of our loan portfolio, may result in loan defaults, foreclosures and additional charge-offs and may necessitate that we significantly increase our allowance, each of which could adversely affect our net income.
The weakening of these standards for any reason, such as an attempt to attract higher yielding loans, a lack of discipline or diligence by our employees in underwriting and monitoring loans, the inability of our employees to adequately adapt policies and procedures to changes in economic or any other conditions affecting borrowers and the quality of our loan portfolio, may result in loan defaults, foreclosures and additional charge-offs and may necessitate that we significantly increase our allowance, each of which could adversely affect our net income.
In addition, increases in criminal activity levels and sophistication, advances in computer capabilities, new discoveries, vulnerabilities in third-party technologies (including browsers and operating systems) or other developments could 38 result in a compromise or breach of the technology, processes and controls that we use to prevent fraudulent transactions and to protect data about us, our customers and underlying transactions, as well as the technology used by our customers to access our systems.
In addition, increases in criminal activity levels and sophistication, advances in computer capabilities, new discoveries, vulnerabilities in third-party technologies (including browsers and operating systems) or other developments could result in a compromise or breach of the technology, processes and controls that we use to prevent fraudulent transactions and to protect data about us, our customers and underlying transactions, as well as the technology used by our customers to access our systems.
Declines in the financial markets or a lack of sustained growth may result in a decline in the performance of our investment management business and may adversely affect the market value and performance of the investment securities that we manage, which could lead to reductions in our investment management fees, because they are based primarily on the market value of the securities we manage, and could lead some of our clients to reduce their assets under our management or seek legal remedies for investment performance.
Declines in the financial markets or a lack of sustained growth may result in a decline in the performance of our investment management business 37 and may adversely affect the market value and performance of the investment securities that we manage, which could lead to reductions in our investment management fees, because they are based primarily on the market value of the securities we manage, and could lead some of our clients to reduce their assets under our management or seek legal remedies for investment performance.
We could encounter difficulty meeting a significant deposit outflow which could negatively impact our profitability or reputation. Any long-term decline in deposit funding would adversely affect our liquidity. While we believe our funding sources are adequate to meet any significant unanticipated deposit withdrawal, we may not be able to manage the risk of deposit volatility effectively.
We could encounter difficulty meeting a significant deposit outflow which could negatively impact our profitability or reputation. Any long-term decline in deposit funding would adversely affect our liquidity. While we believe our funding sources are adequate to meet any significant unanticipated deposit withdrawal, we may not be able to manage the risk of deposit volatility 40 effectively.
If we fail to comply with any final rules adopted by the CFPB, we may face reputational and litigation risks with respect to our PACE assessments. 37 Our trust and investment management business may be negatively impacted by changes in economic and market conditions and clients may seek legal remedies for investment performance.
If we fail to comply with any final rules adopted by the CFPB, we may face reputational and litigation risks with respect to our PACE assessments. Our trust and investment management business may be negatively impacted by changes in economic and market conditions and clients may seek legal remedies for investment performance.
The Company is a bank holding company that conducts substantially all of its operations through the Bank. As a result, our ability to make dividend payments on our common stock depends primarily on certain federal regulatory considerations and the receipt 45 of dividends and other distributions from the Bank.
The Company is a bank holding company that conducts substantially all of its operations through the Bank. As a result, our ability to make dividend payments on our common stock depends primarily on certain federal regulatory considerations and the receipt of dividends and other distributions from the Bank.
Our estimated allowance for loan losses and fair value adjustments with respect to loans acquired in our acquisitions may prove to be insufficient to absorb actual losses in our loan portfolio, which may adversely affect our business, financial condition and results of operations.
Our estimated allowance for credit losses and fair value adjustments with respect to loans acquired in our acquisitions may prove to be insufficient to absorb actual losses in our loan portfolio, which may adversely affect our business, financial condition and results of operations.
Should the ultimate judgments or settlements in any litigation 44 or investigation significantly exceed our insurance coverage, they could have a material adverse effect on our business, financial condition and results of operations.
Should the ultimate judgments or settlements in any litigation or investigation significantly exceed our insurance coverage, they could have a material adverse effect on our business, financial condition and results of operations.
Additionally, Workers United Related Parties have entered into agreements with us that provide certain registration rights under existing registration rights agreements, and in the case of the Workers United Related Parties, the establishment of an advisory board.
Additionally, Workers United Related Parties have entered into agreements with us that provide 46 certain registration rights under existing registration rights agreements, and in the case of the Workers United Related Parties, the establishment of an advisory board.
Although we have developed, and continue to invest in, systems and processes that are designed to detect and prevent security breaches and cyber-attacks and periodically test our security, a breach of our systems, or those of processors, could result in losses to us or our customers; loss of business and/or customers; damage to our reputation; the incurrence of additional expenses (including the cost of notification to consumers, credit monitoring and forensics, and fees and fines imposed by the card networks); disruption to our business; our inability to grow our online services or other businesses; additional regulatory scrutiny or penalties; or our exposure to civil litigation and possible financial liability—any of which could have a material adverse effect on our business, financial condition and results of operations.
Although we have developed, and continue to invest in, systems and processes that are designed to detect and prevent security breaches and cyber-attacks and regularly test our security, a breach of our systems, or those of processors, could result in 38 losses to us or our customers; loss of business and/or customers; damage to our reputation; the incurrence of additional expenses (including the cost of notification to consumers, credit monitoring and forensics, and fees and fines imposed by the card networks); disruption to our business; our inability to grow our online services or other businesses; additional regulatory scrutiny or penalties; or our exposure to civil litigation and possible financial liability—any of which could have a material adverse effect on our business, financial condition and results of operations.
The 41 introduction of such new products requires continued innovative efforts on the part of our management and may require significant time and resources as well as ongoing support and investment.
The introduction of such new products requires continued innovative efforts on the part of our management and may require significant time and resources as well as ongoing support and investment.
If, as a result of general economic conditions, there is a decrease in asset quality or growth in the loan portfolio, our management determines that additional increases in ALLL are necessary, we may incur additional expenses which will reduce our net income, and our business, results of operations or financial condition may be materially and adversely affected.
If, as a result of general economic conditions, there is a decrease in asset quality or growth in the loan portfolio, our management determines that additional increases in ACL are necessary, we may incur additional expenses which will reduce our net income, and our business, results of operations or financial condition may be materially and adversely affected.
These securities are pari passu with tax liens and generally have priority over first mortgage liens. Because PACE financing programs are typically enabled through state legislation and authorized at the local government level, variations between each state’s programs may expose us to increased compliance costs and risks.
These assessments are pari passu with tax liens and generally have priority over first mortgage liens. Because PACE financing programs are typically enabled through state legislation and authorized at the local government level, variations between each state’s programs may expose us to increased compliance costs and risks.
Specifically, the CFPB is contemplating regulations for PACE financing under the ability-to-repay requirements under the Truth in Lending Act, which are currently in place for residential mortgage loans. If final rules are adopted by the CFPB, we may be exposed to increased compliance and regulatory risks related to our residential PACE assessments.
Specifically, the CFPB is contemplating regulations for PACE financing under the ability-to-repay requirements under the Truth in Lending Act, which are currently in place for residential mortgage loans. If final rules are adopted by the CFPB, we may be exposed to increased compliance and regulatory risks related to new residential PACE assessments.
A significant percentage of our common stock is currently held by investment funds affiliated with an amalgamation of Workers United and numerous joint boards, locals or similar organizations authorized under the constitution of Workers United (the “Workers United Related Parties”). Workers United Related Parties own approximately 41% of our common stock.
A significant percentage of our common stock is currently held by investment funds affiliated with an amalgamation of Workers United and numerous joint boards, locals or similar organizations authorized under the constitution of Workers United (the “Workers United Related Parties”). Workers United Related Parties own approximately 42% of our common stock.
If we choose to raise capital by selling shares of our common stock for any reason, the issuance would have a dilutive effect on the holders of our common stock and could have a material negative effect on the value of our common stock. 46 Item 1B. Unresolved Staff Comments. None.
If we choose to raise capital by selling shares of our common stock for any reason, the issuance would have a dilutive effect on the holders of our common stock and could have a material negative effect on the value of our common stock. 47 Item 1B. Unresolved Staff Comments. None.
Our business is highly dependent on the successful and uninterrupted functioning of our information technology and telecommunications systems, third-party servicers accounting systems and mobile and online banking platforms. We outsource many of our major systems, such as data processing, loan servicing, item/payment processing systems, and online banking platforms.
Our business is highly dependent on the successful and uninterrupted functioning of our information technology and telecommunications systems, third-party servicers' accounting systems and mobile and online banking platforms. We outsource many of our major systems, such as data processing, loan servicing, item/payment processing systems, and online banking platforms.
They require management to make difficult, subjective or complex judgments about matters that are uncertain. Materially different amounts could be reported under different conditions or using different assumptions or estimates. The critical accounting policies include the ALLL.
They require management to make difficult, subjective or complex judgments about matters that are uncertain. Materially different amounts could be reported under different conditions or using different assumptions or estimates. The critical accounting policies include the ACL.
The determination of the appropriate level of the ALLL is inherently highly subjective and requires us to make significant estimates of and assumptions regarding current credit risks and future trends, all of which may undergo material changes.
The determination of the appropriate level of the ACL is inherently highly subjective and requires us to make significant estimates of and assumptions regarding current credit risks and future trends, all of which may undergo material changes.
Because of the uncertainty of estimates involved in this matters, we may be required to significantly increase the allowance or sustain loan losses that are significantly higher than the reserve provided. Any of these could have a material adverse effect on our business, financial condition or results of operations.
Because of the uncertainty of estimates involved in this matters, we may be required to significantly increase the allowance or sustain credit losses that are significantly higher than the reserve provided. Any of these could have a material adverse effect on 43 our business, financial condition or results of operations.
The level of the allowance reflects management’s continuing evaluation of loan levels and portfolio composition, observable trends in nonperforming loans, historical loss experience, known and inherent risks in the portfolio, underwriting practices, adequacy of collateral, credit risk grading assessments and other factors.
The level of the allowance reflects management’s continuing evaluation of loan levels and portfolio composition, observable trends in nonperforming loans, historical loss experience, known and inherent risks in the portfolio, underwriting practices, adequacy of collateral, credit risk grading assessments, forecasted economic conditions, and other factors.
In addition, there are continuing concerns related to, among other things, the level of U.S. government debt and fiscal actions that may be taken to address that debt, price fluctuations of key natural resources, the potential resurgence of economic and political tensions with China, the Russian invasion of Ukraine and increasing oil prices due to Russian supply disruptions, each of which may have a destabilizing effect on financial markets and economic activity.
There are continuing concerns related to, among other things, the level of U.S. government debt and fiscal actions that may be taken to address that debt, price fluctuations of key natural resources, the potential resurgence of economic and political tensions with China, the Russian invasion of Ukraine and increasing oil prices due to Russian supply disruptions, and the Israel-Hamas conflict, each of which may have a destabilizing effect on financial markets and economic activity.
Our business could suffer if we experience employee work stoppages, union campaigns or other labor difficulties, and efforts by labor unions could divert management attention and adversely affect operating results. As of December 31, 2022, we had 409 employees, of which approximately 21% are represented by collective bargaining agreements or an employee union.
Our business could suffer if we experience employee work stoppages, union campaigns or other labor difficulties, and efforts by labor unions could divert management attention and adversely affect operating results. As of December 31, 2023, we had 425 employees, of which approximately 21% are represented by collective bargaining agreements or an employee union.
There is also increased scrutiny of compliance with the rules enforced by the Office of Foreign Assets Control. Federal and state bank regulators also focus on compliance with Bank Secrecy Act and anti-money laundering regulations.
There is also increased scrutiny of compliance with the rules enforced by the Office of Foreign Assets Control. Federal and state bank regulators also focus on compliance with BSA and anti-money laundering regulations.
Our financial condition may be affected negatively by the costs of litigation. In difficult market conditions, the volume of claims and amount of damages sought in litigation and investigations against financial institutions have historically increased. We may be involved from time to time in a variety of litigation, investigations or similar matters arising out of our business.
In difficult market conditions, the volume of claims and amount of damages sought in litigation and investigations against financial institutions have historically increased. We may be involved from time to time in a variety of litigation, investigations or similar matters arising out of our business.
We continue to devote a significant amount of effort, time and resources to our controls and ensuring compliance with complex accounting standards and regulations. These efforts also include the management of controls to mitigate operational risks for programs and processes across the Company.
We continue to devote a significant amount of effort, time and resources to our controls and ensuring compliance with complex accounting standards and regulations. These efforts also include the management of controls to mitigate operational risks for programs and processes across the Company. Our third party relationships could expose us to operational and regulatory risks.
Specifically, if our competitors introduce new banking products and services embodying new technologies, or if new banking industry standards and practices emerge, then our existing product and service offerings, technology and systems may be impaired or become obsolete.
Specifically, if our competitors introduce new banking products and services embodying new technologies such as artificial intelligence and machine learning, or if new banking industry standards and practices emerge, then our existing product and service offerings, technology and systems may be impaired or become obsolete.
We are subject to the Community Reinvestment Act and federal and state fair lending laws, and failure to comply with these laws could lead to material penalties. The Community Reinvestment Act (“CRA”), the Equal Credit Opportunity Act and the Fair Housing Act impose nondiscriminatory lending requirements on financial institutions.
We are subject to the Community Reinvestment Act and federal and state fair lending laws, and failure to comply with these laws could lead to material penalties. The Community Reinvestment Act (“CRA”), the ECOA and the FHA impose nondiscriminatory lending requirements on financial institutions.
In addition, these requirements could have a negative impact on our ability to lend, grow deposit balances, make acquisitions or make capital distributions in the form of dividends or share repurchases. Higher capital levels could also lower our return on equity.
In addition, these requirements could have a negative impact on our ability to lend, grow deposit balances, make acquisitions or make capital distributions in the form of dividends or share repurchases.
Unfavorable market conditions can result in a deterioration of the credit quality of borrowers, an increase in the number of loan delinquencies, defaults and charge-offs, foreclosures, additional provisions for loan losses, adverse asset values and a reduction in assets under management or administration. The majority of our loan portfolio is secured by real estate.
Unfavorable market conditions can result in a deterioration of the credit quality of borrowers, an increase in the number of loan delinquencies, defaults and charge-offs, foreclosures, additional provisions for credit losses, adverse asset values and a reduction in assets under management or administration.
Operational and Business Risks We are at risk of increased losses from fraud. Fraudulent activity has taken many forms, ranging from check fraud, mechanical devices attached to ATM machines, social engineering and phishing attacks to obtain personal information or impersonation of our clients through the use of falsified or stolen credentials and debit card fraud.
Fraudulent activity has taken many forms, ranging from check fraud, mechanical devices attached to ATM machines, social engineering and phishing attacks to obtain personal information or impersonation of our clients through the use of falsified or stolen credentials and debit card fraud.
Market and Interest Rate Risks Our business may be adversely affected by economic conditions Some elements of the business environment that affect our financial performance include short-term and long-term interest rates, the prevailing yield curve, inflation, monetary supply, fluctuations in the debt and equity capital markets, and the strength of the domestic economy and the local economies in the markets in which we operate.
Some elements of the business environment that affect our financial performance include short-term and long-term interest rates, the prevailing yield curve, inflation, monetary supply, fluctuations in the debt and equity capital markets, and the strength of the domestic economy and the local economies in the markets in which we operate.
At December 31, 2022, our total multifamily loan exposure in New York State is approximately $703.4 million, of which approximately $490.5 million, or 70%, represents our portfolio’s composition of rent stabilized and rent controlled apartments in the New York multifamily market. Our solar loans expose us to higher credit risk.
At December 31, 2023, our total multifamily loan exposure in New York State is approximately $775.1 million, of which approximately $571.4 million, or 74%, represents our portfolio’s composition of rent stabilized and rent controlled apartments in the New York multifamily market. Our solar loans expose us to higher credit risk.
The federal Financial Crimes Enforcement Network, established by the U.S. Treasury Department to administer the Bank Secrecy Act, is authorized to impose significant civil money penalties for violations of those requirements and has engaged in coordinated enforcement efforts with the individual federal banking regulators, as well as the U.S. Department of Justice, Drug Enforcement Administration and IRS.
Treasury Department to administer the BSA, is 44 authorized to impose significant civil money penalties for violations of those requirements and has engaged in coordinated enforcement efforts with the individual federal banking regulators, as well as the U.S. Department of Justice, Drug Enforcement Administration and IRS.
Although our asset-liability management strategy is designed to control and mitigate exposure to the risks related to changes in the general level of market interest rates, those rates are affected by many factors outside of our control, including inflation, recession, unemployment, money supply, international disorder, instability in domestic and foreign financial markets and policies of various governmental and regulatory agencies, particularly the Federal Open Market Committee (FOMC) of the Federal Reserve.
Accordingly, changes in the general level of market interest rates may adversely affect our net yield on interest-earning assets, loan origination volume and our overall results. 33 Although our asset-liability management strategy is designed to control and mitigate exposure to the risks related to changes in the general level of market interest rates, those rates are affected by many factors outside of our control, including inflation, recession, unemployment, money supply, international disorder, instability in domestic and foreign financial markets and policies of various governmental and regulatory agencies, particularly the Federal Open Market Committee ("FOMC") of the Federal Reserve.
The unique characteristic of PACE assessments is that the assessment is attached to the property rather than the individual borrower. Active programs for residential PACE financing exist in California, Florida and Missouri. As of December 31, 2022, we had a portfolio of $255.4 million in commercial PACE securities and $656.5 million in residential PACE securities.
The unique characteristic of PACE assessments is that the assessment is attached to the property rather than the individual borrower. Active programs for residential PACE financing exist in California, Florida and Missouri. As of December 31, 2023, we had a portfolio of $258.0 million in commercial PACE assessments and $871.9 million in residential PACE assessments.
From time to time, we are, or may become, the subject of information-gathering requests, reviews, investigations and proceedings, and other forms of regulatory inquiry, including by bank regulatory agencies, self-regulatory agencies, and law enforcement authorities.
Many aspects of the banking business involve a substantial risk of legal liability. From time to time, we are, or may become, the subject of information-gathering requests, reviews, investigations and proceedings, and other forms of regulatory inquiry, including by bank regulatory agencies, self-regulatory agencies, and law enforcement authorities.
From time to time, we are subject to unfair labor practice charges, complaints and other legal, administrative and arbitration proceedings initiated against us by unions, the National Labor Relations Board or our employees, which could negatively impact our operating results. In addition, negotiating collective bargaining agreements could divert management attention, which could also adversely affect operating results.
From time to time, we are subject to unfair labor practice charges, complaints and other legal, administrative and arbitration proceedings initiated against us by unions, the National Labor Relations Board or our employees, which could negatively impact our operating results.
Our obligations may be impacted by the funding status of the plan, the plan’s investment performance, changes in the participant demographics, financial stability of contributing employers and changes in actuarial assumptions.
Our multi-employer pension plan expense totaled $7.2 million in 2023. Our obligations may be impacted by the funding status of the plan, the plan’s investment performance, changes in the participant demographics, financial stability of contributing employers and changes in actuarial assumptions.
For instance, our political campaigns, PACs, and state and national party committee clients totaled $643.6 million in deposits as of December 31, 2022 and may increase or decrease their deposit balances significantly as we approach an election campaign, resulting in short-term volatility in their deposit balances held with us through election cycles.
For instance, our on-balance sheet and off-balance sheet deposits from political campaigns, PACs, and state and national party committee clients totaled $1.19 billion, or 16% of total on-balance sheet and off-balance sheet deposits as of December 31, 2023 and may increase or decrease their deposit balances significantly as we approach an election campaign, resulting in short-term volatility in their deposit balances held with us through election cycles.
These negative events may cause us to incur losses and may adversely affect our capital, liquidity and financial condition. Changes in U.S. trade policies and other global political factors beyond our control, including the imposition of tariffs, retaliatory tariffs, or other sanctions, may adversely impact our business, financial condition and results of operations.
Changes in U.S. trade policies and other global political factors beyond our control, including the imposition of tariffs, retaliatory tariffs, or other sanctions, may adversely impact our business, financial condition and results of operations.
The results of such proceedings could lead to significant civil or criminal penalties, including monetary penalties, damages, adverse judgments, settlements, fines, injunctions, restrictions on the way we conduct our business or reputational harm.
The results of such proceedings could lead to significant civil or criminal penalties, including monetary penalties, damages, adverse judgments, settlements, fines, injunctions, restrictions on the way we conduct our business or reputational harm. Risks Related to Our Common Stock Shares of our common stock could face volatility due to banking sector uncertainty.
For example, a change in control caused by the sale of our shares by the Workers United Related Parties may result in a change of management decisions and business policy. Shares of our common stock are subject to dilution. As of December 31, 2022, we had 30,700,198 shares of common stock issued and outstanding.
For example, a change in control caused by the sale of our shares by the Workers United Related Parties may result in a change of management decisions and business policy. Shares of our common stock are subject to dilution.
Conversely, a decrease in the general level of interest rates, among other things, may lead to prepayments on our loan and mortgage-backed securities portfolios and increased competition for deposits, potentially reducing our deposit base. Accordingly, changes in the general level of market interest rates may adversely affect our net yield on interest-earning assets, loan origination volume and our overall results.
Conversely, a decrease in the general level of interest rates, among other things, may lead to prepayments on our loan and mortgage-backed securities portfolios and increased competition for deposits, potentially reducing our deposit base.
In addition, inaccurate management assumptions, deterioration of economic conditions affecting borrowers, new information regarding existing loans, identification or deterioration of additional problem loans, acquisition of problem loans and other factors, both within and outside of our control, may require us to increase our ALLL.
In addition, inaccurate management assumptions, deterioration of economic conditions affecting borrowers, new information regarding existing loans, identification or deterioration of additional problem loans, acquisition of problem loans and other factors, both within and outside of our control, may require us to increase our ACL. 35 Operational and Business Risks We are at risk of increased losses from fraud.
Any such failure could have an adverse effect on our reputation and could adversely affect our business, financial condition, results of operations or prospects. The Federal Reserve may require us to commit capital resources to support the Bank.
Our failure to comply with applicable laws or regulations could result in fines, suspensions of individual employees, litigation, or other sanctions. Any such failure could have an adverse effect on our reputation and could adversely affect our business, financial condition, results of operations or prospects. The Federal Reserve may require us to commit capital resources to support the Bank.
Risks Related to Our Strategy We may not be able to implement our growth strategy or manage costs effectively, resulting in lower earnings or profitability.
Higher capital levels could also lower our return on equity. 41 Risks Related to Our Strategy We may not be able to implement our growth strategy or manage costs effectively, resulting in lower earnings or profitability.
Failure to meet minimum capital requirements could result in certain mandatory and possible additional discretionary actions by regulators that, if undertaken, could have an adverse material effect on our financial condition and results of operations.
While the proposed rules are not currently expected to impact us, and we expect to meet the requirements of the Basel III rules, a failure to meet minimum capital requirements could result in certain mandatory and possible additional discretionary actions by regulators that, if undertaken, could have an adverse material effect on our financial condition and results of operations.
Thus, any borrowing that must be done by the holding company in order to make the required capital injection becomes more difficult and expensive and will adversely impact the holding company’s cash flows, financial condition, results of operations and prospects.
Thus, any borrowing that must be done by the holding company in order to make the required capital injection becomes more difficult and expensive and will adversely impact the holding company’s cash flows, financial condition, results of operations and prospects. We face a risk of noncompliance with the BSA and other anti-money laundering statutes and regulations and corresponding enforcement proceedings.
We maintain an allowance for loan losses ("ALLL") that represents management’s judgment of probable losses and risks inherent in our loan portfolio. As of December 31, 2022, our ALLL totaled $45.0 million, which represents approximately 1.10% of our total loans, net.
We maintain an allowance for credit losses ("ACL") that represents management’s judgment of current expected credit losses and risks inherent in our loan portfolio. As of December 31, 2023, our ACL totaled $65.7 million, which represents approximately 1.49% of our total loans, net.
These products and services require us to comply with a number of regulations issued by the Department of Labor, the Employee Retirement Income Security Act, the FDIC Statement of Principles of Trust Department Management, and federal and state securities regulators. 43 Our failure to comply with applicable laws or regulations could result in fines, suspensions of individual employees, litigation, or other sanctions.
These products and services require us to comply with a number of regulations issued by the Department of Labor, the Employee Retirement Income Security Act, the FDIC Statement of Principles of Trust Department Management, and federal and state securities regulators.
In addition, inherent uncertainties exist when integrating the operations of an acquired entity, including in ability to fully achieve the Company’s strategic objectives and planned operating efficiencies in an acquisition, disruption of the Company’s business and diversion of management’s time and attention and exposure to unknown or contingent liabilities of acquired entities. 42 Legal, Accounting, Regulatory, and Compliance Risks Change s in our accounting policies or in accounting standards could materially affect how we report our financial results and condition.
In addition, inherent uncertainties exist when integrating the operations of an acquired entity, including in ability to fully achieve the Company’s strategic objectives and planned operating efficiencies in an acquisition, disruption of the Company’s business and diversion of management’s time and attention and exposure to unknown or contingent liabilities of acquired entities.
In addition, at December 31, 2022, 90.6% of the properties securing our CRE, multifamily, or construction loans outstanding were located in the states of New York and California, and in Washington, D.C.
The vast majority of our operations and clients are located in New York City, Washington, D.C., and San Francisco. In addition, at December 31, 2023, 88.7% of the properties securing our CRE, multifamily, or construction loans outstanding were located in the states of New York and California, and in Washington, D.C.
The banking business is highly competitive, and we experience competition in our markets from many other financial institutions.
We face strong competition from other banks and financial institutions and other wealth and investment management firms that could hurt our business. 42 The banking business is highly competitive, and we experience competition in our markets from many other financial institutions.
To the extent changes in the global political 32 environment, including Russia’s invasion of Ukraine and the escalating tensions between Russia and the U.S., NATO, the EU and the UK, have a negative impact on us or on the markets in which we operate, our business, results of operations and financial condition could be materially and adversely impacted.
To the extent changes in the global political environment have a negative impact on us or on the markets in which we operate, our business, results of operations and financial condition could be materially and adversely impacted. Our operations and clients are concentrated in large metropolitan areas.
Further, risk of cybersecurity incidents may increase with the political and economic instability or warfare (including the Russia and Ukraine war).
Further, risk of cybersecurity incidents may increase with the political and economic instability or warfare (including the Russia and Ukraine war and campaigns by Chinese hackers to infiltrate computer networks associated with critical American infrastructure).
Reliance on inaccurate, incomplete, fraudulent or misleading financial statements, credit reports or other financial or business information, or the failure to receive such information on a timely basis, could result in loan losses, reputational damage or other effects that could have a material adverse effect on our business, financial condition or results of operations. 36 We participate in a multi-employer non-contributory defined benefit pension plan for both our unionized and non-unionized employees, which could subject us to substantial cash funding requirements in the future.
Reliance on inaccurate, incomplete, fraudulent or misleading financial statements, credit reports or other financial or business information, or the failure to receive such information on a timely basis, could result in credit losses, reputational damage or other effects that could have a material adverse effect on our business, financial condition or results of operations.
Changes in our accounting policies or in accounting standards could materially affect how we report our financial results and condition. From time to time, the FASB changes the financial accounting and reporting standards that govern the preparation of our financial statements.
From time to time, the FASB changes the financial accounting and reporting standards that govern the preparation of our financial statements.
Defense of our reputation and our trademarks, including through litigation, could result in costs adversely affecting our business, results of operations or financial condition. We face strong competition from other banks and financial institutions and other wealth and investment management firms that could hurt our business.
Defense of our reputation and our trademarks, including through litigation, could result in costs adversely affecting our business, results of operations or financial condition.
Our ability to raise capital will depend on, among other things, conditions in the capital markets, which are outside of our control, and our financial performance. Accordingly, we cannot provide assurance that such capital will be available on terms acceptable to us or at all.
Our business needs and future growth may require us to raise capital, but that capital may not be available or may be dilutive. Our ability to raise capital will depend on, among other things, conditions in the capital markets, which are outside of our control, and our financial performance.
As of December 31, 2022, the fair value of our investment securities portfolio was approximately $3.23 billion. Factors beyond our control could significantly affect the fair value of these securities.
The fair value of our investment securities could fluctuate because of factors outside of our control, which could have a material adverse effect on us. As of December 31, 2023, the fair value of our investment securities portfolio was approximately $3.03 billion. Factors beyond our control could significantly affect the fair value of these securities.
We face a risk of noncompliance with the Bank Secrecy Act and other anti-money laundering statutes and regulations and corresponding enforcement proceedings. The federal Bank Secrecy Act, the PATRIOT Act and other laws and regulations require financial institutions, among other duties, to institute and maintain effective anti-money laundering programs, and to file suspicious activity and currency transaction reports as appropriate.
The BSA, the PATRIOT Act, the Anti-Money Laundering Act of 2020, and other laws and regulations require financial institutions, among other duties, to institute and maintain effective anti-money laundering programs, and to file suspicious activity and currency transaction reports as appropriate. FinCEN, established by the U.S.
Our failure to assess any impairments or losses with respect to our securities could have a material adverse effect on our assets, business, cash flow, condition (financial or otherwise), liquidity, results of operations and prospects. The phase-out of LIBOR could negatively impact our net interest income and require significant operational work.
Our failure to assess any impairments or losses with respect to our securities could have a material adverse effect on our assets, business, cash flow, condition (financial or otherwise), liquidity, results of operations and prospects. Credit Risks If we fail to effectively manage credit risk, our business and financial condition will suffer. We must effectively manage credit risk.
In addition, the Economic Growth, Regulatory Release, and Consumer Protection Act required the CFPB to prescribe regulations relating to residential PACE financings. In March 2019, the CFPB issued an advanced notice of proposed rulemaking, but has not issued a proposed rule.
In addition, the Economic Growth, Regulatory Release, and Consumer Protection Act ("EGRRCPA") required the CFPB to prescribe regulations relating to residential PACE financings. In May 2023, the CFPB issued a proposed rule, but has not issued a proposed rule implementing EGRRCPA section 307 and amending Regulation ZX to address how TILA applies to PACE transactions.
It also provided for a 3% wage increase effective July 1, 2020, July 1, 2021 and July 1, 2022, respectively. Capital and Liquidity Risks We are subject to liquidity risk. We require liquidity to meet our deposit and debt obligations as they come due.
Capital and Liquidity Risks We are subject to liquidity risk. We require liquidity to meet our deposit and debt obligations as they come due.
In addition, we may not be able to obtain appropriate types or levels of insurance in the future, nor may we be able to obtain adequate replacement policies with acceptable terms, if at all.
In addition, we may not be able to obtain appropriate types or levels of insurance in the future, nor may we be able to obtain adequate replacement policies with acceptable terms, if at all. 45 From time to time we are, or may become, involved in suits, legal proceedings, information-gatherings, investigations and proceedings by governmental and self-regulatory agencies that may lead to adverse consequences.
We are required to make contributions to the Consolidated Retirement Fund, a multi-employer pension plan that covers both our unionized and non-unionized employees. Our multi-employer pension plan expense totaled $6.3 million in 2022.
We participate in a multi-employer non-contributory defined benefit pension plan for both our unionized and non-unionized employees, which could subject us to substantial cash funding requirements in the future. 36 We are required to make contributions to the Consolidated Retirement Fund, a multi-employer pension plan that covers both our unionized and non-unionized employees.
Economic pressure on consumers and overall economic uncertainty may result in changes in consumer and business spending, borrowing and saving habits.
Economic pressure on consumers, including due to factors such as inflation and the end of student loan repayment moratoriums, as well as overall economic uncertainty may result in changes in consumer and business spending, borrowing and saving habits.
A decline in real estate values can negatively impact our ability to recover our investment should the borrower become delinquent. Loans secured by stock or other collateral may be adversely impacted by a downturn in the economy and other factors that could reduce the recoverability of our investment.
Loans secured by stock or other collateral may be adversely impacted by a downturn in the economy and other factors that could reduce the recoverability of our investment. Unsecured loans are dependent on the solvency of the borrower, which can deteriorate, leaving us with a risk of loss.
Any occurrence that limits our access to capital, may adversely affect our capital costs and our ability to raise capital and, in turn, our liquidity.
Accordingly, we cannot provide assurance that such capital will be available on terms acceptable to us or at all. Any occurrence that limits our access to capital, may adversely affect our capital costs and our ability to raise capital and, in turn, our liquidity.
In particular, the capital requirements applicable to us under the Basel III rules, which became fully phased-in on January 1, 2019 required us to satisfy additional, more stringent, capital adequacy standards. While we expect to meet the requirements of the Basel III rules, we may fail to do so.
In particular, the capital requirements applicable to us under the Basel III rules, which became fully phased-in on January 1, 2019 required us to satisfy additional, more stringent, capital adequacy standards. The Basel III endgame rules, which were proposed in July 2023, would impose higher capital requirements on U.S. banks with at least $100 billion of assets.
We also may not be able to adequately prepare for or compensate for the consequences of such changes.
We also may not be able to adequately prepare for or compensate for the consequences of such changes. Any failure to predict and prepare for changes in interest rates or adjust for the consequences of these changes may adversely affect our earnings and capital levels and overall results.
Any such events could have a material adverse effect on our business, financial condition or results of operations.
Once finalized, this rule could enable greater competition among banks and nonbanks for consumer market share, which could have a material adverse effect on our business, financial condition or results of operations.
The FDIC, the NYDFS, the Department of Justice, and other federal and state agencies are responsible for enforcing these laws and regulations. There are proposed revisions to the CRA, which could affect our compliance obligations. Private parties may also have the ability to challenge an institution’s performance under fair lending laws in private class action litigation.
These regulations create a complex regulatory scheme that will impact how the Bank’s compliance with the CRA is evaluated and that will increase its compliance obligations, unless the regulations are successfully challenged in court. Private parties may also have the ability to challenge an institution’s performance under fair lending laws in private class action litigation.
A failure to maintain adequate liquidity could materially and adversely affect our business, results of operations or financial condition. 40 Our business needs and future growth may require us to raise capital, but that capital may not be available or may be dilutive.
A failure to maintain adequate liquidity could materially and adversely affect our business, results of operations or financial condition. The recent bank failures caused substantial market disruption that has not yet stabilized, leading to ongoing concerns about the liquidity of the financial services industry.
Removed
Unsecured loans are dependent on the solvency of the borrower, which can deteriorate, leaving us with a risk of loss.
Added
Market and Interest Rate Risks Our business may be adversely affected by economic conditions.
Removed
The Federal Reserve's signaling of additional interest rate hikes in 2023, and slowing economic activity in a majority of states, have increased the probability for a recession in the United States.
Added
The majority of our loan portfolio is secured by real estate, 8.0% of which is commercial real estate. A decline in real estate values can negatively impact our ability to recover our investment should the borrower become delinquent.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeItem 2. Properties. As of December 31, 2022, our three branch offices in New York City, one branch office in Washington, D.C., one branch office in San Francisco, and one commercial office in Boston are leased. We believe that our current facilities are adequate to meet our present and foreseeable needs, subject to possible future expansion.
Biggest changeItem 2. Properties. As of December 31, 2023, our three branch offices in New York City, one branch office in Washington, D.C., one branch office in San Francisco, and one commercial office in Boston are leased. We believe that our current facilities are adequate to meet our present and foreseeable needs, subject to possible future expansion.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeBased upon management’s current knowledge, following consultation with legal counsel, in the opinion of management, there is no pending or threatened legal matter that would result in a material adverse effect on our consolidated financial condition or results of operation, either individually or in the aggregate. Item 4. Mine Safety Disclosures. Not applicable. 47 PART II
Biggest changeBased upon management’s current knowledge, following consultation with legal counsel, in the opinion of management, there is no pending or threatened legal matter that would result in a material adverse effect on our consolidated financial condition or results of operation, either individually or in the aggregate. Item 4. Mine Safety Disclosures. Not applicable. 50 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeEffective February 22, 2022, our Board of Directors approved an increase to the share repurchase program authorizing the repurchase of an aggregate amount up to $40 million of our outstanding common stock. The authorization did not require us to acquire any specified number of shares and can be suspended or discontinued without prior notice.
Biggest changeThe authorization did not require us to acquire any specified number of shares and can be suspended or discontinued without prior notice. Under this authorization, $8.3 million of common stock were purchased during the year ended December 31, 2023.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Market Information and Holders of Record Our common stock is listed on The NASDAQ Global Market under the symbol “AMAL.” As of December 31, 2022, we had 30,700,198 shares of common stock outstanding and approximately 200 stockholders of record.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Market Information and Holders of Record Our common stock is listed on The NASDAQ Global Market under the symbol “AMAL.” As of December 31, 2023, we had 30,428,359 shares of common stock outstanding and approximately 200 stockholders of record.
See “ Cautionary Note Regarding Forward- Looking Statements ” and “ Supervision and Regulation—Amalgamated Financial Corp.—Capital Requirements and Payment of Dividends ” and “ Supervision and Regulation—Amalgamated Bank—Payment of Dividends. ” 48 Stock Performance Graph The following stock performance graph compares the cumulative total shareholder returns for the Company's common stock, KBW Bank Index and the KBW Regional Bank Index for the periods indicated.
See “ Cautionary Note Regarding Forward-Looking Statements ” and “ Supervision and Regulation—Amalgamated Financial Corp.—Capital Requirements and Payment of Dividends ” and “ Supervision and Regulation—Amalgamated Bank—Payment of Dividends. ” 51 Stock Performance Graph The following stock performance graph compares the cumulative total shareholder returns for the Company's common stock, KBW Bank Index and the KBW Regional Bank Index for the last five fiscal years.
Following the Reorganization, we intend to continue paying a quarterly cash dividend of $0.10 per share on our common stock, although we may elect not to pay dividends or to change the amount of such dividends.
Dividend Policy We have historically paid a quarterly cash dividend, and intend to continue paying a quarterly cash dividend of $0.10 per share on our common stock, although we may elect not to pay dividends or to change the amount of such dividends.
The graph assumes that an investor originally invested $100 in shares of the Bank's common stock at its closing price on August 8, 2018, the first day that the Company's shares were traded, and assumes reinvestment of dividends and other distributions to stockholders.
The graph assumes that an investor originally invested $100 in shares of the Bank's common stock at its closing price on December 31, 2018, and assumes reinvestment of dividends and other distributions to stockholders.
Cumulative Total Returns Period Ending 8/9/18 12/31/18 12/31/19 12/31/20 12/31/21 3/31/22 6/30/22 9/30/22 12/31/22 Amalgamated $ 100.00 $ 118.54 $ 120.00 $ 87.03 $ 108.30 $ 116.60 $ 128.86 $ 147.52 $ 151.36 KBW Bank Index 100.00 78.50 106.86 95.84 132.60 125.29 102.72 98.26 104.23 KBW Regional Bank Index 100.00 77.81 96.38 88.01 120.27 117.65 103.55 107.63 111.94 Repurchases of Equity Securities There were no purchases of our common stock during the three months ended December 31, 2022 by or on behalf of the Company or any “affiliate purchaser” as defined in Rule 10b-18(a)(3) under the Exchange Act.
Cumulative Total Returns Period Ending 12/31/18 12/31/19 12/31/20 12/31/21 12/31/22 3/31/23 6/30/23 9/30/23 12/31/23 Amalgamated $ 100.00 $ 99.74 $ 70.46 $ 86.00 $ 118.15 $ 90.72 $ 82.51 $ 88.31 $ 138.15 KBW Bank Index 100.00 132.14 114.13 154.12 117.55 95.63 93.50 91.26 111.92 KBW Regional Bank Index 100.00 120.38 105.82 140.94 127.62 103.91 96.95 98.33 122.51 52 Repurchases of Equity Securities The following table contains information regarding purchases of our common stock during the three months ended December 31, 2023 by or on behalf of the Company or any “affiliate purchaser” as defined in Rule 10b-18(a)(3) under the Exchange Act.
Under this authorization, $12.5 million of common stock were purchased during the year ended December 31, 2022. The approximate dollar value that may yet to be purchased under the plans or programs is $24.6 million. 50 Item 6. [Reserved]
The approximate dollar value that may yet to be purchased under the plans or programs is $19.8 million. 53 Item 6. [Reserved]
There were 29,572 shares withheld by the Company during the three months ended December 31, 2022 to cover the cost of options and to pay the taxes associated with the vesting of stock options. 49 Effective April 13, 2021, our Board of Directors authorized a share repurchase program authorizing the repurchase of up to $10 million of our outstanding common stock over the next one-year period.
There were 6,227 shares withheld by the Company during the year ended December 31, 2023. (2) Effective February 25, 2022, our Board of Directors approved an increase to the share repurchase program authorizing the repurchase of an aggregate amount up to $40 million of our outstanding common stock.
Removed
Dividend Policy Before the Reorganization, the Bank had paid a cash dividend to holders of its common stock quarterly since its initial public offering in August 2018.
Added
Issuer Purchases of Equity Securities Period Total number of shares purchased (1) Average price paid per share Total number of shares purchased as part of publicly announced plans or programs Approximate dollar value that may yet be purchased under plans or programs (2) October 1 through October 31, 2023 60,376 $ 16.56 60,376 $ 19,867,732 November 1 through November 30, 2023 30,688 19.47 4,800 $ 19,781,192 December 1 through December 31, 2023 5,283 26.82 — $ 19,781,192 Total 96,347 $ 18.68 65,176 (1) Includes shares purchased as part of our publicly announced share repurchase program and withheld by the Company to pay the costs associated with tax withholding related to the exercise of stock options and RSU and PSU vesting.

Item 7. Management's Discussion & Analysis

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

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Biggest changeChanges in the market interest rates and interest rates we earn on interest-earning assets or pay on interest-bearing liabilities, as well as the volume and types of interest-earning assets, interest-bearing and non-interest-bearing liabilities, are usually the largest drivers of periodic changes in net interest spread, net interest margin and net interest income. 54 The following table sets forth information related to our average balance sheet, average yields on assets, and average costs of liabilities for the periods indicated: Year Ended December 31, 2022 2021 2020 (In thousands) Average Balance Income / Expense Yield / Rate Average Balance Income / Expense Yield / Rate Average Balance Income / Expense Yield / Rate Interest-earning assets: Interest-bearing deposits in banks $ 258,214 $ 2,186 0.85 % $ 521,681 $ 651 0.12 % $ 371,112 $ 697 0.19 % Securities and FHLBNY stock 3,391,056 106,417 3.14 % 2,461,661 54,615 2.22 % 1,834,384 47,046 2.56 % Resell agreements 182,304 4,237 2.32 % 138,833 1,942 1.40 % 56,440 769 1.36 % Total loans, net (1)(2) 3,615,437 145,649 4.03 % 3,180,093 123,318 3.88 % 3,527,261 141,983 4.03 % Total interest-earning assets 7,447,011 258,489 3.47 % 6,302,268 180,526 2.86 % 5,789,197 190,495 3.29 % Non-interest-earning assets: Cash and due from banks 7,126 7,853 25,220 Other assets 273,028 259,718 229,825 Total assets $ 7,727,165 $ 6,569,839 $ 6,044,242 Interest-bearing liabilities: Savings, NOW and money market deposits $ 2,981,688 $ 10,069 0.34 % $ 2,622,584 $ 4,788 0.18 % $ 2,297,841 $ 7,303 0.32 % Time deposits 195,030 987 0.51 % 248,507 1,035 0.42 % 335,433 3,149 0.94 % Total deposits 3,176,718 11,056 0.35 % 2,871,091 5,823 0.20 % 2,633,274 10,452 0.40 % FHLBNY advances 114,521 4,738 4.14 % 123 — 0.00 % 1,585 27 1.70 % Other Borrowings 86,205 2,855 3.31 % 12,575 399 3.17 % — — 0.00 % Total interest-bearing liabilities 3,377,444 18,649 0.55 % 2,883,789 6,222 0.22 % 2,634,859 10,479 0.40 % Non-interest-bearing liabilities: Demand and transaction deposits 3,746,152 3,017,621 2,798,105 Other liabilities 82,931 116,256 102,282 Total liabilities 7,206,527 6,017,666 5,535,247 Stockholders' equity 520,638 552,173 508,995 Total liabilities and stockholders' equity $ 7,727,165 $ 6,569,839 $ 6,044,242 Net interest income / interest rate spread $ 239,840 2.92 % $ 174,304 2.64 % $ 180,016 2.89 % Net interest-earning assets / net interest margin $ 4,069,567 3.22 % $ 3,418,479 2.77 % $ 3,154,338 3.11 % Total Cost of Deposits 0.16 % 0.10 % 0.19 % (1) Amounts are net of deferred origination costs (fees) and the allowance for loan losses and includes loans held for sale (2) Income and yield includes prepayment penalty income in December YTD 2022 of $1.7 million, December YTD 2021 of $1.7 million, and December YTD 2020 of $4.1 million.
Biggest changeChanges in the market interest rates and interest rates we earn on interest-earning assets or pay on interest-bearing liabilities, as well as the volume and types of interest-earning assets, interest-bearing and non-interest-bearing liabilities, are usually the largest drivers of periodic changes in net interest spread, net interest margin and net interest income. 57 The following table sets forth information related to our average balance sheet, average yields on assets, and average costs of liabilities for the periods indicated: Year Ended December 31, 2023 2022 2021 (In thousands) Average Balance Income / Expense Yield / Rate Average Balance Income / Expense Yield / Rate Average Balance Income / Expense Yield / Rate Interest-earning assets: Interest-bearing deposits in banks $ 142,053 $ 5,779 4.07 % $ 258,214 $ 2,186 0.85 % $ 521,681 $ 651 0.12 % Securities (1) 3,250,788 160,298 4.93 % 3,391,056 106,417 3.14 % 2,461,661 54,615 2.22 % Resell agreements 10,233 705 6.89 % 182,304 4,237 2.32 % 138,833 1,942 1.40 % Total loans, net (2)(3) 4,259,195 191,295 4.49 % 3,615,437 145,649 4.03 % 3,180,093 123,318 3.88 % Total interest-earning assets 7,662,269 358,077 4.67 % 7,447,011 258,489 3.47 % 6,302,268 180,526 2.86 % Non-interest-earning assets: Cash and due from banks 5,140 7,126 7,853 Other assets 208,902 273,028 259,718 Total assets $ 7,876,311 $ 7,727,165 $ 6,569,839 Interest-bearing liabilities: Savings, NOW and money market deposits $ 3,344,407 $ 59,818 1.79 % $ 2,981,688 $ 10,069 0.34 % $ 2,622,584 $ 4,788 0.18 % Time deposits 167,167 3,452 2.07 % 185,692 638 0.34 % 248,507 1,035 0.42 % Brokered CDs 364,833 17,854 4.89 % 9,338 349 3.74 % — — — % Total deposits 3,876,407 81,124 2.09 % 3,176,718 11,056 0.35 % 2,871,091 5,823 0.20 % Other borrowings 350,039 15,642 4.47 % 200,726 7,593 3.78 % 12,699 400 3.15 % Total interest-bearing liabilities 4,226,446 96,766 2.29 % 3,377,444 18,649 0.55 % 2,883,789 6,222 0.22 % Non-interest-bearing liabilities: Demand and transaction deposits 3,045,013 3,746,152 3,017,621 Other liabilities 73,770 82,931 116,256 Total liabilities 7,345,229 7,206,527 6,017,666 Stockholders' equity 531,082 520,638 552,173 Total liabilities and stockholders' equity $ 7,876,311 $ 7,727,165 $ 6,569,839 Net interest income / interest rate spread $ 261,311 2.38 % $ 239,840 2.92 % $ 174,304 2.64 % Net interest-earning assets / net interest margin $ 3,435,823 3.41 % $ 4,069,567 3.22 % $ 3,418,479 2.77 % Total Cost of Deposits 1.17 % 0.16 % 0.10 % (1) Includes FHLBNY stock in the average balance, and dividend income on FHLBNY stock in interest income (2) Amounts are net of deferred origination costs.
We invest in non-GSE securities, including property assessed clean energy, or PACE, bonds, in order to generate higher returns, improve portfolio diversification and reduce interest rate and prepayment risk. With the exception of small legacy CRA investments, Trust Preferred securities, and certain corporate bonds, all of our non-GSE securities are senior positions that are the top of the capital structure.
We invest in non-GSE securities, including property assessed clean energy, or PACE, assessments, in order to generate higher returns, improve portfolio diversification and reduce interest rate and prepayment risk. With the exception of small legacy CRA investments, Trust Preferred securities, and certain corporate bonds, all of our non-GSE securities are senior positions that are the top of the capital structure.
Our liquidity risk management process includes (i) ongoing analysis and monitoring of our funding requirements under various balance sheet and economic scenarios, (ii) review and monitoring of lenders, depositors, brokers and other liability holders to ensure appropriate diversification of funding sources and (iii) liquidity contingency planning to address liquidity needs in the event of unforeseen market disruption impacting a wide range of variables.
Our 73 liquidity risk management process includes (i) ongoing analysis and monitoring of our funding requirements under various balance sheet and economic scenarios, (ii) review and monitoring of lenders, depositors, brokers and other liability holders to ensure appropriate diversification of funding sources and (iii) liquidity contingency planning to address liquidity needs in the event of unforeseen market disruption impacting a wide range of variables.
Overview Our business Amalgamated Financial Corp., a Delaware public benefit corporation was formed on August 25, 2020 to serve as the holding company for the Bank, which was formed in 1923 as Amalgamated Bank of New York by the Amalgamated Clothing Workers of America, one of the country’s oldest labor unions.
Our Business Amalgamated Financial Corp., a Delaware public benefit corporation was formed on August 25, 2020 to serve as the holding company for the Bank, which was formed in 1923 as Amalgamated Bank of New York by the Amalgamated Clothing Workers of America, one of the country’s oldest labor unions.
For example, the timing of maturities of our investment 70 portfolio is fairly predictable and subject to a high degree of control when we make investment decisions. Net deposit inflows and outflows, however, are far less predictable and are not subject to the same degree of certainty.
For example, the timing of maturities of our investment portfolio is fairly predictable and subject to a high degree of control when we make investment decisions. Net deposit inflows and outflows, however, are far less predictable and are not subject to the same degree of certainty.
Our products and services are tailored to our target customer base that prefers a financial partner that is socially responsible, values-oriented and committed to creating positive change in the 51 world.
Our products and services are tailored to our target customer base that prefers a financial partner that is socially responsible, values-oriented and committed to creating positive change in the world.
Our investment securities portfolio consists of securities classified as available for sale and held-to-maturity. There were no trading securities in our investment portfolio at December 31, 2022 or at December 31, 2021. All available for sale securities are carried at fair value and may be used for liquidity purposes should management consider it to be in our best interest.
Our investment securities portfolio consists of securities classified as available for sale and held-to-maturity. There were no trading securities in our investment portfolio at December 31, 2023 or at December 31, 2022. All available for sale securities are carried at fair value and may be used for liquidity purposes should management consider it to be in our best interest.
The following is a discussion of the critical accounting policies and significant estimates that require us to make complex and subjective judgments. Additional information about these policies can be found in Note 1 of our consolidated financial statements, which begin on page 83 of this report.
The following is a discussion of the critical accounting policies and significant estimates that require us to make complex and subjective judgments. Additional information about these policies can be found in Note 1 of our consolidated financial statements, which begin on page 86 of this report.
Our multifamily loans are generally used to purchase or refinance apartment buildings of five units or more, which collateralize the loan, in major metropolitan areas within our markets. Multifamily loans have 73% of their exposure in New York City—our largest geographic concentration.
Our multifamily loans are generally used to purchase or refinance apartment buildings of five units or more, which collateralize the loan, in major metropolitan areas within our markets. Multifamily loans have 74% of their exposure in New York City—our largest geographic concentration.
Critical Accounting Estimates Our consolidated financial statements are prepared based on the application of generally accepted accounting policies ("GAAP") in the United States, or GAAP, the most significant of which are described in Note 1 of our audited consolidated financial statements, starting on page 83 of this report.
Critical Accounting Estimates Our consolidated financial statements are prepared based on the application of generally accepted accounting policies ("GAAP") in the United States, or GAAP, the most significant of which are described in Note 1 of our audited consolidated financial statements, starting on page 86 of this report.
Our results of operations are also dependent on non-interest income, consisting primarily of income from Trust Department fees, service charges on deposit accounts, net gains on sales of investment securities and income from bank-owned life insurance (“BOLI”).
Our results of operations are also dependent on non-interest income, consisting primarily of income from Trust Department fees, service charges on deposit accounts, net gains or losses on sales of investment securities and income from bank-owned life insurance (“BOLI”).
Other factors contributing to our results of operations include our provisions for loan losses, income taxes, and non-interest expenses, such as salaries and employee benefits, occupancy and depreciation expenses, professional fees, data processing fees and other miscellaneous operating costs.
Other factors contributing to our results of operations include our provisions for credit losses, income taxes, and non-interest expenses, such as salaries and employee benefits, occupancy and depreciation expenses, professional fees, data processing fees and other miscellaneous operating costs.
We also seek to minimize risks related to these loans by requiring such loans to be collateralized by various business assets (including inventory, equipment, accounts receivable, and the assignment of contracts that generate cash flow). The average size of our C&I loans at December 31, 2022 by exposure was $4.4 million with a median size of $1.0 million.
We also seek to minimize risks related to these loans by requiring such loans to be collateralized by various business assets (including inventory, equipment, accounts receivable, and the assignment of contracts that generate cash flow). The average size of our C&I loans at December 31, 2023 by exposure was $4.6 million with a median size of $1.0 million.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. General The following is a discussion of our consolidated financial condition as of December 31, 2022, as compared to December 31, 2021, and our results of operations for the years ended December 31, 2022, December 31, 2021, and December 31, 2020.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. General The following is a discussion of our consolidated financial condition as of December 31, 2023, as compared to December 31, 2022, and our results of operations for the years ended December 31, 2023, December 31, 2022, and December 31, 2021.
The Company maintains sufficient funding to meet expected capital and debt service obligations for 24 months without the support of dividends from subsidiaries and assuming access to the wholesale markets is maintained.
The Company maintains sufficient funding to meet expected capital and debt service obligations for 18 months without the support of dividends from subsidiaries and assuming access to the wholesale markets is maintained.
As of December 31, 2022, the Bank was categorized as “well capitalized” under the prompt corrective action measures and met 72 the capital conservation buffer requirements. Contractual Obligations We have entered into contractual obligations in the normal course of business that involve elements of credit risk, interest rate risk and liquidity risk.
As of December 31, 2023, the Bank was categorized as “well capitalized” under the prompt corrective action measures and met the capital conservation buffer requirements. Contractual Obligations We have entered into contractual obligations in the normal course of business that involve elements of credit risk, interest rate risk and liquidity risk.
In 2022, our application to the International Standards Organization for a new merchant category code for gun and ammunition stores was approved, which will help in creating new tools that all financial institutions must now use to begin detecting and reporting suspicious activity associated with gun trafficking and mass shootings to the Financial Crimes Enforcement Network, the government agency charged with safeguarding the financial system from illicit use.
In 2022, our application to the International Standards Organization for a new merchant category code for gun and ammunition stores was approved, which will help in creating new tools that all financial institutions must now use to begin detecting and reporting suspicious activity associated with gun trafficking and mass shootings to FinCEN, the government agency charged with safeguarding the financial system from illicit use.
Other sources of liquidity that are available to us include the sale of loans we hold for investment, the ability to acquire additional national market non-core deposits, borrowings through the Federal Reserve’s discount window and the issuance of debt or equity securities.
Other sources of liquidity that are available to us include the sale of loans we hold for investment, securitization of loans or PACE assessments, the ability to acquire additional national market non-core deposits, borrowings through the Federal Reserve’s discount window and the issuance of debt or equity securities.
Although we are no longer majority union-owned, The Amalgamated Clothing Workers of America’s successor, Workers United, an affiliate of the Service Employees International Union that represents workers in the textile, distribution, food service and gaming industries, remains a significant stockholder, holding approximately 41% of our equity as of December 31, 2022.
Although we are no longer majority union-owned, The Amalgamated Clothing Workers of America’s successor, Workers United, an affiliate of the Service Employees International Union that represents workers in the textile, distribution, food service and gaming industries, remains a significant stockholder, holding approximately 42% of our equity as of December 31, 2023.
Discussions of 2020 results and year-to-year comparisons between 2021 and 2020 can be found in the Management's Discussion and Analysis located in Part II, Item 7 of our annual report on Form 10-K for the fiscal year ended December 31, 2021, filed with the SEC on March 11, 2022.
Discussions of 2021 results and year-to-year comparisons between 2022 and 2021 can be found in the Management's Discussion and Analysis located in Part II, Item 7 of our annual report on Form 10-K for the fiscal year ended December 31, 2022, filed with the SEC on March 9, 2023.
This discussion generally focuses on 2022 and 2021 results and year-to-year comparisons between 2022 and 2021.
This discussion generally focuses on 2023 and 2022 results and year-to-year comparisons between 2023 and 2022.
Total loans, net of deferred origination fees and allowance for loan losses, were $4.06 billion as of December 31, 2022 compared to $3.28 billion as of December 31, 2021. Within our commercial loan portfolio, our primary focus has been on C&I, multifamily and CRE lending.
Total loans, net of deferred origination fees and allowance for credit losses, were $4.35 billion as of December 31, 2023 compared to $4.06 billion as of December 31, 2022. Within our commercial loan portfolio, our primary focus has been on C&I, multifamily and CRE lending.
These impacts are partially offset by an increase in the average balances of deposits and other interest-bearing liabilities, as well as an increase in the cost of funds. Net interest spread was 2.92% for the year ended December 31, 2022, compared to 2.64% for the same period in 2021, an increase of 28 basis points.
These impacts are partially offset by an increase in the average balances of deposits and other interest-bearing liabilities, as well as an increase in the cost of funds. Net interest spread was 2.38% for the year ended December 31, 2023, compared to 2.92% for the same period in 2022, a decrease of 54 basis points.
At December 31, 2022, our cash and equivalents, which consist of cash and amounts due from banks and interest-bearing deposits in other financial institutions, amounted to $63.5 million, or 0.8% of total assets, compared to $330.5 million, or 4.7% of total assets at December 31, 2021.
At December 31, 2023, our cash and equivalents, which consist of cash and amounts due from banks and interest-bearing deposits in other financial institutions, amounted to $90.6 million, or 1.1% of total assets, compared to $63.5 million, or 0.8% of total assets at December 31, 2022.
Non-interest-bearing deposits represented 54% of average deposits for the year ended December 31, 2022, contributing to a total cost of deposits of 16 basis points in 2022. Rate-Volume Analysis Increases and decreases in interest income and interest expense result from changes in average balances (volume) of interest-earning assets and interest-bearing liabilities, as well as changes in weighted average interest rates.
Non-interest-bearing deposits represented 44% of average deposits for the year ended December 31, 2023, compared to 54% for the year ended December 31, 2022. Rate-Volume Analysis Increases and decreases in interest income and interest expense result from changes in average balances (volume) of interest-earning assets and interest-bearing liabilities, as well as changes in weighted average interest rates.
The Company anticipates these commitments will be funded by means of normal cash flows, will be funded by a reduction in cash and cash equivalents, or by pay-downs and maturities of loans and other investments. 71 Capital Resources Total stockholders’ equity at December 31, 2022 was $509.0 million, compared to $563.9 million at December 31, 2021, a decrease of $54.9 million.
The Company anticipates these commitments will be funded by means of normal cash flows, will be funded by a reduction in cash and cash equivalents, or by pay-downs and maturities of loans and other investments. Capital Resources Total stockholders’ equity at December 31, 2023 was $585.4 million, compared to $509.0 million at December 31, 2022, an increase of $76.4 million.
Maturities of time certificates of deposit and other time deposits of $250,000 or more outstanding at December 31, 2022 are summarized as follows: Maturities as of December 31, 2022 (In thousands) Within three months $ 96,746 After three but within six months 4,007 After six months but within twelve months 5,164 After twelve months 4,512 $ 110,429 Liquidity Liquidity refers to our ability to maintain cash flow that is adequate to fund our operations, support asset growth, maintain reserve requirements and meet present and future obligations of deposit withdrawals, lending obligations and other contractual obligations through either the sale or maturity of existing assets or by obtaining additional funding through liability management.
Maturities of time certificates of deposit and other time deposits of $250,000 or more outstanding at December 31, 2023 are summarized as follows: Maturities as of December 31, 2023 (In thousands) Within three months $ 22,026 After three but within six months 1,865 After six months but within twelve months 7,463 After twelve months 750 $ 32,104 Liquidity Liquidity refers to our ability to maintain cash flow that is adequate to fund our operations, support asset growth, maintain reserve requirements and meet present and future obligations of deposit withdrawals, lending obligations and other contractual obligations through either the sale or maturity of existing assets or by obtaining additional funding through liability management.
The major categories of our commercial loan portfolio are discussed below: C&I. Our C&I loans are generally made to small and medium-sized manufacturers and wholesale, retail and service-based businesses to provide either working capital or to finance major capital expenditures.
Our C&I loans are generally made to small and medium-sized manufacturers and wholesale, retail and service-based businesses to provide either working capital or to finance major capital expenditures.
The following table presents our non-interest income for the periods indicated: 57 Year Ended December 31, (In thousands) 2022 2021 2020 Trust Department fees $ 14,449 $ 13,352 $ 15,222 Service charges on deposit accounts 10,999 9,355 9,201 Bank-owned life insurance 3,868 2,388 3,085 Gain (loss) on sale of securities (3,637) 649 1,605 Gain (loss) on sale of loans, net (610) 1,887 2,520 Loss on other real estate owned, net (168) (407) (482) Equity method investments income (loss) (2,773) 150 7,411 Other 1,769 1,015 2,042 Total non-interest income $ 23,897 $ 28,389 $ 40,604 Non-interest income was $23.9 million for the year ended December 31, 2022 , compared to $28.4 million for the same period in 2021, a decrease of $4.5 million.
The following table presents our non-interest income for the periods indicated: 60 Year Ended December 31, (In thousands) 2023 2022 2021 Trust Department fees $ 15,175 $ 14,449 $ 13,352 Service charges on deposit accounts 10,999 10,999 9,355 Bank-owned life insurance income 2,882 3,868 2,388 Gain (loss) on sale of securities (7,392) (3,637) 649 Gain (loss) on sale of loans 32 (610) 1,887 Loss on other real estate owned — (168) (407) Equity method investments income (loss) 4,932 (2,773) 150 Other income 2,708 1,769 1,015 Total non-interest income $ 29,336 $ 23,897 $ 28,389 Non-interest income was $29.3 million for the year ended December 31, 2023, compared to $23.9 million for the same period in 2022, an increase of $5.4 million.
The following table presents non-interest expense for the periods indicated: Year Ended December 31, (In thousands) 2022 2021 2020 Compensation and employee benefits $ 74,712 $ 69,844 $ 69,421 Occupancy and depreciation 13,723 14,023 23,040 Professional fees 10,417 12,961 11,205 Data processing 17,732 16,042 11,330 Office maintenance and depreciation 3,012 3,057 3,314 Amortization of intangible assets 1,046 1,207 1,370 Advertising and promotion 3,741 3,230 3,514 Federal deposit insurance premiums 3,228 2,531 3,150 Other 12,960 9,360 7,542 Total non-interest expense $ 140,571 $ 132,255 133,886 Non-interest expense for the year ended December 31, 2022 was $140.6 million , an increase of $8.3 million from $132.3 million for the year ended December 31, 2021.
Non-Interest Expense The following table presents non-interest expense for the periods indicated: Year Ended December 31, (In thousands) 2023 2022 2021 Compensation and employee benefits $ 85,774 $ 74,712 $ 69,844 Occupancy and depreciation 13,605 13,723 14,023 Professional fees 9,637 10,417 12,961 Data processing 17,744 17,732 16,042 Office maintenance and depreciation 2,830 3,012 3,057 Amortization of intangible assets 888 1,046 1,207 Advertising and promotion 4,181 3,741 3,230 Federal deposit insurance premiums 4,018 3,228 2,531 Other expense 12,570 12,960 9,360 Total non-interest expense $ 151,247 $ 140,571 132,255 Non-interest expense for the year ended December 31, 2023 was $151.2 million , an increase of $10.7 million from $140.6 million for the year ended December 31, 2022.
Our C&I loans totaled $925.6 million at December 31, 2022, which comprised 22.5% of our total loan portfolio. During the year ended 2022, the C&I loan portfolio increased by 26.9% from $729.4 million at December 31, 2021. Multifamily .
Our C&I loans totaled $1.01 billion at December 31, 2023, which comprised 22.9% of our total loan portfolio. During the year ended 2023, the C&I loan portfolio increased by 9.2% from $925.6 million at December 31, 2022. Multifamily .
Net income for the year ended December 31, 2022 was $81.5 million, or $2.61 per average diluted share, compared to $52.9 million, or $1.68 per average diluted share, for the same period in 2021.
Net income for the year ended December 31, 2023 was $88.0 million, or $2.86 per average diluted share, compared to $81.5 million, or $2.61 per average diluted share, for the same period in 2022.
During the year ended 2022, the multifamily loan portfolio increased by 17.7% from $821.8 million at December 31, 2021. CRE. Our CRE loans are used to purchase or refinance office buildings, retail centers, industrial facilities, medical facilities and mixed-used buildings.
During the year ended 2023, the multifamily loan portfolio increased by 18.7% from $967.5 million at December 31, 2022. CRE. Our CRE loans are used to purchase or refinance office buildings, owner-occupied office buildings, retail centers, industrial facilities, mixed-used buildings, and education centers.
Resell Agreements As of December 31, 2022, w e have $25.8 million of short term investments of resell agreements backed by government guaranteed loans and other residential loans, with a weighted interest rate of 6.86%.
Resell Agreements As of December 31, 2023, w e had $50.0 million in short term investments of resell agreements, with a weighted interest rate of 6.34%. As of December 31, 2022 , w e had $25.8 million of short term investments of resell agreements backed by government guaranteed loans, with a weighted interest rate of 6.86%.
Within our retail loan portfolio, our primary focus has been on residential one-to-four family (1st lien) mortgages and residential solar loans. We intend to focus any organic growth in our loan portfolio on these lending areas as part of our strategic plan. We actively purchase loans from other originating institutions that we believe provide attractive risk-adjusted returns.
Within our retail loan portfolio, our primary focus has been on residential one-to-four family (1st lien) mortgages and residential solar loans. We intend to focus any organic growth in our loan portfolio on these lending areas as part of our strategic plan.
Net interest income was $239.8 million for the year ended December 31, 2022, compared to $174.3 million for the same period in 2021. This increase of $65.5 million was primarily attributable to continued loan growth and higher average securities balances, as well as increases in yields earned on securities and loans.
Net interest income was $261.3 million for the year ended December 31, 2023, compared to $239.8 million for the same period in 2022. The $21.5 million, or 9.0% increase was primarily attributable to continued loan growth as well as increases in yields earned on securities and loans.
We incur interest expense from interest paid on interest-bearing liabilities, including interest-bearing deposits, FHLBNY advances and other borrowings. To evaluate net interest income, we measure and monitor (i) yields on our loans and other interest-earning assets, (ii) the costs of our deposits and other funding sources, (iii) our net interest spread and (iv) our net interest margin.
To evaluate net interest income, we measure and monitor (i) yields on our loans and other interest-earning assets, (ii) the costs of our deposits and other funding sources, (iii) our net interest spread and (iv) our net interest margin. Net interest spread is equal to the difference between rates earned on interest-earning assets and rates paid on interest-bearing liabilities.
Provision for loan losses totaled an expense of $15.0 million for the year ended December 31, 2022 , compared to a recovery of $0.3 million for the same period in 2021.
Provision for credit losses totaled an expense of $14.7 million for the year ended December 31, 2023 , compared to an expense of $15.0 million for the same period in 2022.
At December 31, 2022, our held-to-maturity securities portfolio primarily consisted of PACE bonds, tax-exempt municipal securities, GSE commercial and residential certificates and other debt. We carry these securities at amortized cost. We had held-to-maturity securities of $1.54 billion at December 31, 2022, and $843.6 million at December 31, 2021.
At December 31, 2023 and December 31, 2022, we had available for sale securities of $1.48 billion and $1.81 billion, respectively. At December 31, 2023, our held-to-maturity securities portfolio primarily consisted of PACE assessments, tax-exempt municipal securities, GSE commercial and residential certificates and other debt. We carry these securities at amortized cost.
Total deposits were $6.60 billion at December 31, 2022, compared to $6.36 billion at December 31, 2021. We believe that our strong deposit franchise is attributable to our mission-based strategy of developing and maintaining relationships with our clients who share similar values and through maintaining a high level of service.
We believe that our strong deposit franchise is attributable to our mission-based strategy of developing and maintaining relationships with our clients who share similar values and through maintaining a high level of service.
Our consumer and other portfolio is comprised of purchased student loans, residential solar loans, unsecured consumer loans and overdraft lines. Our consumer and other loans totaled $464.0 million at December 31, 2022, which comprised 11.3% of our total loan portfolio, compared to $291.8 million, or 8.8% of our total loan portfolio, at December 31, 2021.
Our consumer and other portfolio is comprised of purchased student loans, unsecured consumer loans and overdraft lines. Our consumer and other loans totaled $41.3 million at December 31, 2023, which comprised 0.9% of our total loan portfolio, compared to $47.2 million, or 1.1% of our total loan portfolio, at December 31, 2022.
Government, $32.2 million of consumer home improvement loans and $11.2 million of commercial energy efficient loans. • In 2021, we purchased $154.0 million of residential solar loans, $81.1 million of commercial loans that are unconditionally guaranteed by the U.S. Government, $45.6 million of residential mortgages, $9.6 million of commercial energy efficient loans and $2.5 million of consumer home improvement loans.
Government, $2.1 million of consumer home improvement loans and $10.8 million of commercial energy efficient loans. • In 2022, we purchased $196.4 million of residential solar loans, $122.1 million of residential mortgages, $34.9 million of commercial loans that are unconditionally guaranteed by the U.S. Government, $32.2 million of consumer home improvement loans and $11.2 million of commercial energy efficient loans.
Our residential real estate lending loans totaled $1.37 billion at December 31, 2022, which comprised 74.7% of our retail loan portfolio and 33.5% of our total loan portfolio. During the year ended December 31, 2022, our residential real estate lending loans increased by 29.0% from $1.06 billion at December 31, 2021. Consumer and other.
Our residential real estate lending loans totaled $1.43 billion at December 31, 2023, which comprised 76.0% of our retail loan portfolio and 32.3% of our total loan portfolio. During the year ended December 31, 2023, our residential real estate lending loans increased by 3.9% from $1.37 billion at December 31, 2022. Consumer solar.
Our multifamily loans have been underwritten under stringent guidelines on loan-to-value and debt service coverage ratios that are designed to mitigate credit and concentration risk in this loan category. Our multifamily loans totaled $967.5 million at December 31, 2022, which comprised 23.6% of our total loan portfolio.
Our multifamily loans have been underwritten under stringent guidelines on loan-to-value and debt service coverage ratios that are designed to mitigate credit and concentration risk in this loan category. The average current LTV of our multifamily loans is approximately 54%. 66 Our multifamily loans totaled $1.15 billion at December 31, 2023, which comprised 26.1% of our total loan portfolio.
Interest subsequently received on such loans is recorded as interest income or alternatively as a reduction in the amortized cost of the loan if there is significant doubt as to the collectability of the unpaid principal balance. Loans are returned to accrual status when principal and interest amounts contractually due are brought current and future payments are reasonably assured.
Interest subsequently received on such loans is recorded as interest income or alternatively as a reduction in the amortized cost of the loan if there is significant doubt as to the collectability of the unpaid principal balance.
These factors were partially offset by $81.5 million of net income. We are subject to various regulatory capital requirements administered by federal banking regulators. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by federal banking regulators that, if undertaken, could have a direct material effect on our financial statements.
Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by federal banking regulators that, if undertaken, could have a direct material effect on our financial statements.
Potential problem loans are not included in the nonperforming assets table above and totaled $94.4 million, or 1.2% of total assets, at December 31, 2022, as follows: $91.9 million are commercial loans currently in workout that management expects will be rehabilitated; $0.9 million are commercial loans that are current on payments and are reported as 30-89 days past due, in renewal or extension negotiations, and inclusive of workouts; $0.9 million are residential real estate loans, with $0.9 million at 30 days delinquent.
Potential problem loans are not included in the nonperforming assets table above and totaled $103.5 million, or 1.3% of total assets, at December 31, 2023, as follows: $76.8 million are commercial loans currently in workout that management expects will be rehabilitated; $9.1 million are residential real estate loans, with $9.1 million at 30-89 days delinquent.
These customers include advocacy-based non-profits, social welfare organizations, national labor unions, political organizations, foundations, socially responsible businesses, and other for-profit companies that seek to ensure their profit-making activities align for the benefit of all their stakeholders. In 2021, we introduced ResponsiFunds which are ESG impact products designed to align our clients' investment growth goals with their organizational values.
These customers include advocacy-based non-profits, social welfare organizations, national labor unions, political 54 organizations, foundations, socially responsible businesses, and other for-profit companies that seek to ensure their profit-making activities align for the benefit of all their stakeholders.
Because non-interest-bearing sources of funds, such as non-interest-bearing deposits and stockholders’ equity, also fund interest-earning assets, net interest margin includes the benefit of these non-interest-bearing sources.
Net interest margin is equal to the annualized net interest income divided by average net interest-earning assets. Average balances were derived from average daily balances. Because non-interest-bearing sources of funds, such as non-interest-bearing deposits and stockholders’ equity, also fund interest-earning assets, net interest margin includes the benefit of these non-interest-bearing sources.
The following table shows the regulatory capital ratios for the Company and the Bank at the dates indicated: Actual For Capital Adequacy Purposes (1) To Be Considered Well Capitalized Amount Ratio Amount Ratio Amount Ratio (In thousands) December 31, 2022 Consolidated: Total capital to risk weighted assets $ 721,324 14.87 % $ 387,957 8.00 % N/A N/A Tier 1 capital to risk weighted assets 597,022 12.31 % 290,967 6.00 % N/A N/A Tier 1 capital to average assets 597,022 7.52 % 317,738 4.00 % N/A N/A Common equity tier 1 to risk weighted assets 597,022 12.31 % 218,226 4.50 % N/A N/A Bank: Total capital to risk weighted assets $ 715,458 14.75 % $ 388,107 8.00 % $ 485,134 10.00 % Tier 1 capital to risk weighted assets 668,864 13.79 % 291,080 6.00 % 388,107 8.00 % Tier 1 capital to average assets 668,864 8.44 % 317,111 4.00 % 396,389 5.00 % Common equity tier 1 to risk weighted assets 668,864 13.79 % 218,310 4.50 % 315,337 6.50 % December 31, 2021 Consolidated: Total capital to risk weighted assets $ 656,719 15.95 % $ 329,471 8.00 % N/A N/A Tier 1 capital to risk weighted assets 534,381 12.98 % 247,103 6.00 % N/A N/A Tier 1 capital to average assets 534,381 7.62 % 280,454 4.00 % N/A N/A Common equity tier 1 to risk weighted assets 534,381 12.98 % 185,327 4.50 % N/A N/A Bank: Total capital to risk weighted assets $ 613,030 14.89 % $ 329,376 8.00 % $ 411,720 10.00 % Tier 1 capital to risk weighted assets 575,692 13.98 % 247,032 6.00 % 329,376 8.00 % Tier 1 capital to average assets 575,692 8.21 % 280,433 4.00 % 205,860 5.00 % Common equity tier 1 to risk weighted assets 575,692 13.98 % 185,274 4.50 % 267,618 6.50 % (1) Amounts are shown exclusive of the capital conservation buffer of 2.50%.
The following table shows the regulatory capital ratios for the Company and the Bank at the dates indicated: 75 Actual For Capital Adequacy Purposes (1) To Be Considered Well Capitalized Amount Ratio Amount Ratio Amount Ratio (In thousands) December 31, 2023 Consolidated: Total capital to risk weighted assets $ 788,207 15.64 % $ 403,277 8.00 % N/A N/A Tier 1 capital to risk weighted assets 654,555 12.98 % 302,458 6.00 % N/A N/A Tier 1 capital to average assets 654,555 8.07 % 324,511 4.00 % N/A N/A Common equity tier 1 to risk weighted assets 654,555 12.98 % 226,843 4.50 % N/A N/A Bank: Total capital to risk weighted assets $ 752,828 14.93 % $ 403,266 8.00 % $ 504,083 10.00 % Tier 1 capital to risk weighted assets 689,724 13.68 % 302,450 6.00 % 403,266 8.00 % Tier 1 capital to average assets 689,724 8.50 % 324,515 4.00 % 405,643 5.00 % Common equity tier 1 to risk weighted assets 689,724 13.68 % 226,837 4.50 % 327,654 6.50 % December 31, 2022 Consolidated: Total capital to risk weighted assets $ 721,324 14.87 % $ 387,957 8.00 % N/A N/A Tier 1 capital to risk weighted assets 597,022 12.31 % 290,967 6.00 % N/A N/A Tier 1 capital to average assets 597,022 7.52 % 317,738 4.00 % N/A N/A Common equity tier 1 to risk weighted assets 597,022 12.31 % 218,226 4.50 % N/A N/A Bank: Total capital to risk weighted assets $ 715,458 14.75 % $ 388,107 8.00 % $ 485,134 10.00 % Tier 1 capital to risk weighted assets 668,864 13.79 % 291,080 6.00 % 388,107 8.00 % Tier 1 capital to average assets 668,864 8.44 % 317,111 4.00 % 396,389 5.00 % Common equity tier 1 to risk weighted assets 668,864 13.79 % 218,310 4.50 % 315,337 6.50 % (1) Amounts are shown exclusive of the capital conservation buffer of 2.50%.
As of December 31, 2022, we had purchased $451.7 million of PACE assessment securities from Pace Funding Group LLC and had a remaining commitment of $150.0 million. The PACE assessments have equal-lien priority with property taxes and generally rank senior to first lien mortgages.
These investments are to be held in the Company's available for sale and held-to-maturity investment portfolio. As of December 31, 2023, we had purchased $718.2 million of PACE assessment securities from Pace Funding Group LLC and had a remaining commitment of $85.0 million. The PACE assessments have equal-lien priority with property taxes and generally rank senior to first lien mortgages.
Recently Issued Accounting Pronouncements See Note 2 of our consolidated financial statements, which are included beginning on page 89 of this report for a discussion of recently issued accounting pronouncements that have been or will be adopted by us that will require enhanced disclosures in our financial statements in future periods.
Recently Issued Accounting Pronouncements See Note 2 of our consolidated financial statements, which are included beginning on page 93 of this report for a discussion of recently issued accounting pronouncements that have been or will be adopted by us that will require enhanced disclosures in our financial statements in future periods. 56 Impact of Inflation and Changing Interest Rates Our consolidated financial statements have been prepared in accordance with GAAP, which requires us to measure financial position and operating results primarily in terms of historic dollars.
The $28.6 million increase was primarily due to net interest income which increased by $65.5 million, offset by an increase in the provision for loan losses of $15.3 million, a decrease of non-interest income of $4.5 million, an increase in non-interest expense of $8.3 million, and an increase in income tax expense of $8.9 million.
The $6.5 million increase was primarily due to net interest income which increased by $21.5 million, and an increase of non-interest income of $5.4 million, offset by an increase in non-interest expense of $10.6 million, an increase in income tax expense of $10.1 million.
Additional discussion of our provision for loan losses is included in “ Provision for Loan Losses” below. Net Interest Income Net interest income, representing interest income less interest expense, is a significant contributor to our revenues and earnings. We generate interest income from interest, dividends and prepayment fees on interest-earning assets, including loans, investment securities and other short-term investments.
Net Interest Income Net interest income, representing interest income less interest expense, is a significant contributor to our revenues and earnings. We generate interest income from interest, dividends and prepayment fees on interest-earning assets, including loans, investment securities and other short-term investments. We incur interest expense from interest paid on interest-bearing liabilities, including interest-bearing deposits, FHLBNY advances and other borrowings.
The yield on average earning assets was 3.47% for the year ended December 31, 2022, compared to 2.86% for the same period in 2021, an increase of 61 basis points. This increase was driven primarily by an increase in yields on loans and securities due to a 55 increase in the Federal Funds rate.
The yield on average earning assets was 4.67% for the year ended December 31, 2023, compared to 3.47% for the same period in 2022, an increase of 120 basis points. This increase was driven primarily by the rising rate environment and an increase in average loan balances.
As of December 31, 2022, our total assets were $7.84 billion, our total loans, net of deferred fees and allowance were $4.06 billion, our total deposits were $6.60 billion, and our stockholders' equity was $509.0 million. As of December 31, 2022, our trust business held $38.08 billion in assets under custody and $13.44 billion in assets under management.
As of December 31, 2023, our total assets were $7.97 billion, our total loans, net of deferred fees and allowance were $4.35 billion, our total deposits were $7.01 billion, and our stockholders' equity was $585.4 million. As of December 31, 2023, our trust business held $41.66 billion in assets under custody and $14.82 billion in assets under management.
The net changes attributable to the combined impact of both rate and volume have been allocated proportionately to the changes due to volume and the changes due to rate: Year Ended December 31, 2022 over December 31, 2021 (In thousands) Volume Changes Due To Rate Net Change Interest-earning assets: Interest-bearing deposits in banks $ (1,213) $ 2,748 $ 1,535 Securities and FHLBNY stock 25,037 26,765 51,802 Resell Agreements 862 1,433 2,295 Total loans, net 17,058 5,273 22,331 Total interest income 41,744 36,219 77,963 Interest-bearing liabilities: Savings, NOW and money market deposits 1,076 4,205 5,281 Time deposits (243) 195 (48) Total deposits 833 4,400 5,233 FHLBNY advances 2,368 2,370 4,738 Other Borrowings 2,340 116 2,456 Total borrowings 4,708 2,486 7,194 Total interest expense 5,541 6,886 12,427 Change in net interest income $ 36,203 $ 29,333 $ 65,536 56 Year Ended December 31, 2021 over December 31, 2020 (In thousands) Volume Changes Due To Rate Net Change Interest-earning assets: Interest-bearing deposits in banks $ 227 $ (273) $ (46) Securities and FHLBNY stock 15,183 (7,615) 7,568 Resell Agreements 1,151 23 1,174 Total loans, net (13,784) (4,881) (18,665) Total interest income 2,777 (12,746) (9,969) Interest-bearing liabilities: Savings, NOW and money market deposits 664 (3,179) (2,515) Time deposits (466) (1,648) (2,114) Total deposits 198 (4,827) (4,629) FHLBNY advances — (27) (27) Other Borrowings 199 200 399 Total borrowings 199 173 372 Total interest expense 397 (4,654) (4,257) Change in net interest income $ 2,380 $ (8,092) $ (5,712) Provision for Loan Losses We establish an allowance for loan losses through a provision for loan losses charged as an expense in our Consolidated Statements of Income.
The net changes attributable to the combined impact of both rate and volume have been allocated proportionately to the changes due to volume and the changes due to rate: Year Ended December 31, 2023 over December 31, 2022 (In thousands) Volume Changes Due To Rate Net Change Interest-earning assets: Interest-bearing deposits in banks $ (2,823) $ 6,416 $ 3,593 Securities (6,638) 60,519 53,881 Resell Agreements (4,298) 766 (3,532) Total loans, net 27,206 18,440 45,646 Total interest income 13,447 86,141 99,588 Interest-bearing liabilities: Savings, NOW and money market deposits 5,874 43,875 49,749 Time deposits (347) 3,161 2,814 Brokered CDs 17,505 — 17,505 Total deposits 23,032 47,036 70,068 FHLBNY advances (275) 892 617 Other borrowings 5,517 1,915 7,432 Total borrowings 5,242 2,807 8,049 Total interest expense 28,274 49,843 78,117 Change in net interest income $ (14,827) $ 36,298 $ 21,471 59 Year Ended December 31, 2022 over December 31, 2021 (In thousands) Volume Changes Due To Rate Net Change Interest-earning assets: Interest-bearing deposits in banks $ (1,213) $ 2,748 $ 1,535 Securities 25,037 26,765 51,802 Resell Agreements 862 1,433 2,295 Total loans, net 17,058 5,273 22,331 Total interest income 41,744 36,219 77,963 Interest-bearing liabilities: Savings, NOW and money market deposits 1,076 4,205 5,281 Time deposits (243) 195 (48) Total deposits 833 4,400 5,233 FHLBNY advances 2,368 2,370 4,738 Other borrowings 2,340 116 2,456 Total borrowings 4,708 2,486 7,194 Total interest expense 5,541 6,886 12,427 Change in net interest income $ 36,203 $ 29,333 $ 65,536 Provision for Credit Losses We establish an allowance for credit losses through a provision for credit losses charged as an expense in our Consolidated Statements of Income.
While interest rates are greatly influenced by changes in the inflation rate, they do not necessarily change at the same rate or in the same magnitude as the inflation rate.
Therefore, the effect of changes in interest rates will have a more significant effect on our performance than will the effect of changing prices and inflation in general. While interest rates are greatly influenced by changes in the inflation rate, they do not necessarily change at the same rate or in the same magnitude as the inflation rate.
Our effective tax rate was 24.7% for the year ended December 31, 2022, compared to 25.2% for the same period in 2021. The decrease in the effective tax rate was related to an elected change in taxable income recognition.
Our effective tax rate was 29.5% for the year ended December 31, 2023, compared to 24.7% for the same period in 2022.
We plan to selectively evaluate the purchase of additional loan pools that meet our underwriting criteria as part of our strategic plan. 62 The following table sets forth the composition of our loan portfolio, as of December 31, 2022 and December 31, 2021: (In thousands) December 31, 2022 December 31, 2021 Amount % of total loans Amount % of total loans Commercial portfolio: Commercial and industrial $ 925,641 22.5 % $ 729,385 22.0 % Multifamily mortgages 967,521 23.6 % 821,801 24.8 % Commercial real estate mortgages 335,133 8.2 % 369,429 11.2 % Construction and land development mortgages 37,696 0.9 % 31,539 1.0 % Total commercial portfolio 2,265,991 55.2 % 1,952,154 59.0 % Retail portfolio: Residential real estate lending 1,371,779 33.5 % 1,063,682 32.2 % Consumer and other 463,999 11.3 % 291,818 8.8 % Total retail portfolio 1,835,778 44.8 % 1,355,500 41.0 % Total loans 4,101,769 100.0 % 3,307,654 100.0 % Net deferred loan origination costs (fees) 4,233 4,570 Allowance for loan losses (45,031) (35,866) Total loans, net $ 4,060,971 $ 3,276,358 Commercial loan portfolio Our commercial loan portfolio comprised 55.2% of our total loan portfolio at December 31, 2022 and 59.0% of our total loan portfolio at December 31, 2021.
We plan to selectively evaluate the purchase of additional loan pools that meet our underwriting criteria as part of our strategic plan. 65 The following table sets forth the composition of our loan portfolio, as of December 31, 2023 and December 31, 2022: (In thousands) December 31, 2023 December 31, 2022 Amount % of total loans Amount % of total loans Commercial portfolio: Commercial and industrial $ 1,010,998 22.9 % $ 925,641 22.5 % Multifamily mortgages 1,148,120 26.1 % 967,521 23.6 % Commercial real estate mortgages 353,432 8.0 % 335,133 8.2 % Construction and land development mortgages 23,626 0.5 % 37,696 0.9 % Total commercial portfolio 2,536,176 57.5 % 2,265,991 55.2 % Retail portfolio: Residential real estate lending 1,425,596 32.3 % 1,371,779 33.5 % Consumer solar (1) 408,260 9.3 % 416,849 10.2 % Consumer and other (1) 41,287 0.9 % 47,150 1.1 % Total retail portfolio 1,875,143 42.5 % 1,835,778 44.8 % Total loans 4,411,319 100.0 % 4,101,769 100.0 % Net deferred loan origination costs (fees) (2) — 4,233 Allowance for credit losses (3) (65,691) (45,031) Total loans, net $ 4,345,628 $ 4,060,971 (1) The Company adopted the CECL standard on January 1, 2023.
Over the course of 2021, we were recognized for our leadership on the global stage for our work on climate change with governance positions in the United Nations convened Net Zero Banking Alliance and the Global Partnership for Carbon Accounting Financials and an advisory role for the Glasgow Finance Alliance for Net Zero.
We hold governance positions in the United Nations convened Net Zero Banking Alliance as part of the Steering Group, the Global Partnership for Carbon Accounting Financials as part of the Steering Committee, and as an advisory role for the Glasgow Finance Alliance for Net Zero.
We will evaluate the recoverability of our net deferred tax asset on a periodic basis and record decreases (increases) as a deferred tax provision (benefit) in the Consolidated Statements of Income as appropriate. Deposits Deposits represent our primary source of funds. We are focused on growing our core deposits through relationship-based banking with our business and consumer clients.
Our management concluded that it was more-likely-than-not that the entire amount will be realized. We will evaluate the recoverability of our net deferred tax asset on a periodic basis and record decreases (increases) as a deferred tax provision (benefit) in the Consolidated Statements of Income as appropriate. Deposits Deposits represent our primary source of funds.
The liability portion of the balance sheet serves as our primary source of liquidity. We plan to meet our future cash needs through the generation of deposits. Customer deposits have historically provided a sizeable source of relatively stable and low-cost funds. We are also a member of the FHLBNY, from which we can borrow for leverage or liquidity purposes.
Customer deposits have historically provided a sizeable source of relatively stable and low-cost funds. We are also a member of the FHLBNY, from which we can borrow for leverage or liquidity purposes. The FHLBNY requires that securities and qualifying loans be pledged to secure any advances.
The increase was primarily driven by increased loan purchases within our residential solar loans portfolio. Maturities and Sensitivity of Loans to Changes in Interest Rates The information in the following table is based on the contractual maturities of individual loans, including loans that may be subject to renewal at their contractual maturity.
Maturities and Sensitivity of Loans to Changes in Interest Rates The information in the following table is based on the contractual maturities of individual loans, including loans that may be subject to renewal at their contractual maturity. Renewal of these loans is subject to review and credit approval, as well as 67 modification of terms upon maturity.
The increase in the allowance for loan losses was primarily due to higher loan balances and increases in qualitative factors, offset by charge-offs primarily related to our focus on reducing nonperforming assets. 66 Allocation of Allowance for Loan Losses The following table presents the allocation of the allowance and the percentage of the total amount of loans in each loan category listed as of the dates indicated: At December 31, 2022 At December 31, 2021 (In thousands) Amount % of total loans Amount % of total loans Commercial Portfolio: Commercial and industrial $ 12,916 22.5 % $ 10,652 22.0 % Multifamily 7,104 23.6 % 4,760 24.8 % Commercial real estate 3,627 8.2 % 7,273 11.2 % Construction and land development 825 0.9 % 405 1.0 % Total commercial portfolio $ 24,472 55.2 % $ 23,090 59.0 % Retail Portfolio: Residential real estate lending $ 11,338 33.5 % $ 9,008 32.2 % Consumer and other 9,221 11.3 % 3,768 8.8 % Total retail portfolio $ 20,559 44.8 % $ 12,776 41.0 % Total allowance for loan losses $ 45,031 $ 35,866 Nonperforming Assets Nonperforming assets include all loans categorized as nonaccrual or restructured, other real estate owned and other repossessed assets.
Additionally, the allowance for expected credit losses on off-balance sheet loan exposures was increased by $2.7 million to recognize the Day 1 cumulative impact of adopting the CECL standard. 69 Allocation of Allowance for Credit Losses on Loans The following table presents the allocation of the allowance and the percentage of the total amount of loans in each loan category listed as of the dates indicated: At December 31, 2023 At December 31, 2022 (In thousands) Amount % of total loans Amount % of total loans Commercial Portfolio: Commercial and industrial $ 18,331 22.9 % $ 12,916 22.5 % Multifamily 2,133 26.1 % 7,104 23.6 % Commercial real estate 1,276 8.0 % 3,627 8.2 % Construction and land development 24 0.5 % 825 0.9 % Total commercial portfolio $ 21,764 57.5 % $ 24,472 55.2 % Retail Portfolio: Residential real estate lending 13,273 32.3 % 11,338 33.5 % Consumer solar 27,978 9.3 % 6,867 10.2 % Consumer and other 2,676 0.9 % 2,354 1.1 % Total retail portfolio $ 43,927 42.5 % $ 20,559 44.8 % Total allowance for credit losses $ 65,691 $ 45,031 Nonperforming Assets Nonperforming assets include all loans categorized as nonaccrual, other real estate owned and other repossessed assets.
The major categories of our retail loan portfolio are discussed below: Residential real estate lending . Our residential one-to-four family mortgage loans are residential mortgages that are primarily secured by single-family homes, which can be owner occupied or investor owned.
Our residential one-to-four family mortgage loans are residential mortgages that are primarily secured by single-family homes, which can be owner occupied or investor owned. These loans are either originated by our loan officers or purchased from other originators with the servicing retained by such originators.
As of December 31, 2022 and December 31, 2021, we had approximately $643.6 million and $989.6 million, respectively, in political deposits which are primarily in demand deposits. 69 The following table sets forth the average balance amounts and the average rates paid on deposits held by us for the years ended December 31, 2022, December 31, 2021 and December 31, 2020. 2022 2021 2020 Average Balance Income / Expense Average Rate Paid Average Balance Income / Expense Average Rate Paid Average Balance Income / Expense Average Rate Paid (In thousands) Non-interest-bearing demand and transaction deposits $ 3,746,152 $ — 0.00 % $ 3,017,621 $ — 0.00 % $ 2,798,106 $ — 0.00 % NOW accounts 207,675 450 0.22 % 203,144 170 0.08 % 334,669 440 0.13 % Money market deposit accounts 2,391,641 8,753 0.37 % 2,054,286 4,237 0.21 % 1,748,288 6,445 0.37 % Savings accounts 382,372 866 0.23 % 365,154 381 0.10 % 214,884 418 0.19 % Time deposits 185,692 961 0.52 % 248,507 1,035 0.42 % 335,433 3,149 0.94 % Brokered CD 9,338 26 0.28 % — — — % — — — % $ 6,922,870 $ 11,056 0.16 % $ 5,888,712 $ 5,823 0.10 % $ 5,431,380 $ 10,452 0.19 % We had uninsured deposits of $4.3 million, $4.3 million, and $3.2 million for the years ended 2022, 2021, and 2020, respectively.
As of December 31, 2023 and December 31, 2022, we had approximately $1.19 billion and $643.6 million, respectively, in on-balance sheet and off-balance sheet political deposits which are primarily in demand deposits. 72 The following table sets forth the average balance amounts and the average rates paid on deposits held by us for the years ended December 31, 2023, December 31, 2022 and December 31, 2021. 2023 2022 2021 Average Balance Income / Expense Average Rate Paid Average Balance Income / Expense Average Rate Paid Average Balance Income / Expense Average Rate Paid (In thousands) Non-interest-bearing demand and transaction deposits $ 3,045,013 $ — 0.00 % $ 3,746,152 $ — 0.00 % $ 3,017,621 $ — 0.00 % NOW accounts 193,765 1,804 0.93 % 207,675 450 0.22 % 203,144 170 0.08 % Money market deposit accounts 2,787,911 54,334 1.95 % 2,391,641 8,753 0.37 % 2,054,286 4,237 0.21 % Savings accounts 362,731 3,680 1.01 % 382,372 866 0.23 % 365,154 381 0.10 % Time deposits 167,167 21,286 12.73 % 185,692 961 0.52 % 248,507 1,035 0.42 % Brokered CDs 364,833 20 0.01 % 9,338 26 0.28 % — — — % $ 6,921,420 $ 81,124 1.17 % $ 6,922,870 $ 11,056 0.16 % $ 5,888,712 $ 5,823 0.10 % Additionally, we utilize a custodial deposit transference structure through the IntraFi ICS network for certain deposit programs whereby we, acting as custodian of account holder funds, places a portion of such account holder funds that are not needed to support near term settlement at one or more third-party banks insured by the FDIC (each, a "Program Bank").
The primary effect of inflation on our operations is reflected in increased operating costs. Unlike most industrial companies, our assets and liabilities are primarily monetary in nature. Therefore, the effect of changes in interest rates will have a more significant effect on our performance than will the effect of changing prices and inflation in general.
Changes in the relative value of money due to inflation or recession generally are not considered. The primary effect of inflation on our operations is reflected in increased operating costs. Unlike most industrial companies, our assets and liabilities are primarily monetary in nature.
During the year ended December 31, 2022, the CRE loan portfolio decreased by 9.3% from $369.4 million at December 31, 2021. 63 Retail loan portfolio Our retail loan portfolio comprised 44.8% of our total loan portfolio at December 31, 2022 and 41.0% of our loan portfolio at December 31, 2021.
Our CRE loans totaled $353.4 million at December 31, 2023, which comprised 8.0% of our total loan portfolio. During the year ended December 31, 2023, the CRE loan portfolio increased by 5.5% from $335.1 million at December 31, 2022.
Through our branch network, online, mobile and direct banking channels, we offer a variety of deposit products including demand deposit accounts, money market deposits, NOW accounts, savings and certificates of deposit. We bank politically active customers, such as campaigns, PACs, and state and national party committees, which we refer to as political deposits.
Through our branch network, online, mobile and direct banking channels, we offer a variety of deposit products including demand deposit accounts, money market deposits, NOW accounts, savings and certificates of deposit, Insured Cash Sweep ("ICS") accounts, Certificate of Deposit Account Registry Service accounts, and brokered certificates of deposit.
Over the last two years we have made the following loan purchases: • In 2022, we purchased $196.4 million of residential solar loans, $122.1 million of residential mortgages, $34.9 million of commercial loans that are unconditionally guaranteed by the U.S.
We actively purchase loans from other originating institutions that we believe provide attractive risk-adjusted returns or for CRA purposes. Over the last two years we have made the following loan purchases: • In 2023, we purchased $39.2 million of residential solar loans, $13.7 million of residential mortgages, $1.7 million of commercial loans that are unconditionally guaranteed by the U.S.
The average rate on interest-bearing liabilities was 0.55% for the year ended December 31, 2022, an increase of 33 basis points from the same period in 2021, which was primarily due to an increase in the rate paid due to the increase in the Federal Funds rate, as well the increased use of short-term borrowings.
The average rate on interest-bearing liabilities was 2.29% for the year ended December 31, 2023, an increase of 174 basis points from the same period in 2022, which was primarily due to the rising rate environment, growth in interest-bearing deposits as customers moved into reciprocal products, as well as the utilization of brokered CDs and other borrowings.
If the borrower’s performance under the new terms is not reasonably assured, the loan remains classified as a nonaccrual loan. 67 The following table sets forth information about our nonperforming assets as of December 31, 2022 and December 31, 2021: (In thousands) December 31, 2022 December 31, 2021 Loans 90 days past due and accruing $ — $ — Nonaccrual loans excluding held for sale loans and restructured loans 8,197 14,722 Nonaccrual loans held for sale 6,914 1,000 Troubled debt restructured loans - nonaccrual 13,502 13,497 Troubled debt restructured loans - accruing 6,102 24,997 Other real estate owned — 307 Impaired securities 36 63 Total nonperforming assets $ 34,751 $ 54,586 Nonaccrual loans: Commercial and industrial $ 9,629 $ 8,313 Multifamily 3,828 2,907 Commercial real estate 4,851 4,054 Construction and land development — — Total commercial portfolio 18,308 15,274 Residential real estate lending 1,807 12,525 Consumer and other 1,584 420 Total retail portfolio 3,391 12,945 Total nonaccrual loans $ 21,699 $ 28,219 Nonperforming assets to total assets 0.44 % 0.77 % Nonaccrual assets to total assets 0.36 % 0.42 % Nonaccrual loans to total loans 0.53 % 0.85 % Allowance for loan losses to nonaccrual loans 207.53 % 127.10 % Allowance for loan losses to total loans 1.10 % 1.08 % Ratio of net charge-offs (recoveries) to average loans outstanding during the period: Commercial and industrial (0.03) % 0.08 % Multifamily 0.05 % 0.46 % Commercial real estate 0.00 % 0.08 % Construction and land development 1.12 % (0.01) % Total commercial portfolio 0.03 % 0.25 % Residential real estate lending 0.05 % (0.18) % Consumer and other 1.23 % 1.05 % Total retail portfolio 0.33 % 0.03 % Total 0.16 % 0.16 % Nonperforming assets totaled $34.8 million , or 0.44% of period-end total assets at December 31, 2022 , a decrease of $19.8 million , compared with $54.6 million , or 0.77% of period-end total assets at December 31, 2021.
Loans are returned to accrual status when principal and interest amounts contractually due are brought current and future payments are reasonably assured. 70 The following table sets forth information about our nonperforming assets as of December 31, 2023 and December 31, 2022: (In thousands) December 31, 2023 December 31, 2022 Loans 90 days past due and accruing $ — $ — Nonaccrual loans held for sale 989 6,914 Nonaccrual loans - Commercial 23,189 18,308 Nonaccrual loans - Retail 9,994 3,391 Nonaccrual securities 31 36 Total nonperforming assets $ 34,203 28,649 Nonaccrual loans: Commercial and industrial $ 7,533 9,629 Multifamily — 3,828 Commercial real estate 4,490 4,851 Construction and land development 11,166 — Total commercial portfolio 23,189 18,308 Residential real estate lending 7,218 1,807 Consumer solar 2,673 1,584 Consumer and other 103 — Total retail portfolio 9,994 3,391 Total nonaccrual loans $ 33,183 21,699 Nonperforming assets to total assets 0.43 % 0.37 % Nonaccrual assets to total assets 0.43 % 0.36 % Nonaccrual loans to total loans 0.75 % 0.53 % Allowance for credit losses on loans to nonaccrual loans 197.97 % 207.53 % Allowance for credit losses on loans to total loans 1.49 % 1.10 % Ratio of net charge-offs (recoveries) to average loans outstanding during the period: Commercial and industrial 0.17 % (0.03) % Multifamily 0.22 % 0.05 % Commercial real estate 0.00 % — % Construction and land development 15.21 % 1.12 % Total commercial portfolio 0.36 % 0.03 % Residential real estate lending (0.05) % 0.05 % Consumer solar 1.39 % 1.32 % Consumer and other 0.53 % 0.39 % Total retail portfolio 0.29 % 0.33 % Total 0.33 % 0.16 % Nonperforming assets totaled $34.2 million , or 0.43% of period-end total assets at December 31, 2023 , a increase of $5.6 million, compared with $28.6 million, or 0.37% of period-end total assets at December 31, 2022.
In addition, the allowance includes $0.7 million on-balance-sheet and $48.0 thousand off-balance-sheet reserves for loan downgrades, increases in usage of lines of credit, construction disbursements and reclassification of product types subsequent to the acquisition. 65 The following tables presents, by loan type, the changes in the allowance for the periods indicated: Year Ended December 31, (In thousands) 2022 2021 2020 Balance at beginning of period $ 35,866 $ 41,589 $ 33,847 Loan charge-offs: Commercial portfolio: Commercial and industrial — 813 11,293 Multifamily 416 4,081 — Commercial real estate — 314 3,787 Construction and land development 389 — 970 Retail portfolio: Residential real estate lending 2,448 1,081 492 Consumer and other 5,143 2,699 1,691 Total loan charge-offs 8,396 8,988 18,233 Recoveries of loans previously charged-off: Commercial portfolio: Commercial and industrial 274 221 57 Construction and land development 2 3 1 Retail portfolio: Residential real estate lending 1,800 3,168 975 Consumer and other 483 160 151 Total loan recoveries 2,559 3,552 1,184 Net (recoveries) charge-offs 5,837 5,436 17,049 Provision for (recovery of) loan losses 15,002 (287) 24,791 Balance at end of period $ 45,031 $ 35,866 $ 41,589 The allowance for loan losses increased $9.1 million to $45.0 million at December 31, 2022 from $35.9 million at December 31, 2021.
Year Ended December 31, (In thousands) 2023 2022 2021 Beginning balance $ 45,031 $ 35,866 $ 41,589 Adoption of ASU No. 2016-13 21,229 — — Loan charge-offs: Commercial portfolio: Commercial and industrial 1,726 — 813 Multifamily 2,367 416 4,081 Commercial real estate — — 314 Construction and land development 4,664 389 — Retail portfolio: Residential real estate lending 65 2,448 1,081 Consumer solar 6,966 4,942 2,424 Consumer and other 270 201 275 Total loan charge-offs 16,058 8,396 8,988 Recoveries of loans previously charged-off: Commercial portfolio: Commercial and industrial 53 274 221 Multifamily 20 — — Construction and land development — 2 3 Retail portfolio: Residential real estate lending 706 1,800 3,168 Consumer solar 1,211 423 87 Consumer and other 36 60 73 Total loan recoveries 2,026 2,559 3,552 Net charge-offs 14,032 5,837 5,436 Provision for credit losses 13,463 15,002 (287) Balance at end of period $ 65,691 $ 45,031 $ 35,866 The allowance for credit losses increased $20.7 million to $65.7 million at December 31, 2023 from $45.0 million at December 31, 2022.
We do not intend to sell these securities and we believe it is more likely than not that we will be required to sell them before full recovery of their amortized cost basis, which may be at the time of their maturity. 59 The following table is a summary of our investment portfolio, using market value for available for sale securities and amortized cost for held-to-maturity securities, as of the dates indicated.
The following table is a summary of our investment portfolio, using market value for available for sale securities and amortized cost for held-to-maturity securities, as of the dates indicated.
In addition, we maintain borrowing capacity of approximately $151.7 million with the Federal Reserve’s discount window that is secured by certain securities from our portfolio which are not pledged for other purposes. We also had $77.7 million in subordinated debt, net of issuance costs.
At December 31, 2023, we had $4.4 million in advances from the FHLBNY and a remaining credit availability of $2.03 billion. In addition, we maintain additional borrowing capacity of approximately $588.0 million with the Federal Reserve’s discount window or Bank Term Funding Program ("BTFP") that is secured by certain securities from our portfolio which are not pledged for other purposes.
Our net interest margin was 3.22% fo r the year ended December 31, 2022, an increase of 45 b asis points from 2.77% in the same period in 2021.
Our net interest margin was 3.41% fo r the year ended December 31, 2023, an increase of 19 b asis points from 58 3.22% in the same period in 2022. This was largely due to the continued loan growth, as well as increase in yields earned on loans and securities outpacing the increase in the cost of funds.
Renewal of these loans is subject to review and credit approval, as well as modification of terms upon maturity. Actual repayments of loans may differ from the maturities reflected below because borrowers have the right to prepay obligations with or without prepayment penalties.
Actual repayments of loans may differ from the maturities reflected below because borrowers have the right to prepay obligations with or without prepayment penalties. The following table summarizes our loans held for investment portfolio at December 31, 2023 by maturity date.
The increase was primarily due to a $4.9 million increase in compensation expense due to increased headcount, a $3.6 million increase in other expense related mainly to recruiting services, travel expenses, and other miscellaneous expense, and a $1.7 million increase in data processing expense related to the modernization of the Trust Department, offset by a $2.6 million decrease in professional fees, where in the prior year professional fees were incurred related to our holding company formation and chief executive officer search. 58 Income Taxes We had a provision for income tax expense of $26.7 million for the year ended December 31, 2022 , compared to $17.8 million for the same period in 2021.
The increase was primarily due to a $11.1 million increase in compensation expense due to increased headcount, corporate incentive payments, and temporary personnel costs, an increase in federal deposit insurance premiums expense of $0.8 million, and an increase in advertising and promotion expense of $0.5 million, offset by a $0.8 million decrease in professional fees, and a $0.4 million decrease in other expense. 61 Income Taxes We had a provision for income tax expense of $36.8 million for the year ended December 31, 2023 , compared to $26.7 million for the same period in 2022.
As of December 31, 2022, 81% of our residential one-to-four family mortgage loans were either originated by our loan officers since 2012 or were acquired in our acquisition of NRB, 17% were purchased from two third parties on or after July 2014, and 2% were purchased by us from other originators before 2010.
Our residential real estate lending portfolio is 99% first mortgage loans and 1% second mortgage loans. As of December 31, 2023, approximately 80% of our residential one-to-four family mortgage loans were either originated by our loan officers since 2012 or were acquired in our acquisition of New Resource Bank, and approximately 20% were purchased or acquired.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

3 edited+0 added−0 removed22 unchanged
Biggest changeChange in Market Interest Rates as of December 31, 2022 Estimated Increase (Decrease) in: Immediate Shift Economic Value of Equity Economic Value of Equity ($) Year 1 Net Interest Income Year 1 Net Interest Income ($) +400 basis points -27.9% (352,246) -13.1% (35,722) +300 basis points -19.2% (242,343) -5.2% (14,132) +200 basis points -10.2% (128,373) -0.8% (2,051) +100 basis points -2.9% (36,361) 0.9% 2,578 -100 basis points -3.9% (48,539) -2.3% (6,175) 75
Biggest changeChange in Market Interest Rates as of December 31, 2023 Estimated Increase (Decrease) in: Immediate Shift Economic Value of Equity Economic Value of Equity ($) Year 1 Net Interest Income Year 1 Net Interest Income ($) +400 basis points -24.0% (358,682) -11.7% (30,832) +300 basis points -15.5% (232,293) -6.0% (15,696) +200 basis points -8.3% (123,513) -2.0% (5,368) +100 basis points -1.8% (26,588) -0.1% (235) -100 basis points -3.2% (47,367) -2.3% (6,185) -200 basis points -6.5% (97,549) -3.5% (9,140) 78
The projections assume immediate, parallel shifts 74 downward of the yield curve of 100 basis points and immediate, parallel shifts upward of the yield curve of 100, 200, 300 and 400 basis points. The results of this simulation analysis are hypothetical and should not be relied on as indicative of expected operating results.
The projections assume immediate, parallel shifts 77 downward of the yield curve of 100 and 200 basis points and immediate, parallel shifts upward of the yield curve of 100, 200, 300 and 400 basis points. The results of this simulation analysis are hypothetical and should not be relied on as indicative of expected operating results.
Potential changes to our net interest income and economic value of equity in hypothetical rising and declining rate scenarios calculated as of December 31, 2022 are presented in the following table.
Potential changes to our net interest income and economic value of equity in hypothetical rising and declining rate scenarios calculated as of December 31, 2023 are presented in the following table.

Other AMAL 10-K year-over-year comparisons