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What changed in Metropolitan Bank Holding Corp.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Metropolitan Bank Holding 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.

+421 added−392 removedSource: 10-K (2024-02-28) vs 10-K (2023-02-28)

Top changes in Metropolitan Bank Holding Corp.'s 2023 10-K

421 paragraphs added · 392 removed · 284 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

116 edited+34 added−35 removed132 unchanged
Biggest changeFor example, a risk weight of 0% is assigned to cash and U.S. government securities, a risk weight of 50% is generally assigned to prudently underwritten first lien one-to four-family residential mortgages, a risk weight of 100% is assigned to commercial and consumer loans, a risk weight of 150% is assigned to certain past due loans or are on non-accrual status and a risk weight of between 0% to 600% is assigned to permissible equity interests, depending on certain specified factors.
Biggest changeFor example, a risk weight of 0% is assigned to cash and U.S. government securities, a risk weight of 50% is generally assigned to prudently underwritten first lien one-to four-family residential mortgages, a risk weight of 100% is assigned to commercial and consumer loans, a risk weight of 150% is assigned to certain past due loans or loans on non-accrual status and a risk weight of between 0% to 600% is assigned to permissible equity interests, depending on certain specified factors. 18 Table of Contents In addition to establishing the minimum regulatory capital requirements, the regulations limit capital distributions and certain discretionary bonus payments to management if the institution does not hold a “capital conservation buffer” consisting of 2.5% of common equity Tier 1 capital to risk-weighted assets above the amount necessary to meet its minimum risk-based capital requirements.
By combining the high-tech service and relationship-based focus of a community bank with an extensive suite of financial products and services, the Company is well-positioned to continue to capitalize on the significant growth opportunities available in the New York metropolitan area.
By combining high-tech service with the relationship-based focus of a community bank with an extensive suite of financial products and services, the Company is well-positioned to continue to capitalize on the significant growth opportunities available in the New York metropolitan area.
All payments received on non-accrual loans are generally applied to principal. Loans are considered for return to accrual status when they become current as to principal and interest and remain current for a period of six consecutive months or when, in the opinion of management, the Company expects to receive all of its original principal and interest.
Payments received on non-accrual loans are generally applied to principal. Loans are considered for return to accrual status when they become current as to principal and interest and remain current for a period of six consecutive months or when, in the opinion of management, the Company expects to receive all of its original principal and interest.
The Board of Directors has the overall responsibility for the investment portfolio, including approval of the investment policy. The ALCO and management are responsible for implementation of the Company’s investment policy and monitoring its investment performance. The ALCO reviews the status of its investment portfolio quarterly.
The Board of Directors has the overall responsibility for the investment portfolio, including approval of the investment policy. The ALCO and management are responsible for implementation of the Company’s investment policy and monitoring its investment performance. The ALCO reviews the status of the investment portfolio quarterly.
The operations of the Company are further subject to the: ● The Truth in Savings Act and Regulation DD promulgated thereunder, which specifies disclosure requirements with respect to deposit accounts; ● The Right to Financial Privacy Act, which imposes a duty to maintain the confidentiality of consumer financial records and prescribes procedures for complying with administrative subpoenas of financial records; ● The Electronic Funds Transfer Act and Regulation E promulgated thereunder, which govern automatic deposits to and withdrawals from deposit accounts and customers’ rights and liabilities arising from the use of automated teller machines and other electronic banking services; 23 Table of Contents ● The Check Clearing for the 21st Century Act (also known as “Check 21”), which gives “substitute checks,” such as digital check images and copies made from that image, the same legal standing as the original paper check; and ● State unclaimed property or escheatment laws; and ● Cybersecurity regulations, including but not limited to those implemented by NYSDFS.
The operations of the Company are further subject to: ● The Truth in Savings Act and Regulation DD promulgated thereunder, which specifies disclosure requirements with respect to deposit accounts; 23 Table of Contents ● The Right to Financial Privacy Act, which imposes a duty to maintain the confidentiality of consumer financial records and prescribes procedures for complying with administrative subpoenas of financial records; ● The Electronic Funds Transfer Act and Regulation E promulgated thereunder, which govern automatic deposits to and withdrawals from deposit accounts and customers’ rights and liabilities arising from the use of automated teller machines and other electronic banking services; ● The Check Clearing for the 21 st Century Act (also known as “Check 21”), which gives “substitute checks,” such as digital check images and copies made from that image, the same legal standing as the original paper check; ● State unclaimed property or escheatment laws; and ● Cybersecurity regulations, including but not limited to those implemented by NYSDFS.
The Company also originates term loans to standalone medical facilities such as radiology and dialysis centers and medical practices, which are secured by the assets of the company and the personal guaranties of the sponsors/owners of the practice.
The Company also originates term loans to standalone medical facilities such as radiology and dialysis centers and medical practices, which are generally secured by the assets of the company and the personal guaranties of the sponsors/owners of the practice.
In addition, FRB guidance sets forth the supervisory expectation that bank holding companies will inform and consult with FRB staff in advance of issuing a dividend that exceeds earnings for the quarter and should inform the FRB and should eliminate, defer or significantly reduce dividends if (i) net income available to stockholders for the past four quarters, net of dividends previously paid during that period, is not sufficient to fully fund the dividends, (ii) prospective rate of earnings retention is not consistent with the bank holding company’s capital needs and overall current and prospective financial condition, or (iii) the bank holding company will not meet, or is in danger of not meeting, its minimum regulatory capital adequacy ratios.
In addition, FRB guidance sets forth the supervisory expectation that bank holding companies will inform and consult with FRB staff in advance of issuing a dividend that exceeds earnings for the quarter and should inform the FRB and should eliminate, defer or significantly reduce dividends if (i) net income available to stockholders for the past four quarters, net of dividends previously paid during that period, is not sufficient to fully fund the dividends, (ii) prospective rate of earnings retention is not consistent 24 Table of Contents with the bank holding company’s capital needs and overall current and prospective financial condition, or (iii) the bank holding company will not meet, or is in danger of not meeting, its minimum regulatory capital adequacy ratios.
The regulatory structure establishes a comprehensive framework of activities in which a state member bank may engage and is primarily intended for the protection of depositors, customers and the DIF.
The regulatory structure establishes a comprehensive framework which defines the activities in which a state member bank may engage and is primarily intended for the protection of depositors, customers and the DIF.
Regulators have established the CBLR to be set at 8.5% through calendar year 2021 and 9% thereafter. The CARES Act, signed into law in response to the COVID-19 pandemic, temporarily reduced the CBLR to 8%. The Company did not elect to be governed by the CBLR framework and at December 31, 2022, the Company’s capital exceeded all applicable requirements.
Regulators have established the CBLR to be set at 8.5% through calendar year 2021 and 9% thereafter. The CARES Act, signed into law in response to the COVID-19 pandemic, temporarily reduced the CBLR to 8%. The Company did not elect to be governed by the CBLR framework and at December 31, 2023, the Company’s capital exceeded all applicable requirements.
Investments The Company’s investment objectives are primarily to provide and maintain liquidity, establish an acceptable level of interest rate risk and safely invest excess funds when demand for loans is less than deposit growth. Subject to these primary objectives, the Company also seeks to generate a favorable return.
Investments The Company’s investment objectives are primarily to provide and maintain liquidity, manage to an acceptable level of interest rate risk and safely invest excess funds when demand for loans is less than deposit growth. Subject to these primary objectives, the Company also seeks to generate a favorable return.
The Company targets companies that have $200 million of revenues or less. The Company’s lines of credit are generally reviewed on an annual basis. Term loans typically have terms of two to five years and are also reviewed on an annual basis. The credit facilities may be made with either fixed or floating rates.
The Company targets companies that have $400 million of revenues or less. The Company’s lines of credit are generally reviewed on an annual basis. Term loans typically have terms of two to five years and are also reviewed on an annual basis. The credit facilities may be made with either fixed or floating rates.
In March 2022, the FASB issued ASU 2022-02, Financial Instruments - Credit Losses (ASC 326): Troubled Debt Restructurings and Vintage Disclosures. ASU 2022-02 eliminates the accounting guidance for TDRs by creditors while enhancing disclosure requirements for certain loan refinancings and restructurings by creditors when a borrower is experiencing financial difficulty.
Borrowers with Financial Difficulty In March 2022, the FASB issued ASU 2022-02, Financial Instruments - Credit Losses (ASC 326): Troubled Debt Restructurings and Vintage Disclosures. ASU 2022-02 eliminates the accounting guidance for TDRs by creditors while enhancing disclosure requirements for certain loan refinancings and restructurings by creditors when a borrower is experiencing financial difficulty.
The Company is subject to federal income taxation in the same manner as other corporations. For its 2022 taxable year, the Company is subject to a maximum Federal income tax rate of 21%. The Company is subject to California, Connecticut, Kentucky, Massachusetts, New Jersey, New York State, New York City, and Tennessee income taxes on a consolidated basis.
The Company is subject to federal income taxation in the same manner as other corporations. For its 2023 taxable year, the Company is subject to a maximum Federal income tax rate of 21%. The Company is subject to California, Connecticut, Kentucky, Massachusetts, New Jersey, New York State, New York City, and Tennessee income taxes on a consolidated basis.
The FDIC also has issued guidance on risks banks may face from third-party relationships (e.g., relationships under which the third-party provides services to the bank). The guidance generally requires the Company to perform adequate due diligence on the third-party, appropriately document the relationship, and perform adequate oversight and auditing, in order to the limit the risks to the Company.
The FRB also has issued guidance on risks banks may face from third-party relationships (e.g., relationships under which the third-party provides services to the bank). The guidance generally requires the Company to perform adequate due diligence on the third-party, appropriately document the relationship, and perform adequate oversight and auditing, in order to limit the risks to the Company.
A bank holding company that is not well capitalized or well managed, or that is subject to any unresolved supervisory issues, is required to give the FRB prior written notice of any repurchase or redemption of its outstanding equity securities if the gross consideration for repurchase or redemption, when combined with the net consideration paid for all such 24 Table of Contents repurchases or redemptions during the preceding 12 months, will be equal to 10% or more of the company’s consolidated net worth.
A bank holding company that is not well capitalized or well managed, or that is subject to any unresolved supervisory issues, is required to give the FRB prior written notice of any repurchase or redemption of its outstanding equity securities if the gross consideration for repurchase or redemption, when combined with the net consideration paid for all such repurchases or redemptions during the preceding 12 months, will be equal to 10% or more of the company’s consolidated net worth.
Market Area The Company’s primary market includes the New York metropolitan area, specifically Manhattan and the outer boroughs, and Nassau County, New York. This market is well-diversified and represents a large market for middle market businesses, (defined as businesses with annual revenue of $5 million to $200 million).
Market Area The Company’s primary market includes the New York metropolitan area, specifically Manhattan and the outer boroughs, and Nassau County, New York. This market is well-diversified and represents a large market for middle market businesses (defined as businesses with annual revenue of $5 million to $400 million).
Regulation O also requires that any loan to an insider or a related interest of an insider be approved in advance by a majority of the board of directors of the bank, with any interested director not participating in the voting, if the loan, when aggregated with any existing loans to that insider or the insider’s related interests, would exceed the higher of $25,000 or 5% of the bank’s unimpaired capital and surplus.
Regulation O also requires that any loan to an insider or a related interest of an insider be approved in advance by a 20 Table of Contents majority of the board of directors of the bank, with any interested director not participating in the voting, if the loan, when aggregated with any existing loans to that insider or the insider’s related interests, would exceed the higher of $25,000 or 5% of the bank’s unimpaired capital and surplus.
Establishing banking centers in close proximity to a “critical mass” of its clients has advanced the Company’s ability to retain and grow deposits, provided opportunities to deepen client relationships, and enhance franchise value. 6 Table of Contents Business Strategy The Company’s strategy is to continue to build a relationship-oriented commercial bank by organically growing its existing client relationships and developing new long-term clients.
Establishing banking centers in close proximity to a “critical mass” of its clients has advanced the Company’s ability to retain and grow deposits, provided opportunities to deepen client relationships, and enhance franchise value. Business Strategy The Company’s strategy is to continue to build a relationship-oriented commercial bank by organically growing its existing client relationships and developing new long-term clients.
These laws may also require the Company to notify law enforcement, regulators or consumer reporting agencies in the event of a data breach, as well as businesses and governmental agencies that own data. Third-Party Debit Card Products and Merchant Services The Company is also subject to the rules of Visa, Mastercard and other payment networks in which it participates.
These laws may also require the Company to notify law enforcement, regulators or consumer reporting agencies in the event of a data breach, as well as businesses and governmental agencies that own data. 22 Table of Contents Third-Party Debit Card Products and Merchant Services The Company is also subject to the rules of Visa, Mastercard and other payment networks in which it participates.
Accessibility, tailored product offerings, disciplined underwriting and speed of execution enable the Company to distinguish itself in the market of its target clients, which the Company views as under-served by today’s global financial services industry.
Accessibility, tailored product offerings, disciplined underwriting and speed of execution enable the Company to distinguish itself in the markets of its target clients, which the Company views as under-served by today’s global financial services industry.
The Company continues to utilize the Employee Career Path Program that it implemented in 2021 to empower employees to have direct input over their career path. The employee and their manager meet one on one to define a pathway for learning and career progression.
The Company continues to utilize the Employee Career Path Program that it implemented in 2022 to empower employees to have direct input over their career path. The employee and their manager meet one-on-one to define a pathway for learning and career progression.
As it grows, the Company will attempt to continue to convert many of its lending clients into full retail relationships. The Company differentiates itself in the marketplace by offering excellent service, competitive products, innovative solutions, access to senior management, and an ability to make lending decisions in a timely manner combined with certainty of execution.
As it grows, the Company will attempt to continue to convert many of its lending clients into full retail relationships. The Company seeks to differentiate itself in the marketplace by offering excellent service, competitive products, innovative solutions, access to senior management, and an ability to make lending decisions in a timely manner combined with certainty of execution.
The industries include healthcare with a specialty in skilled nursing facilities, auto leasing firms, wholesalers, manufacturers and importers and exporters of a wide range of products. The loans are secured by the assets of the company including accounts receivable, inventory and equipment and, in most cases, are personally guaranteed. Collateral may also include owner-occupied real estate.
The industries include healthcare with a specialty in skilled nursing facilities, auto leasing firms, wholesalers, manufacturers and importers and exporters of a wide range of products. The loans are secured by the assets of the company including accounts receivable, inventory and equipment and, in most cases, are personally 8 Table of Contents guaranteed. Collateral may also include owner-occupied real estate.
Any loan policy exceptions are fully disclosed to the approving authority. Loans to One Borrower In accordance with loans-to-one-borrower regulations promulgated by the NYSDFS, the Company is generally limited to lending no more than 15% of its capital stock, surplus fund and undivided profits to any one borrower or borrowing entity.
Any loan policy exceptions are fully disclosed to the approving authority. 11 Table of Contents Loans to One Borrower In accordance with loans-to-one-borrower regulations promulgated by the NYSDFS, the Company is generally limited to lending no more than 15% of its capital stock, surplus fund and undivided profits to any one borrower or borrowing entity.
Within the C&I lending group, the Company has lenders who are experienced in lending to the healthcare industry, and particularly to skilled nursing homes. They generally originate loans to borrowers with strong cash flows who are very experienced operators that typically have over 1,000 beds under management.
Within the C&I lending group, the Company has lenders who are experienced in lending to the healthcare industry, and particularly to skilled nursing homes. They generally originate loans to borrowers with strong cash flows from diverse sources and who are very experienced operators that typically have over 1,000 beds under management.
The Company focuses on New York metropolitan area middle-market businesses with annual revenues of $200 million or less and New York metropolitan area real estate entrepreneurs with a net worth of $50 million or more.
The Company focuses on New York metropolitan area middle-market businesses with annual revenues of $400 million or less and New York metropolitan area real estate entrepreneurs with a net worth of $50 million or more.
Further, certain provisions of Title III impose affirmative obligations on a broad range of financial 21 Table of Contents institutions, including banks, thrifts, brokers, dealers, credit unions, money transfer agents and parties registered under the Commodity Exchange Act.
Further, certain provisions of Title III impose affirmative obligations on a broad range of financial institutions, including banks, thrifts, brokers, dealers, credit unions, money transfer agents and parties registered under the Commodity Exchange Act.
Effective July 22, 2010, the Dodd-Frank Act permanently raised the deposit insurance available on all deposit accounts to $250,000. 17 Table of Contents The FDIC finalized a rule, effective April 1, 2011, that set the FDIC assessment range at 2.5 to 45 basis points of total assets less tangible equity.
Effective July 22, 2010, the Dodd-Frank Act permanently raised the basic deposit insurance available on all deposit accounts to $250,000. The FDIC finalized a rule, effective April 1, 2011, that set the FDIC assessment range at 2.5 to 45 basis points of total assets less tangible equity.
The Company has designed products that enable clients to process electronic payments more easily and to better manage their risk of loss. These client accounts are 9 Table of Contents a source of demand deposits and fee income.
The Company has designed products that enable clients to process electronic payments more easily and to better manage their risk of loss. These client accounts are a source of demand deposits and fee income.
There are four Board members who are permanent members of the Credit Committee; and a minimum of two other Board members rotate quarterly. Loans of $10 million or less are approved by management subject to individual officer approval limits.
There are four Board members who are permanent members of the Credit Committee and a minimum of two other Board members rotate quarterly. Loans of $12.5 million or less are approved by management subject to individual officer approval limits.
Authority limits are based upon the individual loan size and the total exposure of the borrower and are conditioned on the loan conforming to the policies contained in the Commercial Loan Policy. All loans over $10 million go to the Credit Committee for approval. The Credit Committee is comprised of Board members and the Company’s Chief Executive Officer.
Authority limits are based upon the individual loan size and the total exposure of the borrower and are conditioned on the loan conforming to the policies contained in the Company’s Commercial Lending Policy. All loans over $12.5 million go to the Credit Committee for approval. The Credit Committee is comprised of Board members and the Company’s Chief Executive Officer.
An exception is 20 Table of Contents made for extensions of credit made pursuant to a benefit or compensation plan of a bank that is widely available to employees of the bank and that does not give any preference to insiders of the bank over other employees of the bank.
An exception is made for extensions of credit made pursuant to a benefit or compensation plan of a bank that is widely available to employees of the bank and that does not give any preference to insiders of the bank over other employees of the bank.
The Company will attempt to continue to convert lending clients into full retail clients and thereby continue to expand its retail presence. 2) Non-borrowing retail clients – These customers, located primarily in the New York City metropolitan area, need an efficient technology interface and the personal service of an experienced banker who can assist them in managing their day to day operations.
The Company will attempt to continue to convert lending clients into full retail clients and thereby continue to expand its retail presence. 2) Non-borrowing retail banking products and services clients – These customers, located primarily in the New York City metropolitan area, need an efficient technology interface and the personal service of an experienced banker who can assist them in managing their day-to-day operations using our retail banking products and services.
Global Payments Business The Company administers domestic and international digital payment settlements on behalf of its fintech clients and serves as an issuing bank for third-party debit card programs nationwide. The Company acts as the depository institution for the processing of prepaid and debit card payments made to various businesses.
Global Payments Business The Company administers domestic and international digital payment settlements on behalf of its non-bank financial service clients and serves as an issuing bank for third-party debit card programs nationwide. The Company acts as the depository institution for the processing of prepaid and debit card payments made to various businesses.
Management intends to continue leveraging the quality of its team, existing relationships and its client-centered approach to further grow its tailored banking solutions, build deeper relationships and increase market share in its market area.
Management intends to continue leveraging the quality of its team, existing relationships and its 6 Table of Contents client-centered approach to further grow its tailored banking solutions, build deeper relationships and increase market share in its market area.
Maximum LTVs range from 50% to 75%, depending on the property type. The minimum debt coverage ratio is 1.20x, with higher coverage required for hospitality and special use properties.
Generally, the maximum LTVs for new originations range from 50% to 75%, depending on the property type and the minimum debt coverage ratio is 1.20x, with higher coverage required for hospitality and special use properties.
Holding Company Regulation The Company, as a bank holding company controlling the Bank, is subject to regulation and supervision by the FRB under the BHCA. The Company is periodically examined by and required to submit reports to the FRB and must comply with the FRB’s rules and regulations.
Holding Company Regulation The Company, as a bank holding company controlling the Bank, is subject to regulation and supervision by the FRB under the BHC Act. The Company is periodically examined by and required to submit reports to the FRB and must comply with the FRB’s rules and regulations.
Capitalization The FRB regulations require state member banks, such as the Bank, to meet several minimum capital standards: a common equity Tier 1 capital to risk-based assets ratio, a Tier 1 capital to risk-based assets ratio, a total capital to risk-based assets and a Tier 1 capital to total assets leverage ratio.
Capitalization The FRB regulations require state member banks to meet several minimum capital standards: a common equity Tier 1 capital to risk-based assets ratio, a Tier 1 capital to risk-based assets ratio, a total capital to risk-based assets and a Tier 1 capital to total assets leverage ratio.
Dividends exceeding those amounts require application to and approval by the NYSDFS 19 Table of Contents or FRB. To pay a cash dividend, a state member bank must also maintain an adequate capital conservation buffer under the capital rules discussed above.
Dividends exceeding those amounts require application to and approval by the NYSDFS or FRB. To pay a cash dividend, a state member bank must also maintain an adequate capital conservation buffer under the capital rules discussed above.
The Company encourages and supports the growth and development of its employees and, whenever possible, seeks to fill positions by promotion and transfer from within the organization. New job openings are posted internally with guidelines for employees to apply.
Training and Development The training and development of employees is a priority. The Company encourages and supports the growth and development of its employees and, whenever possible, seeks to fill positions by promotion and transfer from within the organization. New job openings are posted internally with guidelines for employees to apply.
The Company is a bank holding company, due to its control of the Bank, and is therefore subject to the requirements of the BHCA, and regulation and supervision by the FRB. The Company files reports with and is subject to periodic examination by the FRB.
The Company is a bank holding company, due to its control of the Bank, and is therefore subject to the requirements of the BHC Act, and regulation and supervision by the FRB. The Company files reports with and is subject to periodic examination by the FRB.
The Bank was well capitalized at December 31, 2022. Dividends Under federal and state law and applicable regulations, a state member bank may generally declare a dividend, without approval from the NYSDFS or FRB, in an amount equal to its year-to-date net income plus the prior two years’ net income that is still available for dividend.
The Bank was well capitalized at December 31, 2023. 19 Table of Contents Dividends Under federal and state law and applicable regulations, a state member bank may generally declare a dividend, without approval from the NYSDFS or FRB, in an amount equal to its year-to-date net income plus the prior two years’ net income that is still available for dividend.
At December 31, 2022, $1.2 billion, or 31.5% of the Company’s real estate loan portfolio, consisted of loans to the healthcare industry, which were primarily made to nursing and residential care facilities. The Company has lenders who are experienced in lending to the healthcare industry, and particularly to skilled nursing homes.
At December 31, 2023, $1.5 billion, or 33.3% of the Company’s real estate loan portfolio, consisted of loans to the healthcare industry, which were primarily made to nursing and residential care facilities. The Company has lenders who are experienced in lending to the healthcare industry, and particularly to skilled nursing homes.
The Company also has a loan production office in Miami, Florida, an administrative office in Lakewood, New Jersey, and a property in Louisville, Kentucky that is utilized as office space for our Global Payments Group. Competitors The bank and non-bank financial services industry in the Company’s markets and surrounding areas is highly competitive.
The Company also has a loan production office in Miami, Florida, an administrative office in Lakewood, New Jersey, and a property in Louisville, Kentucky that is utilized as office space for GPG. Competitors The bank and non-bank financial services industry in the Company’s markets and surrounding areas is highly competitive.
However, for all group relationships with total exposure in excess of 20% of risk-based capital, approval of the Credit Committee will be required for loans of any size; except that a loan will not require Credit Committee approval if the loan request is no greater than 10% of the relationship, to a maximum of $1.0 million, whereby Lending Officers approval will be required.
However, for all group relationships with total exposure in excess of 25% of risk-based capital, approval of the Credit Committee will be required for loans of any size; except that a loan will not require Credit Committee approval if the loan request is no greater than 10% of the relationship, to a maximum of $2.5 million, whereby Lending Officers approval will be required.
The majority of the Company’s investments are classified as AFS and HTM and can be used to collateralize FHLBNY borrowings, FRB borrowings, public funds deposits or other borrowings. At December 31, 2022, the investment portfolio consisted primarily of residential mortgage-backed securities and, to a lesser extent, U.S. Government Agency and treasury securities, commercial mortgage-backed securities and municipal securities.
The majority of the Company’s investments are classified as either AFS or HTM and can be used to collateralize FHLBNY borrowings, FRB borrowings, public funds deposits or other borrowings. At December 31, 2023, the investment portfolio consisted primarily of government agency residential mortgage-backed securities and, to a lesser extent, U.S.
The Company generates deposits from prepaid third-party debit card programs, fintech customers, its cash management platform offered to bankruptcy trustees, property management companies and others, local businesses, individuals through client referrals and other relationships and through its retail branch network.
The Company generates deposits from prepaid third-party debit card programs, non-bank financial service customers, its cash management platform offered to bankruptcy trustees, property management companies and others, local businesses, individuals through client referrals and other relationships and through its retail branch network.
The Act includes provisions that extend the expanded Affordable Care Act health plan premium assistance program through 2025, impose an excise tax on stock buybacks, increase funding for IRS tax enforcement, expand energy incentives, and impose a corporate minimum tax.
The Act includes provisions that extend the expanded Affordable Care Act health plan premium assistance program through 2025, impose an excise tax on stock buybacks, increase funding for IRS tax enforcement, expand energy incentives, and impose a corporate minimum tax. See Part I, Item 1A.
The USA PATRIOT Act gives the federal government powers to address money laundering and terrorist threats through enhanced domestic security measures, expanded surveillance powers, increased information sharing, and broadened anti-money laundering requirements.
The USA PATRIOT Act gives the federal government powers to address money laundering and terrorist threats through enhanced domestic security measures, expanded surveillance powers, increased information 21 Table of Contents sharing, and broadened anti-money laundering requirements.
To attract and retain high performing talent, the Company offers competitive, performance-based compensation and a benefits plan that includes comprehensive health care coverage, a 401(k) Plan with a Company match, life and disability insurance, commuter benefits, flexible spending accounts and health savings accounts, wellness programs, Employee Assistance Program, paid time-off and leave policies, including paid maternity/paternity leave.
To attract and retain high performing talent, the Company offers competitive, performance-based compensation and a benefits plan that includes comprehensive health care coverage, supplemental healthcare benefits, a 401(k) plan with a Company match, company sponsored life and disability insurance, voluntary life and AD&D insurance, commuter benefits, flexible spending accounts and health savings accounts, wellness programs, an Employee Assistance Program, paid time-off and leave policies, including paid maternity/paternity leave.
They generally originate loans to borrowers with strong cash flows who are very experienced operators that typically have over 1,000 beds under management.
They generally originate loans to borrowers with strong cash flows from diverse sources and who are very experienced operators that typically have over 1,000 beds under management.
See “Risk Factors – Risk Relating to Legislative and regulatory actions may increase the Company’s costs and impact its business, governance structure, financial condition or results of operations.” Regulation General The Bank is a commercial bank organized under the laws of the state of New York.
“ Risk Factors —Risks Relating Related to Laws and Regulations and Their Enforcement—Legislative and regulatory actions may increase the Company’s costs and impact its business, governance structure, financial condition or results of operations.” Regulation General The Bank is a commercial bank organized under the laws of the state of New York.
Management believes that not every potential client of the Company is in need of extensions of credit; instead, these clients require a bank that can assist in making them more efficient and competitive. 3) Global payments business – The Company is an active issuer of debit cards for third-party debit card programs and administers domestic and international digital payments settlements for its fintech clients.
Management understands that not every potential client of the Company is in need of an extension of credit; instead, these clients require a bank that can assist in making them more efficient and competitive. 3) Global payments business – The Company is an issuer of debit cards for third-party debit card programs and administers domestic and international digital payments settlements for its non-bank financial service clients.
All employees are required to complete a minimum number of hours of Compliance, BSA/Anti-Money Laundering, Enterprise Risk, Information Security/Cyber Security and technical training annually via the Company’s Learning Management System (“LMS”). Employees are also periodically assigned Professional Skills training via the LMS. The Board of Directors receives on-site training in these areas as well as through the LMS.
All employees are required to complete assigned Compliance, BSA/Anti-Money Laundering, Enterprise Risk, Information Security/Cybersecurity, Fraud Prevention and technical training courses annually via the Company’s Learning Management System (“LMS”). Employees are also periodically assigned professional skills training via the LMS. The Board of Directors receives on-site training in these areas as well as through the LMS.
We consider our relationship with our employees to be good. As of December 31, 2022, the Company employed 239 full-time employees, and 2 part-time employees, none of whom are represented by a collective bargaining unit.
We consider our relationship with our employees to be good. As of December 31, 2023, the Company employed 275 full-time employees, and 2 part-time employees, none of whom are represented by a collective bargaining agreement.
The Company has developed tailored underwriting criteria and credit management processes for each of the various loan product types it offers customers. 11 Table of Contents Underwriting In evaluating each potential loan relationship, the Company adheres to a disciplined underwriting evaluation process including, but not limited to the following: ● understanding the customer’s financial condition and ability to repay the loan; ● verifying that the primary and secondary sources of repayment are adequate in relation to the amount and structure of the loan; ● observing appropriate LTV guidelines for collateral-dependent loans; ● identifying the customer’s level of experience in their business; ● identifying macroeconomic and industry level trends; ● maintaining targeted levels of diversification for the loan portfolio, both as to type of borrower and geographic location of collateral; and ● ensuring that each loan is properly documented and liens are perfected on collateral.
Underwriting In evaluating each potential loan relationship, the Company adheres to a disciplined underwriting evaluation process including, but not limited to the following: ● understanding the customer’s financial condition and ability to repay the loan; ● verifying that the primary and secondary sources of repayment are adequate in relation to the amount and structure of the loan; ● observing appropriate LTV guidelines for collateral-dependent loans; ● identifying the customer’s level of experience in their business; ● identifying macroeconomic and industry level trends; ● maintaining targeted levels of diversification for the loan portfolio, both as to type of borrower and geographic location of collateral; and ● ensuring that each loan is properly documented and liens are perfected on collateral.
At December 31, 2022, the Company had $150.0 million of Federal funds purchased and $100.0 million of FHLBNY advances outstanding. Human Capital Resources Our employees are vital to our success and growth and are considered one of our greatest assets. The experience, knowledge, and customer service excellence they bring everyday differentiates us from our competitors.
At December 31, 2023, the Company had $99.0 million of Federal funds purchased and $440.0 million of FHLBNY advances outstanding. Human Capital Resources Our employees are vital to our success and growth and are considered one of our greatest assets. The experience, knowledge, and customer service excellence they bring every day differentiates us from our competitors.
This allows for career advancement, and new learning opportunities, as well as benefiting the Company by organically building its bench strength to support future growth. The Company conducts a comprehensive New Employee Orientation for all new hires.
This allows for career advancement and new learning opportunities, as well as benefiting the Company by organically building its bench strength to support future growth. The Company conducts a comprehensive New Employee Orientation for all new hires. In 2023, the Company enhanced the New Employee Orientation to provide a more comprehensive welcome experience.
The Company’s minimum required capital conservation buffer was at 2.5% of 18 Table of Contents risk-weighted assets at December 31, 2022. See Part II, Item 7., “ Management's Discussion and Analysis of Financial Condition and Results of Operations ― Regulation” for a summary of the Company’s capital ratios.
The Company’s minimum required capital conservation buffer was at 2.5% of risk-weighted assets at December 31, 2023. See Part II, Item 7., “Management's Discussion and Analysis of Financial Condition and Results of Operations ― Regulation” for a summary of the Company’s capital ratios.
A Phase I Environmental Report is generally required for all new CRE loans. Loans are generally written for terms of three to five years, although loans with longer terms are occasionally written. Interest rates may be fixed or floating, and repayment schedules are generally based on a 25- to 30-year amortization schedule although interest only loans are also offered.
Loans are generally written for terms of three to five years, although loans with longer terms are occasionally written. Interest rates may be fixed or floating, and repayment schedules are generally based on a 25- to 30-year amortization schedule, although interest only loans are also offered.
Additional Cyber Security and Information Security updates and reminders are provided periodically. 14 Table of Contents The Company provides in-person training to employees on topics such as Cybersecurity, Enterprise Risk, Compliance, Technology, Strategic Planning, Goal Setting, and Employee Health Benefits.
Additional Cybersecurity and Information Security updates and reminders are provided periodically throughout the year. The Company provides in-person training to employees on topics such as Cybersecurity, Enterprise Risk, Compliance, Technology, Strategic Planning, Goal Setting, and Employee Benefits.
For example, the regulations specify that a bank’s CRA performance will be considered in its expansion (e.g., branching or merger) proposals and may be the basis for approving, denying or conditioning the approval of an application. The Company is awaiting its most recent CRA rating for the examination conducted in 2022.
For example, the regulations specify that a bank’s CRA performance will be considered in its expansion (e.g., branching or merger) proposals and may be the basis for approving, denying or conditioning the approval of an application. The latest FRB CRA rating received by the Company was “Satisfactory” for the examination conducted in 2022.
These activities, together with six strategically located banking centers, generate a stable source of deposits and a diverse loan portfolio with attractive risk-adjusted yields. As of December 31, 2022, the Company’s assets, loans, deposits, and stockholders’ equity totaled $6.3 billion, $4.8 billion, $5.3 billion and $575.9 million, respectively.
These activities, together with six strategically located banking centers, generate a stable source of deposits and a diverse loan portfolio with attractive risk-adjusted yields. As of December 31, 2023, the Company’s assets, loans, deposits, and stockholders’ equity totaled $7.1 billion, $5.6 billion, $5.7 billion and $659.0 million, respectively.
See “Business – Emerging Growth Company Status. ​ 5 Table of Contents Available Information The SEC maintains an internet site, www.sec.gov, that contains the Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments thereto, and other reports electronically filed with the SEC.
Available Information The SEC maintains an internet site, www.sec.gov, that contains the Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments thereto, and other reports electronically filed with the SEC.
On-going relationships and tailored products Management believes that the focus on servicing all aspects of the clients’ businesses, including cash management and lending solutions, better positions the Company to be able to provide a host of services designed to meet its clients’ current and future needs.
On-going relationships and tailored products Management believes that the focus on servicing all aspects of the clients’ businesses, including cash management and lending solutions, better positions the Company to be able to meet its clients’ current and future needs. The Company has the flexibility and commitment to create solutions tailored to the needs of each client.
The Company maintains a robust risk management program that is designed to ensure safe and sound operations in compliance with applicable laws, rules and guidance around its global payments products. In January 2023, the Company announced that it will fully exit the digital currency business, commonly referred to as the crypto-asset related business.
The Company maintains a risk management program that is designed to ensure safe and sound operations in compliance with applicable laws, rules and guidance around its global payments products. In 2023, the Company completed the exit from the digital currency business, commonly referred to as the crypto-asset related business. In early 2024, the Company decided to exit all BaaS relationships.
The ratios of women and men in the Company are 47% and 53% at December 31, 2022, respectively, which is relatively unchanged from December 31, 2021. Approximately 34.4% of the employees identified as minorities at December 31, 2022, as compared to 29.7% at December 31, 2021.
The ratios of women and men in the Company are 47% and 53% at December 31, 2023, respectively, which is relatively unchanged from December 31, 2022. Approximately 35.4% of the employees identified as minorities at December 31, 2023, as compared to 34.4% at December 31, 2022. Within that percentage, 19.1% identify as women, which is unchanged from December 31, 2022.
In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (ASC 326), which requires the measurement of all expected credit losses for financial assets held at the reporting date be based on historical experience, current conditions, and reasonable and supportable forecasts. The Company adopted this guidance effective January 1, 2023.
Allowance for Credit Losses – Loans and Loan Commitments The Company adopted ASU No. 2016-13, Financial Instruments – Credit Losses (“ASC 326”) effective January 1, 2023, which requires the measurement of all expected credit losses for financial assets held at the reporting date be based on historical experience, current conditions, and reasonable and supportable forecasts.
The types of construction loans the Company may originate are both extensive renovation loans as well as ground-up construction loans. At December 31, 2022, construction loans comprised 3.0% of the Company’s loan portfolio. In all cases the owner/developer has extensive construction experience, sufficient equity in the transaction (maximum loan to cost of 65%) and personal recourse on the loan.
Generally, the types of construction loans the Company originates include extensive renovation loans as well as ground-up construction loans. At December 31, 2023, construction loans comprised 2.8% of the Company’s loan portfolio. In all cases, the owner/developer has extensive construction experience, sufficient equity in the transaction (maximum loan to cost of 65%) and provides personal recourse on the loan.
If a concentration is present, management must employ heightened risk management practices that address key elements, including board and management oversight and strategic planning, portfolio management, development of underwriting standards, risk assessment and monitoring through market analysis and stress testing, and maintenance of increased capital levels as needed to support the level of CRE lending.
If a concentration is present, management must employ heightened risk management practices that address key elements, including board and management oversight and strategic planning, portfolio management, development of underwriting standards, risk assessment and monitoring through market analysis and stress testing, and maintenance of increased capital levels as needed to support the level of CRE lending. 17 Table of Contents Federal Deposit Insurance Deposit accounts at the Bank are insured up to applicable legal limits by the FDIC’s DIF.
See “ Management’s Discussion and Analysis of Financial Condition and Results of Operations – Recent Events.” Corporate Cash Management Deposit Accounts The Company’s entrepreneurial approach has encouraged management to find alternatives to traditional retail bank services, such as corporate cash management deposit accounts.
See Part II, Item 7., “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Recent Events.” Corporate Cash Management and EB-5 Immigrant Investor Program Deposit Accounts The Company’s entrepreneurial approach has encouraged management to find alternatives to traditional retail bank services, such as corporate cash management deposit accounts and EB-5 Immigrant Investor Program (the “EB-5 Program”) deposit accounts.
The Company has the flexibility and commitment to create solutions tailored to the needs of each client. For example, the Company entered the healthcare lending space in 2001 and built out processes, procedures, and customized infrastructure to support its clients in this industry.
For example, the Company entered the healthcare lending space in 2001 and built out processes, procedures, and customized infrastructure to support its clients in this industry.
The Company has policies, procedures and systems designed to comply with these regulations, and it reviews and documents such policies, procedures and systems to ensure continued compliance with these regulations.
The Company has policies, procedures and systems designed to comply with these regulations, and it reviews and documents such policies, procedures and systems to monitor its compliance with these regulations. ​ 25 Table of Contents
The Company believes that it has a very stable deposit base as it successfully encourages its business borrowers to maintain their operating banking relationship with the Company. The Company’s deposit strategy primarily focuses on developing borrowing and other service-oriented relationships with customers rather than competing with other institutions on rate.
The Company believes that it has a very stable deposit base, as evidenced by its customer diversification and relationship-driven approach. The Company’s deposit strategy primarily focuses on developing borrowing and other service-oriented relationships with customers rather than competing with other institutions on rate.
The Company has an Employee Engagement Committee (“EEC”) comprised of employees from various departments who organize events to support community-based functions, employee interests, educational sessions around different cultures, and volunteering for charities, among other activities. An educational lunch and learn was presented to employees in June 2022 on the meaning of Juneteenth.
The Company has an Employee Engagement Committee (“EEC”) comprised of employees from many different departments who organize events to support community-based functions, employee interests, educational sessions around different cultures, and volunteerism, among other activities. A number of educational lunch and learn sessions were presented to employees in 2023 on various business activities in which the Company engages.
Loan Approval Authority The Company’s lending activities follow written, non-discriminatory, underwriting standards and loan origination procedures established by its Board of Directors and management. The Company has established several levels of lending authority that have been delegated by the Board of Directors to the Credit Committee and other personnel in accordance with the Lending Authority in the Commercial Loan Policy.
The Company has established several levels of lending authority that have been delegated by the Board of Directors to the Credit Committee and other personnel in accordance with the lending authority in the Company’s Commercial Lending Policy.
Within that percentage, 19.1% identify as women, as compared to 17.3% at December 31, 2021. The Company defines minorities as the following groups based on the U.S. Department of Labor Affirmative Action definition: Black or African American, Hispanic, or Latino, Native Hawaiian or Other Pacific Islander, and American Indians/Alaskan Natives.
The Company defines minorities as the following groups based on the U.S. Department of Labor Affirmative Action definition: Black or African American, Hispanic, or Latino, Native Hawaiian or Other Pacific Islander, and American Indians/Alaskan Natives.
As a member, the Company is required to own capital stock in the FHLB and is authorized to apply for advances collateralized by certain of its real estate-related mortgage loans and other assets, provided certain standards related to creditworthiness have been met. Advances are made under several different programs, each having its own interest rate and range of maturities.
The FHLB provides credit products for its member financial institutions. As a member, the Company is required to own capital stock in the FHLB and is authorized to apply for advances collateralized by certain of its real estate-related mortgage loans and other assets, provided certain standards related to creditworthiness have been met.
The latest FRB CRA rating received by the Company was “Satisfactory” for the examination conducted in 2020. New York State Regulation The Company is also subject to provisions of the New York State Banking Law that impose continuing and affirmative obligations upon a banking institution organized in New York State to serve the credit needs of its local community.
New York State Regulation The Company is also subject to provisions of the New York State Banking Law that impose continuing and affirmative obligations upon a banking institution organized in New York State to serve the credit needs of its local community. Such obligations are substantially similar to those imposed by the CRA.
The Company’s market area has a diversified economy typical of most urban population centers, with the majority of employment provided by services, wholesale/retail trade, finance/insurance/real estate, technology companies and construction. A relationship-led strategy has provided the Company with select opportunities in other U.S. markets, with a particular focus on South Florida.
The Company’s market area has a diversified economy typical of most urban population centers, with the majority of employment provided by services, wholesale/retail trade, finance/insurance/real estate, technology companies and construction.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeAs a result, competitors may be able to offer more convenient products and services than the Company, which would put it at a competitive disadvantage. The Company also outsources some of its operational and technological infrastructure, including modifications and improvements to these systems, to third parties.
Biggest changeThe Company continuously monitors its operational and technological capabilities and makes modifications and improvements as it deems appropriate. Many of the Company’s larger competitors have substantially greater resources to invest in operational and technological infrastructure. As a result, competitors may be able to offer more convenient products and services than the Company, which would put it at a competitive disadvantage.
The Company also has an available line of credit with the FRBNY discount window. The Company also may borrow funds from third-party lenders, such as other financial institutions.
The Company also has an available line of credit with the FRBNY discount window. The Company may also borrow funds from third-party lenders, such as other financial institutions.
The USA PATRIOT and the BSA require financial institutions to develop programs to prevent financial institutions from being used for money laundering and terrorist activities. If such activities are detected, financial institutions are obligated to file suspicious activity reports with the Financial Crimes Enforcement Network, a bureau of the U.S. Department of the Treasury.
The USA PATRIOT Act and the BSA require financial institutions to develop programs to prevent financial institutions from being used for money laundering and terrorist activities. If such activities are detected, financial institutions are obligated to file suspicious activity reports with the Financial Crimes Enforcement Network, a bureau of the U.S. Department of the Treasury.
Risks Related to Economic Conditions Inflation can have an adverse impact on our business and on our customers. Inflation risk is the risk that the value of assets or income from investments will be worth less in the future as inflation decreases the value of money.
Risks Related to Economic Conditions Inflation can have an adverse impact on our business and on our customers. Inflation risk is the risk that the value of assets or income from investments will be worth less in the future as rising inflation decreases the value of money.
A lack of liquidity could adversely affect the Company’s financial condition and results of operations. Liquidity is essential to the Company’s business. The Company relies on its ability to generate deposits and effectively manage the repayment and maturity schedules of loans to ensure that there is adequate liquidity to fund its operations.
A lack of liquidity could adversely affect the Company’s financial condition and results of operations. Liquidity is essential to the Company’s business. The Company relies on its ability to generate deposits and effectively manage the repayment and maturity schedules of loans and investments to ensure that there is adequate liquidity to fund its operations.
Compliance with the Dodd-Frank Act and its implementing regulations has and will continue to result in additional operating and compliance costs that could have a material adverse effect on the business, financial condition, results of operations and growth prospects of the Company.
Compliance costs with the Dodd-Frank Act and its implementing regulations has and will continue to result in additional operating and compliance burdens that could have a material adverse effect on the business, financial condition, results of operations and growth prospects of the Company.
Due to the breadth and geographical reach of the Company’s client base, developing and maintaining its operational systems and infrastructure is challenging, particularly as a result of rapidly evolving legal and regulatory requirements and technological shifts.
Due to the breadth and geographical reach of the Company’s client base, developing and maintaining its operational and information systems and infrastructure is challenging, particularly as a result of rapidly evolving legal and regulatory requirements and technological shifts.
As these threats and government and regulatory oversight of associated risks continue to evolve, the Company may be required to expend additional resources to enhance or expand upon the security measures it currently maintains.
As these threats, incidents and government and regulatory oversight of associated risks continue to evolve, the Company may be required to expend additional resources to enhance or expand upon the security measures it currently maintains.
Certain aspects of regulatory or legislative changes to laws applicable to the financial industry, if enacted or adopted could: expose the Company to additional costs, including increased compliance costs; impact the profitability of the Company’s business activities; limit the fees we may charge; increase the ability of non-banks to offer competing financial services and products; change deposit insurance assessments; require more oversight; or change certain of its business practices, including the ability to offer new products, obtain financing, attract deposits, make loans 37 Table of Contents and achieve satisfactory interest rate spreads.
Certain aspects of regulatory or legislative changes to laws applicable to the financial industry, if enacted or adopted could: expose the Company to additional costs, including increased compliance costs; impact the profitability of the Company’s business activities; limit the fees we may charge; increase the ability of non-banks to offer competing financial services and products; change deposit insurance assessments; require more oversight; or change certain of its business practices, including the ability to offer new products, obtain financing, attract deposits, make loans and achieve satisfactory interest rate spreads.
Its financial, accounting, data processing, check processing, electronic funds transfer, loan processing, online and mobile banking, automated teller machines, backup or other operating or security systems and infrastructure may fail to operate properly or become disabled or damaged as a result of a number of factors including events that are wholly or partially beyond its control, including major infrastructure outages, natural disasters or events arising from local or larger scale political or social matters, including terrorist acts, pandemics, and cyber-attacks.
Its financial, accounting, data processing, check processing, electronic funds transfer, loan processing, online and mobile banking, automated teller machines, backup or other operating or security systems and infrastructure may fail to operate properly or become disabled or damaged as a result of a number of factors including events that are wholly or partially beyond its control, including major infrastructure outages, natural disasters or events arising from local or larger scale political or social matters, including terrorist acts, pandemics, and cyberattacks.
Furthermore, the Company may not be able to ensure that all of its clients, suppliers, counterparties and other third parties have appropriate controls in place to protect themselves from cyber-attacks or to protect the confidentiality of the information that they exchange with us, particularly where such information is transmitted by electronic means.
Furthermore, the Company may not be able to ensure that all of its clients, suppliers, counterparties and other third parties have appropriate controls in place to protect themselves from cyberattacks or to protect the confidentiality of the information that they exchange with us, particularly where such information is transmitted by electronic means.
An adverse development with respect to one loan or one credit relationship can expose the Company to significantly greater risk of loss compared to an adverse development with respect to a one-to four-family residential mortgage loan or a CRE loan. If the allowance for credit losses is not sufficient to cover actual loan losses, earnings could decrease.
An adverse development with respect to one loan or one credit relationship can expose the Company to significantly greater risk of loss compared to an adverse development with respect to a one-to four-family residential mortgage loan or a CRE loan. 26 Table of Contents If the allowance for credit losses is not sufficient to cover actual loan losses, earnings could decrease.
The Company’s market area contains not only a large number of community and regional banks, but also a significant presence of the country’s largest commercial banks and a growing presence of fintech financial services companies. The Company competes with other state and national financial institutions, savings and loan associations, savings banks, credit unions and other companies offering financial services.
The Company’s market area contains not only a large number of community and regional banks, but also a significant presence of the country’s largest commercial banks and a growing presence of non-bank financial services companies. The Company competes with other state and national financial institutions, savings and loan associations, savings banks, credit unions and other companies offering financial services.
Although the Company has developed, and continues to invest in, systems and processes that are designed to detect and prevent security breaches and cyber-attacks, a breach of its systems and global payments infrastructure or those of our fintech partners and processors could result in: losses to the Company and its customers; loss of business and/or customers; damage to its 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 its business; an inability to grow its online services or other businesses; additional regulatory scrutiny or penalties; and/or exposure to civil litigation and possible financial liability — any of which could have a material adverse effect on the Company’s business, financial condition and results of operations.
Although the Company has developed, and continues to invest in, systems and processes that are designed to detect and prevent security breaches and cyberattacks, a breach of its systems and global payments infrastructure or those of our non-bank financial service partners and processors could result in: losses to the Company and its customers; loss of business and/or customers; damage to its 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 its business; an inability to grow its online services or other businesses; additional regulatory scrutiny or penalties; and/or exposure to civil litigation and possible financial liability — any of which could have a material adverse effect on the Company’s business, financial condition and results of operations.
The Company’s ability to develop and deliver 30 Table of Contents new products and services that meet the needs of its existing customers and attract new ones depends on the functionality of its technology systems. The financial services industry is undergoing rapid technological changes with frequent introductions of new technology-driven products and services.
The Company’s ability to develop and deliver new products and services that meet the needs of its existing customers and attract new ones depends on the functionality of its technology systems. The financial services industry is undergoing rapid technological changes with frequent introductions of new technology-driven products and services.
Further, the demand for deposits may be reduced due to a variety of factors such as demographic patterns, changes in customer preferences, reductions in consumers’ disposable income, the monetary policy of the FRB or regulatory actions that decrease customer access to particular products.
Further, the supply of deposits may be reduced due to a variety of factors such as demographic patterns, changes in customer preferences, reductions in consumers’ disposable income, the monetary policy of the FRB or regulatory actions that decrease customer access to particular products.
As discussed below under — “Risks Related to Market Interest Rates—Interest rate shifts may reduce net interest income and otherwise negatively impact the Company’s financial condition and results of operation.” Inflationary conditions and rising market interest rates may lead to declines in the value of our investment securities, particularly those with longer maturities, although this effect can be less pronounced for floating rate instruments.
As discussed below under “—Risks Related to Market Interest 27 Table of Contents Rates— Interest rate shifts may reduce net interest income and otherwise negatively impact the Company’s financial condition and results of operation.” Inflationary conditions and rising market interest rates may lead to declines in the value of our investment securities, particularly those with longer maturities, although this effect can be less pronounced for floating rate instruments.
Employee errors could also subject the Company to financial claims for negligence. The Company maintains a system of internal controls and insurance coverage to mitigate operational risks, including data processing system failures and errors and customer or employee fraud.
Employee errors could also subject the Company to financial claims for negligence. 31 Table of Contents The Company maintains a system of internal controls and insurance coverage to mitigate operational risks, including data processing system failures and errors and customer or employee fraud.
Competition also may intensify as new competitors emerge, businesses enter 33 Table of Contents into business combinations and partnerships, and established companies in other segments expand to become competitive with various aspects of our business.
Competition also may intensify as new competitors emerge, businesses enter into business combinations and partnerships, and established companies in other segments expand to become competitive with various aspects of our business.
The Company has established processes and procedures intended to 31 Table of Contents identify, measure, monitor and report the types of risk to which it is subject, including credit, liquidity, operational, regulatory compliance and reputational risks.
The Company has established processes and procedures intended to identify, measure, monitor and report the types of risk to which it is subject, including credit, liquidity, operational, regulatory compliance and reputational risks.
The Company may try to serve such borrowers by selling loan participations to other financial institutions; however, this strategy may not succeed. 35 Table of Contents Risks Related to Business Strategy The Company may not be able to grow and if it does, it may have difficulty managing that growth.
The Company may try to serve such borrowers by selling loan participations to other financial institutions; however, this strategy may not succeed. Risks Related to Business Strategy The Company may not be able to grow and if it does, it may have difficulty managing that growth.
Operational risk exposures could adversely impact the Company’s results of operations, liquidity and financial condition, and cause reputational harm. Additionally, global markets may be adversely affected by natural disasters, the emergence of widespread health emergencies or pandemics, cyber-attacks or campaigns, military conflict, terrorism or other geopolitical events. Global market disruptions may affect the Company’s business liquidity.
Operational risk exposures could adversely impact the Company’s results of operations, liquidity and financial condition, and cause reputational harm. Additionally, global markets may be adversely affected by natural disasters, the emergence of widespread health emergencies or pandemics, cyberattacks, military conflict, terrorism, or other geopolitical events. Global market disruptions may affect the Company’s liquidity.
These changes may be beyond the Company’s control, can be hard to predict, and can materially impact how it records and reports its financial condition and results of operations.
These changes may be beyond the Company’s control, can be hard to predict, and can materially impact how it 37 Table of Contents records and reports its financial condition and results of operations.
Competitors with greater resources may possess an advantage through their ability to maintain numerous banking locations in more convenient sites, conduct more extensive promotional and advertising campaigns, or operate a more developed technology platform.
Competitors with greater resources may possess an advantage through their ability to maintain numerous banking locations in more convenient sites, conduct more extensive promotional and advertising campaigns, or 36 Table of Contents operate a more developed technology platform.
Risks Related to Lending Activities A substantial portion of the Company’s loan portfolio consists of CRE, including multi-family real estate loans, and commercial loans, which have a higher degree of risk than other types of loans. At December 31, 2022, $4.8 billion, or 99.5% of total loans, consisted of CRE and C&I loans.
Risks Related to Lending Activities A substantial portion of the Company’s loan portfolio consists of CRE, including multi-family real estate loans, and commercial loans, which have a higher degree of risk than other types of loans. At December 31 , 2023, $5.6 billion, or 99.7% of total loans, consisted of CRE and C&I loans.
Risk Related to the Company’s Operations A failure in the Company’s operational systems or infrastructure, or those of third parties, could impair the Company’s liquidity, disrupt its businesses, result in the unauthorized disclosure of confidential information, damage its reputation and cause financial losses.
Risks Related to the Company’s Operations A failure in the Company’s operational and/or information systems or infrastructure, or those of third parties, including cyber-attacks, could impair the Company’s liquidity, disrupt its businesses, result in the unauthorized disclosure of confidential information, damage its reputation, and cause financial losses.
For more information on changes in accounting standards, see “ NOTE 3 - SUMMARY OF RECENT ACCOUNTING PRONOUNCEMENTS” to the Company’s consolidated financial statements in this Form 10-K.
For more information on changes in accounting standards, see “NOTE 3 — SUMMARY OF RECENT ACCOUNTING PRONOUNCEMENTS ” to the Company’s consolidated financial statements in this Form 10-K.
As the result of the COVID-19 pandemic and any related adverse local and national economic consequences, we could be subject to any of the following risks, any of which could have a material, adverse effect on our business, financial condition, liquidity, and results of operations: the demand for our products and services may decline, making it difficult to grow assets and income; if the economy worsens, loan delinquencies, problem assets, and foreclosures may increase, resulting in increased charges and reduced income; collateral for loans, especially real estate, may decline in value, which could cause loan losses to increase; our ACL may increase if borrowers experience financial difficulties, which will adversely affect our net income; the net worth and liquidity of loan guarantors may decline, impairing their ability to honor commitments to us; our cyber security risks may increase if a significant number of our employees are forced to work remotely; and FDIC premiums may increase if the agency experiences additional resolution costs.
Global pandemics, such as COVID-19, or localized epidemics, could have a significant adverse impact on our financial condition and results of operations and we could be subject to any of the following risks, any of which could have a material, adverse effect on our business, financial condition, liquidity, and results of operations: the demand for our products and services may decline, making it difficult to grow assets and income; if the economy worsens, loan delinquencies, problem assets, and foreclosures may increase, resulting in increased charges and reduced income; collateral for loans, especially real estate, may decline in value, which could cause loan losses to increase; our ACL may increase if borrowers experience financial difficulties, which will adversely affect our net income; the net worth and liquidity of loan guarantors may decline, impairing their ability to honor commitments to us; our cybersecurity risks may increase if a significant number of our employees are forced to work remotely; and FDIC premiums may increase if the agency experiences additional resolution costs.
The potential for fraud in the card payment industry is significant. Issuers of prepaid and debit cards and other companies have suffered significant losses in recent years with respect to the theft of cardholder data that has been illegally exploited for personal gain. The theft of such information is regularly reported and affects individuals and businesses.
Issuers of prepaid and debit cards and other companies have suffered significant losses in recent years with respect to the theft of cardholder data that has been illegally exploited for personal gain. The theft of such information is regularly reported and affects individuals and businesses. Losses from various types of fraud have been substantial for certain card industry participants.
The Company faces risks related to its operational, technological and organizational infrastructure. The Company’s ability to grow and compete is dependent on its ability to build or acquire and manage the necessary operational and technological infrastructure and to manage the cost of that infrastructure as it expands.
The Company’s ability to grow and compete is dependent on its ability to build or acquire and manage the necessary operational and technological infrastructure and to manage the cost of that infrastructure as it expands.
If consumer acceptance of prepaid financial services does not continue to develop or develops more slowly than expected or if there is a shift in the mix of payment forms away from the Company’s products and services, it could have a material adverse effect on the Company’s financial position and results of operations.
If consumer acceptance of prepaid financial services does not continue to develop or develops more slowly than expected or if there is a shift in the mix of payment forms away from the Company’s products and services, it could have a material adverse effect on the Company’s financial position and results of operations. 35 Table of Contents The potential for fraud in the card payment industry is significant.
If these third-party service providers experience difficulties, fail to comply with banking regulations or terminate their services and if the Company is unable to replace them with other service providers, its operations could be interrupted.
The Company also outsources some of its operational and technological infrastructure to third parties. If these third-party service providers experience difficulties, fail to comply with banking regulations or terminate their services and if the Company is unable to replace them with other service providers, its operations could be interrupted.
Accordingly, a downturn in the real estate market and/or a challenging business and economic environment may increase the Company’s risk related to CRE, multi-family real estate and commercial loans. If the cash flows from business operations of our customers is reduced, the borrower’s ability to repay the loan may be impaired.
A downturn in the real estate market and/or a challenging business and economic environment may increase the Company’s risk related to CRE, multi-family real estate and commercial loans. If the cash flows from business operations of our customers is reduced, the borrower may be unable to repay the loan according to the contractual terms of the loan agreement.
A significant decline in local economic conditions, caused by inflation, recession, acts of terrorism, an outbreak of hostilities or other international or domestic calamities, unemployment or other factors beyond the Company’s control, would likely cause an increase in the rates of delinquencies, defaults, foreclosures, bankruptcies and losses in its loan portfolio.
A large portion of the Company’s business is concentrated in New York, and in New York City in particular. 28 Table of Contents A significant decline in local economic conditions, caused by inflation, recession, acts of terrorism, an outbreak of hostilities or other international or domestic calamities, unemployment or other factors beyond the Company’s control, would likely cause an increase in the rates of delinquencies, defaults, foreclosures, bankruptcies and losses in its loan portfolio.
While it is management’s belief that policies and procedures with respect to the CRE portfolio have been implemented consistent with this guidance, bank regulators could require that additional policies and procedures be implemented that may result in additional costs or that may result in the curtailment of CRE lending that would adversely affect the Bank’s loan originations and profitability. 26 Table of Contents Because the Company intends to continue to increase its commercial loans, its credit risk may increase.
While it is management’s belief that policies and procedures with respect to the CRE portfolio have been implemented consistent with this guidance, bank regulators could require that additional policies and procedures be implemented that may result in additional costs or that may result in the curtailment of CRE lending that would adversely affect the Bank’s loan originations and profitability.
In addition, the increasing reliance on technology systems and networks and the occurrence and potential adverse impact of attacks on such systems and networks, both generally and in the financial services industry, have enhanced government and regulatory scrutiny of the measures taken by companies to protect against cyber-security threats.
In addition, the increasing reliance on information systems, and the occurrence and potential adverse impact of attacks on such systems, both generally and in the financial services industry, have encouraged increased government and regulatory scrutiny of the measures taken by companies to protect against cybersecurity threats and incidents.
See “Risk Factors ― The Company and the Bank’s business, financial condition, results of operations and future prospects could be adversely affected by the highly regulated environment and the laws and regulations that govern it.” The Company faces intense competition in the global payments industry.
See “ — Risks Related to Laws and Regulation and Their Enforcement ― The Company and the Bank’s business, financial condition, results of operations and future prospects could be adversely affected by the highly regulated environment and the laws and regulations that govern it.” 34 Table of Contents The Company faces intense competition in the global payments industry.
The Company is a community banking institution that provides banking services to the local communities in the market areas in which it operates, and therefore, its ability to diversify its economic risks is limited by its local markets and economies. A large portion of the Company’s business is concentrated in New York, and in New York City in particular.
The Company is a community banking institution that provides banking services to the local communities in the market areas in which it operates, and therefore, its ability to diversify its economic risks is limited by its local markets and economies.
Risk Factors The Company’s operations and financial results are subject to various risks and uncertainties, including but not limited to those described below, which could adversely affect its business, financial condition, results of operations, cash flows and the trading price of its common stock. 25 Table of Contents Risks Related to the COVD-19 Outbreak The economic impact of the COVID-19 outbreak could adversely affect the Company’s financial condition and results of operations.
Item 1A. Risk Factors The Company’s operations and financial results are subject to various risks and uncertainties, including but not limited to those described below, which could adversely affect its business, financial condition, results of operations, cash flows and the trading price of its common stock.
If the Company is not able to differentiate its products and services from those of its competitors, drive value for customers, or effectively and efficiently align its resources with its goals and objectives, the Company may not be able to compete effectively in the market. We derive a percentage of our deposits from deposit accounts generated through our BaaS relationships.
If the Company is not able to differentiate its products and services from those of its competitors, drive value for customers, or effectively and efficiently align its resources with its goals and objectives, the Company may not be able to compete effectively in the market.
These portfolios have grown in recent years and the Company intends to continue to emphasize these types of lending. CRE, including multi-family real estate, and commercial loans are often larger and involve greater risks than other types of loans since payments on such loans are often dependent on the successful operation or development of the property or business involved.
CRE, including multi-family real estate, and commercial loans are often larger and involve greater risks than other types of loans since payments on such loans are often dependent on the successful operation or development of the property or business involved.
During the year ended December 31, 2022, we reported an other comprehensive loss of $76.9 million related to net changes in unrealized losses in the AFS securities portfolio, which negatively impacted stockholders’ equity, as well as book value per common share.
At December 31, 2023, we reported an accumulated other comprehensive loss of $54.7 29 Table of Contents million, net of tax, related to net changes in unrealized losses in the AFS securities portfolio, which negatively impacted stockholders’ equity, as well as book value per common share.
Risks Related to the Company’s Global Payments Business Regulatory scrutiny of BaaS solutions and related technology considerations has recently increased. We provide global payments infrastructure access to our fintech partners, which includes serving as an issuing bank for third-party managed prepaid and debit card programs nationwide and providing other financial services infrastructure, including cash settlement and custodian deposit services.
We provide global payments infrastructure access to our non-bank financial service partners, which includes serving as an issuing bank for third-party managed prepaid and debit card programs nationwide and providing other financial services infrastructure, including cash settlement and custodian deposit services.
The Company’s access to funding sources in amounts adequate to finance or capitalize its activities, or on terms that are acceptable, could be impaired by factors that affect the Company directly or the financial services industry or economy in general, such as disruptions in the financial markets or negative views and expectations about the prospects for the financial services industry, a decrease in the level of the Company’s business activity as a result of a downturn in markets or by one or more adverse regulatory actions against the Company.
The Company’s access to funding sources in amounts adequate to finance or capitalize its activities, or on terms that are acceptable, could be impaired by factors that affect the Company directly or the financial services industry or economy in general, such as disruptions in the financial markets or negative views and expectations about the prospects for the financial services industry, a decrease in the level of the Company’s business activity as a result of a downturn in markets or by one or more adverse regulatory actions against the Company. 32 Table of Contents Any decline in available funding could adversely impact the Company’s ability to originate loans, invest in securities, meet expenses, or to fulfill obligations such as repaying borrowings or meeting deposit withdrawal demands, any of which could have a material adverse impact on its liquidity, business, financial condition and results of operations.
From time to time, the FASB or the SEC may change the financial accounting and reporting standards that govern the preparation of the Company’s financial statements. In addition, the bodies that interpret the accounting standards (such as banking regulators, outside auditors or management) may change their interpretations or positions on how these standards should be applied.
In addition, the bodies that interpret the accounting standards (such as banking regulators, or outside auditors) may change their interpretations or positions on how these standards should be applied.
The Company intends to increase its portfolio of commercial loans, including working capital lines of credit, equipment financing, healthcare and medical receivables, documentary letters of credit and standby letters of credit. These loans generally have more risk than one- to four-family residential mortgage loans and CRE loans.
Because the Company intends to continue to increase its commercial loans, its credit risk may increase. The Company intends to increase its portfolio of commercial loans, including working capital lines of credit, equipment financing, healthcare and medical receivables, documentary letters of credit and standby letters of credit.
If the Company is required to materially increase its level of the ACL for any reason, such increase could adversely affect its business, financial condition and results of operations. 36 Table of Contents Risk Related to Laws and Regulation and Their Enforcement The Company and the Bank’s business, financial condition, results of operations and future prospects could be adversely affected by the highly regulated environment and the laws and regulations that govern it.
Risks Related to Laws and Regulation and Their Enforcement The Company and the Bank’s business, financial condition, results of operations and future prospects could be adversely affected by the highly regulated environment and the laws and regulations that govern it.
A material portion of the Company’s loan portfolio is comprised of loans collateralized by real estate. There is a risk that hazardous or toxic waste could be discovered on the properties that secure these loans.
There is a risk that hazardous or toxic waste could be discovered on the properties that secure these loans.
The Company may experience significant credit losses, which could have a material adverse effect on its operating results. Various assumptions and judgments about the collectability of the loan portfolio are made, including the creditworthiness of borrowers and the value of the real estate and other assets serving as collateral for the repayment of many loans.
Various assumptions and judgments about the collectability of the loan portfolio are made, including the creditworthiness of borrowers and the value of the real estate and other assets serving as collateral for the repayment of many loans.
Losses from various types of fraud have been substantial for certain card industry participants. The Bank in many cases has indemnification agreements with third parties; however, such indemnifications may not fully cover losses.
The Bank in many cases has indemnification agreements with third parties; however, such indemnifications may not fully cover losses.
If we cannot replace such deposits, we may be required to seek alternative and potentially higher rate funding sources as compared to the existing relationship resulting in an increase in interest expense. We may also find it necessary to sell securities or other assets to meet funding needs, which could result in realized losses.
If a relationship were to be terminated, it could materially reduce our deposits and impact our liquidity. If we cannot replace such deposits, we may be required to seek alternative and potentially higher rate funding sources as compared to the existing relationship resulting in an increase in interest expense.
Changes in card network fees could impact operations. Card networks periodically increase the fees (known as interchange fees) that are charged to acquirers and that the Company charges to its merchants.
We may also find it necessary to sell securities or other assets to meet funding needs, which could result in realized losses. Changes in card network fees could impact operations. Card networks periodically increase the fees (known as interchange fees) that are charged to acquirers and that the Company charges to its merchants.
Also, our partner(s) could terminate a relationship with us for many reasons, including being able to obtain better terms from another provider or dissatisfaction with the level or quality of our services. If a relationship were to be terminated, it could materially reduce our deposits and impact our liquidity.
We may exit relationships where such requirements are not met or be required by our regulators to exit such relationships. Also, our partner(s) could terminate a relationship with us for many reasons, including being able to obtain better terms from another provider or dissatisfaction with the level or quality of our services.
The Company recently announced that it will fully exit its digital currency business due to recent developments in the crypto-asset industry, material changes in the regulatory environment regarding banks’ involvement in crypto-asset related businesses, and a strategic assessment of the business case for the Company’s further involvement at this time.
This decision followed a careful review by the Board of Directors and management and reflected recent developments in the crypto-asset industry, material changes in the regulatory environment regarding banks’ involvement in digital currency business, and a strategic assessment of the business case for the Company’s further involvement at this time.
Regulatory and legal requirements applicable to the prepaid and debit card industry are unique and frequently changing. Achieving and maintaining compliance with frequently changing legal and regulatory requirements requires a significant investment in qualified personnel, hardware, software and other technology platforms, external legal counsel and consultants and other infrastructure components.
Achieving and maintaining compliance with frequently changing legal and regulatory requirements requires a significant investment in qualified personnel, hardware, software and other technology platforms, external legal counsel and consultants and other infrastructure components. These investments may not ensure compliance or otherwise mitigate risks involved in this business.
Legislative and regulatory actions may increase the Company’s costs and impact its business, governance structure, financial condition or results of operations. Federal and state regulatory agencies frequently adopt changes to their regulations or change the manner in which existing regulations are applied.
Federal and state regulatory agencies frequently adopt changes to their regulations or change the manner in which existing regulations are applied.
See “Risk Factors ― The Company and the Bank’s business, financial condition, results of operations and future prospects could be adversely affected by the highly regulated environment and the laws and regulations that govern it.” A portion of the Company’s business provided banking services to digital currency businesses and their customers, and changes in the digital currency industry or the digital currency businesses we provided services to may have adversely affected our growth and profitability or damaged our reputation.
“Legal Proceedings.” A portion of the Company’s business provided banking services to digital currency businesses and their customers, and changes in the digital currency industry or the digital currency businesses we provided services to may have adversely affected our growth and profitability or damaged our reputation. The Company provided cash management solutions to digital currency businesses and their customers.
Additionally, there are ongoing investigations by federal and state governmental entities concerning a prepaid debit card product program that was offered by the Company through an independent program manager.
Additionally, there have been and continue to be ongoing investigations by governmental entities concerning a prepaid debit card product program that was offered by GPG.
If we foreclose on these loans, our holding period for the collateral typically is longer than for a single or multi-family residential property because there are fewer potential purchasers of the collateral. The Company’s plans to increase its portfolio of these loans could result in increased credit risk in the portfolio.
In addition, commercial loans generally have a larger average size as compared with other loans, and the collateral for commercial loans is generally less readily-marketable. If we foreclose on these loans, our holding period for the collateral typically is longer than for a single or multi-family residential property because there are fewer potential purchasers of the collateral.
In the event that the Company is unable to perform all these tasks and meet these challenges effectively, its growth prospects and earnings could be adversely impacted. Risks Related to Accounting Matters Changes in accounting standards could materially impact the Company’s financial statements.
In the event that the Company is unable to perform all these tasks and meet these challenges effectively, its growth prospects and earnings could be adversely impacted. Uncertainty in the development, deployment, use and regulation of artificial intelligence could subject us to additional risks.
Adverse economic conditions and government policy responses to such conditions could have a material adverse effect on the business, financial condition, results of operations and prospects of the Company. 28 Table of Contents A substantial majority of the Company’s loans and operations are in New York, and therefore its business is particularly vulnerable to a downturn in the New York City economy.
A substantial majority of the Company’s loans and operations are in New York, and therefore its business is particularly vulnerable to a downturn in the New York City economy.
If final settlements with the FRB and the NYSDFS are not reached and the FRB and the NYSDFS do bring public enforcement actions, such actions and their resolution, as well as any other matter arising out of the foregoing program, could have a materially adverse effect on the Company and the Bank’s assets, business, cash flows, financial condition, liquidity, prospects and/or results of operations.
Additional enforcement or other actions arising out of the prepaid debit card program in question could have a materially adverse effect on the Company and the Bank’s assets, business, cash flows, financial condition, liquidity, prospects and/or results of operations.
Recently, federal bank regulators have increasingly focused on the risks related to bank and fintech company partnerships, raising concerns regarding risk management, oversight, internal controls, information security, change management, and information technology operational resilience. This focus is demonstrated by recent regulatory enforcement actions against other banks that have allegedly not adequately addressed these concerns while growing their BaaS offerings.
Recently, federal bank regulators have increasingly focused on the risks related to bank and non-bank financial service company partnerships, raising concerns regarding risk management, oversight, internal controls, information security, change management, and information technology operational resilience.
Since repayment of commercial loans depends on the successful management and operation of borrowers’ businesses, repayment of such loans can be affected by adverse conditions in the local and national economy. In addition, commercial loans generally have a larger average size as compared with other loans, and the collateral for commercial loans is generally less readily-marketable.
These loans generally have more risk than one- to four-family residential mortgage loans and CRE loans. Since repayment of commercial loans depends on the successful management and operation of borrowers’ businesses, repayment of such loans can be affected by adverse conditions in the local and national economy.
Failure to successfully manage these risks in the development and implementation of new lines of business or new products or services could reduce our revenues and potentially generate losses. The Company may be adversely impacted by the transition from LIBOR as a reference rate.
Failure to successfully manage these risks in the development and implementation of new lines of business or new products or services could reduce our revenues and potentially generate losses. The Company is exposed to the risks of natural disasters and global market disruptions. The Company handles a substantial volume of customer and other financial transactions every day.
During the year ended December 31, 2022, we reported an other comprehensive loss of $76.9 million related to net changes in unrealized losses in the AFS securities portfolio.
During the year ended December 31, 2023, we reported an other comprehensive gain of $11.1 million related to net changes in unrealized losses in the AFS securities portfolio. Fluctuations in market value may be caused by changes in market interest rates, lower market prices for securities and limited investor demand.
Changes in any of these policies are influenced by macroeconomic conditions and other factors that are beyond the Company’s control.
Changes in any of these policies are influenced by macroeconomic conditions and other factors that are beyond the Company’s control. Adverse economic conditions and government policy responses to such conditions could have a material adverse effect on the business, financial condition, results of operations and prospects of the Company.
The determination of the appropriate level of allowance is subject to judgment and requires the Company to make significant estimates of current credit risks and future trends, all of which are subject to material changes. If assumptions prove to be incorrect, the ACL may not cover losses in the loan portfolio at the date of the financial statements.
The determination of the appropriate level of allowance is subject to judgment and requires the Company to make significant estimates of current credit risks and future trends, all of which are subject to material changes. In estimating the allowance, the Company relies on models and economic forecasts developed by external parties as the primary driver of the allowance.
Compliance with these laws and regulations is difficult and costly, and changes to these laws and regulations often impose additional compliance costs.
For further discussion see Part I, Item 1. “Business — Regulation of the Bank —Capitalization ” and “Business —Holding Company Regulation .” Compliance with these laws and regulations is difficult and costly, and changes to these laws and regulations often impose additional compliance costs.
Additionally, there are ongoing investigations by federal and state governmental entities concerning a prepaid debit card product program that was offered by the Company through an independent program manager. These include investigations as to which the Company is a subject by the FRB and certain state authorities, including the NYSDFS.
This focus is demonstrated by recent regulatory enforcement actions against banks that have allegedly not adequately addressed these concerns while growing their non-bank financial service offerings. Additionally, there are ongoing investigations by federal and state governmental entities concerning a prepaid debit card product program that was offered by the Company through an independent program manager.
The Company is in discussions with the FRB and the NYSDFS with respect to consensual resolutions of their investigations.
The FRB Consent Order and NYSDFS Consent Order constitute separate consensual resolutions with each of the FRB and the NYSDFS with respect to their investigations, each of which is now closed as a result of such order.
Deposit accounts acquired through these relationships totaled $1.2 billion, or 23.5% of total deposits, at December 31, 2022. We provide oversight over these relationships, which must meet all internal and regulatory requirements. We may exit relationships where such requirements are not met or be required by our regulators to exit such relationships.
We derive a percentage of our deposits from deposit accounts generated through our relationships with non-bank financial service companies. Deposit accounts acquired through these relationships totaled $781 million, or 13.6% of total deposits, at December 31, 2023. We provide oversight over these relationships, which must meet all internal and regulatory requirements.
Fluctuations in market value may be caused by changes in market interest rates, lower market prices for securities and limited investor demand. 29 Table of Contents Changes in the estimated fair value of securities may reduce stockholders’ equity and net income. At December 31, 2022, we had $445.7 million of AFS securities.
Changes in the estimated fair value of securities may reduce stockholders’ equity and net income. At December 31, 2023, we had AFS securities with an amortized cost of $539.0 million and a fair value of $461.2 million.
At December 31, 2022, the Company has $161.4 million of rent-regulated stabilized multi-family loans, which had a weighted-average LTV of 42.24% at the date of last appraisal, a weighted average debt coverage ratio of 3.34x. 27 Table of Contents The Company could be subject to environmental risks and associated costs on its foreclosed real estate assets, which could materially and adversely affect its financial condition and results of operation.
The Company could be subject to environmental risks and associated costs on its foreclosed real estate assets, which could materially and adversely affect its financial condition and results of operation. A material portion of the Company’s loan portfolio is comprised of loans collateralized by real estate.
Although the Company takes protective measures to maintain the confidentiality, integrity and security of information, its computer systems, software and networks may be vulnerable to unauthorized access, loss or destruction of data (including confidential client information), account takeovers, unavailability of service, computer viruses or other malicious code, cyber-attacks and other events that could have an adverse security impact.
For example, the Company’s operational and information systems or infrastructure, or those of our third-party providers, may be vulnerable to unauthorized access, loss or destruction of data (including confidential client information), account takeovers, disruptions of service, computer viruses or other malicious code, cyberattacks and other incidents that could create a cybersecurity event, any of which could remain undetected for an extended period of time.
Furthermore, failure to adequately manage this transition process with customers could adversely impact the Company’s reputation or could have a material adverse effect on the Company’s business, financial condition and results of operations. The Company is exposed to the risks of natural disasters and global market disruptions.
Failure to successfully manage any of these or other risks while exiting these BaaS relationships could have a material adverse effect on our business, financial condition and results of operations.
For a discussion of the impact please see “ NOTE 3 ‒ SUMMARY OF RECENT ACCOUNTING PRONOUNCEMENTS ” to the Company’s consolidated financial statements in this Form 10-K. Loan customers may not repay their loans according to the terms of their loans, and the collateral securing the payment of their loans may be insufficient to assure repayment.
Loan customers may not repay their loans according to the terms of their loans, and the collateral securing the payment of their loans may be insufficient to assure repayment. The Company may experience significant credit losses, which could have a material adverse effect on its operating results.
Over the past year, in response to a pronounced rise in inflation, the Federal Reserve Board has raised certain benchmark interest rates to combat inflation.
As a result of sustained inflationary pressures, the Federal Reserve Board has raised certain benchmark interest rates several times and has previously indicated its willingness to continue to maintain increased interest rates if needed to further combat inflation.
Removed
Given the ongoing and dynamic nature of the COVID-19 pandemic, including the rate of vaccine acceptance and the development of new variants, it is difficult to predict the full impact of the COVID-19 outbreak on our business. The extent of such impact will depend on future developments, which are highly uncertain, including when COVID-19 can be controlled and abated.
Added
These portfolios have grown in recent years and the Company intends to continue to emphasize these types of lending. The Company lends against a variety of asset classes, including skilled nursing facilities, healthcare, multi-family, office, hospitality, mixed use, retail, and warehouse.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThe Company believes that current facilities at its branches are adequate to meet its present and foreseeable needs. We lease a property in Florida that is utilized as a loan production office and a property in New Jersey that is utilized as an administrative office.
Biggest changeIn addition, we lease a property in Kentucky that is utilized as office space for GPG. All the leases on these properties expire at various dates through 2035. The Company believes that current facilities at its offices and branches are adequate to meet its present and foreseeable needs. 43 Table of Contents
As of December 31, 2022, each of the Company’s offices and banking centers are leased, except for 1302-13 th Avenue Brooklyn , which is to be used in the future as its Brooklyn banking center.
As of December 31, 2023, each of the Company’s offices and banking centers are leased, except for its Brooklyn banking center located at 5102 13th Avenue, Brooklyn, which the Company owns. We also lease a property in Florida that is utilized as a loan production office and a property in New Jersey that is utilized as an administrative office.
Removed
We also lease a property in Kentucky that is utilized as office space for our Global Payments Group. All the leases on these properties expire at various dates through 2035.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeIf final settlements with the FRB and the NYSDFS are not reached and the FRB and the NYSDFS do bring public enforcement actions, such actions and their resolution, as well as any other matter arising out of the foregoing program, could have a materially adverse effect on the Company and the Bank’s assets, business, cash flows, financial condition, liquidity, prospects and/or results of operations.
Biggest changeAdditional enforcement or other actions arising out of the prepaid debit card program in question, along with any other matters arising out of the foregoing program, could have a materially adverse effect on the Company and the Bank’s assets, business, cash flows, financial condition, liquidity, prospects and/or results of operations.
The Company is in discussions with the FRB and the NYSDFS with respect to consensual resolutions of their investigations.
The FRB Consent Order and NYSDFS Consent Order constitute separate consensual resolutions with each of the FRB and the NYSDFS with respect to their investigations, each of which is now closed as a result of such order.
Removed
Item 3. Legal Proceedings The Company is subject to certain pending and threatened legal actions that arise out of the normal course of business.
Added
Item 3. Legal Proceedings There have been and continue to be ongoing investigations by governmental entities concerning a prepaid debit card product program that was offered by GPG. These include investigations involving the Company and the Bank by the Board of Governors of the FRB and certain state authorities, including the NYSDFS.
Removed
Given the nature, scope and complexity of the extensive legal and regulatory landscape applicable to the business 38 Table of Contents (including laws and regulations governing consumer protection, fair lending, fair labor, privacy, information security and anti-money laundering and anti-terrorism laws), the Company, like all banking organizations, is subject to heightened legal and regulatory compliance and litigation risk.
Added
During the early stages of the COVID-19 pandemic, third parties used this prepaid debit card product to establish unauthorized accounts and to receive unauthorized government benefits payments, including unemployment insurance benefits payments made pursuant to the Coronavirus Aid, Relief, and Economic Security Act from many states.
Removed
Although the Company is unable at this time to determine the final terms on which the FRB and NYSDFS investigations will be resolved or the timing of such resolutions, the Company accrued a charge of $35.0 million during the fourth quarter of 2022 to establish a reserve for what the Company believes is a reasonable estimate of the probable loss associated with the FRB and NYSDFS settlements.
Added
The Company ceased accepting new accounts from this program manager in July 2020 and exited its relationship with this program manager in August 2020. The Company has cooperated and continues to cooperate in these investigations and continues to review this matter.
Added
As previously disclosed, the Bank entered into (i) an Order to Cease and Desist and Order of Assessment of a Civil Money Penalty Issued Upon Consent with the FRB (the “FRB Consent Order”), effective October 16, 2023, and (ii) a Consent Order with the NYSDFS (the “NYSDFS Consent Order”), effective October 18, 2023.
Added
The FRB Consent Order provided for a civil money penalty of $14.5 million and requires the Bank’s Board of Directors to submit a plan to further strengthen board oversight of the management and operations of GPG and the Bank to develop, among other things, a written plan to enhance the Bank’s customer identification program, a plan to improve the Bank’s customer due diligence program and a plan to enhance the Bank’s third party risk management program.
Added
The NYSDFS Consent Order provided for a civil money penalty of $15.0 million and requires the Bank to provide certain information regarding the Bank’s program to supervise third-party program managers and various status reports regarding certain compliance-related matters in connection with the Bank’s oversight of third-party program managers of the Bank’s prepaid debit card program.
Added
The Company reserved the foregoing amounts payable to the FRB and NYSDFS through a regulatory settlement reserve recorded in 2022 and 2023.
Added
Since 2020, the Bank has been actively working to enhance its processes and procedures so as to more effectively and efficiently address the concerns that arose.
Added
In addition to the matters described above, the Company is subject to various other pending and threatened legal actions relating to the conduct of its business activities, as well as inquiries and investigations from regulators, including but not limited to, the FRB and the NYSDFS.
Added
In the opinion of management, as of December 31, 2023, the ultimate aggregate liability, if any, arising out of any such other pending or threatened matters will not be material to the Company’s financial condition, results of operations, and liquidity.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThere were no sales of unregistered securities or repurchases of shares of common stock during the year ended December 31, 2022. 39 Table of Contents Performance Graph The following graph compares, for the period from December 31, 2017 through December 31, 2022, the cumulative shareholder return (change in the stock price plus reinvested dividends) for the common stock of the Company with the cumulative return for the (i) Standard and Poor’s 500 (“S&P 500”) Index and (ii) KBW Bank Index.
Biggest changeThere were no sales of unregistered securities or repurchases of shares of common stock during the year ended December 31, 2023. ​ 45 Table of Contents Performance Graph The following graph compares, for the period from December 31, 2018 through December 31, 2023, the cumulative shareholder return (change in the stock price plus reinvested dividends) for the common stock of the Company with the cumulative return for the (i) Standard and Poor’s 500 (“S&P 500”) Index and (ii) KBW Bank Index.
The performance reflected below assumes that $100 was invested in our common stock and each of the indices at their closing prices on December 31, 2017. The performance of our common stock reflected below is not necessarily indicative of our future performance. ​
The performance reflected below assumes that $100 was invested in our common stock and each of the indices at their closing prices on December 31, 2018. The performance of our common stock reflected below is not necessarily indicative of our future performance. ​
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities The Company’s shares of common stock are traded on the New York Stock Exchange under the symbol “MCB”. The approximate number of holders of record of the Company’s common stock as of February 23, 2023 was 75.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities The Company’s shares of common stock are traded on the New York Stock Exchange under the symbol “MCB”. The approximate number of holders of record of the Company’s common stock as of February 26, 2024 was 77.

Item 7. Management's Discussion & Analysis

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

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Biggest changeThe yields set forth below include the effect of deferred loan origination fees and costs, and purchase discounts and premiums that are amortized or accreted to interest income. ​ 50 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ ​ December 31, 2022 ​ ​ December 31, 2021 ​ December 31, 2020 ​ Average ​ ​ ​ ​ Average ​ ​ ​ ​ Average ​ ​ ​ ​ ​ Outstanding ​ ​ ​ ​ Yield / ​ ​ Outstanding ​ ​ ​ ​ Yield / ​ Outstanding ​ ​ ​ ​ Yield / (dollars in thousands) ​ Balance ​ Interest ​ Rate ​ ​ Balance ​ Interest ​ Rate ​ Balance ​ Interest ​ Rate Assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest-earning assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Loans (1) ​ $ 4,361,412 ​ $ 231,851 5.32 % ​ $ 3,448,468 ​ $ 164,528 4.77 % ​ $ 2,888,180 ​ $ 136,497 4.73 % Available-for-sale securities ​ 538,425 ​ 6,921 1.29 ​ ​ 489,922 ​ 5,066 1.03 ​ ​ 192,472 ​ 3,108 1.59 ​ Held-to-maturity securities ​ 495,812 ​ 8,682 1.75 ​ ​ 50,110 ​ 746 1.49 ​ ​ 3,282 ​ 59 1.77 ​ Equity investments - non-trading ​ ​ 2,339 ​ ​ 32 ​ 1.37 ​ ​ ​ 2,312 ​ ​ 26 ​ 1.13 ​ ​ ​ 2,279 ​ ​ 41 ​ 1.77 ​ Overnight deposits ​ 1,156,468 ​ 12,314 1.05 ​ ​ 1,669,754 ​ 2,310 0.14 ​ ​ 732,130 ​ 2,546 0.35 ​ Other interest-earning assets ​ 16,700 ​ 939 5.62 ​ ​ 11,897 ​ 608 5.11 ​ ​ 16,467 ​ 846 5.14 ​ Total interest-earning assets ​ 6,571,156 ​ 260,739 3.97 ​ ​ 5,672,463 ​ 173,284 3.05 ​ ​ 3,834,810 ​ 143,097 3.73 ​ Non-interest-earning assets ​ 90,495 ​ ​ ​ 89,002 ​ ​ ​ 59,584 ​ ​ Allowance for loan and lease losses ​ (40,020) ​ ​ ​ (37,235) ​ ​ ​ (31,381) ​ ​ Total assets ​ $ 6,621,631 ​ ​ ​ $ 5,724,230 ​ ​ ​ $ 3,863,013 ​ ​ Liabilities and Stockholders' Equity: ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest-bearing liabilities: ​ ​ ​ ​ ​ ​ ​ ​ ​ Money market and savings accounts ​ $ 2,652,502 ​ ​ 28,694 1.08 ​ ​ $ 2,394,616 ​ ​ 13,392 0.56 ​ ​ $ 1,798,109 ​ ​ 12,420 0.69 ​ Certificates of deposit ​ 59,645 ​ 590 0.99 ​ ​ 83,313 ​ 849 1.02 ​ ​ 98,483 ​ 1,824 1.85 ​ Total interest-bearing deposits ​ 2,712,147 ​ 29,284 1.08 ​ ​ 2,477,929 ​ 14,241 0.57 ​ ​ 1,896,592 ​ 14,244 0.75 ​ Borrowed funds ​ 45,878 ​ 2,297 5.00 ​ ​ 45,303 ​ 2,042 4.51 ​ ​ 129,460 ​ 3,932 2.99 ​ Total interest-bearing liabilities ​ 2,758,025 ​ 31,581 1.15 ​ ​ 2,523,232 ​ 16,283 0.65 ​ ​ 2,026,052 ​ 18,176 0.90 ​ Non-interest-bearing liabilities: ​ ​ ​ ​ ​ ​ ​ ​ ​ Non-interest-bearing deposits ​ 3,223,606 ​ ​ ​ 2,708,547 ​ ​ ​ 1,443,094 ​ ​ Other non-interest-bearing liabilities ​ 61,213 ​ ​ ​ 79,239 ​ ​ ​ 73,250 ​ ​ Total liabilities ​ 6,042,844 ​ ​ ​ 5,311,018 ​ ​ ​ 3,542,396 ​ ​ Stockholders' equity ​ 578,787 ​ ​ ​ 413,212 ​ ​ ​ 320,617 ​ ​ Total liabilities and equity ​ $ 6,621,631 ​ ​ ​ $ 5,724,230 ​ ​ ​ $ 3,863,013 ​ ​ Net interest income ​ ​ $ 229,158 ​ ​ ​ $ 157,001 ​ ​ ​ $ 124,921 ​ Net interest rate spread (2) ​ ​ 2.82 % ​ ​ 2.41 % ​ ​ 2.83 % Net interest margin (3) ​ ​ 3.49 % ​ ​ 2.77 % ​ ​ 3.26 % Total cost of deposits (4) ​ ​ 0.49 % ​ ​ 0.27 % ​ ​ 0.43 % Total cost of funds (5) ​ ​ 0.53 % ​ ​ ​ 0.31 % ​ ​ ​ 0.52 % (1) Amount includes deferred loan fees and non-performing loans.
Biggest changeThe yields set forth below include the effect of deferred loan origination fees and costs, and purchase discounts and premiums that are amortized or accreted to interest income. ​ 56 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ ​ December 31, 2023 ​ ​ December 31, 2022 ​ December 31, 2021 ​ ​ Average ​ ​ ​ ​ Yield / ​ ​ Average ​ ​ ​ ​ Yield / ​ Average ​ ​ ​ ​ Yield / (dollars in thousands) ​ Balance ​ Interest ​ Rate ​ ​ Balance ​ Interest ​ Rate ​ Balance ​ Interest ​ Rate Assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest-earning assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Loans (1) ​ $ 5,147,653 ​ $ 345,039 6.70 % ​ $ 4,361,412 ​ $ 231,851 5.32 % ​ $ 3,448,468 ​ $ 164,528 4.77 % Available-for-sale securities ​ 527,873 ​ 8,865 1.68 ​ ​ 538,425 ​ 6,921 1.29 ​ ​ 489,922 ​ 5,066 1.03 ​ Held-to-maturity securities ​ 499,379 ​ 9,608 1.92 ​ ​ 495,812 ​ 8,682 1.75 ​ ​ 50,110 ​ 746 1.49 ​ Equity investments - non-trading ​ ​ 2,381 ​ ​ 52 ​ 2.17 ​ ​ ​ 2,339 ​ ​ 32 ​ 1.37 ​ ​ ​ 2,312 ​ ​ 26 ​ 1.13 ​ Overnight deposits ​ 176,813 ​ 9,319 5.20 ​ ​ 1,156,468 ​ 12,314 1.05 ​ ​ 1,669,754 ​ 2,310 0.14 ​ Other interest-earning assets ​ 33,061 ​ 2,522 7.63 ​ ​ 16,700 ​ 939 5.62 ​ ​ 11,897 ​ 608 5.11 ​ Total interest-earning assets ​ 6,387,160 ​ 375,405 5.88 ​ ​ 6,571,156 ​ 260,739 3.97 ​ ​ 5,672,463 ​ 173,284 3.05 ​ Non-interest-earning assets ​ 169,377 ​ ​ ​ 90,495 ​ ​ ​ 89,002 ​ ​ Allowance for credit losses ​ (49,923) ​ ​ ​ (40,020) ​ ​ ​ (37,235) ​ ​ Total assets ​ $ 6,506,614 ​ ​ ​ $ 6,621,631 ​ ​ ​ $ 5,724,230 ​ ​ Liabilities and Stockholders' Equity: ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest-bearing liabilities: ​ ​ ​ ​ ​ ​ ​ ​ ​ Money market and savings accounts ​ $ 3,299,427 ​ ​ 127,494 3.86 ​ ​ $ 2,652,502 ​ ​ 28,694 1.08 ​ ​ $ 2,394,616 ​ ​ 13,392 0.56 ​ Certificates of deposit ​ 42,926 ​ 1,183 2.76 ​ ​ 59,645 ​ 590 0.99 ​ ​ 83,313 ​ 849 1.02 ​ Total interest-bearing deposits ​ 3,342,353 ​ 128,677 3.85 ​ ​ 2,712,147 ​ 29,284 1.08 ​ ​ 2,477,929 ​ 14,241 0.57 ​ Borrowed funds ​ 445,061 ​ 23,892 5.37 ​ ​ 45,878 ​ 2,297 5.00 ​ ​ 45,303 ​ 2,042 4.51 ​ Total interest-bearing liabilities ​ 3,787,414 ​ 152,569 4.03 ​ ​ 2,758,025 ​ 31,581 1.15 ​ ​ 2,523,232 ​ 16,283 0.65 ​ Non-interest-bearing liabilities: ​ ​ ​ ​ ​ ​ ​ ​ ​ Non-interest-bearing deposits ​ 1,960,469 ​ ​ ​ 3,223,606 ​ ​ ​ 2,708,547 ​ ​ Other non-interest-bearing liabilities ​ 137,725 ​ ​ ​ 61,213 ​ ​ ​ 79,239 ​ ​ Total liabilities ​ 5,885,608 ​ ​ ​ 6,042,844 ​ ​ ​ 5,311,018 ​ ​ Stockholders' equity ​ 621,006 ​ ​ ​ 578,787 ​ ​ ​ 413,212 ​ ​ Total liabilities and equity ​ $ 6,506,614 ​ ​ ​ $ 6,621,631 ​ ​ ​ $ 5,724,230 ​ ​ Net interest income ​ ​ $ 222,836 ​ ​ ​ $ 229,158 ​ ​ ​ $ 157,001 ​ Net interest rate spread (2) ​ ​ 1.85 % ​ ​ 2.82 % ​ ​ 2.41 % Net interest margin (3) ​ ​ 3.49 % ​ ​ 3.49 % ​ ​ 2.77 % Total cost of deposits (4) ​ ​ 2.43 % ​ ​ 0.49 % ​ ​ 0.27 % Total cost of funds (5) ​ ​ 2.65 % ​ ​ ​ 0.53 % ​ ​ ​ 0.31 % (1) Amount includes deferred loan fees and non-performing loans.
By combining the high-tech service and relationship-based focus of a community bank with an extensive suite of financial products and services, the Company is well-positioned to continue to capitalize on the significant growth opportunities available in the New York metropolitan area.
By combining high-tech service with the relationship-based focus of a community bank with an extensive suite of financial products and services, the Company is well-positioned to continue to capitalize on the significant growth opportunities available in the New York metropolitan area.
Through its wholly owned bank subsidiary, Metropolitan Commercial Bank (the “Bank”), a New York state chartered bank, the Company provides a broad range of business, commercial and retail banking products and services to small businesses, middle-market enterprises, public entities and affluent individuals in the New York metropolitan area.
Through its wholly owned bank subsidiary, Metropolitan Commercial Bank, a New York state chartered bank, the Company provides a broad range of business, commercial and retail banking products and services to small businesses, middle-market enterprises, public entities and affluent individuals in the New York metropolitan area.
Regulation The Company and the Bank are subject to various regulatory capital requirements administered by the Federal banking agencies. At December 31, 2022 and December 31, 2021, the Company and the Bank met all applicable regulatory capital requirements to be considered “well capitalized” under regulatory guidelines.
Regulation The Company and the Bank are subject to various regulatory capital requirements administered by the Federal banking agencies. At December 31, 2023 and December 31, 2022, the Company and the Bank met all applicable regulatory capital requirements to be considered “well capitalized” under regulatory guidelines.
The Company and the Bank manage their capital to comply with their internal planning targets and regulatory capital standards administered by federal banking 54 Table of Contents agencies. The Company and the Bank review capital levels on a monthly basis.
The Company and the Bank manage their 60 Table of Contents capital to comply with their internal planning targets and regulatory capital standards administered by federal banking agencies. The Company and the Bank review capital levels on a monthly basis.
Tax-exempt securities, if any, were presented on a tax-equivalent basis, using a federal tax rate of 21%. ​ 43 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Due Within ​ ​ Due After 1 ​ ​ Due After 5 ​ ​ Due After ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 1 Year ​ ​ Through 5 Years ​ ​ Through 10 Years ​ ​ 10 Years ​ ​ Total ​ ​ ​ Amortized ​ ​ ​ ​ Amortized ​ ​ ​ ​ Amortized ​ ​ ​ ​ Amortized ​ ​ ​ ​ Amortized ​ ​ Fair ​ ​ ​ (dollars in thousands) Cost Yield ​ Cost Yield ​ Cost Yield ​ ​ Cost ​ Yield ​ Cost ​ Value ​ Yield ​ Available-for-sale ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ U.S.
Tax-exempt securities, if any, were presented on a tax-equivalent basis, using a federal tax rate of 21%. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Due Within ​ ​ Due After 1 ​ ​ Due After 5 ​ ​ Due After ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 1 Year ​ ​ Through 5 Years ​ ​ Through 10 Years ​ ​ 10 Years ​ ​ Total ​ ​ ​ Amortized ​ ​ ​ ​ Amortized ​ ​ ​ ​ Amortized ​ ​ ​ ​ Amortized ​ ​ ​ ​ Amortized ​ ​ Fair ​ ​ ​ (dollars in thousands) Cost Yield ​ Cost Yield ​ Cost Yield ​ ​ Cost ​ Yield ​ Cost ​ Value ​ Yield ​ Available-for-sale ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ U.S.
Although management evaluates available information to determine the adequacy of the ALLL, the level of allowance is an estimate which is subject to significant judgment and short-term change.
Although management evaluates available information to determine the adequacy of the ACL, the level of allowance is an estimate which is subject to significant judgment and short-term change.
Given the size of the market in which the Company operates and its differentiated approach to client service, there is significant opportunity to grow its loan and deposits.
Given the size of the market in which the Company operates and its differentiated approach to client service, there is significant opportunity to grow its loans and deposits.
Below is a table of the Company and Bank’s capital ratios for the periods indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Minimum Ratio ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Minimum ​ ​ Required ​ ​ Minimum ​ ​ ​ ​ At ​ ​ At ​ ​ Ratio to be ​ ​ for Capital ​ ​ Capital ​ ​ ​ ​ December 31, ​ ​ December 31, ​ ​ “Well ​ ​ Adequacy ​ ​ Conservation ​ ​ ​ 2022 ​ ​ 2021 ​ ​ Capitalized” ​ Purposes ​ Buffer (1) ​ The Company ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Tier 1 leverage ratio ​ 10.2 % ​ 8.5 % ​ N/A ​ ​ 4.0 % ​ — % ​ Common equity tier 1 ​ 12.1 % ​ 14.1 % ​ N/A ​ ​ 4.5 % ​ 2.5 % ​ Tier 1 risk-based capital ratio ​ 12.5 % ​ 14.6 % ​ N/A ​ ​ 6.0 % ​ 2.5 % ​ Total risk-based capital ratio ​ 13.4 % ​ 16.1 % ​ N/A ​ ​ 8.0 % ​ 2.5 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ The Bank ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Tier 1 leverage ratio ​ 10.0 % ​ 8.4 % ​ 5.00 % ​ 4.0 % ​ — % ​ Common equity tier 1 ​ 12.3 % ​ 14.4 % ​ 6.50 % ​ 4.5 % ​ 2.5 % ​ Tier 1 risk-based capital ratio ​ 12.3 % ​ 14.4 % ​ 8.00 % ​ 6.0 % ​ 2.5 % ​ Total risk-based capital ratio ​ 13.1 % ​ 15.2 % ​ 10.00 % ​ 8.0 % ​ 2.5 % ​ (1) As of December 31, 2022, the capital conservation buffer for the Company and the Bank was 5.4% and 5.1%, respectively, which exceeded the minimum requirement of 2.5% required to be held by banking institutions.
Below is a table of the Company and Bank’s capital ratios for the periods indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Minimum Ratio ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Minimum ​ ​ Required ​ ​ Minimum ​ ​ ​ ​ At ​ ​ At ​ ​ Ratio to be ​ ​ for Capital ​ ​ Capital ​ ​ ​ ​ December 31, ​ ​ December 31, ​ ​ “Well ​ ​ Adequacy ​ ​ Conservation ​ ​ ​ 2023 ​ ​ 2022 ​ ​ Capitalized” ​ Purposes ​ Buffer ​ The Company ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Tier 1 leverage ratio ​ 10.6 % ​ 10.2 % ​ N/A ​ ​ 4.0 % ​ — % ​ Common equity tier 1 ​ 11.5 % ​ 12.1 % ​ N/A ​ ​ 4.5 % ​ 2.5 % ​ Tier 1 risk-based capital ratio ​ 11.8 % ​ 12.5 % ​ N/A ​ ​ 6.0 % ​ 2.5 % ​ Total risk-based capital ratio ​ 12.8 % ​ 13.4 % ​ N/A ​ ​ 8.0 % ​ 2.5 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ The Bank ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Tier 1 leverage ratio ​ 10.3 % ​ 10.0 % ​ 5.00 % ​ 4.0 % ​ — % ​ Common equity tier 1 ​ 11.5 % ​ 12.3 % ​ 6.50 % ​ 4.5 % ​ 2.5 % ​ Tier 1 risk-based capital ratio ​ 11.5 % ​ 12.3 % ​ 8.00 % ​ 6.0 % ​ 2.5 % ​ Total risk-based capital ratio ​ 12.5 % ​ 13.1 % ​ 10.00 % ​ 8.0 % ​ 2.5 % ​ (1) As of December 31, 2023, the capital conservation buffer for the Company and the Bank was 4.8% and 4.5%, respectively, which exceeded the minimum requirement of 2.5% required to be held by banking institutions.
If the transfer of the participation interest does not qualify for sale treatment under GAAP, the amount of the loan transferred is recorded as a secured borrowing. There were $7.7 million in secured borrowings as of December 31, 2022 and $32.5 million as of December 31, 2021.
If the transfer of the participation interest does not qualify for sale treatment under GAAP, the amount of the loan transferred is recorded as a secured borrowing. There were $7.6 million in secured borrowings as of December 31, 2023 and $7.7 million as of December 31, 2022.
The Company’s most liquid assets are cash and cash equivalents. The levels of these assets are dependent on the Company’s operating, financing, lending, and investing activities during any given period. At December 31, 2022 and 2021, cash and cash equivalents totaled $257.4 million and $2.4 billion, respectively.
The Company’s most liquid assets are cash and cash equivalents. The levels of these assets are dependent on the Company’s operating, financing, lending, and investing activities during any given period. At December 31, 2023 and 2022, cash and cash equivalents totaled $269.5 million and $257.4 million, respectively.
Selected Financial Information The following table includes selected financial information for the Company for the periods indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ At or for the year ended December 31, ​ ​ ​ 2022 ​ 2021 ​ 2020 Performance Ratios ​ ​ ​ ​ ​ Return on average assets ​ ​ 0.90 % ​ 1.06 % ​ 1.02 % Return on average equity ​ ​ 10.27 ​ 14.65 ​ 12.31 ​ Net interest spread (1) ​ ​ 2.82 ​ 2.41 ​ 2.83 ​ Net interest margin (2) ​ ​ 3.49 ​ 2.77 ​ 3.26 ​ Average interest-earning assets to average interest-bearing liabilities ​ ​ 238.26 ​ 224.81 ​ 189.28 ​ Non-interest expense/average assets ​ ​ 2.25 ​ 1.53 ​ 1.93 ​ Efficiency ratio ​ ​ 58.16 ​ 48.32 ​ 52.51 ​ Average equity to average total assets ​ ​ 8.74 ​ 7.22 ​ 8.30 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Earnings per Share ​ ​ ​ ​ ​ Basic earnings per common share ​ $ 5.42 ​ $ 6.64 ​ $ 4.76 ​ Diluted earnings per common share ​ ​ 5.29 ​ ​ 6.45 ​ ​ 4.66 ​ ​ ​ ​ ​ ​ ​ (1) Determined by subtracting the weighted average cost of total interest-bearing liabilities from the weighted average yield on total interest-earning assets.
Selected Financial Information The following table includes selected financial information for the Company for the periods indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ At or for the year ended December 31, ​ ​ ​ 2023 ​ 2022 ​ 2021 Performance Ratios ​ ​ ​ ​ ​ Return on average assets ​ ​ 1.19 % ​ 0.90 % ​ 1.06 % Return on average equity ​ ​ 12.44 ​ 10.27 ​ 14.65 ​ Net interest spread (1) ​ ​ 1.85 ​ 2.82 ​ 2.41 ​ Net interest margin (2) ​ ​ 3.49 ​ 3.49 ​ 2.77 ​ Average interest-earning assets to average interest-bearing liabilities ​ ​ 168.64 ​ 238.26 ​ 224.81 ​ Non-interest expense/average assets ​ ​ 2.02 ​ 2.25 ​ 1.53 ​ Efficiency ratio ​ ​ 52.46 ​ 58.16 ​ 48.32 ​ Average equity to average total assets ​ ​ 9.54 ​ 8.74 ​ 7.22 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Earnings per Share ​ ​ ​ ​ ​ Basic earnings per common share ​ $ 6.95 ​ $ 5.42 ​ $ 6.64 ​ Diluted earnings per common share ​ ​ 6.91 ​ ​ 5.29 ​ ​ 6.45 ​ ​ ​ ​ ​ ​ ​ (1) Determined by subtracting the weighted average cost of total interest-bearing liabilities from the weighted average yield on total interest-earning assets.
For an analysis of 2021 results compared with 2020 results, see Part II, Item 7., “ Management's Discussion and Analysis of Financial Condition and Results of Operations ” in the annual report on Form 10-K for the year ended December 31, 2021 filed with the SEC. 40 Table of Contents The Company’s primary lending products are CRE, including multi-family loans, and C&I loans.
For an analysis of 2022 results compared with 2021 results, see Part II, Item 7., “Management's Discussion and Analysis of Financial Condition and Results of Operations” in the annual report on Form 10-K for the year ended December 31, 2022 filed with the SEC. The Company’s primary lending products are CRE, including multi-family loans, and C&I loans.
The Debentures, the sole assets of Trust I, mature on December 9, 2035 and bear interest at a floating rate of three-month LIBOR plus 1.85%. The Debentures are callable at any time. At December 31, 2022, the Debentures bore an interest rate of 5.93%.
The Debentures, the sole assets of Trust I, mature on December 9, 2035 and bear interest at a floating rate of three-month SOFR plus 1.85%. The Debentures are callable at any time. At December 31, 2023, the Debentures bore an interest rate of 7.51%.
Time deposits due within one year as of December 31, 2022 totaled $37.6 million, or 0.7% of total deposits. Total time deposits were $52.1 million, or 1.0% of total deposits, at December 31, 2022. The Company’s primary investing activities are the origination, and to a lesser extent, purchase of loans and securities.
Time deposits due within one year as of December 31, 2023 totaled $31.8 million, or 0.6% of total deposits. Total time deposits were $35.4 million, or 0.6% of total deposits, at December 31, 2023. The Company’s primary investing activities are the origination, and to a lesser extent, purchase of loans and securities.
Critical accounting policies are defined as those involving significant judgments and assumptions by management that could have a material impact on the carrying value of certain assets or on income under different assumptions or conditions.
Critical accounting estimates are necessary in the application of certain accounting policies and procedures and are particularly susceptible to significant change. Critical accounting policies are defined as those involving significant judgments and assumptions by management that could have a material impact on the carrying value of certain assets or on income under different assumptions or conditions.
If the transfer of the participation interest does not qualify for sale treatment under GAAP, the amount of the loan transferred is recorded as a secured borrowing. There were $7.7 million in secured borrowings as of December 31, 2022 and $32.5 million as of December 31, 2021.
The Company is generally the servicer for these loans. If the transfer of the participation interest does not qualify for sale treatment under GAAP, the amount of the loan transferred is recorded as a secured borrowing. There were $7.6 million and $7.7 million in secured borrowings as of December 31, 2023 and 2022, respectively.
The Company originated $1.8 billion and $1.2 billion of loans during the years ended December 31, 2022 and 2021, respectively. During the year ended December 31, 2022, the Company purchased $33.8 million and $173.6 million of AFS and HTM securities, respectively.
The Company originated $1.4 billion and $1.8 billion of loans during the years ended December 31, 2023 and 2022, respectively. During the year ended December 31, 2023, the Company purchased $46.8 million and $24.6 million of AFS and HTM securities, respectively.
While maturities and scheduled amortization of loans and securities and borrowings are predictable sources of funds, deposit flows, 53 Table of Contents mortgage prepayments and security sales are greatly influenced by the general level of interest rates and changes thereto, economic conditions and competition.
The Company’s primary sources of funds consist of deposit inflows, loan repayments and maturities, securities cash flows and borrowings. While maturities and scheduled amortization of loans and securities and borrowings are predictable sources of funds, deposit flows, mortgage prepayments and securities sales are greatly influenced by the general level of interest rates and changes thereto, economic conditions and competition.
At both December 31, 2022 and December 31, 2021, total CRE loans were 366.0% and 343.4% of the Bank’s risk-based capital, respectively. ​ 55 Table of Contents ​
At both December 31, 2023 and December 31, 2022, total CRE loans were 368.1% and 366.0% of the Bank’s risk-based capital, respectively. ​ 61 Table of Contents
The Company expects minimal financial impact from the exit of this business. The Company has four active institutional crypto-asset related clients where the Company’s activities are limited to providing debit card, payment, and account services.
Aside from related low cost deposit outflows, there was minimal financial impact from the exit of this business. The Company had four active institutional crypto-asset related clients where the Company’s activities were limited to providing debit card, payment, and account services.
The increase in average yields on loans and overnight deposits reflects the increase in prevailing interest rates on existing floating rate loans and overnight deposits, as well as higher yields on new loan production. Interest Expense Interest expense increased $15.3 million to $31.6 million for 2022, as compared to $16.3 million for 2021.
The increase in average yields on loans reflects the increase in prevailing interest rates on existing floating rate loans, as well as higher yields on new loan production. Interest Expense Interest expense increased by $121.0 million to $152.6 million for 2023, as compared to $31.6 million for 2022.
In addition, as of December 31, 2022, the aggregate 48 Table of Contents amount of the Company’s uninsured time deposits was $30.8 million.
In addition, as of December 31, 2023, the 54 Table of Contents aggregate amount of the Company’s uninsured time deposits was $21.2 million.
The Debentures II, the sole assets of Trust II, mature on October 7, 2036, and bear interest at a floating rate of three-month LIBOR plus 2.00%. The Debentures II are callable at any time. At December 31, 2022, the Debentures II bore an interest rate of 6.08%.
The Debentures II, the sole assets of Trust II, mature on October 7, 2036, and bear interest at a floating rate of three-month SOFR plus 2.00%. The Debentures II are callable at any time. At December 31, 2023, the Debentures II bore an interest rate of 7.66%. Secured Borrowings The Company has loan participation agreements with counterparties.
Discussion of the Results of Operations for the year ended December 31, 2022 Net Income Net income was $59.4 million for 2022 as compared to $60.6 million for 2021.
Discussion of the Results of Operations for the year ended December 31, 2023 Net Income Net income was $77.3 million for 2023 an increase of $17.8 million as compared to $59.4 million for 2022.
(2) Determined by dividing net interest income by total average interest-earning assets. ​ Discussion of Financial Condition The Company had total assets of $6.3 billion at December 31, 2022, a decrease of 11.9% from December 31, 2021. Total cash and cash equivalents were $257.4 million at December 31, 2022, a decrease of $2.1 billion, or 89.1%, from December 31, 2021.
(2) Determined by dividing net interest income by total average interest-earning assets. ​ Discussion of Financial Condition The Company had total assets of $7.1 billion at December 31, 2023, an increase of 12.8% from December 31, 2022. Total cash and cash equivalents were $269.5 million at December 31, 2023, an increase of $12.0 million, or 4.7%, from December 31, 2022.
The following are scheduled maturities of time deposits greater than $250,000 as of December 31, 2022 (in thousands): ​ ​ ​ ​ ​ ​ At December 31, 2022 Three months or less ​ $ 4,452 Over three months through six months ​ 10,004 Over six months through one year ​ 9,048 Over one year ​ 7,255 Total ​ $ 30,759 ​ Borrowings Federal Funds Purchased and FHLB Advances To support a more efficient balance sheet, particularly related to the decrease in deposits related to the exit of the digital currency business, the Company may at times utilize FHLB advances or other funding sources.
The following are scheduled maturities of time deposits greater than $250,000 as of December 31, 2023 (in thousands): ​ ​ ​ ​ ​ ​ At December 31, 2023 Three months or less ​ $ 8,710 Over three months through six months ​ 6,000 Over six months through one year ​ 6,089 Over one year ​ 429 Total ​ $ 21,228 ​ Borrowings Federal Funds Purchased and FHLB Advances To support a more efficient balance sheet, particularly related to the decrease in deposits related to the exit from the digital currency business, the Company may at times utilize wholesale funding, which at December 31, 2023, was comprised of $99.0 million of Federal funds purchased and $440.0 million of FHLBNY advances.
The following table sets forth the stated maturities and weighted average yields of investment securities, excluding equity securities, at December 31, 2022. The table does not include the effect of prepayments or scheduled principal amortization. The weighted average yield for each group of securities was weighted by the amortized cost of the securities in the group.
The table does not include the effect of prepayments or scheduled principal amortization. The weighted average yield for each group of securities was weighted by the amortized cost of the securities in the group.
Because of uncertainties associated with local and national economic, operating, regulatory and other conditions, the impact of the COVID-19 pandemic, collateral values and future cash flows from the loan portfolio, it is possible that a material change could occur in the ALLL in the near term.
Because of uncertainties associated with local and national economic forecasts, the operating and regulatory environment, collateral values and future cash flows from the loan portfolio, it is possible that a material change could occur in the ACL. The evaluation of the adequacy of loan collateral is often based upon estimates and appraisals.
For further discussion of the ALLL, see “Business – Asset Quality – Allowance for Loan Losses.” The Company adopted ASU No. 2016 13, Financial Instruments – Credit Losses (ASC 326) effective January 1, 2023, which requires the measurement of all expected credit losses for financial assets held at the reporting date be based on historical experience, current conditions, and reasonable and supportable forecasts.
The Company adopted ASC 326 effective January 1, 2023, which requires the measurement of all expected credit losses for financial assets held at amortized cost to be based on historical experience, current condition, and reasonable and supportable forecasts.
The increase primarily included increases of $895.1 million in CRE loans (including owner occupied) and $262.1 million in C&I loans. For the year ended December 31, 2022, the Company’s loan production was $1.8 billion, as compared to $1.2 billion for the year ended December 31, 2021.
For the year ended December 31, 2023, the Company’s loan production was $1.4 billion, as compared to $1.8 billion for the year ended December 31, 2022. As of December 31, 2023, total loans consisted primarily of CRE, including multi-family mortgage loans, and C&I.
The tables below summarize the Company’s deposit composition by segment for the periods indicated, and the dollar and percent change from December 31, 2021 to December 31, 2022 (dollars in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ At December 31, ​ ​ ​ Percentage ​ ​ Percentage ​ ​ ​ ​ ​ of total ​ ​ ​ ​ of total ​ ​ 2022 ​ balance ​ 2021 ​ balance Non-interest-bearing demand deposits ​ $ 2,422,151 45.9 % $ 3,668,673 57.0 % Money market ​ 2,792,554 52.9 ​ 2,666,983 41.5 ​ Savings accounts ​ 11,144 0.2 ​ 20,930 0.3 ​ Time deposits ​ 52,063 1.0 ​ 78,986 1.2 ​ Total ​ $ 5,277,912 100.0 % $ 6,435,572 100.0 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2022 vs. 2021 ​ 2022 vs. 2021 ​ ​ ​ dollar ​ percentage ​ ​ Change Change Non-interest-bearing demand deposits ​ $ (1,246,522) (34.0) % Money market ​ 125,571 4.7 ​ Savings accounts ​ (9,786) (46.8) ​ Time deposits ​ (26,923) (34.1) ​ Total ​ $ (1,157,660) (18.0) % ​ The table below summarizes the Company’s average balances and average interest rate paid, by segment, for the periods indicated (dollars in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ At December 31, ​ ​ ​ ​ ​ Average ​ ​ ​ ​ Average ​ ​ ​ 2022 ​ Rate ​ 2021 ​ Rate ​ Non-interest-bearing demand deposits ​ $ 3,223,606 — % $ 2,708,547 — % Money market ​ 2,634,055 1.08 ​ 2,375,525 0.56 ​ Savings accounts ​ 18,446 0.21 ​ 19,091 0.23 ​ Time deposits ​ 59,645 0.99 ​ 83,313 1.02 ​ Total ​ $ 5,935,752 ​ ​ $ 5,186,476 ​ ​ ​ At December 31, 2022, the aggregate amount of uninsured deposits (deposits in amounts greater than $250,000, which is the maximum amount for federal deposit insurance) was $2.2 billion.
The tables below summarize the Company’s deposit composition by segment for the periods indicated, and the dollar and percent change from December 31, 2022 to December 31, 2023 (dollars in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ At December 31, ​ ​ ​ Percentage ​ ​ Percentage ​ ​ ​ ​ ​ of total ​ ​ ​ ​ of total ​ ​ 2023 ​ balance ​ 2022 ​ balance Non-interest-bearing demand deposits ​ $ 1,837,874 32.0 % $ 2,422,151 45.9 % Money market ​ 3,856,975 67.3 ​ 2,792,554 52.9 ​ Savings accounts ​ 7,043 0.1 ​ 11,144 0.2 ​ Time deposits ​ 35,400 0.6 ​ 52,063 1.0 ​ Total ​ $ 5,737,292 100.0 % $ 5,277,912 100.0 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2023 vs. 2022 ​ 2023 vs. 2022 ​ ​ ​ dollar ​ percentage ​ ​ Change Change Non-interest-bearing demand deposits ​ $ (584,277) (24.1) % Money market ​ 1,064,421 38.1 ​ Savings accounts ​ (4,101) (36.8) ​ Time deposits ​ (16,663) (32.0) ​ Total ​ $ 459,380 8.7 % ​ The table below summarizes the Company’s average balances and average interest rate paid, by segment, for the periods indicated (dollars in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ At December 31, ​ ​ ​ ​ ​ Average ​ ​ ​ ​ Average ​ ​ ​ 2023 ​ Rate ​ 2022 ​ Rate ​ Non-interest-bearing demand deposits ​ $ 1,960,469 — % $ 3,223,606 — % Money market ​ 3,289,641 3.86 ​ 2,634,055 1.08 ​ Savings accounts ​ 9,786 0.96 ​ 18,446 0.21 ​ Time deposits ​ 42,926 2.76 ​ 59,645 0.99 ​ Total ​ $ 5,302,822 ​ ​ $ 5,935,752 ​ ​ ​ At December 31, 2023, the aggregate amount of FDIC uninsured deposits (deposits in amounts greater than $250,000, which is the maximum amount for federal deposit insurance) was $1.6 billion.
These activities, together with six strategically located banking centers, generate a stable source of deposits and a diverse loan portfolio with attractive risk-adjusted yields.
The Company has developed various deposit gathering strategies, which generate the funding necessary to operate without a large branch network. These activities, together with six strategically located banking centers, generate a stable source of deposits and a diverse loan portfolio with attractive risk-adjusted yields.
The following is a table of off-balance sheet arrangements broken out by fixed and variable rate commitments for the periods indicated therein (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ At December 31, ​ ​ ​ 2022 ​ 2021 ​ 2020 ​ ​ Fixed Rate Variable Rate Fixed Rate Variable Rate Fixed Rate Variable Rate Unused commitments ​ $ 40,685 ​ $ 364,908 ​ $ 39,676 ​ $ 346,115 ​ $ 19,024 ​ $ 266,696 ​ Standby and commercial letters of credit ​ 53,947 ​ — ​ 49,988 ​ — ​ 34,264 ​ — ​ ​ ​ $ 94,632 ​ $ 364,908 ​ $ 89,664 ​ $ 346,115 ​ $ 53,288 ​ $ 266,696 ​ ​ The following is a maturity schedule for the Company’s off-balance sheet arrangements at December 31, 2022 (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total 2023 2024 - 2025 2026 - 2027 Thereafter Unused commitments ​ $ 405,593 ​ $ 175,490 ​ $ 199,664 ​ $ 28,939 ​ $ 1,500 Standby and commercial letters of credit ​ 53,947 ​ 15,316 ​ 33,631 ​ 5,000 ​ — ​ ​ $ 459,540 ​ $ 190,806 ​ $ 233,295 ​ $ 33,939 ​ $ 1,500 ​ Liquidity and Capital Resources Liquidity is the ability to economically meet current and future financial obligations.
The following is a table of off-balance sheet arrangements broken out by fixed and variable rate commitments for the periods indicated therein (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ At December 31, ​ ​ ​ 2023 ​ 2022 ​ 2021 ​ ​ Fixed Rate Variable Rate Fixed Rate Variable Rate Fixed Rate Variable Rate Unused commitments ​ $ 67,418 ​ $ 527,730 ​ $ 40,685 ​ $ 364,908 ​ $ 39,676 ​ $ 346,115 ​ Standby and commercial letters of credit ​ 59,532 ​ — ​ 53,947 ​ — ​ 49,988 ​ — ​ ​ ​ $ 126,950 ​ $ 527,730 ​ $ 94,632 ​ $ 364,908 ​ $ 89,664 ​ $ 346,115 ​ ​ The following is a maturity schedule for the Company’s off-balance sheet arrangements at December 31, 2023 (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total 2024 2025 - 2026 2027 - 2028 Thereafter Unused commitments ​ $ 595,148 ​ $ 270,490 ​ $ 273,631 ​ $ 43,954 ​ $ 7,073 Standby and commercial letters of credit ​ 59,532 ​ 37,294 ​ 18,238 ​ 4,000 ​ — ​ ​ $ 654,680 ​ $ 307,784 ​ $ 291,869 ​ $ 47,954 ​ $ 7,073 ​ 59 Table of Contents Liquidity and Capital Resources Liquidity is the ability to economically meet current and future financial obligations.
At December 31, 2022, the Company had $150.0 million of Federal funds purchased and $100.0 million of FHLBNY advances. At December 31, 2021, the Company had no Federal funds purchased and no FHLBNY advances.
At December 31, 2022, the Company had $150.0 million of Federal funds purchased and $100.0 million of FHLBNY advances. The Company had $2.8 billion and $1.9 billion of available secured wholesale funding capacity at December 31, 2023 and 2022, respectively.
The following table sets forth the ALLL allocated by loan category for the periods indicated (dollars in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ At December 31, ​ ​ ​ 2022 ​ ​ 2021 ​ ​ ​ ​ ​ ​ ​ ​ % of ​ ​ ​ ​ ​ ​ ​ % of ​ ​ ​ ​ ​ ​ % of ​ Loans in ​ ​ ​ ​ % of Loans in ​ ​ ​ ​ ​ Allowance Category ​ ​ ​ ​ ​ Allowance ​ Category ​ ​ ​ Allowance ​ to Total ​ to Total ​ ​ Allowance ​ to Total to Total ​ ​ Amount Allowance Loans ​ Amount Allowance Loans Real Estate ​ ​ ​ Commercial ​ $ 29,496 65.8 % 67.0 % ​ ​ 22,216 64.0 % 66.5 % Construction ​ 1,983 4.4 3.0 ​ ​ ​ 2,105 6.1 4.1 ​ Multi-family ​ 2,823 6.3 9.7 ​ ​ 2,156 6.2 9.5 ​ One-to four-family ​ 105 0.2 1.1 ​ ​ 140 0.4 1.5 ​ Commercial and industrial ​ 10,274 22.9 18.7 ​ ​ 7,708 22.2 17.5 ​ Consumer ​ 195 ​ 0.4 ​ 0.5 ​ ​ ​ 404 ​ 1.1 ​ 0.9 ​ Total ​ $ 44,876 100.0 % 100.0 % ​ $ 34,729 100.0 % 100.0 % ​ Goodwill The Company performed an impairment assessment and determined that no impairment of goodwill existed as of October 1, 2022.
The following table sets forth the ACL allocated by loan category for the periods indicated (dollars in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ At December 31, ​ ​ ​ 2023 ​ ​ 2022 ​ ​ ​ ​ ​ ​ ​ ​ % of ​ ​ ​ ​ ​ ​ ​ % of ​ ​ ​ ​ ​ ​ % of ​ Loans in ​ ​ ​ ​ % of Loans in ​ ​ ​ ​ ​ Allowance Category ​ ​ ​ ​ ​ Allowance ​ Category ​ ​ ​ Allowance ​ to Total ​ to Total ​ ​ Allowance ​ to Total to Total ​ ​ Amount Allowance Loans ​ Amount Allowance Loans Real Estate ​ ​ ​ Commercial ​ $ 35,635 61.6 % 68.4 % ​ ​ 29,496 65.8 % 67.0 % Construction ​ 1,765 3.0 2.7 ​ ​ ​ 1,983 4.4 3.0 ​ Multi-family ​ 8,215 14.2 8.3 ​ ​ 2,823 6.3 9.7 ​ One-to four-family ​ 663 1.1 1.7 ​ ​ 105 0.2 1.1 ​ Commercial and industrial ​ 11,207 19.3 18.6 ​ ​ 10,274 22.9 18.7 ​ Consumer ​ 480 ​ 0.8 ​ 0.3 ​ ​ ​ 195 ​ 0.4 ​ 0.5 ​ Total ​ $ 57,965 100.0 % 100.0 % ​ $ 44,876 100.0 % 100.0 % ​ ​ The Company also records an ACL on unfunded loan commitments, which is based on the same assumptions as funded loans and also considers the probability of funding.
Securities classified as AFS, which provide additional sources of liquidity, totaled $445.7 million at December 31, 2022 and $566.6 million at December 31, 2021. There were $25.0 million and $0.0 securities pledged to the FRBNY discount window at December 31, 2022 and 2021, respectively.
Securities classified as AFS, which provide additional sources of liquidity, totaled $461.2 million at December 31, 2023 and $445.7 million at December 31, 2022. There were $845.7 million and $25.0 million of securities pledged to support wholesale funding, and to a lesser extent certain other types of deposits, at December 31, 2023 and 2022, respectively.
Treasury securities ​ $ — ​ — % ​ $ 29,852 ​ 1.03 % ​ $ — ​ — % ​ $ — ​ — % ​ $ 29,852 ​ $ 27,629 ​ 1.03 % U.S.
Treasury securities ​ $ — ​ — % ​ $ 29,895 ​ 1.03 % ​ $ — ​ — % ​ $ — ​ — % ​ $ 29,895 ​ $ 28,483 ​ 1.03 % U.S.
The evaluation of the adequacy of loan collateral is often based upon estimates and appraisals. Because of changing economic conditions, the valuations determined from such estimates and appraisals may also change. Accordingly, the Company may ultimately incur losses that vary from management’s current estimates.
Because of changing economic conditions, the valuations determined from such estimates and appraisals may also change. Accordingly, the Company may ultimately incur losses that vary from management’s current estimates. Adjustments to the ACL will be reported in the period in which such adjustments become known and can be reasonably estimated.
Compensation and benefits increased $11.4 million to $57.3 million for 2022 as compared to $45.9 million for 2021. This increase was due primarily to an increase in total compensation in line with revenue growth and the increase in the number of full-time employees to 239 for 2022, as compared to 202 for 2021.
This increase was in line with loan growth and the increase in the number of full-time employees to 275 for 2023, as compared to 239 for 2022. Professional fees increased by $3.7 million to $18.1 million for 2023 as compared to $14.4 million for 2022, primarily due to an increase in legal fees related to regulatory matters.
The decrease in digital currency business deposits reflects the Company’s decision to fully exit the crypto-asset related vertical in light of recent developments in the crypto-asset industry and material changes in the regulatory environment regarding banks’ involvement in crypto-asset related businesses. Non-interest-bearing demand deposits were 45.9% of total deposits at December 31, 2022, compared to 57.0% at December 31, 2021.
Non-interest-bearing demand deposits were 32.0% of total deposits at December 31, 2023, compared to 45.9% at December 31, 2022. The decreases in crypto-related deposits and the percentage of non-interest-bearing demand deposits to total deposits reflects the Company’s full exit from the digital currency business in 2023.
The other discrete items related to the change in the geographical mix regarding state apportionment and a higher favorable deduction for the vesting of restricted stock awards in 2022 compared to the prior year. ​ Off-Balance Sheet Arrangements The Company is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers.
The elevated effective tax rate for the year 2022 reflects the recording of the $35.0 million regulatory settlement reserve and other discrete tax items. ​ Off-Balance Sheet Arrangements The Company is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers.
For purposes of 51 Table of Contents this table, changes attributable to both rate and volume, which cannot be segregated, have been allocated proportionately, based on the changes due to rate and the changes due to volume (in thousands). ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ At December 31, ​ ​ 2022 over 2021 ​ 2021 over 2020 ​ ​ Increase (Decrease) ​ Total ​ Increase (Decrease) ​ Total ​ ​ Due to ​ Increase ​ Due to ​ Increase ​ Volume Rate (Decrease) Volume Rate (Decrease) Interest-earning assets: ​ ​ ​ ​ ​ ​ Loans ​ $ 47,033 ​ $ 20,290 ​ $ 67,323 ​ $ 26,720 ​ $ 1,311 ​ $ 28,031 Available-for-sale securities ​ 537 ​ 1,318 ​ 1,855 ​ 3,338 ​ (1,380) ​ 1,958 Held-to-maturity securities ​ 7,781 ​ 155 ​ 7,936 ​ 697 ​ (10) ​ 687 Equity investments ​ ​ — ​ ​ 6 ​ ​ 6 ​ ​ 1 ​ ​ (16) ​ ​ (15) Overnight deposits ​ ​ (911) ​ ​ 10,915 ​ ​ 10,004 ​ ​ 1,925 ​ ​ (2,161) ​ ​ (236) Other interest-earning assets ​ 265 ​ 66 ​ 331 ​ (234) ​ (4) ​ (238) Total interest-earning assets ​ $ 54,705 ​ $ 32,750 ​ $ 87,455 ​ $ 32,447 ​ $ (2,260) ​ $ 30,187 Interest-bearing liabilities: ​ ​ ​ ​ ​ ​ Money market and savings accounts ​ $ 1,581 ​ $ 13,721 ​ $ 15,302 ​ $ 3,622 ​ $ (2,650) ​ $ 972 Certificates of deposit ​ (235) ​ (24) ​ (259) ​ (249) ​ (726) ​ (975) Total deposits ​ 1,346 ​ 13,697 ​ 15,043 ​ 3,373 ​ (3,376) ​ (3) Borrowed funds ​ 27 ​ 228 ​ 255 ​ (3,269) ​ 1,379 ​ (1,890) Total interest-bearing liabilities ​ 1,373 ​ 13,925 ​ 15,298 ​ 104 ​ (1,997) ​ (1,893) Change in net interest income ​ $ 53,332 ​ $ 18,825 ​ $ 72,157 ​ $ 32,343 ​ $ (263) ​ $ 32,080 ​ Net interest margin increased 72 basis points to 3.49% for 2022 from 2.77% for 2021 driven largely by the increase in the average balance of loans and the increase in loan and overnight deposit yields partially offset by the decrease in the average balance of overnight deposits and a higher cost of funds.
For purposes of 57 Table of Contents this table, changes attributable to both rate and volume, which cannot be segregated, have been allocated proportionately, based on the changes due to rate and the changes due to volume (in thousands). ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ At December 31, ​ ​ 2023 over 2022 ​ 2022 over 2021 ​ ​ Increase (Decrease) ​ Total ​ Increase (Decrease) ​ Total ​ ​ Due to ​ Increase ​ Due to ​ Increase ​ Volume Rate (Decrease) Volume Rate (Decrease) Interest-earning assets: ​ ​ ​ ​ ​ ​ Loans ​ $ 46,252 ​ $ 66,936 ​ $ 113,188 ​ $ 47,033 ​ $ 20,290 ​ $ 67,323 Available-for-sale securities ​ (138) ​ 2,082 ​ 1,944 ​ 537 ​ 1,318 ​ 1,855 Held-to-maturity securities ​ 62 ​ 864 ​ 926 ​ 7,781 ​ 155 ​ 7,936 Equity investments ​ ​ 1 ​ ​ 19 ​ ​ 20 ​ ​ — ​ ​ 6 ​ ​ 6 Overnight deposits ​ ​ (17,471) ​ ​ 14,476 ​ ​ (2,995) ​ ​ (911) ​ ​ 10,915 ​ ​ 10,004 Other interest-earning assets ​ 1,160 ​ 423 ​ 1,583 ​ 265 ​ 66 ​ 331 Total interest-earning assets ​ $ 29,866 ​ $ 84,800 ​ $ 114,666 ​ $ 54,705 ​ $ 32,750 ​ $ 87,455 Interest-bearing liabilities: ​ ​ ​ ​ ​ ​ Money market and savings accounts ​ $ 8,557 ​ $ 90,243 ​ $ 98,800 ​ $ 1,581 ​ $ 13,721 ​ $ 15,302 Certificates of deposit ​ (205) ​ 798 ​ 593 ​ (235) ​ (24) ​ (259) Total deposits ​ 8,352 ​ 91,041 ​ 99,393 ​ 1,346 ​ 13,697 ​ 15,043 Borrowed funds ​ 21,416 ​ 179 ​ 21,595 ​ 27 ​ 228 ​ 255 Total interest-bearing liabilities ​ 29,768 ​ 91,220 ​ 120,988 ​ 1,373 ​ 13,925 ​ 15,298 Change in net interest income ​ $ 98 ​ $ (6,420) ​ $ (6,322) ​ $ 53,332 ​ $ 18,825 ​ $ 72,157 ​ Net interest margin was consistent at 3.49% for the years 2023 and 2022.
At December 31, 2022 and 2021, the Company’s securities portfolio primarily consisted of investment grade mortgage-backed securities and collateralized mortgage obligations issued by government agencies.
At December 31, 2023 and 2022, the Company’s securities portfolio primarily consisted of investment grade mortgage-backed securities and collateralized mortgage obligations issued by government agencies. Allowance for Credit Losses – Securities Effective January 1, 2023, the Company estimates and recognizes an ACL for HTM debt securities pursuant to ASC 326.
Government agency securities ​ $ — — % ​ $ 52,996 0.63 % ​ $ 10,000 1.10 % ​ $ 5,000 ​ 1.68 % ​ $ 67,996 ​ $ 59,372 ​ 0.78 % U.S.
Government agency securities ​ $ — — % ​ $ 62,997 0.71 % ​ $ — — % ​ $ 5,000 ​ 1.68 % ​ $ 67,997 ​ $ 61,775 ​ 0.78 % U.S.
The Company generates deposits from businesses and individuals through client referrals and other relationships and through its retail presence. The Company has established deposit concentration thresholds to avoid the possibility of dependence on any single depositor base for funds. The Company has loan participation agreements with counterparties. The Company is generally the servicer for these loans.
The Company has established deposit concentration thresholds to avoid the possibility of dependence on any single depositor base for funds. Total deposits were $5.7 billion at December 31, 2023, an increase of $459.4 million, or 8.7%, from December 31, 2022. The Company has loan participation agreements with counterparties. The Company is generally the servicer for these loans.
During the year ended December 31, 2021, the Company purchased $484.8 million and $383.6 million of AFS and HTM securities, respectively. Financing activities consist primarily of activity in deposit accounts. Total deposits decreased by $1.2 billion for the year ended December 31, 2022 and increased $2.6 billion during the year ended December 31, 2021.
During the year ended December 31, 2022, the Company purchased $33.8 million and $173.6 million of AFS and HTM securities, respectively. Financing activities consist primarily of activity in deposit accounts and borrowings. The Company generates deposits from businesses and individuals through client referrals and other relationships and through its retail presence.
Accumulated Other Comprehensive Income Accumulated other comprehensive loss, net of tax, was $54.3 million, at December 31, 2022 an increase of $46.8 million from December 31, 2021.
Accumulated Other Comprehensive Loss Accumulated other comprehensive loss, net of tax, was $52.9 million, at December 31, 2023, a decrease of $1.4 million from December 31, 2022.
The ratio of ALLL to total loans was 0.93% at December 31, 2022 and 2021. The increase in the ALLL was primarily due to loan growth.
The ratio of ACL to total loans was 1.03% at December 31, 2023 compared to 0.93% at December 31, 2022. The increase in the ACL was primarily due to loan growth, a $4.8 million provision for credit losses on a single multi-family loan and the adoption of ASC 326.
The Company’s primary deposit products are checking, savings, and term deposit accounts, all of which are insured by the FDIC under the maximum amounts allowed by law. In addition to traditional commercial banking products, the Company offers corporate cash management and retail banking services and is an established leader in BaaS through its Global Payments Group (“global payments business”).
The Company’s primary deposit products are checking, savings, and term deposit accounts, all of which are insured by the FDIC under the maximum amounts allowed by law.
In addition, the Company does not intend to sell and does not believe that it is more likely than not that it will be required to sell these investments until there is a full recovery of the unrealized loss, which may be at maturity.
In addition, the Company does not intend, nor would it be required 50 Table of Contents to sell, these investments until there is a full recovery of the unrealized loss, which may be at maturity. As a result, no ACL was recognized during the year ended December 31, 2023. Loans Loans are the Company’s primary interest-earning asset.
The Company is in discussions with the FRB and the NYSDFS with respect to consensual resolutions of their investigations.
The FRB Consent Order and NYSDFS Consent Order constitute separate consensual resolutions with each of the FRB and the NYSDFS with respect to their investigations, each of which is now closed as a result of such order.
The $1.2 million decrease primarily reflects a $35.0 million regulatory settlement reserve, a $11.4 million increase in compensation and benefits, a $7.7 million increase in professional fees, a $6.3 million increase in the provision for loan losses, and $8.5 million increase income tax expense, partially offset by a $72.2 million increase in net interest income.
The increase was driven by primarily by the $35.0 million regulatory settlement reserve recorded in the fourth quarter of 2022, partially offset by the $9.7 million increase in compensation and benefits, the $4.5 million increase in FDIC assessments and the $3.6 million increase in professional fees.
Provision for Loan Losses The provision for loan losses increased $6.3 million to $10.1 million for 2022, as compared to $3.8 million for 2021, which reflected loan growth. Non-Interest Income Non-interest income increased by $2.9 million to $26.6 million for 2022, as compared to $23.7 million for 2021.
Provision for Credit Losses – Loans and Loan Commitments The provision for credit losses for loans and loan commitments increased by $2.2 million to $12.3 million for 2023, as compared to $10.1 million for 2022.
Adjustments to the ALLL will be reported in the period in which such adjustments become known and can be reasonably estimated. All loan losses are charged to the ALLL when the loss actually occurs or when the collectability of the principal is unlikely. Recoveries are credited to the allowance at the time of recovery.
All loan losses are charged to the ACL when the loss actually occurs or when the collectability of principal is deemed to be unlikely. Recoveries are credited to the allowance at the time of recovery. Various regulatory agencies, as an integral part of their examination process, periodically review the Company’s ACL.
Total cost of funds for 2022 was 53 basis points compared to 31 basis points for 2021, which reflects the increase in prevailing interest rates and competition for deposits. Interest Income Interest income increased $87.5 million to $260.7 million for 2022, as compared to $173.3 million for 2021.
Total cost of funds for 2023 was 265 basis points compared to 53 basis points for 2022, which reflects the increase in prevailing interest rates and the shift from non-interest bearing deposits to interest bearing funding primarily related to the final exit from the digital currency business in 2023.
The increase from the prior year was primarily due to the $1.4 billion increase in the average balance of loans and securities, and the 55 basis point and 91 basis point increases in average yield for loans and overnight deposits, respectively.
Interest Income Interest income increased by $114.7 million to $375.4 million for 2023, as compared to $260.7 million for 2022. The increase from the prior year was due primarily to the $786.2 million increase in the average balance of loans, and the 138 basis point increase in average yield for loans.
Management believes the Company’s most critical accounting policy, which involves the most complex or subjective decisions or assessments, is as follows: Allowance for Loan Losses The ALLL has been determined in accordance with GAAP. The Company is responsible for the timely and periodic determination of the amount of the ALLL.
The ACL has been determined in accordance with GAAP. The Company is responsible for the timely and periodic determination of the amount of the ACL. Management believes that the ACL for loans and loan commitments is adequate to cover expected credit losses over the life of the loan portfolio.
The Company has no loans outstanding to any of these clients, does not hold crypto-assets on its balance sheet and does not market or sell crypto-assets to its customers. The process of closing out the Company’s relationships with these clients in an orderly fashion has commenced and is expected to be completed during 2023.
The Company had no loans outstanding to any of these clients, did not hold crypto-assets on its balance sheet and did not market or sell crypto-assets to its customers. 47 Table of Contents In early 2024, following its decision to exit all consumer facing BaaS relationships, the Company decided to exit all BaaS relationships.
There are ongoing investigations by federal and state governmental entities concerning a prepaid debit card product program that was offered by the Company through an independent program manager. See “ Management’s Discussion and Analysis of Financial Condition and Results of Operations – Recent Events.
Recent Events There have been and continue to be ongoing investigations by governmental entities concerning a prepaid debit card product program that was offered by GPG.
The change reflects the $207.4 million purchase of AFS and HTM securities, which was partially offset by the $121.4 million paydown of AFS and HTM securities and the $76.9 million increase in unrealized losses on AFS securities reflecting the prevailing interest rate environment.
The change reflects the $108.3 million in paydowns and maturities of AFS and HTM securities, partially offset by the $71.4 million purchase of AFS and HTM securities and the $11.1 million increase in unrealized losses on AFS securities reflecting the changes in the prevailing interest rate environment. 49 Table of Contents The following table sets forth the stated maturities and weighted average yields of investment securities, excluding equity securities, at December 31, 2023.
The table below sets forth key asset quality ratios: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ At or for the year ended December 31, ​ ​ ​ ​ 2022 ​ 2021 ​ 2020 ​ Asset Quality Ratios ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Non-performing loans to total loans ​ ​ — % ​ 0.28 % ​ 0.20 % Allowance for loan losses to total loans ​ ​ 0.93 ​ 0.93 ​ 1.13 ​ Non-performing loans to total assets ​ ​ — ​ 0.14 ​ 0.15 ​ Allowance for loan losses to non-performing loans ​ ​ N.M ​ ​ 337.6 ​ ​ 554.2 ​ Allowance for loan losses to non-accrual loans ​ ​ N.M ​ ​ 346.6 ​ ​ 630.0 ​ Non-accrual loans to total loans ​ ​ — ​ ​ 0.27 ​ ​ 0.18 ​ Ratio of net charge-offs (recoveries) to average loans outstanding in aggregate ​ ​ — ​ ​ 0.13 ​ ​ 0.01 ​ ​ ​ 46 Table of Contents Allowance for Loan Losses The allowance is an amount that management believes will be adequate to absorb probable incurred losses on existing loans.
The table below sets forth key asset quality ratios (dollars in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ At or for the year ended December 31, ​ ​ ​ ​ 2023 ​ ​ 2022 ​ ​ 2021 ​ Asset Quality Ratios ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Non-performing loans ​ $ 51,897 ​ ​ $ 24 ​ ​ $ 10,286 ​ Non-performing loans to total loans ​ ​ 0.92 % ​ ​ — % ​ ​ 0.28 % Allowance for credit losses to total loans ​ ​ 1.03 % ​ ​ 0.93 % ​ 0.93 % Non-performing loans to total assets ​ ​ 0.73 % ​ ​ — % ​ 0.14 % Allowance for credit losses to non-performing loans ​ ​ 111.7 % ​ ​ N.M. % ​ ​ 337.6 % Ratio of net charge-offs (recoveries) to average loans outstanding in aggregate ​ ​ 0.02 % ​ ​ — % ​ ​ 0.13 % N.M. — not meaningful ​ ​ 52 Table of Contents Allowance for Credit Losses – Loans and Loan Commitments The Company adopted ASC 326 effective January 1, 2023, which requires the measurement of all expected credit losses for financial assets held at the reporting date be based on historical experience, current conditions, and reasonable and supportable forecasts.
At December 31, 2022, the Company’s loan portfolio includes loans to the following industries (dollars in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ At December 31, 2022 ​ ​ ​ ​ ​ ​ % of Total ​ ​ ​ ​ Balance ​ Loans (1) ​ CRE (2) ​ ​ Skilled Nursing Facilities $ 1,216,902 25.14 % Multi-family ​ ​ 468,540 ​ 9.68 ​ Retail ​ ​ 330,164 ​ 6.82 ​ Mixed use ​ ​ 356,880 ​ 7.37 ​ Office ​ ​ 387,591 ​ 8.01 ​ Hospitality ​ ​ 189,609 ​ 3.92 ​ Construction ​ ​ 143,693 ​ 2.97 ​ Other ​ ​ 764,678 ​ 15.80 ​ Total CRE ​ $ 3,858,057 ​ 79.71 % ​ ​ ​ ​ ​ ​ ​ C&I (3) ​ ​ ​ ​ ​ ​ Healthcare ​ $ 100,170 ​ 2.07 % Skilled Nursing Facilities ​ 119,206 ​ 2.46 ​ Finance & Insurance ​ ​ 229,262 ​ 4.74 ​ Wholesale ​ ​ 48,868 ​ 1.01 ​ Manufacturing ​ ​ 53,260 ​ 1.10 ​ Other ​ ​ 354,215 ​ 7.32 ​ Total C&I ​ $ 904,981 ​ 18.70 % (1) Net of deferred fees and costs (2) CRE, not including one-to four-family loans and participations (3) Excluding premiums and overdraft adjustments ​ The largest concentration in the loan portfolio is to the healthcare industry, which amounted to $1.4 billion, or 29.7% of total loans, at December 31, 2022, including $1.3 billion in loans to skilled nursing facilities (“SNF”). ​ 45 Table of Contents The following table sets forth certain information at December 31, 2022 regarding the amount of contractual loan maturities during the periods indicated.
At December 31, 2023, the Company’s loan portfolio includes loans to the following industries (dollars in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ At December 31, 2023 ​ ​ ​ ​ ​ ​ % of Total ​ ​ ​ ​ Balance ​ Loans ​ CRE (1) ​ ​ Skilled Nursing Facilities $ 1,505,529 26.7 % Multi-family ​ ​ 467,536 ​ 8.3 ​ Office ​ ​ 379,412 ​ 6.7 ​ Mixed use ​ ​ 367,479 ​ 6.5 ​ Hospitality ​ ​ 360,801 ​ 6.4 ​ Retail ​ ​ 303,234 ​ 5.4 ​ Land ​ ​ 244,467 ​ 4.3 ​ Warehouse / industrial ​ ​ 169,384 ​ 3.0 ​ Construction ​ ​ 153,512 ​ 2.7 ​ Other ​ ​ 527,405 ​ 9.3 ​ Total CRE ​ $ 4,478,759 ​ 79.4 % ​ ​ ​ ​ ​ ​ ​ C&I ​ ​ ​ ​ ​ ​ Finance & Insurance ​ $ 260,385 ​ 4.6 % Skilled Nursing Facilities ​ ​ 206,030 ​ 3.7 ​ Individuals ​ 137,237 ​ 2.4 ​ Healthcare ​ ​ 127,560 ​ 2.3 ​ Services ​ ​ 77,221 ​ 1.4 ​ Wholesale ​ ​ 55,690 ​ 1.0 ​ Manufacturing ​ ​ 45,238 ​ 0.8 ​ Other ​ ​ 142,102 ​ 2.5 ​ Total C&I ​ $ 1,051,463 ​ 18.6 % ​ (1) CRE, not including one-to four-family loans. ​ The largest concentration in the loan portfolio is to the healthcare industry, which amounted to $1.8 billion, or 32.7% of total loans, at December 31, 2023, including $1.7 billion in loans to skilled nursing facilities. ​ 51 Table of Contents The following table sets forth certain information at December 31, 2023 regarding the amount of contractual loan maturities during the periods indicated.
The increase was due to the prevailing interest rate environment, which increased the unrealized losses on AFS securities, partially offset by the increases in unrealized gains on cash flow hedges prior to their termination in the third quarter of 2022.
The decrease was due to decreases in unrealized losses on AFS securities due to changes in 55 Table of Contents prevailing market interest rates, partially offset by unrealized losses and reclassification adjustments to net income on cash flow hedges.
The decrease reflected the $1.1 billion deployment of cash into loans and securities and the $1.2 billion outflow of deposits. Investments Total securities were $958.2 million at December 31, 2022, an increase of 0.8% from December 31, 2021.
The increase was due primarily to the $459.4 million increase in deposits and the $331.4 million of net cash provided by operations and wholesale funding, partially offset by the $789.7 million net deployment into loans. Investments Total securities were $932.2 million at December 31, 2023, a decrease of 2.7% from December 31, 2022.
At December 31, 2022, the Company had $150.0 million of Federal funds purchased and $100.0 million of FHLBNY advances. At December 31, 2022, the Company had available borrowing capacity of $984.4 million at the FHLBNY, and available borrowing capacity of $137.6 million at the FRBNY discount window.
At December 31, 2023, the Company had $99.0 million of Federal funds purchased and $440.0 million of FHLBNY advances. At December 31, 2023, the Company had cash on deposit with the Federal Reserve Bank of New York and available secured wholesale funding borrowing capacity of $3.1 billion.
The Global Payments Group provides global payments infrastructure to its fintech partners, which includes serving as an issuing bank for third-party debit card programs nationwide and providing other financial infrastructure, including cash settlement and custodian deposit services. The Company has developed various deposit gathering strategies, which generate the funding necessary to operate without a large branch network.
In addition, through GPG the Company provides services to non-bank financial service companies by serving as an issuing bank for third- party debit card programs, while also providing such companies with other financial infrastructure components, including 46 Table of Contents cash settlement and custodian deposit services.
See “NOTE 3 ‒ SUMMARY OF RECENT ACCOUNTING PRONOUNCEMENTS ” to the Company’s consolidated financial statements in this Form 10-K. The ALLL is increased through a provision for loan losses charged to operations. Loans are charged against the ALLL when management believes that the collectability of all or a portion of the principal is unlikely.
For further discussion of the ACL, see Part I, Item 1., “ Busines s— Asset Quality —Allowance for Credit Losses—Loans and Loan Commitments.” Recently Issued Accounting Standards For a discussion of the impact of recently issued accounting standards, please see “NOTE 3 — SUMMARY OF RECENT ACCOUNTING PRONOUNCEMENTS ” to the Company’s consolidated financial statements in this Form 10-K.
OTTI is required to be recognized if: (1) the Company intends to sell the security; (2) it is more likely than not that the Company will be required to sell the security before recovery of its amortized cost basis; or (3) the present value of expected cash flows is not sufficient to recover the entire amortized cost basis.
The Company recognizes a credit impairment if the Company has the intent to sell the security, or it is more likely than not that the Bank will be required to sell the security before recovery of its amortized cost. The unrealized losses on AFS securities are primarily due to the changes in market interest rates subsequent to purchase.
Critical Accounting Policies A summary of accounting policies is provided in Note 2 to the consolidated financial statements included in this report. Critical accounting estimates are necessary in the application of certain accounting policies and procedures and are particularly susceptible to significant change.
The process of closing out the Company’s relationships with BaaS clients in an orderly fashion has commenced and is expected to be completed during 2024. The Company expects minimal financial impact from the exit of this business. Critical Accounting Policies A summary of accounting policies is provided in Note 2 to the consolidated financial statements included in this report.
The increase was driven primarily by increases in Global Payments Group revenue from higher fintech BaaS transactions. 52 Table of Contents Non-Interest Expense Non-interest expense increased $61.4 million to $148.7 million for 2022 as compared to $87.3 million for 2021. The increase was driven by the $35.0 million regulatory settlement reserve and increases in compensation and benefits and professional fees.
The increase was driven primarily by increases in service charges on deposits and other service charges and fees . Non-Interest Expense Non-interest expense decreased by $17.2 million to $131.5 million for 2023 as compared to $148.7 million for 2022.
Removed
In addition, the Global Payments Group is an established leader in BaaS to a myriad of domestic and international fintech companies.
Added
In addition to traditional commercial banking products, the Company offers corporate cash management and retail banking services and through GPG provides services to non-bank financial service companies by serving as an issuing bank for third-party debit card programs, while also providing such companies with other financial infrastructure components, including cash settlement and custodian deposit services.
Removed
Recent Events In January 2023, the Company announced that it will fully exit the digital currency business, commonly referred to as the crypto-asset related business.
Added
The Bank entered into (i) an Order to Cease and Desist and Order of Assessment of a Civil Money Penalty Issued Upon Consent with the FRB (the “FRB Consent Order”), effective October 16, 2023, and (ii) a Consent Order with the NYSDFS (the “NYSDFS Consent Order”), effective October 18, 2023.
Removed
This determination will not affect customers’ existing ability to send funds to, or receive funds from, crypto-asset companies they choose to do business with, or the Company’s service to customers that do not have crypto-asset related activity as a principal line of business.
Added
The FRB Consent Order provided for a civil money penalty of $14.5 million and requires the Bank’s Board of Directors to submit a plan to further strengthen board oversight of the management and operations of GPG and the Bank to develop, among other things, a written plan to enhance the Bank’s customer identification program, a plan to improve the Bank’s customer due diligence program and a plan to enhance the Bank’s third party risk management program.
Removed
There are ongoing investigations by federal and state governmental entities concerning a prepaid debit card product program that was offered by the Company through an independent program manager. These include investigations as to which the Company is a subject by the FRB and certain state authorities, including the NYSDFS.
Added
The NYSDFS Consent Order provided for a civil money penalty of $15.0 million and requires the Bank to provide certain information regarding the Bank’s program to supervise third-party program managers and various status reports regarding certain compliance-related matters in connection with the Bank’s oversight of third-party program managers of the Bank’s prepaid debit card program.
Removed
During the early stages of the COVID-19 pandemic, third parties used this prepaid debit card product to establish unauthorized accounts and to receive unauthorized government benefits payments, including unemployment insurance benefits payments made pursuant to the CARES Act from many states.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

12 edited+3 added−4 removed8 unchanged
Biggest changeThese estimates require certain assumptions to be made, including loan and mortgage-related investment prepayment speeds, reinvestment rates, and deposit maturities and decay rates. These assumptions are inherently uncertain. As a result, no simulation model can precisely predict the impact of changes in interest rates on net interest income.
Biggest changeThe following table shows the estimated impact on net interest income for the one-year period beginning December 31, 2023 resulting from potential changes in interest rates, expressed in basis points. These estimates require certain assumptions to be made, including loan and mortgage-related investment prepayment speeds, reinvestment rates, and deposit maturities and decay rates. These assumptions are inherently uncertain.
Although the net interest income table below provides an indication of the Company’s interest rate risk exposure at a particular point in time, such estimates are not intended to, and do not, provide a precise forecast of the effect of changes in market interest rates on net interest income and will differ from actual results.
Although the net interest income table below provides an indication of the Company’s interest rate risk exposure at a particular point in time, such estimates are not intended to, and do not, provide a precise forecast of the effect of changes in market interest rates on net interest income and may differ from actual results.
In the event of an instantaneous and sustained parallel downward shift of 100 basis point in interest rates, it would experience a 1.42% increase in net interest income. Economic Value of Equity Analysis The Company analyzes the sensitivity of its financial condition to changes in interest rates through an EVE model.
In the event of an instantaneous and sustained parallel downward shift of 200 basis point in interest rates, it would experience a 4.73% increase in net interest income. Economic Value of Equity Analysis The Company analyzes the sensitivity of its financial condition to changes in interest rates through an EVE model.
In the event of an immediate downward shift of 100 basis points in interest rates, the Company would experience a 4.19% increase in its EVE. The preceding simulation analyses do not represent a forecast of actual results and should not be relied upon as being indicative of expected operating results.
In the event of an immediate downward shift of 200 basis points in interest rates, the Company would experience a 6.00% increase in its EVE. 63 Table of Contents The preceding simulation analyses do not represent a forecast of actual results and should not be relied upon as being indicative of expected operating results.
The Company manages its exposure to interest rates primarily by structuring its balance sheet in the ordinary course of business. The Company generally originates fixed and floating rate loans with maturities of less than five years.
The Company manages its exposure to interest rates primarily by prudently structuring its balance sheet in the ordinary course of business. The Company generally originates fixed and floating rate loans with maturities of less than five years. The interest rate risk on these loans is offset to some degree by the mix and structure of the deposit portfolio.
For further discussion of the interest rate cap, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Discussion of Financial Condition – Accumulated Other Comprehensive Income.” Net Interest Income At-Risk The Company analyzes its sensitivity to changes in interest rates through a net interest income simulation model, which estimates what net interest income would be for a one-year period based on current interest rates, and then calculates what the net interest income would be for the same period under different interest rate assumptions.
Net Interest Income At-Risk The Company analyzes its sensitivity to changes in interest rates through a net interest income simulation model, which estimates what net interest income would be for a one-year period based on current interest rates, and then calculates what the net interest income would be for the same period under different interest rate assumptions.
That group also reviews liquidity, capital, deposit mix, loan mix and investment positions. Interest Rate Risk As a financial institution, the Company’s primary component of market risk is interest rate volatility.
The ALCO meets regularly to review, among other things, the sensitivity of assets and liabilities to market interest rate changes, local and national market conditions and market interest rates. That group also reviews liquidity, capital, deposit mix, loan mix and investment positions. Interest Rate Risk As a financial institution, the Company’s primary component of market risk is interest rate volatility.
Interest rates do not necessarily move in the same direction or to the same extent as the prices of goods and services. Item 8. Financial Statements and Supplementary Data For the Company’s consolidated financial statements, see index on page 65.
Interest rates do not necessarily move in the same direction or to the same extent as the prices of goods and services.
The following table indicates the 56 Table of Contents sensitivity of projected annualized net interest income to the interest rate movements described above (dollars in thousands): ​ ​ ​ ​ ​ ​ ​ At December 31, 2022 ​ Change in ​ Net ​ Year 1 ​ Interest ​ Interest ​ Change ​ Rates ​ Income Year 1 ​ from ​ (basis points) Forecast Level ​ +400 ​ $ 214,811 ​ (7.39) % +300 ​ ​ 218,743 ​ (5.70) ​ +200 ​ ​ 222,668 ​ (4.01) ​ +100 ​ ​ 227,657 ​ (1.86) ​ — ​ ​ 231,961 ​ — ​ -100 ​ ​ 235,250 ​ 1.42 ​ -200 ​ ​ 237,337 ​ 2.32 ​ -300 ​ ​ 237,128 ​ 2.23 ​ -400 ​ ​ 240,389 ​ 3.63 ​ ​ The table above indicates that at December 31, 2022, in the event of an instantaneous and sustained parallel upward shift of 200 basis points in interest rates, the Company would experience an 4.01% decrease in net interest income.
The following table indicates the 62 Table of Contents sensitivity of projected annualized net interest income to the interest rate movements described above (dollars in thousands): ​ ​ ​ ​ ​ ​ ​ At December 31, 2023 ​ Change in ​ Net ​ Year 1 ​ Interest ​ Interest ​ Change ​ Rates ​ Income Year 1 ​ from ​ (basis points) Forecast Level ​ +400 ​ $ 206,210 ​ (12.05) % +300 ​ ​ 212,810 ​ (9.24) ​ +200 ​ ​ 219,420 ​ (6.42) ​ +100 ​ ​ 227,415 ​ (3.01) ​ — ​ ​ 234,464 ​ — ​ -100 ​ ​ 240,132 ​ 2.42 ​ -200 ​ ​ 245,559 ​ 4.73 ​ -300 ​ ​ 251,568 ​ 7.29 ​ -400 ​ ​ 258,038 ​ 10.05 ​ ​ The table above indicates that at December 31, 2023, in the event of an instantaneous and sustained parallel upward shift of 200 basis points in interest rates, the Company would experience a 6.42% decrease in net interest income.
(4) EVE Ratio represents EVE divided by the fair value of assets. ​ 57 Table of Contents The table above indicates that at December 31, 2022, in the event of an immediate upward shift of 200 basis in interest rates, the Company would experience a 13.45% decrease in its EVE.
(2) EVE is the fair value of expected cash flows from assets, less the fair value of the expected cash flows arising from liabilities adjusted for the value of off-balance sheet contracts. ​ The table above indicates that at December 31, 2023, in the event of an immediate upward shift of 200 basis in interest rates, the Company would experience a 14.99% decrease in its EVE.
The Board of Directors has oversight of the Company’s asset and liability management function, which is managed by the Company’s ALCO. The ALCO meets regularly to review, among other things, the sensitivity of assets and liabilities to market interest rate changes, local and national market conditions and market interest rates.
The Board of Directors has oversight of the Company’s asset and liability management function, which is managed by the Company’s ALCO. The ALCO has further assigned responsibility for the day-to-day management of interest rate risk to the CFO, or his designee.
The interest rate risk on these loans is offset by the cost of deposits, where many of such deposits generally pay interest based on a floating rate index. Based upon the nature of operations, the Company is not subject to FX or commodity price risk and does not own any trading assets.
Based upon the nature of its operations, the Company is not subject to FX or commodity price risk.
Removed
In the first quarter of 2020, the Company entered into an interest rate cap derivative contract as part of its interest rate risk management strategy. In the third quarter of 2022, the Company terminated the interest rate cap.
Added
On occasion, the Company enters into derivative contracts as a part of its asset liability management strategy to help manage its interest rate risk position. The Company also periodically enters into certain commercial loan interest rate swap agreements to provide commercial loan customers the ability to convert loans from variable to fixed interest rates.
Removed
For modeling purposes, the Company reclassifies licensing fees on corporate cash management accounts from non-interest expense to interest expense since the fees are indexed to certain market interest rates. The following table shows the estimated impact on net interest income for the one-year period beginning December 31, 2022 resulting from potential changes in interest rates, expressed in basis points.
Added
As a result, no simulation model can precisely predict the impact of changes in interest rates on net interest income.
Removed
The table below represents an analysis of IRR as measured by the estimated changes in EVE, resulting from instantaneous and sustained parallel shifts in the yield curve (+/- 100, +/- 200, +/- 300 and +/- 400 basis points) at December 31, 2022 (dollars in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Estimated ​ EVE ​ ​ ​ ​ ​ Increase (Decrease) in ​ as a Percentage of Fair ​ ​ ​ ​ ​ EVE ​ Value of Assets (3) Change in ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Increase Interest Rates ​ Estimated ​ ​ ​ ​ ​ EVE ​ (Decrease) (basis points) (1) EVE (2) Dollars Percent Ratio (4) (basis points) +400 ​ $ 546,271 ​ $ (202,948) ​ (27.09) % 9.62 ​ (253.25) +300 ​ ​ 597,219 ​ ​ (152,000) ​ (20.29) ​ 10.31 ​ (184.21) +200 ​ ​ 648,475 ​ ​ (100,744) ​ (13.45) ​ 10.97 ​ (118.30) +100 ​ ​ 704,426 ​ ​ (44,793) ​ (5.98) ​ 11.66 ​ (49.16) — ​ ​ 749,219 ​ ​ — ​ — ​ 12.16 ​ — -100 ​ ​ 780,626 ​ ​ 31,407 ​ 4.19 ​ 12.43 ​ 27.12 -200 ​ ​ 794,931 ​ ​ 45,712 ​ 6.10 ​ 12.44 ​ 28.12 -300 ​ ​ 789,773 ​ ​ 40,554 ​ 5.41 ​ 12.14 ​ (1.20) -400 ​ ​ 750,021 ​ ​ 802 ​ 0.11 ​ 11.37 ​ (78.79) (1) Assumes an immediate uniform change in interest rates at all maturities.
Added
The table below represents an analysis of IRR as measured by the estimated changes in EVE, resulting from instantaneous and sustained parallel shifts in the yield curve (+/- 100, +/- 200, +/- 300 and +/- 400 basis points) at December 31, 2023 (dollars in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Estimated ​ ​ ​ ​ ​ ​ Increase (Decrease) in ​ ​ ​ ​ ​ ​ EVE ​ Change in ​ ​ ​ ​ ​ ​ ​ ​ Interest Rates ​ Estimated ​ ​ ​ ​ ​ (basis points) (1) EVE (2) Dollars Percent +400 ​ $ 376,887 ​ $ (161,671) ​ (30.02) % +300 ​ ​ 417,262 ​ ​ (121,296) ​ (22.52) ​ +200 ​ ​ 457,825 ​ ​ (80,733) ​ (14.99) ​ +100 ​ ​ 503,927 ​ ​ (34,631) ​ (6.43) ​ — ​ ​ 538,558 ​ ​ — ​ — ​ -100 ​ ​ 561,483 ​ ​ 22,925 ​ 4.26 ​ -200 ​ ​ 570,876 ​ ​ 32,318 ​ 6.00 ​ -300 ​ ​ 573,904 ​ ​ 35,346 ​ 6.56 ​ -400 ​ ​ 535,138 ​ ​ (3,420) ​ (0.64) ​ (1) Assumes an immediate uniform change in interest rates at all maturities.
Removed
(2) EVE is the fair value of expected cash flows from assets, less the fair value of the expected cash flows arising from liabilities adjusted for the value of off-balance sheet contracts. (3) Fair value of assets represents the amount at which an asset could be exchanged between knowledgeable and willing parties in an arms-length transaction.

Other MCB 10-K year-over-year comparisons