10q10k10q10k.net

What changed in Metropolitan Bank Holding Corp.'s 10-K — 2023 vs 2024

vs

Paragraph-level year-over-year comparison of Metropolitan Bank Holding Corp.'s 2023 and 2024 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 2024 report.

+372 added−425 removedSource: 10-K (2025-02-28) vs 10-K (2024-02-28)

Top changes in Metropolitan Bank Holding Corp.'s 2024 10-K

372 paragraphs added · 425 removed · 311 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

113 edited+24 added−39 removed130 unchanged
Biggest changeCorporate cash management accounts belong to clients who are in possession of or have discretion over large deposits such as, but not limited to, property management companies, title companies, bankruptcy trustees and charter schools. The EB-5 Program, administered by the U.S.
Biggest changeManagement 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) Corporate cash management clients – The Company provides corporate cash management services to clients who are in possession of, or have discretion over, large deposits such as, but not limited to, property management companies, title companies and bankruptcy trustees. 4) Government entities, municipalities and other local entities – The Company provides customized financial solutions for government entities, municipalities, public institutions, and charter schools to help them reach their strategic objectives. 5) EB-5 Program accounts – The EB-5 Program, administered by the U.S.
As a state-chartered bank that is a member of the FRB, the Bank is subject to FDIC regulations as well as primary supervision, periodic examination and regulation by the NYSDFS as its state regulator and by the FRB as its primary federal regulator.
As a state-chartered bank that is a member of the FRB, the Bank is subject to FDIC regulations as well as supervision, periodic examination and regulation by the NYSDFS as its primary state regulator and by the FRB as its primary federal regulator.
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.
The Company focuses on the New York metropolitan area middle-market businesses with annual revenues of $400 million or less and the New York metropolitan area real estate entrepreneurs with a net worth of $50 million or more.
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.
Within the C&I lending group, the Company has lenders who are experienced in lending to the healthcare industry, 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 FDIC, the OCC and the FRB have also jointly issued the CRE Guidance. The CRE Guidance, which addresses land development, construction, and certain multi-family loans, as well as CRE loans, does not establish specific lending limits but rather reinforces and enhances these agencies’ existing regulations and guidelines for such lending and portfolio management.
The FDIC, the OCC and the FRB have also jointly issued CRE Guidance. The CRE Guidance, which addresses land development, construction, and certain multi-family loans, as well as CRE loans, does not establish specific lending limits but rather reinforces and enhances these agencies’ existing regulations and guidelines for such lending and portfolio management.
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.
Dividends exceeding those amounts require application to and approval by the NYSDFS and/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.
Control, as defined under federal law, means ownership, control of or holding irrevocable proxies representing more than 25% of any class of voting stock, control in any manner of the election of a majority of the company’s directors, or a determination by the regulator that the acquirer has the power to direct, or directly or indirectly to exercise a controlling influence over, the management or policies of the institution.
Control, as defined under federal law, means ownership, control of or holding irrevocable proxies representing 25% or more of any class of voting stock, control in any manner of the election of a majority of the company’s directors, or a determination by the regulator that the acquirer has the power to direct, or directly or indirectly to exercise a controlling influence over, the management or policies of the institution.
Aggregate loans by a state commercial bank to any single borrower or group of related borrowers are generally limited to 15% of a bank’s capital stock, surplus fund and undivided profits, plus an additional 10% if secured by specified readily marketable collateral. Federal and state law and regulations limit a bank’s investment authority.
Aggregate loans by a state-chartered commercial bank to any single borrower or group of related borrowers are generally limited to 15% of a bank’s capital stock, surplus fund and undivided profits, plus an additional 10% if secured by specified readily marketable collateral. Federal and state law and regulations limit a bank’s investment authority.
The NYSDFS classifies investment securities into five different types and, depending on its type, a state commercial bank may have the authority to deal in and underwrite the security. The NYSDFS has also permitted New York state member banks to purchase certain non-investment securities that can be reclassified and underwritten as loans.
The NYSDFS classifies investment securities into five different types and, depending on its type, a state-chartered commercial bank may have the authority to deal in and underwrite the security. The NYSDFS has also permitted New York state member banks to purchase certain non-investment securities that can be reclassified and underwritten as loans.
A loan may also be designated as non-accrual at any time if payment of principal or interest in full is not expected due to deterioration in the financial condition of the borrower. At the time loans are placed on non-accrual status, the accrual of interest is discontinued and previously accrued interest is reversed.
A loan may also be designated as non-accrual at any time if payment of principal or interest in full is not expected due to deterioration in the financial condition of the borrower. At the time loans are placed on non-accrual status, the accrual of interest is discontinued and previously accrued and unpaid interest is reversed.
The performance of the models is dependent on the variables used in the models being reasonable predictors for the loan portfolio’s performance. However, these variables may not capture all sources of risk within the portfolio. As a result, the Company reviews the results and makes qualitative adjustments to the models to capture limitations of the models as necessary.
The performance of the models is dependent on the variables used in the models being reasonable predictors for the loan portfolio’s performance. However, these variables may not capture all sources of risk within the portfolio. As a result, the Company reviews the results and makes qualitative adjustments to the models to manage limitations of the models as necessary.
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 primarily in the New York metropolitan area.
Through its wholly owned bank subsidiary, Metropolitan Commercial Bank, a New York state-chartered commercial 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 individuals primarily in the New York metropolitan area.
Factors considered in the underwriting include: the stability of the projected cash flows from the real estate based on operating history, tenancy, and current rental market conditions; the development and property management experience of the principals; the financial wherewithal of the principals, including an analysis of global cash flows; and credit history of the principals.
Factors considered in loan underwriting include: the stability of the projected cash flows from the real estate based on operating history, tenancy, and current rental market conditions; the development and property management experience of the principals; the financial wherewithal of the principals, including an analysis of global cash flows; and credit history of the principals.
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.
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 financial services industry.
Among other things, Title III of the USA PATRIOT Act and the related regulations require: ● Establishment of anti-money laundering compliance programs that include policies, procedures, and internal controls; the designation of a BSA officer; a training program; and independent testing; ● Filing of certain reports to Financial Crimes Enforcement Network and law enforcement that are designated to assist in the detection and prevention of money laundering and terrorist financing activities; ● Establishment of a program specifying procedures for obtaining and maintaining certain records from customers seeking to open new accounts, including verifying the identity of customers; ● In certain circumstances, compliance with enhanced due diligence policies, procedures and controls designed to detect and report money-laundering, terrorist financing and other suspicious activity; ● Monitoring account activity for suspicious transactions; and ● A heightened level of review for certain high-risk customers or accounts.
Among other things, Title III of the USA PATRIOT Act and the related regulations require: ● Establishment of anti-money laundering compliance programs that include policies, procedures, and internal controls; the designation of a BSA officer; a training program; and independent testing; ● Filing of certain reports to Financial Crimes Enforcement Network and law enforcement that are designated to assist in the detection and prevention of money laundering and terrorist financing activities; ● Establishment of a program specifying procedures for obtaining and maintaining certain records from customers seeking to open new accounts, including verifying the identity of customers; 20 Table of Contents ● In certain circumstances, compliance with enhanced due diligence policies, procedures and controls designed to detect and report money-laundering, terrorist financing and other suspicious activity; ● Monitoring account activity for suspicious transactions; and ● A heightened level of review for certain high-risk customers or accounts.
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.
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.
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.
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.
These risks include completion risk, which is impacted by unanticipated delays and/or cost overruns, and market risk, i.e., the risk that market rental rates and/or market sales prices may decline before the project is completed. Therefore, the Company only originates construction loans on a very selective basis.
These risks include completion risk, which could be impacted by unanticipated delays and/or cost overruns, and market risk, i.e., the risk that market rental rates and/or market sales prices may decline before the project is completed. Therefore, the Company only originates construction loans on a very selective 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 Company is subject to federal income taxation in the same manner as other corporations. For its 2024 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.
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.
By combining high-tech service with the relationship-based focus of a community bank and offering 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 and elsewhere.
Deposit Products and Services The Company’s retail products and services are similar to those of mid-to-large competitive banks in its market, and include, but are not limited to, online banking, mobile banking, ACH, and remote deposit capture. The Company has and will continue to make investments in technology to meet the needs of its customers.
Deposit Products and Services The Company’s retail products and services are similar to those of mid-to-large banks in its market, and include, but are not limited to, online banking, mobile banking, ACH, and remote deposit capture. The Company has made, and will continue to make, investments in technology to meet the needs of its customers.
Acquisition of more than 10% of any class of a bank holding company’s voting stock constitutes a rebuttable presumption of control under the regulations under certain circumstances including where, as is the case with the Company, the issuer has registered securities under Section 12 of the Securities Exchange Act of 1934.
Acquisition of 10% or more of any class of a bank holding company’s voting stock constitutes a rebuttable presumption of control under the regulations under certain circumstances including where, as is the case with the Company, the issuer has registered securities under Section 12 of the Securities Exchange Act of 1934.
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.
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.
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.
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.
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.
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.
Separately, the Superintendent of the NYSDFS also has the authority to appoint a receiver or liquidator of any state-chartered bank under specified circumstances, including where (i) the bank is conducting its business in an unauthorized or unsafe manner, (ii) the bank has suspended payment of its obligations, or (iii) the bank cannot with safety and expediency continue to do business.
Separately, the Superintendent of the NYSDFS also has the authority to appoint a receiver or 19 Table of Contents liquidator of any state-chartered bank under specified circumstances, including where (i) the bank is conducting its business in an unauthorized or unsafe manner, (ii) the bank has suspended payment of its obligations, or (iii) the bank cannot with safety and expediency continue to do business.
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.
Allowance for Credit Losses – Loans and Loan Commitments The Company adopted ASU No. 2016-13, Financial Instruments – Credit Losses (ASC 326) (“ASC 326”) effective January 1, 2023, which requires that 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 FDIC adopted a final rule in 2022, applicable to all insured depository institutions, to increase initial base deposit insurance assessment rate schedules uniformly by two basis points, beginning in the first quarterly assessment period of 2023. The FDIC also concurrently maintained the DIF reserve ratio at 2.0% for 2023.
The FDIC adopted a final rule in 2022, applicable to all insured depository institutions, to increase 16 Table of Contents initial base deposit insurance assessment rate schedules uniformly by two basis points, beginning in the first quarterly assessment period of 2023. The FDIC also concurrently maintained the DIF reserve ratio at 2.0% for 2023.
The Company makes these documents filed with the SEC available free of charge through the Company’s website, www.mcbankny.com, by clicking the Investor Relations tab and selecting “SEC Filings” under the “Filings & Financials” tab. Information included on the Company’s website is not part of this Annual Report on Form 10-K.
The Company makes these documents that have been filed with the SEC available free of charge through the Company’s website, www.mcbankny.com, by clicking the Investor Relations tab and selecting “SEC Filings” under the “Filings & Financials” tab. Information included on the Company’s website is not part of this Annual Report on Form 10-K.
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.
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.
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 secured by the assets of the company and the personal guarantees of the sponsors/owners of the practice.
Further, provisions of the Basel III regime described above limit discretionary bonus payments to bank and bank holding company executives if the institution’s regulatory capital ratios fail to exceed certain thresholds. The scope and content of the banking regulators’ policies on incentive compensation are likely to continue evolving.
Further, 18 Table of Contents provisions of the Basel III regime described above limit discretionary bonus payments to bank and bank holding company executives if the institution’s regulatory capital ratios fail to exceed certain thresholds. The scope and content of the banking regulators’ policies on incentive compensation are likely to continue evolving.
Federal, State and Local Taxation The following is a general description of material tax matters and does not purport to be a comprehensive review of the tax rules applicable to the Company. For federal income tax purposes, the Company files a consolidated income tax return on a calendar year basis using the accrual method of accounting.
Federal, State and Local Taxation The following is a general description of material tax matters and does not purport to be a comprehensive review of the tax rules applicable to the Company. 14 Table of Contents For federal income tax purposes, the Company files a consolidated income tax return on a calendar year basis using the accrual method of accounting.
The USA PATRIOT Act also includes prohibitions on correspondent accounts for foreign shell banks and requires compliance with record keeping obligations with respect to correspondent accounts of foreign banks. The bank regulatory agencies have increased the regulatory scrutiny of the BSA and anti-money laundering programs maintained by financial institutions.
The USA PATRIOT Act also includes prohibitions on correspondent accounts for foreign shell banks and requires compliance with record keeping obligations with respect to correspondent accounts of foreign banks. The federal banking agencies have increased the regulatory scrutiny of the BSA and anti-money laundering programs maintained by financial institutions.
In performing an assessment of whether any decline in 12 Table of Contents fair value is due to a credit loss, the Company considers the extent to which the fair value is less than the amortized cost, changes in credit ratings, any adverse economic conditions, as well as all relevant information at the individual security level, such as credit deterioration of the issuer, explicit or implicit guarantees by the federal government or the collateral underlying the security.
In performing an assessment of whether any decline in fair value is due to credit loss, the Company considers the extent to which the fair value is less than the amortized cost, changes in credit ratings, any adverse economic conditions, as well as all relevant information at the individual security level, such as credit deterioration of the issuer, explicit or implicit guarantees by the federal government or the collateral underlying the security.
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 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. ​ 24 Table of Contents
The Company is subject to the consolidated holding company capital requirements. The policy of the FRB is that a bank holding company must serve as a source of financial and managerial strength to its subsidiary banks by providing capital and other support in times of distress. The Dodd-Frank Act codified the source of strength policy.
The policy of the FRB is that a bank holding company must serve as a source of financial and managerial strength to its subsidiary banks by providing capital and other support in times of distress. The Dodd-Frank Act codified the source of strength policy.
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 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; ● 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. 22 Table of Contents 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.
Fair value is generally calculated based on the value of the underlying collateral less an appraisal discount and the estimated cost to sell. All loan losses are charged-off 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.
Fair value is generally calculated based on the value of the underlying collateral less an appraisal discount. All loan losses are charged-off 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.
The summary is not intended to be exhaustive and is qualified in its entirety by reference to the actual laws and regulations. Regulation of the Bank Loans and Investments State commercial banks have authority to originate and purchase any type of loan, including commercial, CRE, residential mortgages or consumer loans.
The summary is not intended to be exhaustive and is qualified in its entirety by reference to the actual laws and regulations. 15 Table of Contents Regulation of the Bank Loans and Investments State-chartered commercial banks have authority to originate and purchase any type of loan, including commercial, CRE, residential mortgages or consumer loans.
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.
The Company has established several levels of lending authority that have been delegated by the Board of Directors to the Credit Committee, a standing committee of the Bank’s board of directors, and other personnel in accordance with the lending authority in the Company’s Commercial Lending Policy.
The ACL is determined using average industry credit ratings and historical loss experience, and is initially recognized upon acquisition of the securities, and subsequently remeasured on a recurring basis. Effective January 1, 2023, pursuant to ASU No. 2016-13, the Company evaluates AFS debt securities that experienced a decline in fair value below amortized cost for credit impairment.
The ACL is determined using average industry credit ratings and historical loss experience, and is initially recognized upon acquisition of the securities, and subsequently remeasured on a recurring basis. Pursuant to ASU No. 2016-13, the Company evaluates AFS debt securities that have experienced a decline in fair value below amortized cost for credit impairment.
Incentive Compensation Guidance The FRB, OCC, FDIC and other federal banking agencies have issued comprehensive guidance intended to ensure that the incentive compensation policies of banking organizations, including state member banks and bank holding companies, do not undermine the safety and soundness of those organizations by encouraging excessive risk-taking.
Incentive Compensation Guidance The federal banking agencies have issued comprehensive guidance intended to ensure that the incentive compensation policies of banking organizations, including state member banks and bank holding companies, do not undermine the safety and soundness of those organizations by encouraging excessive risk-taking.
The Company competes with a wide range of regional and national banks located in its market areas as well as non-bank commercial finance companies on a nationwide basis.
The Company competes with a wide range of community, regional and large banks located in its market areas as well as non-bank commercial finance companies on a nationwide basis.
In all cases these loans are secured by the assets of the operating company, and in almost all cases the credit facilities are personally guaranteed by principals of the company, who are typically high net worth individuals.
In all cases these loans are secured by the 8 Table of Contents assets of the operating company, and in almost all cases the credit facilities are personally guaranteed by principals of the company, who are typically high net worth individuals.
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.
The Bank was well capitalized at December 31, 2024. 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.
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.
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, flexible spending accounts and health savings accounts, wellness programs, commuter benefits, 13 Table of Contents Company sponsored life and disability insurance, voluntary life and AD&D insurance, commuter benefits, an Employee Assistance Program, paid time-off, and leave policies, including paid parental leave.
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.
They generally originate loans 7 Table of Contents to borrowers with strong cash flows from diverse sources and who are very experienced operators that typically have over 1,000 beds under management.
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.
Loans are considered for return to accrual status when they become current as to principal and interest payments 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 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.
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.
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.
Generally, the types of construction loans the Company originates include extensive renovation loans as well as ground-up construction loans. At December 31, 2024, construction loans comprised 3.4% 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.
Significant penalties and fines, as well as other supervisory orders may be imposed on a financial institution for non-compliance with these requirements. In addition, for financial institutions engaging in a merger transaction, federal bank regulatory agencies must consider the effectiveness of the financial institution’s efforts to combat money laundering activities.
Significant penalties and fines, as well as other supervisory orders may be imposed on a financial institution for non-compliance with these requirements. In addition, for financial institutions seeking approval for a merger transaction, federal banking agencies must consider the effectiveness of the financial institution’s efforts to combat money laundering activities.
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 believes that it has a very stable deposit base, supported 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 interest rates.
In evaluating acquisition applications, the FRB evaluates factors such as the financial condition, management resources and future prospects of the parties, the convenience and needs of the communities involved and competitive factors. In addition, bank holding companies may generally only engage in activities that are closely related to banking as determined by the FRB.
In evaluating acquisition applications, the FRB evaluates factors such as the financial condition, management resources and future prospects of the parties, the convenience and needs of the communities involved, and the effect on competition in the relevant market(s). In addition, bank holding companies may generally only engage in activities that are closely related to banking as determined by the FRB.
It has established deposit concentration thresholds to avoid the possibility of dependence on any single depositor base for funds. Borrowings The Company maintains diverse funding sources including, but not limited to, borrowing lines at the FHLB and the FRB discount window. The Company may, from time to time, utilize advances from the FHLB to supplement its funding sources.
It has established deposit concentration thresholds to avoid the possibility of dependence on any single depositor base for funds. Borrowings The Company maintains diverse funding sources including, but not limited to, borrowing lines at the FHLB and the FRB discount window.
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.
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.
Additionally, the Company is always working to expand its team by attracting and developing individuals that embody its spirit as “The Entrepreneurial Bank.” This helps to ensure that it continues to meet its high standard of excellence, which drives relationships and loan growth.
Additionally, the Company is always working to expand its team by attracting and developing individuals that embody its spirit as “The Entrepreneurial Bank.” This helps to ensure that it continues to meet its high standards of excellence, which drives relationships and enhances franchise value.
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.
The Company has developed tailored underwriting criteria and credit management processes for each of the various loan product types it offers. 10 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 on collateral are perfected.
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.
At December 31, 2024, $1.9 billion, or 38.8% 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, particularly to skilled nursing homes.
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.
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 adopted this guidance effective January 1, 2023.
At December 31, 2023, the Company had $174.9 million of New York City rent-regulated stabilized multi-family loans, which had a weighted-average debt coverage ratio of 2.5x and an average LTV of 45.4% based on the most recent appraisal. If expense growth exceeds revenue growth, a property may not generate sufficient cash flows to cover debt service.
At December 31, 2024, the Company had $168.0 million of New York City rent-regulated stabilized multi-family loans, which had a weighted-average debt coverage ratio of 2.7x and an average LTV of 42.1% based on the most recent appraisal. If expense growth exceeds revenue growth, a property may not generate sufficient cash flows to cover debt service.
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.
These activities, together with six strategically located banking centers, generate a stable source of deposits to fund a diverse loan portfolio with attractive risk-adjusted yields. As of December 31, 2024, the Company’s assets, loans, deposits, and stockholders’ equity totaled $7.3 billion, $6.0 billion, $6.0 billion and $729.8 million, respectively.
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.
The Company also has a loan production office in Miami, Florida and an administrative office in Lakewood, New Jersey. Competitors The bank and non-bank financial services industry in the Company’s markets and surrounding areas is highly competitive.
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.
The Credit Committee is comprised of five Board members who are “permanent members” of the Credit Committee, including the Chief Executive Officer 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.
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.
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.
For collateral dependent financial assets where the Company has determined that foreclosure of the collateral is probable and where the borrower is experiencing financial difficulty, the ACL is measured based on the difference between the fair value of the collateral and the amortized cost basis of the asset as of the measurement date.
For collateral dependent financial assets where the borrower is experiencing financial difficulty, the ACL is measured based on the difference between the fair value of the collateral (less selling costs if applicable) and the amortized cost basis of the asset as of the measurement date.
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.
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.
While the Company is subject to the CFPB regulations, because it has less than $10 billion in total consolidated assets, the FRB and the NYSDFS are responsible for examining and supervising the Company’s compliance with these consumer financial laws and regulations. In addition, the Company is subject to certain state laws and regulations designed to protect consumers.
While the Company is not subject to CFPB supervision, because it has less than $10 billion in total consolidated assets, the FRB and the NYSDFS are responsible for examining and enforcing the Company’s compliance 21 Table of Contents with these consumer financial laws and regulations.
In addition, the Economic Growth Act includes regulatory relief for community banks regarding regulatory examination cycles, call reports, the Volcker Rule, mortgage disclosures and risk weights for certain high-risk CRE loans. What follows is a summary of some of the laws and regulations applicable to the Bank and the Company.
In addition, the Economic Growth Act includes regulatory relief for community banks regarding regulatory examination cycles, call reports, the Volcker Rule, mortgage disclosures and risk weights for certain high-risk CRE loans.
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.
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 Dodd-Frank Act directed the FRB to issue consolidated capital requirements for depository institution holding companies that are no less stringent, both quantitatively and in terms of components of capital, than those applicable to institutions themselves. Consolidated regulatory capital requirements identical to those applicable to the subsidiary banks applied to bank holding companies as of January 1, 2015.
The FRB has historically imposed consolidated capital adequacy guidelines for bank holding companies structured similar, but not identical, to those of state member banks. The Dodd-Frank Act directed the FRB to issue consolidated capital requirements for depository institution holding companies that are no less stringent, both quantitatively and in terms of components of capital, than those applicable to institutions themselves.
Any change in the laws and regulations applicable to the Company and the Bank could have a material adverse impact on their operations and the Company’s stockholders. 16 Table of Contents On May 24, 2018, the Economic Growth, Regulatory Relief and Consumer Protection Act (the “Economic Growth Act”) was enacted to modify or remove certain financial reform rules and regulations, including some of those implemented under the Dodd-Frank Wall Street and Consumer Protection Act (“Dodd-Frank Act”).
On May 24, 2018, the Economic Growth, Regulatory Relief and Consumer Protection Act (the “Economic Growth Act”) was enacted to modify or remove certain financial reform rules and regulations, including some of those implemented under the Dodd-Frank Wall Street and Consumer Protection Act (“Dodd-Frank Act”).
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.
As of December 31, 2024, the Company employed 291 full-time employees, and 2 part-time employees, none of whom are represented by a collective bargaining agreement.
However, FRB guidance generally provides for bank holding company consultation with FRB staff prior to engaging in a repurchase or redemption of a bank holding company’s stock, even if a formal written notice is not required.
However, FRB guidance generally provides for bank holding company consultation with FRB staff prior to engaging in a repurchase or redemption of a bank holding company’s stock, even if a formal written notice is not required. 23 Table of Contents The above FRB requirements may restrict a bank holding company’s ability to pay dividends to stockholders or engage in repurchases or redemptions of its shares.
The Company seeks to maintain a broadly diversified loan portfolio in terms of type of customer, type of loan product, geographic area and industries in which business customers are engaged. The Company has developed tailored underwriting criteria and credit management processes for each of the various loan product types it offers customers.
The Company seeks to maintain a broadly diversified loan portfolio in terms of type of customer, type of loan product, geographic area and industries in which business customers are engaged.
Safety and Soundness Standards Each federal banking agency, including the FRB, has adopted guidelines establishing general standards relating to, among other things, internal controls, information and internal audit systems, loan documentation, credit underwriting, interest rate exposure, asset growth, asset quality, earnings, compensation, fees and benefits and information security standards.
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. 17 Table of Contents Safety and Soundness Standards Each federal banking agency, including the FRB, has adopted guidelines establishing general standards relating to, among other things, internal controls, information and internal audit systems, loan documentation, credit underwriting, interest rate exposure, asset growth, asset quality, earnings, compensation, fees and benefits and information security standards.
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.
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, ultimately to enhance franchise value.
The Company adopted this guidance effective January 1, 2023, see “NOTE 3 — 10 Table of Contents SUMMARY OF RECENT ACCOUNTING PRONOUNCEMENTS ” to the Company’s consolidated financial statements in this Form 10-K. The Company works closely with borrowers that are experiencing financial difficulties to identify viable solutions that minimize the potential for loss.
See “ NOTE 3 — SUMMARY OF RECENT ACCOUNTING PRONOUNCEMENTS ” to the Company’s consolidated financial statements in this Form 10-K. The Company works closely with borrowers that are experiencing financial difficulties to identify viable solutions that minimize the potential for loss and under certain circumstances may modify the terms of these loans to maximize their collectability.
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.
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. 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 6 Table of Contents share.
This is an increase of 36 employees, or approximately 14.9%, from December 31, 2022 to support our expanding businesses and to support risk management in the Company’s Lending, Deposits and Cash Management business lines, as well as in the Financial Crimes Compliance, Human Resources, Risk Management, Operations and Technology groups.
This increase of 16 employees, or approximately 5.8%, from December 31, 2023 reflects our expanding business and the expansion of risk management programs in connection with the Company’s Lending, Deposits and Cash Management business lines, as well as in the Financial Crimes Compliance, Human Resources, Risk Management, Operations and Technology functions.

… 96 more changes not shown on this page.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

70 edited+16 added−38 removed105 unchanged
Biggest changeWe expect to incur a number of other costs associated with the exit from all of our BaaS relationships through at least the end of 2024, including those related to notifying customers and other interested parties of our decision to exit such relationships, and our results of operations could be adversely impacted in future periods if this exit takes significantly longer than anticipated, if we incur additional, unanticipated costs, or if we face litigation related to the exit.
Biggest changeOur results of operations could be adversely impacted in future periods if we cannot fully replace deposit accounts acquired through such BaaS relationships, if we incur additional, unanticipated costs, including if we face litigation or other reputational harm related to the winddown of the business.
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 downturn in the real estate market and/or a challenging business and economic environment may increase the Company’s risk related to CRE, including 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.
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.
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 large financial institutions, savings and loan associations, savings banks, credit unions and other companies offering financial services.
Accordingly, changes in the level of market interest rates affect the Company’s net yield on interest earning assets, loan origination volume and overall results. If market interest rates rise rapidly, interest rate caps may limit increases in the interest rates on certain adjustable-rate loans, thus limiting the upside to our net interest income.
Accordingly, changes in the level and direction of market interest rates affect the Company’s net yield on interest earning assets, loan origination volume and overall results. If market interest rates rise rapidly, interest rate caps may limit increases in the interest rates on certain adjustable-rate loans, thus limiting the upside to our net interest income.
If customers move money out of bank deposits and into other investments such as money market funds, the Company would lose a relatively low-cost source of funds, which would increase its funding costs and reduce net interest income.
If our customers move money out of bank deposits and into other investments such as money market funds, the Company would lose a relatively low-cost source of funds, which would increase its funding costs and reduce net interest income.
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.
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.
External factors, such as regulatory reception, compliance with regulations and guidance, competitive alternatives, and shifting market preferences, may also impact the successful implementation of a new line of business or a new product or service.
External factors, such as regulatory reception, shifting regulatory expectations, compliance with regulations and guidance, competitive alternatives, and shifting market preferences, may also impact the successful implementation of a new line of business or a new product or service.
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.
The Company’s access to funding sources in amounts adequate to finance 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. 31 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.
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.
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, practices, strategy, and profitability.
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.
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. 25 Table of Contents If the allowance for credit losses is not sufficient to cover actual loan losses, earnings could decrease.
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.
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 could lead to declines in the value of our investment 26 Table of Contents securities, particularly those with longer maturities, although this effect can be less pronounced for floating rate instruments.
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 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 may be fewer potential purchasers of the collateral.
The 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 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 technologically-advanced products and services than the Company, which would put it at a competitive disadvantage.
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 addition, CRE loan concentration is an area that has experienced heightened regulatory focus.
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 may be fewer potential purchasers of the collateral. In addition, CRE loan concentration is an area that has experienced heightened regulatory focus.
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.
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 36 Table of Contents obligated to file suspicious activity reports with the Financial Crimes Enforcement Network, a bureau of the U.S. Department of the Treasury.
It is possible that competitive pressures will result in the Company absorbing a portion of such increases in the future, which would increase its costs, reduce profit margin and adversely affect its business and financial condition. In addition, the card networks require certain capital requirements.
It is possible that competitive pressures will result in the Company absorbing a portion of such increases in the future, which would increase its costs, reduce profit margin and adversely affect its business and financial condition. In addition, the card 33 Table of Contents networks require certain capital requirements.
In addition, inflation generally increases the cost of goods and services we use in our business operations, such as electricity and other utilities, which increases our non-interest expenses.
In addition, inflation generally increases the cost of goods and services we use in our business operations, such as electricity and other utilities, which could increase our non-interest expenses.
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.
As previously disclosed, the Bank entered into (i) an Order to Cease and 35 Table of Contents 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.
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.
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.
While the Company maintains cybersecurity insurance, the costs related to cybersecurity threats or disruptions may not be fully insured. For information on our cybersecurity risk management, strategy and governance, see Part I, Item 1C., “Cybersecurity.” 30 Table of Contents The Company faces risks related to its operational, technological and organizational infrastructure.
While the Company maintains cybersecurity insurance, the costs related to cybersecurity threats or disruptions may not be fully insured. For information on our cybersecurity risk management, strategy and governance, see Part I, Item 1C., “Cybersecurity.” The Company faces risks related to its operational, technological and organizational infrastructure.
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.
These portfolios have grown in recent years and the Company intends to continue to emphasize CRE and C&I lending. The Company lends against a variety of asset classes, including skilled nursing facilities, healthcare, multi-family, office, hospitality, mixed use, retail, and warehouse.
Also, certain adjustable-rate loans re-price based on lagging interest rate indices. This lagging effect may also negatively impact our net interest income when general interest rates continue to rise periodically. The Company’s securities portfolio may be impacted by fluctuations in market value, potentially reducing accumulated other comprehensive income and/or earnings.
Also, certain adjustable-rate loans may re-price based on lagging interest rate indices. This lagging effect may also negatively impact our net interest income if general interest rates were to rise. The Company’s securities portfolio may be impacted by fluctuations in market value, potentially reducing accumulated other comprehensive income and/or earnings.
Similar to other large corporations, operational risk can manifest itself in many ways, such as errors related to failed or inadequate processes, faulty or disabled computer systems, fraud by employees or outside persons and exposure to external events.
Similar to other large corporations, operational risk can manifest itself in many ways, such as errors related to failed or inadequate 29 Table of Contents processes, faulty or disabled computer systems, fraud by employees or outside persons and exposure to external events.
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.
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.
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.
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 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 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 Company also has an available credit facility with the FRBNY discount window. The Company may also borrow funds from third-party lenders, such as other financial institutions.
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.
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, changes to trade policies, treaties and tariffs, or other geopolitical events. Global market disruptions may affect the Company’s liquidity.
For further discussion see Part I, Item 3., “Legal Proceedings.” Additional enforcement or other actions arising out of the prepaid debit card program or otherwise could have a materially adverse effect on the Company and the Bank’s assets, business, cash flows, financial condition, liquidity, prospects and/or 38 Table of Contents results of operations.
Additional enforcement or other actions arising out of the prepaid debit card program or otherwise 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. For further discussion see Part I, Item 3.
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.
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, 2024, $5.9 billion, or 98.3% of total loans, consisted of CRE and C&I loans.
There also may be real or perceived social harm, unfairness, or other outcomes that undermine public confidence in the use and deployment of AI. In addition, third parties may deploy AI technologies in a manner that reduces customer demand for our business or financial products and services.
There also may be real or perceived social harm, unfairness, or other outcomes that undermine public confidence in the use and deployment of AI. In addition, third parties may deploy AI technologies to commit fraud against us or in a manner that reduces customer demand for our business or financial 34 Table of Contents products and services.
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 .” and Part I, Item 3.
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.” and Part I, Item 3. “Legal Proceedings.” Changes in card network fees could impact operations.
As a result of these restrictions, it is possible that rental income on certain rent-regulated properties might not rise sufficiently over time to satisfy increases in the loan rate at repricing or increases in overhead expenses (e.g., utilities, taxes, etc.).
As a result of these restrictions, it is possible that rental income on certain rent-regulated properties might not rise sufficiently over time to satisfy increases in interest payments due to increases in underlying rate reset indices or increases in overhead expenses (e.g., utilities, taxes, etc.).
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.
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.
As a result, a downturn in the local economy, generally and the real estate market specifically, could significantly reduce the Company’s profitability and growth and adversely affect its financial condition. Risks Related to Market Interest Rates The reversal of monetary policy actions that resulted in a historically low interest rate environment may adversely affect our net interest income and profitability.
As a result, a downturn in the local economy, generally and the real estate market specifically, could significantly reduce the Company’s profitability and growth and adversely affect its financial condition. ​ ​ 27 Table of Contents Risks Related to Market Interest Rates Changes in monetary policy may adversely affect our net interest income and profitability.
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.
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.
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.
Changes in the estimated fair value of securities may reduce stockholders’ equity and net income. At December 31, 2024, we had AFS securities with an amortized cost of $559.1 million and a fair value of $482.1 million.
Deposit balances can decrease when customers perceive alternative investments as providing a better risk/return tradeoff, which are strongly influenced by such external factors as the direction of interest rates, local and national economic conditions and the availability and attractiveness of alternative investments.
Deposit balances can decrease when customers perceive alternative investments as providing a better risk/return tradeoff, which are strongly influenced by such external factors as the level of and direction of interest rates, local and national economic conditions, potential impacts related to or resulting from regional and community bank stresses, and the availability and attractiveness of alternative investments.
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.
Prior to the Company’s exit of the GPG BaaS business, we provided global payments infrastructure access to our non-bank financial service partners, which included 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 effects of such policies upon the Company’s business, financial condition and results of operations cannot be predicted. Non-compliance with the USA PATRIOT Act, BSA, or other laws and regulations could result in fines or sanctions.
The effects of such policies upon the Company’s business, financial condition and results of operations cannot be predicted. For further discussion, see “ “ — Risks Related to Market Interest Rates .” Non-compliance with the USA PATRIOT Act, BSA, or other laws and regulations could result in fines or sanctions.
Risks Related to Competitive Matters The Company operates in a highly competitive industry and faces significant competition from other financial institutions and financial services providers, the result of which may decrease growth or profits.
An increase in the required capital level would further limit the use of capital for other purposes. Risks Related to Competitive Matters The Company operates in a highly competitive industry and faces significant competition from other financial institutions and financial services providers, the result of which may decrease growth or profits.
At December 31, 2023, the Company has $174.9 million of New York City rent-regulated stabilized multi-family loans, which had a weighted-average LTV of 45.4% at the date of the most recent appraisal, and a weighted average debt coverage ratio of 2.5x.
At December 31, 2024, the Company has $168.0 million of New York City rent-regulated stabilized multi-family loans, which had a weighted-average LTV of 42.1% at the date of the most recent appraisal, and a weighted average debt coverage ratio of 2.7x.
We could be subject to additional regulatory scrutiny with respect to that portion of our business that could have a material adverse effect on the business, financial condition, results of operations and growth prospects of the Company.
We could be subject to additional regulatory scrutiny with respect to our prior GPG BaaS business, our winddown process and lingering operational tasks which could have a material adverse effect on the business, financial condition, results of operations and growth prospects of the Company.
As discussed below, the increase in market interest rates is expected to have an adverse effect on our net interest income and profitability. Interest rate shifts may reduce net interest income and otherwise negatively impact the Company’s financial condition and results of operations.
As discussed below, if market interest rates rise in response to changes in the Federal Reserve Board’s monetary policy, such an increase could have an adverse effect on our net interest income and profitability. Interest rate shifts may reduce net interest income and otherwise negatively impact the Company’s financial condition and results of operations.
Further, any new laws, rules and regulations could make compliance more difficult or expensive. The Dodd-Frank Act, among other things, imposed higher capital requirements on bank holding companies and changed the rules regarding FDIC insurance premiums.
Further, any new laws, rules and regulations, including changes to regulatory policy and the promulgation of new laws and regulations following the inauguration of the new presidential administration in the U.S, could make compliance more difficult or expensive. The Dodd-Frank Act, among other things, imposed higher capital requirements on bank holding companies and changed the rules regarding FDIC insurance premiums.
Sustained higher interest rates administered by the Federal Reserve to tame persistent inflationary price pressures could also push down asset prices and weaken economic activity.
If the Federal Reserve were to administer higher interest rates to tame inflationary price pressures, such increased rates could also push down asset prices and weaken economic activity.
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.
During the year ended December 31, 2024, we reported an other comprehensive gain of $789,000 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 or imbalances in supply and demand.
The Company may also not be successful in expanding its operations organically or through strategic acquisitions while managing the costs and implementation risks associated with this growth strategy.
The Company may not be successful in increasing the volume of loans and deposits at acceptable levels and upon terms it finds acceptable. The Company may also not be successful in expanding its operations organically or through strategic acquisitions while managing the costs and implementation risks associated with this growth strategy.
The Company relies heavily on its executive management team and other key employees and could be adversely affected by the unexpected loss of their services. The Company’s success depends in large part on the performance of its key personnel, as well as on its ability to attract, motivate and retain highly qualified senior and middle management and other skilled employees.
The Company’s success depends in large part on the performance of its key personnel, as well as on its ability to attract, motivate and retain highly qualified senior and middle management and other skilled employees.
Uncertainty about the federal fiscal policymaking process, the medium- and long-term fiscal outlook of the federal government, and future tax rates is a concern for businesses, consumers and investors in the United States. The Company’s business is also significantly affected by monetary and related policies of the U.S. federal government and its agencies.
Uncertainty about the federal fiscal and regulatory policymaking process, the medium- and long-term fiscal outlook of the federal government, and future tax rates is a concern for businesses, consumers and investors in the United States.
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.
Failure to successfully manage any of these or other risks in connection with exiting these BaaS relationships could have a material adverse effect on our business, financial condition and results of operations. Regulatory scrutiny of non-bank financial service solutions and related technology considerations has recently increased.
However, as with any risk management framework, there are inherent limitations to these risk management strategies as there may exist, or develop in the future, risks that have not been appropriately anticipated or identified. If the Company’s risk management framework proves ineffective, it could suffer unexpected losses and its business and results of operations could be materially adversely affected.
However, as with any risk management framework, there are inherent limitations to these risk management strategies and controls as there may exist, or develop in the future, risks that have not been appropriately anticipated or identified.
The Company’s ability to grow depends, in part, upon its ability to expand its market share, successfully attract deposits, and identify loan and investment opportunities as well as opportunities to generate fee-based income. The Company may not be successful in increasing the volume of loans and deposits at acceptable levels and upon terms it finds acceptable.
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’s ability to grow depends, in part, upon its ability to expand its market share, successfully attract deposits, and identify loan and investment opportunities as well as opportunities to generate fee-based income.
If internal controls fail to prevent or detect an occurrence, or if any resulting loss is not insured or exceeds applicable insurance limits, it could have a material adverse impact on the Company’s business, financial condition and results of operations.
If internal controls fail to prevent or detect an occurrence, or if any resulting loss is not insured or exceeds applicable insurance limits, it could have a material adverse impact on the Company’s business, financial condition and results of operations. 30 Table of Contents The Company relies heavily on its executive management team and other key employees and could be adversely affected by the unexpected loss of their services or the need to increase current compensation levels to attract and retain employees.
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.
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. 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.
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.
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. 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.
An inability to raise funds through deposits, borrowings, the sale and maturities of loans and securities and other sources could have a substantial negative effect on liquidity. The Company’s most important source of funds is deposits.
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. An inability to raise funds through deposits, borrowings, the sale and maturities of loans and securities and other sources could have a substantial negative effect on liquidity.
Risks Related to the Company’s Global Payments Business The exit from all of the Company’s BaaS relationships may cost more than anticipated and may subject us to additional risk. In early 2024, the Company decided to exit all BaaS relationships. There are substantial risks and uncertainties associated with these efforts.
Risks Related to the Company’s Merchant Services and Global Payments Businesses The exit from all of the Company’s BaaS relationships may cost more than anticipated and may subject us to additional risk. During 2024 the Company exited the GPG BaaS business, and only residual operational tasks remain to be completed.
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.
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.
The Company’s business, and in particular, the debit card and cash management solutions business and global payments business, is dependent on its ability to process and monitor, on a daily basis, a large number of transactions, many of which are highly complex, across numerous and diverse markets.
The Company’s business is dependent on its ability to process and monitor, on a daily basis, a large number of transactions, many of which are highly complex, across numerous and diverse markets. These transactions, as well as the information technology services provided to clients, often must adhere to client-specific guidelines, as well as legal and regulatory standards.
Federal and state regulatory agencies frequently adopt changes to their regulations or change the manner in which existing regulations are applied.
“Legal Proceedings.” 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.
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.
At December 31, 2024, we reported an accumulated other comprehensive loss of $53.1 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. 28 Table of Contents 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.
Due to their size, many competitors may offer a broader range of products and services, as well as better pricing for certain products and services than the Company can offer. Further, increased competition among financial services companies due to the continued consolidation of financial institutions may adversely affect the Company’s ability to market its products and services.
Due to their size, many competitors may offer a broader range of products and services, as well as better pricing for certain products and services than the Company can offer. Larger banks may also have more resilient operational and intellectual technology infrastructure.
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.
Lower lending limits may discourage borrowers with lending needs that exceed these limits from doing business with the Company. The Company may try to serve such borrowers by selling loan participations to other financial institutions; however, this strategy may not succeed.
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.
During 2024 the Company exited the GPG BaaS business, and only residual operational tasks remain to be completed. The Company has been subject to investigations by governmental entities concerning a prepaid debit card product program that was offered through the GPG BaaS business.
Physical risks include extreme storms or wildfires that damage or destroy property and inventory securing loans we make, or may interrupt our customer’s business operations, putting them in financial difficulty, and increasing the risk of default. 33 Table of Contents Our customers are also facing changes in energy and commodity prices driven by climate change, as well as new regulatory requirements resulting in increased operational costs.
Physical risks include extreme storms or wildfires that damage or destroy property and inventory securing loans we make, or may interrupt our customer’s business operations, putting them in financial difficulty, and increasing the risk of default. 32 Table of Contents In addition, if our underwriting process underestimates the potential impact of severe weather events on our customers and their businesses, there could be a material adverse effect on our business, financial condition and results of operations.
In addition, the Company’s legally mandated lending limits are lower than those of certain of its competitors that have greater capital. Lower lending limits may discourage borrowers with lending needs that exceed these limits from doing business with the Company.
Further, increased competition among financial services companies due to the continued consolidation of financial institutions may adversely affect the Company’s ability to market its products and services. In addition, the Company’s legally mandated lending limits are lower than those of certain of its competitors that have greater capital.
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.
The Company maintains business in merchant acquiring and merchant services. Card networks periodically increase the fees (known as interchange fees) that are charged to acquirers and that the Company charges to its merchants.
Global pandemics, or localized epidemics, could adversely affect the Company’s financial condition and results of operations.
Our customers are also facing changes in energy and commodity prices driven by climate change, as well as new regulatory requirements resulting in increased operational costs. Global pandemics, or localized epidemics, could adversely affect the Company’s financial condition and results of 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.
If the Company’s risk management framework proves ineffective, it could suffer unexpected losses and its business and results of operations could be materially adversely affected. A lack of liquidity could adversely affect the Company’s financial condition and results of operations. Liquidity is essential to the Company’s business.
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 Company’s business is also significantly affected by fiscal, monetary, regulatory and related policies of the U.S. federal government and its agencies, and the impact of the new U.S. presidential administration and Congress on those policies is uncertain. Changes in any of these policies are influenced by macroeconomic conditions and other factors that are beyond the Company’s control.
Removed
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.
Added
In 2022 and 2023, the Federal Reserve Board raised interest rates in response to concerns over inflation risk.
Removed
Financial challenges at other banking institutions could lead to depositor concerns that spread within the banking industry causing disruptive deposit outflows and other destabilizing results. In 2023, certain specialized banking institutions with elevated concentrations of uninsured deposits experienced large deposit outflows, resulting in the institutions being placed into FDIC receiverships.
Added
Although the Federal Reserve Board began lowering interest rates in 2024, interest rates remain elevated and there continues to be uncertainty in the evolution of market and economic conditions, including the possibility of additional measures that could be taken by the Federal Reserve Board, related to concerns over inflation risk.
Removed
In the aftermath, there has been substantial market disruption and indications that deposit concerns could spread within the banking industry, leading to deposit outflows and other destabilizing results that could adversely affect the Company’s business, financial condition and results of operations.
Added
Although the Company engages third-party services on an ongoing basis to conduct independent audits of its risk management systems, these service providers may fail to identify cybersecurity strategies and processes the Company could implement in order to potentially be more consistent with industry best practices.
Removed
The Federal Reserve Board exercised monetary policy actions that decreased benchmark interest rates significantly, in response to the COVID-19 pandemic. The Federal Reserve Board has reversed its easy money policies given its concerns over inflation. Market interest rates have risen in response to the change in the Federal Reserve Board’s monetary policies.
Added
Alternatively, we may be required to increase current compensation levels to attract and retain employees, which could negatively impact our business, financial condition, and results of operations.
Removed
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.
Added
The Company’s most important source of funds is deposits.

… 44 more changes not shown on this page.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

18 edited+6 added−8 removed24 unchanged
Biggest changeMonitor Cybersecurity Incidents The Technology Committee established the Information Technology and Information Security Working Group (the “IT/IS Working Group”), which is comprised of the CDO, the Head of Information Technology Infrastructure, the CISO, the Information Security Officer, the Information Security Assurance Program Manager and certain other members of the Company’s information technology engineering staff.
Biggest changeThe Company’s Network and Cloud Administration is led by the CDO and is also responsible for managing security infrastructure and deploying, configuring, and managing various security solutions, tools and products to assist in safeguarding the Company’s information system infrastructure and operations. 40 Table of Contents Monitor Cybersecurity Incidents The IT Steering Committee, which is a subcommittee of the ERMC, established the Information Technology and Information Security Working Group (the “IT/IS Working Group”), which is comprised of the CDO, the Head of Information Technology Infrastructure, the CISO, the Information Security Officer, the Information Security Assurance Program Manager and certain other members of the Company’s information technology engineering staff.
The CISO plays an important role in the prevention, detection, mitigation, and remediation of cybersecurity incidents and in informing management, the Technology Committee and the Board of Directors on cybersecurity risks and issues. The CISO provides quarterly briefings to the Technology Committee on any significant information security issues, relevant cybersecurity metrics and the status of the Company’s security-related strategic initiatives.
The CISO plays an important role in the prevention, detection, mitigation, and remediation of cybersecurity incidents and in informing management, the Risk Committee and the Board of Directors on cybersecurity risks and issues. The CISO provides quarterly briefings to the Risk Committee on any significant information security issues, relevant cybersecurity metrics and the status of the Company’s security-related strategic initiatives.
In connection with these responsibilities, the ERM receives quarterly risk and control self-assessments and action plans for risk remediation, if required, to reduce residual risks. This includes information security action plans from the CISO, the CDO, and/or other key stakeholders.
In connection with these responsibilities, the ERMC receives quarterly risk and control self-assessments and action plans for risk remediation, if required, to reduce residual risks. This includes information security action plans from the CISO, the CDO, and/or other key stakeholders.
The Technology Committee also receives reports and updates from management regarding significant cybersecurity developments so that the Board of Directors can be promptly notified, as and when appropriate, of any threats or incidents as well as management’s proposed responses.
The Risk Committee also receives reports and updates from management regarding significant cybersecurity developments so that the Board of Directors can be promptly notified, as and when appropriate, of any threats or incidents as well as management’s proposed responses.
As the operating company, the Bank’s general risk management personnel, including the Chief Risk Officer (“CRO”), work closely with their information technology and security counterparts to evaluate and address cybersecurity threats in alignment with our business objectives and operational needs. The Company also maintains a system-wide information systems security program that applies to all employees.
The Bank’s general risk management personnel, including the Chief Risk Officer (“CRO”), work closely with their information technology and security counterparts to evaluate and address cybersecurity threats in alignment with our business objectives and operational needs. The Company also maintains a system-wide information security program that applies to all employees.
In addition to these scheduled meetings, the Technology Committee, the CISO, the CDO, the CRO, and other members of management maintain ongoing dialogues with respect to emerging or potential cybersecurity threats.
In addition to these scheduled meetings, the Risk Committee, the CISO, the CDO, the CRO, and other members of management maintain ongoing dialogues with respect to emerging or potential cybersecurity threats.
Managing Material Risks & Integrated Overall Risk Management The Company has integrated cybersecurity risk management into its broader risk management framework in order to promote a culture that values protecting sensitive information. This integration is intended to promote the inclusion of cybersecurity considerations in decision-making processes throughout the Company.
Managing Material Risks & Integrated Overall Risk Management The Company has integrated cybersecurity risk management into its broader risk management framework in order to promote a culture that values protecting sensitive information. This integration is intended to promote the inclusion of 37 Table of Contents cybersecurity considerations in decision-making processes throughout the Company.
Reporting to Board of Directors The CISO provides management, the Technology Committee and the Board of Directors with information regarding the Company’s cybersecurity program and potential cybersecurity threats or incidents.
Reporting to Board of Directors The CISO provides management, the Risk Committee and the Board of Directors with information regarding the Company’s cybersecurity program and potential cybersecurity threats or incidents.
Our CDO’s technical and managerial experience is helpful for developing and executing our cybersecurity strategies. The CDO helps to oversee the Company’s efforts to improve its system’s capabilities, reliability, scalability and security. 42 Table of Contents The Company’s CRO is responsible for identifying, controlling and mitigating risks that could impact the Company’s operations.
Our CDO’s technical and managerial experience is helpful for developing and executing our cybersecurity strategies. The CDO helps to oversee the Company’s efforts to improve its system’s capabilities, reliability, scalability and security. The Company’s CRO is responsible for identifying, controlling and mitigating risks that could impact the Company’s operations.
All employees are expected to assist in safeguarding the Company’s information systems and to assist in the discovery and reporting of cybersecurity incidents.
All employees are expected to assist in safeguarding the Company’s information systems and to assist in the detection and reporting of cybersecurity incidents.
Management’s Role Managing Risk The Company’s Enterprise Risk Management Committee (the “ERM”), an interdepartmental, management-level committee, meets at least quarterly and is responsible for ensuring that the Company has appropriate policies and 41 Table of Contents procedures in place to help identify, measure, monitor and control potentially significant business risks.
Management’s Role Managing Risk The Company’s Enterprise Risk Management Committee (the “ERMC”), an interdepartmental, management-level committee, meets at least quarterly and is responsible for ensuring that the Company has appropriate policies and procedures in place to help identify, measure, monitor and control potentially significant business risks.
The CISO also provides mid-year and annual reports to the full Board of Directors of the Company regarding the state of the Company’s information security program.
As discussed above, the CISO also provides 39 Table of Contents mid-year and annual reports to the full Board of Directors regarding the state of the Company’s information security program.
For more information regarding the risks we face from cybersecurity threats, see Part I, Item 1A., “Risk Factors— Risks Related to the Company’s Operations—A failure in the Company’s operation 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 .” Governance Board of Directors Oversight The Board of Directors is responsible for overseeing the Company’s cybersecurity program.
For more information regarding the risks we face from cybersecurity threats, see Part I, Item 1A., “Risk Factors— Risks Related to the Company’s Operations—A failure in the Company’s operation 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 .” 38 Table of Contents Governance Board of Directors Oversight Our information security program is designed to ensure adequate governance, and oversight is in place while evolving to meet changes in applicable laws and regulations, and industry best practices.
Management, the CDO, the CRO, and the Incident Management Team (the “IMT”) are also required to report cybersecurity threats and incidents to the Technology Committee and/or the Board of Directors, as applicable.
Management, the Company’s Chief Digital Officer (the “CDO”), the CRO, and the Incident Management Team (the “IMT”) are also required to report cybersecurity threats and incidents to the Risk Committee and/or the Board of Directors, as applicable.
The incorporation of these reports into the ERM’s meetings is intended to promote the inclusion of cybersecurity considerations in the risk management decision-making processes throughout the Company. The Information Technology Steering Committee (the “IT Steering Committee”) meets at least quarterly and is composed of sixteen members of management, including the CDO, the CRO and the CISO.
The incorporation of these reports into the ERMC’s meetings is intended to promote the inclusion of cybersecurity considerations in the risk management decision-making processes throughout the Company. The Information Technology/Information Security Steering Committee (the “IT Steering Committee”) reports directly into the ERMC and meets at least quarterly.
The IT Steering Committee oversees information technology matters at the Company, including the implementation of all cybersecurity policies, standards, guidelines and procedures.
The IT Steering Committee is composed of senior members of management, including the CDO, the CRO and the CISO. The IT Steering Committee oversees information technology matters at the Company, including the implementation of all cybersecurity policies, standards, guidelines and procedures.
In addition, the IT Steering Committee provides quarterly reports to the Board of Directors regarding any information-technology-related matters that, in the opinion of the IT Steering Committee, should be brought to the attention of the Board of Directors of the Company.
In addition, the IT Steering Committee provides quarterly reports to the ERMC and the Risk Committee regarding any information-technology-related matters that, in the opinion of the IT Steering Committee, should be escalated.
This approach is designed to help identify and mitigate risks related to data breaches or other cybersecurity incidents originating from third-parties in order to better protect our customers’ personally identifiable information and the Company’s assets and data. 40 Table of Contents Risks from Cybersecurity Threats We have not encountered cybersecurity threats or incidents that have materially and adversely affected, or are reasonably likely to materially and adversely affect, the Company’s business strategy, results of operations or financial condition.
This approach is designed to help identify and mitigate risks related to data breaches or other cybersecurity incidents originating from third-parties in order to better protect our customers’ personally identifiable information and the Company’s assets and data.
Removed
In connection with carrying out these oversight responsibilities, the Board of Directors delegated certain matters to the Technology Committee (the “Technology Committee”) of the Board of Directors.
Added
Risks from Cybersecurity Threats We have not encountered cybersecurity threats or incidents that have materially and adversely affected, or are reasonably likely to materially and adversely affect, the Company’s business strategy, results of operations or financial condition.
Removed
The Technology Committee is central to the Board of Directors’ oversight of cybersecurity risks and is responsible for assisting the Board of Directors in its oversight of technology and innovation strategies, as well as developing plans related to information systems and cybersecurity.
Added
Cybersecurity is a significant risk to the enterprise and matters related to information security are regularly featured as part of management’s enterprise risk profile updates to the Risk Committee of the Board of Directors (the “Risk Committee”), which occur at least on a quarterly basis.
Removed
The Technology Committee meets at least quarterly and is composed of three board members with diverse skills and experience, including risk management, technology, and finance, which the Board of Directors considers to be helpful in overseeing cybersecurity risks.
Added
The Chair of the Risk Committee reports to the Board of Directors on the committee’s proceedings and activities, including in connection with the committee’s deliberation on information security matters, on a regular basis.
Removed
The Technology Committee reports quarterly (and more frequently if necessary) to the Board of Directors on the activities of the Technology Committee since its last report, including material developments with respect to the risks from cybersecurity threats.
Added
In addition to regular touchpoints on cyber matters at the Risk Committee, the Board of Directors receives briefings from the Bank’s Chief Information Security Officer (the “CISO”) semi-annually.
Removed
One of the primary responsibilities of the Technology Committee is to review reports submitted by the Chief Information Security Officer (the “CISO”) of the Company, the Company’s Chief Digital Officer (the “CDO”), the CRO, and other officers or employees regarding cybersecurity threats and incidents in order to assist in coordinating prevention and mitigation efforts.
Added
The Board of Directors directly, and through its standing committees (particularly the Risk Committee and the Audit Committee of the Board of Directors) also engage in broader discussions regarding existing and emerging operational and technology risks with members of management across all lines of defense.
Removed
In addition, the Technology Committee conducts an annual review of its own performance and the Company’s cybersecurity-related expenditures to identify areas for potential improvement that could benefit the cybersecurity program of the Company. The Technology Committee also participates in strategic decisions by the Board of Directors by offering recommendations regarding significant investments or initiatives that could impact the Company’s cybersecurity.
Added
To supplement the Board of Directors’ regular engagement regarding the Company’s information security program, the director education program includes cybersecurity-related training opportunities, which assists the directors in staying current on developments and maintaining appropriate knowledge regarding the evolving cybersecurity and threat landscape.
Removed
This involvement is meant to promote the integration of cybersecurity considerations into the broader strategic objectives of the Company by helping the Board of Directors remain aware of the role information security has in the Company’s broader risk management framework.
Removed
The Company’s Network and Cloud Administration is led by the CDO and is also responsible for managing security infrastructure and deploying, configuring, and managing various security solutions, tools and products to assist in safeguarding the Company’s information system infrastructure and operations.

Item 2. Properties

Properties — owned and leased real estate

2 edited+0 added−0 removed1 unchanged
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
Biggest changeAll the leases on these properties expire at various dates through 2041. The Company believes that current facilities at its offices and branches are adequate to meet its present and foreseeable needs.
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.
As of December 31, 2024, 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.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

5 edited+5 added−3 removed4 unchanged
Biggest changeSince 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.
Biggest changeSince 2020, the Bank has been actively working to enhance its processes and procedures so as to more effectively and efficiently address the issues identified in the course of these investigations. On November 21, 2024, Michael Wyse, as Plan Administrator for the Voyager Wind-Down Debtor, filed an action in U.S.
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.
In the opinion of management, as of December 31, 2024, 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. ​
Additional 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.
Additional 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, 41 Table of Contents prospects and/or results of operations.
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.
Item 3. Legal Proceedings There have been investigations by governmental entities concerning a prepaid debit card product program that was offered by the GPG BaaS business. These include investigations involving the Company and the Bank by the Board of Governors of the FRB and certain state authorities, including the NYSDFS.
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.
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 in these investigations.
Removed
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
In the third quarter of 2024, the Company recorded a $10.0 million regulatory reserve in connection with an investigation by the Attorney General of the State of Washington that was resolved in the fourth quarter of 2024.
Removed
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
District Court for the Southern District of New York in which the Bank was named as defendant. The complaint asserts that the Bank is responsible for alleged fraud by Voyager against its own customers and that the Bank is responsible for Voyager’s own alleged offering and sales of unregistered securities.
Removed
The Company reserved the foregoing amounts payable to the FRB and NYSDFS through a regulatory settlement reserve recorded in 2022 and 2023.
Added
The Voyager Wind-Down Debtor was established pursuant to the plan approved by the Bankruptcy Court overseeing the bankruptcy of Voyager Digital Holdings, Inc. (“Voyager”) and its debtor affiliates. The complaint does not allege any specific amount of damages.
Added
The Bank intends to defend the case vigorously, including seeking dismissal based upon what the Bank considers to be faulty premises and meritless allegations. As a result of the bankruptcy, the Bank accounted for and transmitted all funds held in the Bank’s FBO account owed to Voyager customers.
Added
Litigation is inherently uncertain and the Company cannot reasonably estimate the maximum potential exposure or the range of possible loss in association with this matter.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

3 edited+0 added−0 removed2 unchanged
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.
Biggest changeThere were no sales of unregistered securities or repurchases of shares of common stock during the year ended December 31, 2024. ​ 43 Table of Contents Performance Graph The following graph compares, for the period from December 31, 2019 through December 31, 2024, 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, 2018. 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, 2019. 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 26, 2024 was 77.
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 24, 2025 was 63.

Item 7. Management's Discussion & Analysis

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

86 edited+9 added−25 removed28 unchanged
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.
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. ​ 54 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ ​ December 31, 2024 ​ ​ December 31, 2023 ​ December 31, 2022 ​ ​ Average ​ ​ ​ ​ Yield / ​ ​ Average ​ ​ ​ ​ Yield / ​ Average ​ ​ ​ ​ Yield / (dollars in thousands) ​ Balance ​ Interest ​ Rate ​ ​ Balance ​ Interest ​ Rate ​ Balance ​ Interest ​ Rate Assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest-earning assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Loans (1) ​ $ 5,842,570 ​ $ 429,748 7.36 % ​ $ 5,147,653 ​ $ 345,039 6.70 % ​ $ 4,361,412 ​ $ 231,851 5.32 % Available-for-sale securities ​ 576,040 ​ 12,917 2.24 ​ ​ 527,873 ​ 8,865 1.68 ​ ​ 538,425 ​ 6,921 1.29 ​ Held-to-maturity securities ​ 450,048 ​ 8,369 1.86 ​ ​ 499,379 ​ 9,608 1.92 ​ ​ 495,812 ​ 8,682 1.75 ​ Equity investments - non-trading ​ ​ 3,377 ​ ​ 92 ​ 2.73 ​ ​ ​ 2,381 ​ ​ 52 ​ 2.17 ​ ​ ​ 2,339 ​ ​ 32 ​ 1.37 ​ Overnight deposits ​ 269,472 ​ 15,013 5.57 ​ ​ 176,813 ​ 9,319 5.20 ​ ​ 1,156,468 ​ 12,314 1.05 ​ Other interest-earning assets ​ 29,386 ​ 2,240 7.62 ​ ​ 33,061 ​ 2,522 7.63 ​ ​ 16,700 ​ 939 5.62 ​ Total interest-earning assets ​ 7,170,893 ​ 468,379 6.53 ​ ​ 6,387,160 ​ 375,405 5.88 ​ ​ 6,571,156 ​ 260,739 3.97 ​ Non-interest-earning assets ​ 182,936 ​ ​ ​ 169,377 ​ ​ ​ 90,495 ​ ​ Allowance for credit losses ​ (60,384) ​ ​ ​ (49,923) ​ ​ ​ (40,020) ​ ​ Total assets ​ $ 7,293,445 ​ ​ ​ $ 6,506,614 ​ ​ ​ $ 6,621,631 ​ ​ Liabilities and Stockholders' Equity: ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest-bearing liabilities: ​ ​ ​ ​ ​ ​ ​ ​ ​ Money market and savings accounts ​ $ 4,298,166 ​ ​ 195,695 4.55 ​ ​ $ 3,299,427 ​ ​ 127,494 3.86 ​ ​ $ 2,652,502 ​ ​ 28,694 1.08 ​ Certificates of deposit ​ 57,227 ​ 2,318 4.05 ​ ​ 42,926 ​ 1,183 2.76 ​ ​ 59,645 ​ 590 0.99 ​ Total interest-bearing deposits ​ 4,355,393 ​ 198,013 4.55 ​ ​ 3,342,353 ​ 128,677 3.85 ​ ​ 2,712,147 ​ 29,284 1.08 ​ Borrowed funds ​ 336,364 ​ 17,282 5.14 ​ ​ 445,061 ​ 23,892 5.37 ​ ​ 45,878 ​ 2,297 5.00 ​ Total interest-bearing liabilities ​ 4,691,757 ​ 215,295 4.59 ​ ​ 3,787,414 ​ 152,569 4.03 ​ ​ 2,758,025 ​ 31,581 1.15 ​ Non-interest-bearing liabilities: ​ ​ ​ ​ ​ ​ ​ ​ ​ Non-interest-bearing deposits ​ 1,788,170 ​ ​ ​ 1,960,469 ​ ​ ​ 3,223,606 ​ ​ Other non-interest-bearing liabilities ​ 119,364 ​ ​ ​ 137,725 ​ ​ ​ 61,213 ​ ​ Total liabilities ​ 6,599,291 ​ ​ ​ 5,885,608 ​ ​ ​ 6,042,844 ​ ​ Stockholders' equity ​ 694,154 ​ ​ ​ 621,006 ​ ​ ​ 578,787 ​ ​ Total liabilities and equity ​ $ 7,293,445 ​ ​ ​ $ 6,506,614 ​ ​ ​ $ 6,621,631 ​ ​ Net interest income ​ ​ $ 253,084 ​ ​ ​ $ 222,836 ​ ​ ​ $ 229,158 ​ Net interest rate spread (2) ​ ​ 1.94 % ​ ​ 1.85 % ​ ​ 2.82 % Net interest margin (3) ​ ​ 3.53 % ​ ​ 3.49 % ​ ​ 3.49 % Total cost of deposits (4) ​ ​ 3.22 % ​ ​ 2.43 % ​ ​ 0.49 % Total cost of funds (5) ​ ​ 3.32 % ​ ​ ​ 2.65 % ​ ​ ​ 0.53 % (1) Amount includes deferred loan fees and non-performing loans.
Economic forecasts can change significantly over an economic cycle and have a significant level of uncertainty associated with them. The performance of the models is dependent on the variables used in the models being reasonable predictors for the loan portfolio’s performance. However, these variables may not capture all sources of risk within the portfolio.
Economic forecasts can change significantly over an economic cycle and have a significant level of uncertainty associated with them. The performance of these models is dependent on the variables used in the models being reasonable predictors for the loan portfolio’s performance. However, these variables may not capture all sources of risk within the portfolio.
The volume column shows the effects attributable to changes in volume (changes in volume multiplied by prior rate).
The rate column shows the effects attributable to changes in rate (changes in rate multiplied by prior volume). The volume column shows the effects attributable to changes in volume (changes in volume multiplied by prior rate).
These judgments are evaluated through the Company’s review process and revised on a quarterly basis to account for changes in forecasts, facts and circumstances. One of the more significant judgments involved in estimating the Company’s ACL relates to the macroeconomic forecasts used to estimate credit losses and the relative weightings applied to them.
These adjustments are evaluated through the Company’s review process and revised on a quarterly basis to account for changes in forecasts, facts and circumstances. One of the more significant judgments involved in estimating the Company’s ACL relates to the macroeconomic forecasts used to estimate credit losses and the relative weightings applied to them.
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.
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 and elsewhere.
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.
Through its wholly owned bank subsidiary, Metropolitan Commercial Bank, a New York state chartered commercial 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 individuals in the New York metropolitan area.
(2) Determined by subtracting the annualized average cost of total interest-bearing liabilities from the annualized average yield on total interest earning assets. (3) Determined by dividing net interest income by total average interest-earning assets. (4) Determined by dividing interest expense on deposits by total average interest-bearing and non-interest bearing deposits.
(2) Determined by subtracting the average cost of total interest-bearing liabilities from the average yield on total interest earning assets. (3) Determined by dividing net interest income by total average interest-earning assets. (4) Determined by dividing interest expense on deposits by total average interest-bearing and non-interest bearing deposits.
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.
For an analysis of 2023 results compared with 2022 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, 2023 filed with the SEC. The Company’s primary lending products are CRE, including multi-family loans, and C&I loans.
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.
Below is a table of the Company and Bank’s capital ratios for the periods indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Minimum ​ ​ Minimum Ratio ​ ​ Minimum ​ ​ ​ ​ At ​ ​ At ​ ​ Ratio to be ​ ​ Required for ​ ​ Capital ​ ​ ​ ​ December 31, ​ ​ December 31, ​ ​ “Well ​ ​ Capital Adequacy ​ ​ Conservation ​ ​ ​ 2024 ​ ​ 2023 ​ ​ Capitalized” ​ Purposes ​ Buffer (1) ​ The Company ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Tier 1 leverage ratio ​ 10.8 % ​ 10.6 % ​ N/A ​ ​ 4.0 % ​ — % ​ Common equity tier 1 ​ 11.9 % ​ 11.5 % ​ N/A ​ ​ 4.5 % ​ 2.5 % ​ Tier 1 risk-based capital ratio ​ 12.3 % ​ 11.8 % ​ N/A ​ ​ 6.0 % ​ 2.5 % ​ Total risk-based capital ratio ​ 13.3 % ​ 12.8 % ​ N/A ​ ​ 8.0 % ​ 2.5 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ The Bank ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Tier 1 leverage ratio ​ 10.6 % ​ 10.3 % ​ 5.00 % ​ 4.0 % ​ — % ​ Common equity tier 1 ​ 12.0 % ​ 11.5 % ​ 6.50 % ​ 4.5 % ​ 2.5 % ​ Tier 1 risk-based capital ratio ​ 12.0 % ​ 11.5 % ​ 8.00 % ​ 6.0 % ​ 2.5 % ​ Total risk-based capital ratio ​ 13.0 % ​ 12.5 % ​ 10.00 % ​ 8.0 % ​ 2.5 % ​ (1) As of December 31, 2024, the capital conservation buffer for the Company and the Bank was 5.3% and 5.0%, respectively, which exceeded the minimum requirement of 2.5% required to be held by banking institutions.
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.
At December 31, 2024 and 2023, 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.
The ACL for loans is measured on the loan’s amortized cost basis, excluding interest receivable, and is initially recognized upon origination or purchase of the loans and subsequently remeasured on a recurring basis. The ACL is recognized as a contra-asset, and credit loss expense is recorded as a provision for credit losses in the consolidated statements of operation.
The ACL for loans is measured on the loan’s amortized cost basis, excluding interest receivable, and is initially recognized upon origination or purchase of the loans and subsequently remeasured on a recurring basis. The ACL is recognized as a contra-asset, and credit loss expense is recorded as a provision for credit losses in the consolidated statements of operations.
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.
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 may be greatly influenced by the general level of interest rates and changes thereto, economic conditions and competition.
As a result of such examinations, the Company may need to recognize additions to the ACL based on the regulators’ judgments. In estimating the ACL, the Company relies on models and economic forecasts developed by external parties as the primary driver of the ACL. These models and forecasts are based on nationwide data sets.
As a result of such examinations, the Company may need to recognize additions to the ACL based on the regulators’ observations. In estimating the ACL, the Company relies on models and economic forecasts developed by external parties as the primary driver of the ACL. These external models and forecasts are based on nationwide data sets.
The ACL is recognized as a liability, and credit loss expense is recorded as a provision for unfunded loan commitments within the provision for credit losses in the consolidated statements of operation. Upon funding of the loan, any related ACL previously recorded on the unfunded amount is reversed and an ACL is subsequently recognized on the outstanding loan.
The ACL is recognized as a liability, and credit loss expense is recorded as a provision for unfunded loan commitments within the provision for credit losses in the consolidated statements of operations. Upon funding of the loan, any related ACL previously recorded on the unfunded amount is reversed and an ACL is subsequently recognized on the outstanding loan.
This hypothetical analysis is intended to illustrate the impact of adverse changes in the macroeconomic environment at a point in time and is not intended to reflect the full nature and extent of potential future change in the ACL.
This hypothetical analysis is intended to illustrate the impact of adverse changes in the macroeconomic forecasts at a point in time and is not intended to reflect the full nature and extent of potential future change in the ACL.
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.
Because of uncertain economic conditions, the valuations determined from such estimates and appraisals may 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 apparent and can be reasonably estimated.
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.
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, 2024, the Debentures II bore an interest rate of 6.92%. Secured Borrowings The Company has loan participation agreements with certain counterparties.
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.
The Company originated $1.3 billion and $1.4 billion of loans during the years ended December 31, 2024 and 2023, respectively. During the year ended December 31, 2024, the Company purchased $72.8 million of AFS securities. During the year ended December 31, 2023, the Company purchased $46.8 million and $24.6 million of AFS and HTM securities, respectively.
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%.
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, 2024, the Debentures bore an interest rate of 6.77%.
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.
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, 2024 and 2023, cash and cash equivalents totaled $200.3 million and $269.5 million, respectively.
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.
The table below sets forth key asset quality ratios (dollars in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ At or for the year ended December 31, ​ ​ ​ ​ 2024 ​ ​ 2023 ​ ​ 2022 ​ Asset Quality Ratios ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Non-performing loans ​ $ 32,600 ​ ​ $ 51,897 ​ ​ $ 24 ​ Non-performing loans to total loans ​ ​ 0.54 % ​ ​ 0.92 % ​ ​ — % Allowance for credit losses to total loans ​ ​ 1.05 % ​ ​ 1.03 % ​ 0.93 % Non-performing loans to total assets ​ ​ 0.45 % ​ ​ 0.73 % ​ — % Allowance for credit losses to non-performing loans ​ ​ 194.1 % ​ ​ 111.7 % ​ ​ N.M. % Ratio of net charge-offs (recoveries) to average loans outstanding in aggregate ​ ​ — % ​ ​ 0.02 % ​ ​ — % N.M. — not meaningful ​ 50 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.
The Company does not recognize an ACL on accrued interest receivables, consistent with its policy to reverse interest income when interest is 90 days or more past due. The ACL for loans was $58.0 million at December 31, 2023, as compared to $44.9 million at December 31, 2022.
The Company does not recognize an ACL on accrued interest receivable, consistent with its policy to reverse interest income when interest is 90 days or more past due. The ACL for loans was $63.3 million at December 31, 2024, as compared to $58.0 million at December 31, 2023.
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.
Time deposits due within one year as of December 31, 2024 totaled $118.1 million, or 2.0% of total deposits. Total time deposits were $125.4 million, or 2.1% of total deposits, at December 31, 2024. The Company’s primary investing activities are the origination, and to a lesser extent, purchase of loans and securities.
The ACL for loan commitments was $1.2 million at December 31, 2023, as compared to $180,000 at December 31, 2022.
The ACL for loan commitments was $2.0 million at December 31, 2024, as compared to $1.2 million at December 31, 2023.
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.
The following table sets forth the ACL allocated by loan category for the periods indicated (dollars in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ At December 31, ​ ​ ​ 2024 ​ ​ 2023 ​ ​ ​ ​ ​ ​ ​ ​ % 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 ​ $ 42,070 66.5 % 71.3 % ​ ​ 35,635 61.6 % 68.4 % Construction ​ 1,962 3.1 3.4 ​ ​ ​ 1,765 3.0 2.7 ​ Multi-family ​ 7,290 11.5 6.3 ​ ​ 8,215 14.2 8.3 ​ One-to four-family ​ 577 0.9 1.5 ​ ​ 663 1.1 1.7 ​ Commercial and industrial ​ 10,991 17.4 17.3 ​ ​ 11,207 19.3 18.6 ​ Consumer ​ 383 ​ 0.6 ​ 0.2 ​ ​ ​ 480 ​ 0.8 ​ 0.3 ​ Total ​ $ 63,273 100.0 % 100.0 % ​ $ 57,965 100.0 % 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.
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.
The increase in average yields on loans reflects the increase in prevailing market interest rates on existing floating rate loans, as well as higher yields on new loan production. Interest Expense Interest expense increased by $62.7 million to $215.3 million for 2024, as compared to $152.6 million for 2023.
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
At both December 31, 2024 and December 31, 2023, total CRE loans were 346.1% and 368.1% of the Bank’s risk-based capital, respectively. ​ 59 Table of Contents
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.
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 45 Table of Contents income under different assumptions or conditions.
Such qualitative factors may include adjustments to better capture the imprecision associated with the economic forecasts, and the ability of the models to capture emerging risks within the portfolio that may not be represented in the data.
As a result, the Company reviews the results and makes qualitative adjustments to capture potential limitations of the external models as necessary. Such qualitative factors may include adjustments to better capture the imprecision associated with the economic forecasts, and the ability of the models to capture emerging risks within the portfolio that may not be represented in the data.
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.
In addition, as of 52 Table of Contents December 31, 2024, the estimated aggregate amount of the Company’s uninsured time deposits was $26.2 million.
Goodwill The Company performed an impairment assessment and determined that no impairment of goodwill existed as of October 1, 2023. 53 Table of Contents Other Assets and Other Liabilities Other assets were $172.6 million at December 31, 2023, an increase of $24.2 million from December 31, 2022.
Goodwill The Company performed an impairment assessment and determined that no impairment of goodwill existed as of October 1, 2024. 51 Table of Contents Other Assets and Other Liabilities Other assets were $183.3 million at December 31, 2024, an increase of $10.7 million from December 31, 2023.
(5) Determined by dividing interest expense by the sum of total average interest-bearing liabilities and total average non-interest-bearing deposits. ​ ​ ​ The following table presents the effects of changing rates and volumes on net interest income for the periods indicated. The rate column shows the effects attributable to changes in rate (changes in rate multiplied by prior volume).
(5) Determined by dividing interest expense by the sum of total average interest-bearing liabilities and total average non-interest-bearing deposits. ​ ​ ​ 55 Table of Contents The following table presents the effects of changing rates and volumes on net interest income for the periods indicated.
All else equal, the impact of this hypothetical forecast would result in a net increase of approximately 48 Table of Contents $5.8 million, or 10.0%, in the Company’s total ACL for loans and loan commitments as of December 31, 2023.
All else equal, the impact of this hypothetical forecast would result in a net increase of approximately $7.3 million, or 11.6%, in the Company’s total ACL for loans and loan commitments as of December 31, 2024.
(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.
(2) Determined by dividing net interest income by total average interest-earning assets. ​ Discussion of Financial Condition The Company had total assets of $7.3 billion at December 31, 2024, an increase of 3.3% from December 31, 2023. Total cash and cash equivalents were $200.3 million at December 31, 2024, a decrease of $69.2 million, or 25.7%, from December 31, 2023.
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.
Securities classified as AFS, which provide additional sources of liquidity, totaled $482.1 million at December 31, 2024 and $461.2 million at December 31, 2023. At December 31, 2024 there were $750.3 million of securities pledged to support wholesale funding, and to a lesser extent certain other types of deposits, of which $65.5 million were encumbered.
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 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.
At December 31, 2023, 80.5% of the CRE and C&I loan portfolio was concentrated in the New York metropolitan area, mainly New York City, and Florida.
As of December 31, 2024, total loans consisted primarily of CRE, including multi-family mortgage loans, and C&I. At December 31, 2024, 80.5% of the CRE and C&I loan portfolio was concentrated in the New York metropolitan area, mainly New York City, and Florida.
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.
Interest Income Interest income increased by $93.0 million to $468.4 million for 2024, as compared to $375.4 million for 2023. The increase from the prior year was due primarily to the $694.9 million increase in the average balance of loans, and the 66 basis point increase in the average yield for 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 in secured borrowings as of December 31, 2023 and $7.7 million as of December 31, 2022.
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.
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.
At December 31, 2024 and December 31, 2023, 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 agencies.
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.
The effective tax rate for the prior year reflects a discrete tax item related to the exercise of stock options in the third quarter of 2023 and the reversal of the regulatory settlement reserve in that 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.
Deposits Total deposits were $5.7 billion at December 31, 2023, an increase of $459.4 million, or 8.7%, from December 31, 2022.
Deposits Total deposits were $6.0 billion at December 31, 2024, an increase of $245.7 million, or 4.3%, from December 31, 2023.
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.
Provision for Credit Losses – Loans and Loan Commitments The provision for credit losses for loans and loan commitments was $6.3 million for 2024, as compared to $12.3 million for 2023.
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.
Management believes that the ACL for loans and loan commitments is adequate to cover expected credit losses over the life of the loan portfolio. 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.
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.
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 48 Table of Contents cost.
Substantially all loans are secured by specific items of collateral including business and consumer assets, and commercial and residential real estate. Commercial loans are expected to be repaid from cash flows from operations of commercial enterprises.
Substantially all loans are secured by specific items of collateral including business and consumer assets, and commercial and residential real estate. Commercial loans are expected to be repaid from cash flows from operations of commercial enterprises. The Company has developed various deposit gathering strategies, which generate the funding necessary to operate without a large branch network.
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 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. 46 Table of Contents 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, ​ ​ ​ 2024 ​ ​ 2023 ​ ​ 2022 Performance Ratios ​ ​ ​ ​ ​ ​ ​ Return on average assets ​ ​ 0.91 % ​ ​ 1.19 % ​ ​ 0.90 % Return on average equity ​ ​ 9.61 ​ ​ 12.44 ​ ​ 10.27 ​ Net interest spread (1) ​ ​ 1.94 ​ ​ 1.85 ​ ​ 2.82 ​ Net interest margin (2) ​ ​ 3.53 ​ ​ 3.49 ​ ​ 3.49 ​ Average interest-earning assets to average interest-bearing liabilities ​ ​ 152.84 ​ ​ 168.64 ​ ​ 238.26 ​ Non-interest expense/average assets ​ ​ 2.38 ​ ​ 2.02 ​ ​ 2.25 ​ Efficiency ratio ​ ​ 62.68 ​ ​ 52.46 ​ ​ 58.16 ​ Average equity to average total assets ​ ​ 9.52 ​ ​ 9.54 ​ ​ 8.74 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Earnings per Share ​ ​ ​ ​ ​ ​ ​ Basic earnings per common share ​ $ 5.97 ​ ​ $ 6.95 ​ ​ $ 5.42 ​ Diluted earnings per common share ​ ​ 5.93 ​ ​ ​ 6.91 ​ ​ ​ 5.29 ​ ​ ​ ​ ​ ​ ​ ​ ​ (1) Determined by subtracting the weighted average cost of total interest-bearing liabilities from the weighted average yield on total interest-earning assets.
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.
Total cost of funds for 2024 was 332 basis points compared to 265 basis points for 2023, which reflects the relatively high short-term interest rates in the earlier part of the year, the intense competition for deposits, and a shift from non-interest bearing deposits to interest bearing funding primarily related to the GPG exit.
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.
Total deposits were $6.0 billion at December 31, 2024, an increase of $245.7 million, or 4.3%, from December 31, 2023. The Company has loan participation agreements with counterparties. The Company is generally the servicer for these loans.
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 ratio of ACL to total loans was 1.05% at December 31, 2024 compared to 1.03% at December 31, 2023. The increase in the ACL was primarily due to loan growth and a provision related to a single C&I loan.
The increase from the prior year was due primarily to the 212 basis point increase in total cost of funds and the shift from non-interest bearing deposits to interest bearing funding primarily related to the exit from the digital currency business in 2023.
The increase from the prior year was due primarily to the 67 basis point increase in total cost of funds that reflects the relatively high short-term interest rates in the earlier part of the year, the intense competition for deposits, and a shift from non-interest bearing deposits to interest bearing funding primarily related to the GPG exit.
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.
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, ​ ​ ​ 2024 ​ 2023 ​ 2022 ​ ​ Fixed Rate Variable Rate Fixed Rate Variable Rate Fixed Rate Variable Rate Unused commitments ​ $ 108,561 ​ $ 586,821 ​ $ 67,418 ​ $ 527,730 ​ $ 40,685 ​ $ 364,908 ​ Standby and commercial letters of credit ​ 31,920 ​ — ​ 59,532 ​ — ​ 53,947 ​ — ​ ​ ​ $ 140,481 ​ $ 586,821 ​ $ 126,950 ​ $ 527,730 ​ $ 94,632 ​ $ 364,908 ​ ​ The following is a maturity schedule for the Company’s off-balance sheet arrangements at December 31, 2024 (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total 2025 2026 - 2027 2028 - 2029 Thereafter Unused commitments ​ $ 695,382 ​ $ 202,673 ​ $ 470,821 ​ $ 11,363 ​ $ 10,525 Standby and commercial letters of credit ​ 31,920 ​ 11,122 ​ 20,798 ​ — ​ — ​ ​ $ 727,302 ​ $ 213,795 ​ $ 491,619 ​ $ 11,363 ​ $ 10,525 ​ 57 Table of Contents Liquidity and Capital Resources Liquidity is the ability to economically meet current and future financial obligations.
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.
The tables below summarize the Company’s deposit composition by segment for the periods indicated (dollars in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ At December 31, ​ ​ ​ Percentage ​ ​ Percentage ​ ​ ​ ​ ​ of total ​ ​ ​ ​ of total ​ ​ 2024 ​ balance ​ 2023 ​ balance Non-interest-bearing demand deposits ​ $ 1,334,054 22.3 % $ 1,837,874 32.0 % Money market ​ 4,514,579 75.5 ​ 3,856,975 67.3 ​ Savings accounts ​ 8,943 0.1 ​ 7,043 0.1 ​ Time deposits ​ 125,397 2.1 ​ 35,400 0.6 ​ Total ​ $ 5,982,973 100.0 % $ 5,737,292 100.0 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2024 vs. 2023 ​ 2024 vs. 2023 ​ ​ ​ dollar ​ percentage ​ ​ Change Change Non-interest-bearing demand deposits ​ $ (503,820) (27.4) % Money market ​ 657,604 17.0 ​ Savings accounts ​ 1,900 27.0 ​ Time deposits ​ 89,997 254.2 ​ Total ​ $ 245,681 4.3 % ​ The table below summarizes the Company’s average balances and average interest rate paid, by segment, for the periods indicated (dollars in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ ​ ​ ​ Average ​ ​ ​ ​ Average ​ ​ ​ 2024 ​ Rate ​ 2023 ​ Rate ​ Non-interest-bearing demand deposits ​ $ 1,788,170 — % $ 1,960,469 — % Money market ​ 4,288,522 4.56 ​ 3,289,641 3.86 ​ Savings accounts ​ 9,644 2.76 ​ 9,786 0.96 ​ Time deposits ​ 57,227 4.05 ​ 42,926 2.76 ​ Total ​ $ 6,143,563 ​ ​ $ 5,302,822 ​ ​ ​ At December 31, 2024, the estimated 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.
The decision to terminate these financial service partnerships will reduce the Company’s exposure to the heightened, and evolving, regulatory standards related to these activities.
Recent Events In early 2024, following its decision to exit all consumer facing BaaS relationships, the Company decided to exit all GPG BaaS relationships. The decision to terminate these financial service partnerships will reduce the Company’s exposure to the heightened, and evolving, regulatory standards related to these activities.
The Company is focused on organically growing and expanding its position in the New York metropolitan area and growing its business outside of New York through growth of its New York-based customers and their businesses as they expand in other states.
The Company is focused on organically growing its position in the New York metropolitan area. Growth in other markets across the country is generally dependent on the business activities of our New York-based customers.
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 change reflects $92.9 million in paydowns and maturities of AFS and HTM securities, partially offset by $72.8 million of purchases of AFS securities. ​ 47 Table of Contents The following table sets forth the stated maturities and weighted average yields of investment securities, excluding equity securities, at December 31, 2024.
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.
For purposes of 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, ​ ​ 2024 over 2023 ​ 2023 over 2022 ​ ​ Increase (Decrease) ​ Total ​ Increase (Decrease) ​ Total ​ ​ Due to ​ Increase ​ Due to ​ Increase ​ Volume Rate (Decrease) Volume Rate (Decrease) Interest-earning assets: ​ ​ ​ ​ ​ ​ Loans ​ $ 49,214 ​ $ 35,495 ​ $ 84,709 ​ $ 46,252 ​ $ 66,936 ​ $ 113,188 Available-for-sale securities ​ 867 ​ 3,185 ​ 4,052 ​ (138) ​ 2,082 ​ 1,944 Held-to-maturity securities ​ (925) ​ (314) ​ (1,239) ​ 62 ​ 864 ​ 926 Equity investments ​ ​ 25 ​ ​ 15 ​ ​ 40 ​ ​ 1 ​ ​ 19 ​ ​ 20 Overnight deposits ​ ​ 5,009 ​ ​ 685 ​ ​ 5,694 ​ ​ (17,471) ​ ​ 14,476 ​ ​ (2,995) Other interest-earning assets ​ (280) ​ (2) ​ (282) ​ 1,160 ​ 423 ​ 1,583 Total interest-earning assets ​ $ 53,910 ​ $ 39,064 ​ $ 92,974 ​ $ 29,866 ​ $ 84,800 ​ $ 114,666 Interest-bearing liabilities: ​ ​ ​ ​ ​ ​ Money market and savings accounts ​ $ 42,922 ​ $ 25,279 ​ $ 68,201 ​ $ 8,557 ​ $ 90,243 ​ $ 98,800 Certificates of deposit ​ 471 ​ 664 ​ 1,135 ​ (205) ​ 798 ​ 593 Total deposits ​ 43,393 ​ 25,943 ​ 69,336 ​ 8,352 ​ 91,041 ​ 99,393 Borrowed funds ​ (5,623) ​ (987) ​ (6,610) ​ 21,416 ​ 179 ​ 21,595 Total interest-bearing liabilities ​ 37,770 ​ 24,956 ​ 62,726 ​ 29,768 ​ 91,220 ​ 120,988 Change in net interest income ​ $ 16,140 ​ $ 14,108 ​ $ 30,248 ​ $ 98 ​ $ (6,420) ​ $ (6,322) ​ Net interest margin was 3.53% for 2024, as compared to 3.49% for 2023, the 4 basis point increase was primarily driven by an increase in the average balance of loans and the yield on loans, partially offset by an increase in the average balance of deposits and the cost of funds.
The Company owns all of the common stock of Trust I in exchange for contributed capital of $310,000.
Trust Preferred Securities Payable On December 7, 2005, the Company established MetBank Capital Trust I, a Delaware statutory trust (“Trust I”). The Company owns all of the common stock of Trust I in exchange for contributed capital of $310,000.
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 increase was due primarily to an increase of $459.7 million in CRE loans (including owner occupied), partially offset by a $90.8 million decrease in multi-family loans. For the year ended December 31, 2024, the Company’s loan production was $1.3 billion, as compared to $1.4 billion for the year ended December 31, 2023.
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 unrealized losses on AFS securities are primarily due to the changes in market interest rates subsequent to purchase. In addition, the Company does not intend, nor would it be required to sell, these investments until there is a full recovery of the unrealized loss, which may be at maturity.
The Company has no material commitments or demands that are likely to affect its liquidity other than as set forth below.
At December 31, 2024, the Company had cash on deposit with the FRBNY and available secured wholesale funding borrowing capacity of $2.9 billion. The Company has no material commitments or demands that are likely to affect its liquidity other than as set forth below.
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.
Management believes the Company’s most critical accounting policy, which involves the most complex or subjective decisions or assessments, is the allowance for credit losses. Allowance for Credit Losses 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.
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.
At December 31, 2024, the Company’s loan portfolio includes loans to the following industries (dollars in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ At December 31, 2024 ​ ​ ​ ​ ​ ​ % of Total ​ ​ ​ ​ Balance ​ Loans ​ CRE (1) ​ ​ Skilled Nursing Facilities $ 1,900,013 31.4 % Multi-family ​ ​ 376,737 ​ 6.2 ​ Office ​ ​ 411,456 ​ 6.8 ​ Mixed use ​ ​ 315,989 ​ 5.2 ​ Hospitality ​ ​ 327,227 ​ 5.4 ​ Retail ​ ​ 340,743 ​ 5.6 ​ Land ​ ​ 234,327 ​ 3.9 ​ Construction ​ ​ 206,960 ​ 3.4 ​ Warehouse / industrial ​ ​ 173,390 ​ 2.9 ​ Other ​ ​ 614,216 ​ 10.2 ​ Total CRE ​ $ 4,901,058 ​ 81.0 % ​ ​ ​ ​ ​ ​ ​ C&I ​ ​ ​ ​ ​ ​ Finance & Insurance ​ $ 273,494 ​ 4.5 % Skilled Nursing Facilities ​ ​ 238,081 ​ 3.9 ​ Individuals ​ 159,206 ​ 2.6 ​ Healthcare ​ ​ 117,041 ​ 1.9 ​ Services ​ ​ 69,086 ​ 1.1 ​ Wholesale ​ ​ 64,276 ​ 1.1 ​ Manufacturing ​ ​ 28,970 ​ 0.5 ​ Other ​ ​ 95,992 ​ 1.6 ​ Total C&I ​ $ 1,046,146 ​ 17.2 % ​ (1) CRE, not including one-to four-family loans. ​ The largest concentration in the loan portfolio is to the healthcare industry, which amounted to $2.3 billion, or 37.3% of total loans, at December 31, 2024, including $2.1 billion in loans to skilled nursing facilities. 49 Table of Contents ​ The following table sets forth certain information at December 31, 2024 regarding the amount of contractual loan maturities during the periods indicated.
The increase was due primarily to increases in income tax receivables and accrued interest receivables. Other liabilities were $94.0 million at December 31, 2023, a decrease of $30.6 million from December 31, 2022. The decrease was due primarily to a decrease in accrued expenses related to the regulatory settlement reserve recorded in 2022.
The increase was due primarily to increases in lease right of use assets and tax related assets. Other liabilities were $109.9 million at December 31, 2024, an increase of $15.9 million from December 31, 2023. The increase was due primarily to increases in lease liabilities and accounts payable, accrued expenses and other liabilities.
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.
The Company’s primary deposit products are checking, savings, and term deposit accounts, all of which are insured by the FDIC up to the maximum amounts allowed by law. These activities, together with six strategically located banking centers, generate a stable source of deposits to support the growth of our diverse loan portfolio.
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.
There were $7.4 million and $7.6 million in secured borrowings as of December 31, 2024 and 2023, respectively. 53 Table of Contents Discussion of the Results of Operations for the year ended December 31, 2024 Net Income Net income was $66.7 million for 2024, a decrease of $10.6 million as compared to $77.3 million for 2023.
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.
At December 31, 2024, the Company had $210.0 million of Federal funds purchased and $240.0 million of FHLBNY advances. At December 31, 2023, the Company had $99.0 million of Federal funds purchased and $440.0 million of FHLBNY advances.
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 are scheduled maturities of time deposits greater than $250,000 as of December 31, 2024 (in thousands): ​ ​ ​ ​ ​ ​ At December 31, 2024 Three months or less ​ $ 13,934 Over three months through six months ​ 4,924 Over six months through one-year ​ 1,766 Over one-year ​ 5,552 Total ​ $ 26,176 ​ Borrowings To support the balance sheet, the Company may at times utilize FHLB advances or other funding sources.
Treasury securities ​ $ — ​ — % ​ $ 29,895 ​ 1.03 % ​ $ — ​ — % ​ $ — ​ — % ​ $ 29,895 ​ $ 28,483 ​ 1.03 % U.S.
Treasury securities ​ $ 29,938 ​ 1.02 % ​ $ — ​ — % ​ $ — ​ — % ​ $ — ​ — % ​ $ 29,938 ​ $ 29,528 ​ 1.02 % U.S.
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.
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. The Company has established deposit concentration thresholds to avoid the possibility of dependence on any single depositor base for funds.
State and Municipal securities ​ ​ — ​ — ​ ​ ​ — ​ — ​ ​ ​ — ​ — ​ ​ ​ 15,569 ​ 2.00 ​ ​ ​ 15,569 ​ ​ 13,995 ​ 2.00 ​ Residential MBS ​ ​ — — ​ ​ ​ — — ​ ​ ​ 1,112 1.93 ​ ​ ​ 414,194 ​ 1.94 ​ ​ 415,306 ​ 354,750 ​ 1.94 ​ Commercial MBS ​ ​ — — ​ ​ ​ 8,090 1.39 ​ ​ ​ — — ​ ​ ​ — ​ — ​ ​ ​ 8,090 ​ 7,024 ​ 1.39 ​ Total ​ $ — — % ​ $ 37,985 1.10 % ​ $ 1,112 1.93 % ​ $ 429,763 1.95 % ​ $ 468,860 ​ $ 404,252 ​ 1.88 % ​ 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.
State and Municipal securities ​ ​ — ​ — ​ ​ ​ — ​ — ​ ​ ​ — ​ — ​ ​ ​ 15,319 ​ 2.00 ​ ​ ​ 15,319 ​ ​ 13,633 ​ 2.00 ​ Residential MBS ​ ​ — — ​ ​ ​ — — ​ ​ ​ 858 1.98 ​ ​ ​ 374,374 ​ 1.93 ​ ​ 375,232 ​ 316,366 ​ 1.93 ​ Commercial MBS ​ ​ — — ​ ​ ​ 8,068 1.39 ​ ​ ​ — — ​ ​ ​ — ​ — ​ ​ ​ 8,068 ​ 7,192 ​ 1.39 ​ Total ​ $ 29,938 1.02 % ​ $ 8,068 1.39 % ​ $ 858 1.98 % ​ $ 389,693 1.93 % ​ $ 428,557 ​ $ 366,719 ​ 1.86 % ​ There were $750.3 million and $845.7 million of securities pledged to support wholesale funding, and to a lesser extent certain other types of deposits, of which $65.5 million and $60.0 million were encumbered, at December 31, 2024 and 2023, respectively.
Government agency securities ​ $ — — % ​ $ 62,997 0.71 % ​ $ — — % ​ $ 5,000 ​ 1.68 % ​ $ 67,997 ​ $ 61,775 ​ 0.78 % U.S.
Government agency securities ​ $ 38,000 0.52 % ​ $ 24,999 0.88 % ​ $ — — % ​ $ 5,000 ​ 1.68 % ​ $ 67,999 ​ $ 63,752 ​ 0.74 % U.S.
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.
Non-interest-bearing demand deposits were 22.3% of total deposits at December 31, 2024, compared to 32.0% at December 31, 2023.
This increase primarily reflects the effect of a $35.0 million regulatory settlement reserve recorded in 2022, partially offset by a $6.3 decrease in net interest income due to the higher cost of funds and the shift from non-interest bearing deposits to interest bearing funding related to the final exit from the digital currency business in 2023, a $9.7 million increase in compensation and benefits, and a $4.5 million increase in FDIC Assessments.
This decrease primarily reflects the pre-tax $10.0 million regulatory reserve recorded in the third quarter of 2024, the $5.0 million reversal of the reserve in 2023, a $10.9 million increase in compensation and benefits related to the increase in the number and mix of employees, as well as severance related expenses, and a $6.1 million increase in technology costs primarily related to the digital transformation initiatives, partially offset by a $36.3 million increase in net interest income.
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 increase in the number of full-time employees to 291 for 2024, as compared to 275 for 2023 was in line with business growth and our expanding risk management program. The $6.1 million increase in technology costs was due primarily to the digital transformation initiatives.
Loan Portfolio Total loans, net of deferred fees and unamortized costs, were $5.6 billion at December 31, 2023, an increase of 16.2% from December 31, 2022. The increase was due primarily to an increase of $657.0 million in CRE loans (including owner occupied) and $142.8 million in C&I loans.
As a result, no ACL was recognized during the year ended December 31, 2024. Loans Loans are the Company’s primary interest-earning asset class. Loan Portfolio Total loans, net of deferred fees and unamortized costs, were $6.0 billion at December 31, 2024, an increase of 7.3% from December 31, 2023.
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.
The decrease from the prior year was driven primarily by lower GPG revenue as that business was wound down, partially offset by an increase in service charges on deposit accounts. Non-Interest Expense Non-interest expense increased by $42.0 million to $173.6 million for 2024 as compared to $131.5 million for 2023.
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 Company had cash on deposit with the FRBNY and available secured wholesale funding borrowing capacity of $ 2.9 billion and $3.1 billion, respectively, at December 31, 2024 and 2023, respectively. The Federal Reserve established the Bank Term Funding Program (“BTFP”) on March 12, 2023, as a funding source for eligible depository institutions.
The increase in deposits from December 31, 2022, was due primarily to an increase of $749.2 million in retail deposits and $229.1 million in EB-5 Program, Title and Escrow and Charter School deposits, partially offset by the $491.0 million decrease in crypto-related deposits.
The increase in deposits from December 31, 2023, was due primarily to an increase of $934.7 million spread across most of the Bank’s various deposit verticals, partially offset by a $689.0 million decrease in GPG deposits due to the completion of the GPG exit.
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.
This digital transformation initiative is expected to be completed by year-end 2025. 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.

… 40 more changes not shown on this page.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

14 edited+1 added−1 removed8 unchanged
Biggest changeOn 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.
Biggest changeOn occasion, the Company enters into derivative contracts as a part of its asset liability management strategy to help manage its IRR position.
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 net interest income sensitivity to changes in interest rates through a 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.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk General The principal objective of the Company’s asset and liability management function is to evaluate the interest rate risk within the balance sheet and pursue a controlled assumption of interest rate risk while maximizing net income and preserving adequate levels of liquidity and capital.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk General The principal objective of the Company’s asset and liability management function is to evaluate the interest rate risk within the balance sheet and pursue a controlled assumption of IRR while maximizing net income and preserving adequate levels of liquidity and capital.
The 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.
The following table shows the estimated impact on net interest income for the one-year period beginning December 31, 2024 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.
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.
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 IRR on these loans is offset to some degree by the mix and structure of the deposit portfolio.
Fluctuations in interest rates will ultimately impact both the level of income and expense recorded on most assets and liabilities, and the fair value of all interest-earning assets and interest-bearing liabilities, other than those which have a short term to maturity. Interest rate risk is the potential of economic losses due to future interest rate changes.
Fluctuations in interest rates will ultimately impact both the level of income and expense recorded on most assets and liabilities, and the fair value of all interest-earning assets and interest-bearing liabilities, other than those which have a short term to maturity. IRR is the potential for economic losses due to future interest rate changes.
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 instantaneous and sustained parallel downward shift of 200 basis point in interest rates, it would experience a 9.01% 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.
These economic losses can be reflected as a loss of future net interest income and/or a loss of current fair values. The objective is to measure the effect on net interest income and to adjust the balance sheet to minimize the inherent risk while at the same time maximizing income.
These economic losses can be reflected as a loss of future net interest income and/or a loss of current fair values. The objective is to measure the effect on net interest income and to adjust, as deemed appropriate, the balance sheet to manage the inherent risk while at the same time maximizing income.
(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.
(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, 2024, in the event of an immediate upward shift of 200 basis in interest rates, the Company would experience a 12.88% decrease in its EVE.
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.
In the event of an immediate downward shift of 200 basis points in interest rates, the Company would experience a 7.50% increase in its EVE. 61 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 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.
The ALCO meets regularly to review, among other things, the sensitivity of earnings and the market value of assets and liabilities to market interest rate changes and local and national market conditions and market interest rates. That group also reviews liquidity, capital, deposit mix, loan mix and investment positions.
Based upon the nature of its operations, the Company is not subject to FX or commodity price risk.
Based upon the nature of its operations, the Company is not subject to FX or commodity price risk. Interest Rate Risk As a financial institution, the Company’s primary market risk exposure is IRR.
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 Board of Directors bears the ultimate oversight responsibility for the Company’s asset and liability management function. The Company’s ALCO is responsible for assisting the Board of Directors with this oversight. The ALCO has further assigned responsibility for the day-to-day management of IRR to the CFO, or their designee.
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.
The following table indicates the 60 Table of Contents sensitivity of projected annualized net interest income to the interest rate movements described above (dollars in thousands): ​ ​ ​ ​ ​ ​ ​ At December 31, 2024 ​ Change in ​ Net ​ Year 1 ​ Interest ​ Interest ​ Change ​ Rates ​ Income Year 1 ​ from ​ (basis points) Forecast Level ​ +400 ​ $ 214,696 ​ (17.02) % +300 ​ ​ 225,492 ​ (12.85) ​ +200 ​ ​ 236,305 ​ (8.67) ​ +100 ​ ​ 247,890 ​ (4.19) ​ — ​ ​ 258,731 ​ — ​ -100 ​ ​ 270,244 ​ 4.45 ​ -200 ​ ​ 282,055 ​ 9.01 ​ -300 ​ ​ 296,024 ​ 14.41 ​ -400 ​ ​ 313,626 ​ 21.22 ​ ​ The table above indicates that at December 31, 2024, in the event of an instantaneous and sustained parallel upward shift of 200 basis points in interest rates, the Company would experience a 8.67% decrease in 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, 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.
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, 2024 (dollars in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Estimated ​ ​ ​ ​ ​ ​ Increase (Decrease) in ​ ​ ​ ​ ​ ​ EVE ​ Change in ​ ​ ​ ​ ​ ​ ​ ​ Interest Rates ​ Estimated ​ ​ ​ ​ ​ (basis points) (1) EVE (2) Dollars Percent +400 ​ $ 524,002 ​ $ (183,361) ​ (25.92) % +300 ​ ​ 569,851 ​ ​ (137,512) ​ (19.44) ​ +200 ​ ​ 616,284 ​ ​ (91,079) ​ (12.88) ​ +100 ​ ​ 666,702 ​ ​ (40,661) ​ (5.75) ​ — ​ ​ 707,363 ​ ​ — ​ — ​ -100 ​ ​ 739,238 ​ ​ 31,875 ​ 4.51 ​ -200 ​ ​ 760,405 ​ ​ 53,042 ​ 7.50 ​ -300 ​ ​ 774,656 ​ ​ 67,293 ​ 9.51 ​ -400 ​ ​ 767,882 ​ ​ 60,519 ​ 8.56 ​ (1) Assumes an immediate uniform change in interest rates at all maturities.

Other MCB 10-K year-over-year comparisons