Amalgamated Financial Corp

Previous wording

The following is a discussion of our consolidated financial condition as of March 31, 2024, as compared to December 31, 2023, and our results of operations for the three month periods ended March 31, 2024 and March 31, 2023. The purpose of this discussion is to focus on information about our financial condition and results of operations which is not otherwise apparent from our consolidated financial statements and is intended to provide insight into our results of operations and financial condition. This discussion and analysis is best read in conjunction with our unaudited consolidated financial statements and related notes as well as the financial and statistical data appearing elsewhere in this report and our Annual Report on Form 10-K for the year ended December 31, 2023 (the “2023 Annual Report”), filed with the Securities and Exchange Commission on March 7, 2024. Historical results of operations and the percentage relationships among any amounts included, and any trends that may appear, may not indicate results of operations for any future periods.

Current wording

The following is a discussion of our consolidated financial condition as of June 30, 2024, as compared to December 31, 2023, and our results of operations for the three and six month periods ended June 30, 2024 and June 30, 2023. The purpose of this discussion is to focus on information about our financial condition and results of operations which is not otherwise apparent from our consolidated financial statements and is intended to provide insight into our results of operations and financial condition. This discussion and analysis is best read in conjunction with our unaudited consolidated financial statements and related notes as well as the financial and statistical data appearing elsewhere in this report and our Annual Report on Form 10-K for the year ended December 31, 2023 (the “2023 Annual Report”), filed with the Securities and Exchange Commission on March 7, 2024. Historical results of operations and the percentage relationships among any amounts included, and any trends that may appear, may not indicate results of operations for any future periods.

Previous wording

The Company was formed on August 25, 2020 to serve as the holding company for the Bank, effective March 1, 2021 when the Company acquired the common stock of the Bank. The Bank was formed in 1923 as Amalgamated Bank of New York by the Amalgamated Clothing Workers of America, one of the country’s oldest labor unions. Although we are no longer majority union-owned, The Amalgamated Clothing Workers of America’s successor, Workers United, an affiliate of the Service Employees International Union that represents workers in the textile, distribution, food service and gaming industries, remains a significant stockholder, holding approximately 41% of our equity as of March 31, 2024. As of March 31, 2024, our total assets were $8.14 billion, our total loans, net of allowance for credit losses were $4.36 billion, our total deposits were $7.31 billion, and our stockholders' equity was $616.9 million. As of March 31, 2024, our trust business held $34.95 billion in assets under custody and $13.87 billion in assets under management.

Current wording

The Company was formed on August 25, 2020 to serve as the holding company for the Bank, effective March 1, 2021 when the Company acquired the common stock of the Bank. The Bank was formed in 1923 as Amalgamated Bank of New York by the Amalgamated Clothing Workers of America, one of the country’s oldest labor unions. Although we are no longer majority union-owned, The Amalgamated Clothing Workers of America’s successor, Workers United, an affiliate of the Service Employees International Union that represents workers in the textile, distribution, food service and gaming industries, remains a significant stockholder, holding approximately 41% of our equity as of June 30, 2024. As of June 30, 2024, our total assets were $8.25 billion, our total loans, net of allowance for credit losses were $4.41 billion, our total deposits were $7.45 billion, and our stockholders' equity was $646.1 million. As of June 30, 2024, our trust business held $34.60 billion in assets under custody and $14.00 billion in assets under management.

Previous wording

There have been no significant changes to our significant accounting policies, or the estimates made pursuant to those policies as described in our 2023 Annual Report.

Current wording

Other than the addition of accounting policies related to derivatives, there have been no significant changes to our significant accounting policies, or the estimates made pursuant to those policies as described in our 2023 Annual Report.

Previous wording

Net income for the first quarter of 2024 was$27.2 million, or $0.89 per diluted share, compared to$21.3 million, or $0.69 per diluted share, for the first quarter of 2023. The$5.9 million increase was primarily due to a$7.2 million increase in interest income on loans, a$2.9 million increase in interest income on securities, a$2.0 million increase in interest on interest-bearing deposits in banks, a$5.0 million increase in non-interest income, and a$3.4 million decrease in provision for credit losses, offset by an increase in interest expense of$11.2 million primarily related to deposits, and a$3.7 million increase in income tax expense.

Current wording

Net income for the second quarter of 2024 was$26.8 million, or $0.87 per diluted share, compared to$21.6 million, or $0.70 per diluted share, for the second quarter of 2023. The$5.2 million increase was primarily due to a$5.9 million increase in interest income on loans, a$5.5 million increase in interest income on securities, a$1.6 million increase in interest on interest-bearing deposits in banks, a$1.4 million increase in non-interest income, and a$0.7 million decrease in provision for credit losses, offset by a$6.9 million increase in interest expense primarily related to deposits, an increase in non-interest expense of $2.0 million, and a$1.2 million increase in income tax expense.

Previous wording

(2)Includes prepayment penalty income in 1Q2024 and 1Q2023 of $18 and $0 thousand, respectively

Current wording

(2)Includes prepayment penalty income in 2Q2024 and 2Q2023 of $0 and $0 thousand, respectively

Previous wording

Net interest income was$68.0 million for the first quarter of 2024, compared to$67.3 million for the first quarter of 2023. The$0.7 million increase from the first quarter of 2023 was primarily attributable to higher yields and average balances on interest-earning assets, partially offset by higher costs and average balances on interest-bearing liabilities.

Current wording

Net interest income was$69.2 million for the second quarter of 2024, compared to$63.0 million for the second quarter of 2023. The$6.2 million increase, or 9.8% increase from the second quarter of 2023 was primarily attributable to higher yields and average balances on interest-earning assets, partially offset by higher costs and average balances on interest-bearing liabilities.

Previous wording

Net interest spread was 2.24% for the three months ended March 31, 2024, compared to 2.72% for the same period in 2023, a decrease of 48 basis points. Our net interest margin was 3.49% for the first quarter of 2024, a decrease of 10 basis points from 3.59% in the first quarter of 2023. This was largely due to increases in interest-bearing liabilities outpacing increases in interest-earning assets, and increases in the cost of funds outpacing increases in yields.

Current wording

Net interest spread was 2.09% for the three months ended June 30, 2024, compared to 2.33% for the same period in 2023, a decrease of 24 basis points. Our net interest margin was 3.46% for the second quarter of 2024, an increase of 13 basis points from 3.33% in the second quarter of 2023. This was largely due to increases in yields and average balances on interest-bearing assets, offset by increases in cost of funds on interest-bearing liabilities.

Previous wording

The yield on average earning assets was 4.97% for the three months ended March 31, 2024, compared to 4.53% for the same period in 2023, an increase of 44 basis points. This increase was driven primarily by the current rate environment resulting in increased yields across securities and loan portfolios.

Current wording

The yield on average earning assets was 4.94% for the three months ended June 30, 2024, compared to 4.55% for the same period in 2023, an increase of 39 basis points. This increase was driven primarily by the current rate environment resulting in increased yields across securities and loan portfolios.

Previous wording

The average rate on interest-bearing liabilities was 2.73% for the three months ended March 31, 2024, an increase of 92 basis points from the same period in 2023, which was primarily due to the rising rate environment that led to an increase in interest expense paid for deposits, particularly in savings, NOW, and money market deposits and time deposits. Non-interest-bearing deposits represented 44% of average deposits for the three months ended March 31, 2024, compared to 48% for the three months ended March 31, 2023.

Current wording

The average rate on interest-bearing liabilities was 2.85% for the three months ended June 30, 2024, an increase of 63 basis points from the same period in 2023, which was primarily due to the rising rate environment that led to an increase in interest expense paid for deposits, particularly in savings, NOW, and money market deposits and time deposits. Non-interest-bearing deposits represented 45.3% of average deposits for the three months ended June 30, 2024, compared to 44.7% for the three months ended June 30, 2023.

Previous wording

Provision for credit losses totaled an expense of $1.6 million for the first quarter of 2024 compared to an expense of $5.0 million for the same period in 2023. The provision for credit losses on loans totaled an expense of $0.9 million, the provision for credit losses on securities totaled a recovery of $11 thousand, and the provision for credit losses on off-balance sheet credit exposures was an expense of $0.7 million. Overall, the provision expense on loans was primarily driven by increases in specific loan reserves, charge-offs on the solar loan portfolio, and an increase in reserve for multifamily loans to reflect the current market repricing conditions, offset by improvements in macro-economic forecasts used in the CECL model.

Current wording

Provision for credit losses totaled an expense of $3.2 million for the second quarter of 2024 compared to an expense of $3.9 million for the same period in 2023. The provision for credit losses on loans totaled an expense of $1.8 million, the provision for credit losses on securities was a recovery of $2 thousand, and the provision for credit losses on off-balance sheet credit exposures was an expense of $1.4 million. Overall, the provision expense on loans was primarily driven by charge-offs on the solar loan portfolio and an increase in reserve for solar loans given the level of continued losses, offset by improvements in macro-economic forecasts used in the CECL model.

Previous wording

Our non-interest income includes Trust Department fees, which consist of fees received in connection with investment advisory and custodial management services of investment accounts, service fees charged on deposit accounts, income on BOLI, gain or loss on sales of securities, sales of loans, income from equity method investments, and other income.

Current wording

Our non-interest income includes Trust Department fees, which consist of fees received in connection with investment advisory and custodial management services of investment accounts, service fees charged on deposit accounts, income on BOLI, gain or loss on sales of securities, gain or loss on sales of loans, income or losses from equity method investments, and other income.

Previous wording

Non-interest income was$10.2 million for the first quarter of 2024, compared to$5.2 million for the first quarter in 2023. The increase of $5.0 million in thefirst quarter of 2024 compared to the corresponding quarter in 2023 was primarily due to a $3.6 million increase in service charges on deposit accounts primarily due to increases in ICS One-Way Sell income, and an increase in income from equity investments of $1.9 million. This was partially offset by a decrease in other income of$0.7 million primarily attributed to a gain on the repurchase of subordinated debt in the first quarter of 2023.

Current wording

Non-interest income was$9.3 million for the second quarter of 2024, compared to$7.9 million for the second quarter in 2023. The increase of $1.4 million in thesecond quarter of 2024 compared to the corresponding quarter in 2023 was primarily due to a $5.9 million increase in service charges on deposit accounts primarily due to increases in ICS One-Way Sell income, partially offset by a $2.4 million increase in losses on sale of securities and a decrease in income from equity investments of $2.2 million.

Previous wording

Trust Department fees consist of fees we receive in connection with our investment advisory and custodial management services of investment accounts. Our Trust Department fees were $3.9 million in the first quarter of 2024, compared to $3.9 million in the same period in 2023.

Current wording

Trust Department fees consist of fees we receive in connection with our investment advisory and custodial management services of investment accounts. Our Trust Department fees were $3.7 million in the second quarter of 2024, compared to $4.0 million in the same period in 2023.

Previous wording

Non-interest expense for the first quarter of 2024 was $38.2 million, a decrease of $0.4 million from $38.6 million for the first quarter of 2023. The decrease was driven by a $0.5 million decrease in occupancy and depreciation due to a gain from settlement of a lease termination, a $0.4 million decrease in advertising and promotion expense, and a $0.3 million decrease in other expense, offset by $0.4 million increase in federal deposit insurance premiums expense, by a $0.3 million increase in compensation expense, and a $0.2 million increase in professional fees.

Current wording

Non-interest expense for the six months ended June 30, 2024 was $77.7 million, an increase of $1.5 million from $76.2 million for six months ended June 30, 2023. The increase was driven by a $2.1 million increase in compensation and benefits expense related to an expected increase in compensation due to increased headcount, corporate incentive payments, and temporary personnel costs, and a $0.8 million increase in data processing expense. This was partially offset by a $0.5 million decrease in occupancy and depreciation expense due to a gain from settlement of a lease termination, a $0.4 million decrease in other expense, a $0.3 million decrease in professional fees and a $0.2 million decrease in office maintenance and depreciation expense.

Previous wording

Our total assets were $8.14 billion at March 31, 2024, compared to $7.97 billion at December 31, 2023. Notable changes within individual balance sheet line items include a $81.2 million increase in resell agreements, an increase in cash of $64.6 million and a $22.1 million increase in securities, a $13.8 million increase in loans receivable, net, a $293.8 million increase in deposits, and a $165.3 million decrease in other borrowings.

Current wording

Our total assets were $8.25 billion at June 30, 2024, compared to $7.97 billion at December 31, 2023. Notable changes within individual balance sheet line items include a $437.0 million increase in deposits, a $174.9 million increase in securities, a $87.5 million increase in resell agreements, a $62.8 million increase in loans receivable, net, a $230.0 million decrease in other borrowings, and a decrease in cash of $32.6 million.

Previous wording

At March 31, 2024 and December 31, 2023, we had available for sale securities of $1.53 billion and $1.48 billion, respectively.

Current wording

At June 30, 2024 and December 31, 2023, we had available for sale securities of $1.69 billion and $1.48 billion, respectively.

Previous wording

At March 31, 2024, our held-to-maturity securities portfolio primarily consisted of PACE assessments, tax-exempt municipal securities, GSE commercial and residential certificates and other debt. We carry these securities at amortized cost. We had held-to-maturity securities of $1.67 billion at March 31, 2024, and $1.70 billion at December 31, 2023.

Current wording

At June 30, 2024, our held-to-maturity securities portfolio primarily consisted of PACE assessments, tax-exempt municipal securities, GSE commercial and residential certificates and other debt. We carry these securities at amortized cost. We had held-to-maturity securities of $1.66 billion at June 30, 2024, and $1.70 billion at December 31, 2023.

Previous wording

Management measures expected credit losses on held-to-maturity debt securities on a collective basis by major security type. Accrued interest receivable on held-to-maturity debt securities totaled $18.5 million at March 31, 2024 and $22.5 million at December 31, 2023, and is excluded from the estimate of credit losses, as accrued interest receivable is reversed for securities placed on nonaccrual status. The allowance for credit losses for held-to-maturity securities at March 31, 2024 was $0.7 million compared to $0.7 million at December 31, 2023. The provision for credit losses for held-to-maturity securities was a recovery of $11 thousand for the three months ended March 31, 2024, compared to an expense of $45 thousand for the three months ended March 31, 2023.

Current wording

Management measures expected credit losses on held-to-maturity debt securities on a collective basis by major security type. Accrued interest receivable on held-to-maturity debt securities totaled $18.1 million at June 30, 2024 and $22.5 million at December 31, 2023, and is excluded from the estimate of credit losses, as accrued interest receivable is reversed for securities placed on nonaccrual status. The allowance for credit losses for held-to-maturity securities at June 30, 2024 was $0.7 million compared to $0.7 million at December 31, 2023. The provision for credit losses for held-to-maturity securities was a recovery of $2.0 thousand and $13.0 thousand for the three and six months ended June 30, 2024, compared to an expense of $20.0 thousand and $65.0 thousand for the three and six months ended June 30, 2023, respectfully.

Previous wording

Our securities portfolio primarily consists of high quality investments in mortgage-backed securities to government sponsored entities and other asset-backed securities and PACE assessments. All non-agency securities, composed of non-agency commercial mortgage-backed securities, collateralized loan obligations, non-agency mortgage-backed securities, and asset-backed securities, are senior tranche and approximately 86% carry AAA credit ratings and 13% carry A credit ratings or higher. Approximately 50% of this portfolio is classified as “available for sale.”

Current wording

Our securities portfolio primarily consists of high quality investments in mortgage-backed securities to government sponsored entities and other asset-backed securities and PACE assessments. All non-agency securities, composed of non-agency commercial mortgage-backed securities, collateralized loan obligations, non-agency mortgage-backed securities, and asset-backed securities, are senior tranche and approximately 87% carry AAA credit ratings and 13% carry A credit ratings or higher. Approximately 50% of this portfolio is classified as “available for sale.”

Previous wording

Lending-related income is the most important component of our net interest income and is the main driver of our results of operations. Total loans, net of deferred origination fees and allowance for credit losses, were $4.36 billion as of March 31, 2024 compared to $4.35 billion as of December 31, 2023. Within our commercial loan portfolio, our primary focus has been on C&I, multifamily and CRE lending. Within our retail loan portfolio, our primary focus has been on residential 1-4 family (1st lien) mortgages. We intend to focus any organic growth in our loan portfolio on these lending areas as part of our strategic plan.

Current wording

Lending-related income is the most important component of our net interest income and is the main driver of our results of operations. Total loans, net of deferred origination fees and allowance for credit losses, were $4.41 billion as of June 30, 2024 compared to $4.35 billion as of December 31, 2023. Within our commercial loan portfolio, our primary focus has been on C&I, multifamily and CRE lending. Within our retail loan portfolio, our primary focus has been on residential 1-4 family (1st lien) mortgages. We intend to focus any organic growth in our loan portfolio on these lending areas as part of our strategic plan.

Previous wording

Our commercial loan portfolio comprised 58.0% of our total loan portfolio at March 31, 2024 and 57.5% of our total loan portfolio at December 31, 2023. The major categories of our commercial loan portfolio are discussed below:

Current wording

Our commercial loan portfolio comprised 59.0% of our total loan portfolio at June 30, 2024 and 57.5% of our total loan portfolio at December 31, 2023. The major categories of our commercial loan portfolio are discussed below:

Previous wording

C&I. Our C&I loans are generally made to small and medium-sized manufacturers and wholesale, retail and service-based businesses to provide either working capital or to finance major capital expenditures. In addition, our C&I portfolio includes commercial solar financings; for many of these we are the sole lender, while for some others we are a participant in a syndicated credit facility led by another institution. The primary source of repayment for C&I loans is generally operating cash flows of the business or project. We also seek to minimize risks related to these loans by requiring such loans to be collateralized by various business assets (including inventory, equipment, accounts receivable, and the assignment of contracts that generate cash flow). The average size of our C&I loans at March 31, 2024 by exposure was $4.1 million with a median size of $1.0 million. We have shifted our lending strategy to focus on developing full customer relationships including deposits, cash management, and lending. The businesses that we focus on are generally mission aligned with our core values, including organic and natural products, sustainable companies, clean energy, nonprofits, and B Corporations TM.

Current wording

C&I. Our C&I loans are generally made to small and medium-sized manufacturers and wholesale, retail and service-based businesses to provide either working capital or to finance major capital expenditures. In addition, our C&I portfolio includes commercial solar financings; for many of these we are the sole lender, while for some others we are a participant in a syndicated credit facility led by another institution. The primary source of repayment for C&I loans is generally operating cash flows of the business or project. We also seek to minimize risks related to these loans by requiring such loans to be collateralized by various business assets (including inventory, equipment, accounts receivable, and the assignment of contracts that generate cash flow). The average size of our C&I loans at June 30, 2024 by exposure was $4.0 million with a median size of $0.6 million. We have shifted our lending strategy to focus on developing full customer relationships including deposits, cash management, and lending. The businesses that we focus on are generally mission aligned with our core values, including organic and natural products, sustainable companies, clean energy, nonprofits, and B Corporations TM.

Previous wording

Our C&I loans totaled $1.01 billion at March 31, 2024, which comprised 22.9% of our total loan portfolio. During the three months ended March 31, 2024, the C&I loan portfolio increased by 0.3% from $1.01 billion at December 31, 2023.

Current wording

Our C&I loans totaled $1.01 billion at June 30, 2024, which comprised 22.6% of our total loan portfolio. During the six months ended June 30, 2024, the C&I loan portfolio was largely unchanged from $1.01 billion at December 31, 2023.

Previous wording

Multifamily. Our multifamily loans are generally used to purchase or refinance apartment buildings of five units or more, which collateralize the loan, in major metropolitan areas within our markets. Multifamily loans have 70% of their exposure in New York City. Our multifamily loans have been underwritten under stringent guidelines on loan-to-value and debt service coverage ratios that are designed to mitigate credit and concentration risk in this loan category. The average current LTV of our multifamily loans is approximately 55%.

Current wording

Multifamily. Our multifamily loans are generally used to purchase or refinance apartment buildings of five units or more, which collateralize the loan, in major metropolitan areas within our markets. Multifamily loans have 65% of their exposure in New York City. Our multifamily loans have been underwritten under stringent guidelines on loan-to-value and debt service coverage ratios that are designed to mitigate credit and concentration risk in this loan category. The average current LTV of our multifamily loans is approximately 55%.

Previous wording

Our multifamily loans totaled $1.18 billion at March 31, 2024, which comprised 26.6% of our total loan portfolio. During the three months ended March 31, 2024, the multifamily loan portfolio increased by 2.4% from $1.15 billion at December 31, 2023.

Current wording

Our multifamily loans totaled $1.23 billion at June 30, 2024, which comprised 27.5% of our total loan portfolio. During the six months ended June 30, 2024, the multifamily loan portfolio increased by 7.2% from $1.15 billion at December 31, 2023.

Previous wording

CRE. Our CRE loans are used to purchase or refinance office buildings, retail centers, industrial facilities, medical facilities and mixed-used buildings. Our CRE loans totaled $353.6 million at March 31, 2024, which comprised 8.0% of our total loan portfolio. During the three months ended March 31, 2024, the CRE loan portfolio was largely unchanged from $353.4 million at December 31, 2023.

Current wording

CRE. Our CRE loans are used to purchase or refinance office buildings, retail centers, industrial facilities, medical facilities and mixed-used buildings. Our CRE loans totaled $377.5 million at June 30, 2024, which comprised 8.4% of our total loan portfolio. During the six months ended June 30, 2024, the CRE loan portfolio increased by 6.8% from $353.4 million at December 31, 2023.

Previous wording

Our retail loan portfolio comprised 42.0% of our total loan portfolio at March 31, 2024 and 42.5% of our loan portfolio at December 31, 2023. The major categories of our retail loan portfolio are discussed below.

Current wording

Our retail loan portfolio comprised 41.0% of our total loan portfolio at June 30, 2024 and 42.5% of our loan portfolio at December 31, 2023. The major categories of our retail loan portfolio are discussed below.

Previous wording

Residential real estate lending. Our residential 1-4 family mortgage loans are residential mortgages that are primarily secured by single-family homes, which can be owner occupied or investor owned. These loans are either originated by our loan officers or purchased from other originators with the servicing generally retained by such originators. Our residential real estate lending portfolio is 99% first mortgage loans and 1% second mortgage loans. As of March 31, 2024, approximately 80% of our residential 1-4 family mortgage loans were either originated by our loan officers since 2012 or were acquired in our acquisition of New Resource Bank, and 20% were purchased or acquired. Our residential real estate lending loans totaled $1.42 billion at March 31, 2024, which comprised 76.4% of our retail loan portfolio and 32.1% of our total loan portfolio. As of March 31, 2024, our residential real estate lending loans decreased by 0.4% from $1.43 billion at December 31, 2023.

Current wording

Residential real estate lending. Our residential 1-4 family mortgage loans are residential mortgages that are primarily secured by single-family homes, which can be owner occupied or investor owned. These loans are either originated by our loan officers or purchased from other originators with the servicing generally retained by such originators. Our residential real estate lending portfolio is 99% first mortgage loans and 1% second mortgage loans. As of June 30, 2024, approximately 80% of our residential 1-4 family mortgage loans were either originated by our loan officers or were acquired in our acquisition of New Resource Bank, and 20% were purchased or acquired. Our residential real estate lending loans totaled $1.40 billion at June 30, 2024, which comprised 76.8% of our retail loan portfolio and 31.4% of our total loan portfolio. As of June 30, 2024, our residential real estate lending loans decreased by 1.5% from $1.43 billion at December 31, 2023.

Previous wording

Consumer solar. Our consumer solar portfolio is comprised of purchased residential solar loans, secured by Uniform Commercial Code ("UCC") financing statements. Our consumer solar loans totaled $398.5 million at March 31, 2024, which comprised 9.0% of our total loan portfolio, compared to $408.3 million, or 9.3% of our total loan portfolio, at December 31, 2023.

Current wording

Consumer solar. Our consumer solar portfolio is comprised of purchased residential solar loans, secured by Uniform Commercial Code ("UCC") financing statements. Our consumer solar loans totaled $385.6 million at June 30, 2024, which comprised 8.6% of our total loan portfolio, compared to $408.3 million, or 9.3% of our total loan portfolio, at December 31, 2023.

Previous wording

Consumer and other. Our consumer and other portfolio is comprised of purchased student loans, unsecured consumer loans and overdraft lines. Our consumer and other loans totaled $39.5 million at March 31, 2024, which comprised 0.9% of our total loan portfolio, compared to $41.3 million, or 0.9% of our total loan portfolio, at December 31, 2023.

Current wording

Consumer and other. Our consumer and other portfolio is comprised of purchased student loans, unsecured consumer loans and overdraft lines. Our consumer and other loans totaled $38.0 million at June 30, 2024, which comprised 1.0% of our total loan portfolio, compared to $41.3 million, or 0.9% of our total loan portfolio, at December 31, 2023.

Previous wording

The following tables presents, by loan type, the changes in the allowance for credit losses for the three months ended March 31, 2024 and March 31, 2023:

Current wording

The following tables presents, by loan type, the changes in the allowance for credit losses for the three and six months ended June 30, 2024 and June 30, 2023:

Previous wording

During the quarter, the allowance for credit losses on loans decreased$1.3 million to$64.4 million at March 31, 2024 from$65.7 millionat December 31, 2023. The ratio of allowance to total loans was 1.46% at March 31, 2024 and 1.49% at December 31, 2023.

Current wording

During the quarter, the allowance for credit losses on loans decreased$1.0 million to$63.4 million at June 30, 2024 from$64.4 millionat March 31, 2024. The ratio of allowance to total loans was 1.42% at June 30, 2024 and 1.46% at March 31, 2024.

Previous wording

Nonperforming assets totaled $34.0 million, or 0.42% of period-end total assets at March 31, 2024, a decrease of $0.2 million, compared with $34.2 million, or 0.43% of period-end total assets at December 31, 2023. The decrease in non-performing assets at March 31, 2024 compared to December 31, 2023 assets was primarily driven by a $2.5 million decrease in residential real estate nonaccrual loans, offset by a $1.2 million increase in commercial and industrial nonaccrual loans, and a $1.2 million increase in consumer solar nonaccrual loans.

Current wording

Nonperforming assets totaled $35.7 million, or 0.43% of period-end total assets at June 30, 2024, an increase of $1.5 million, compared with $34.2 million, or 0.43% of period-end total assets at December 31, 2023. The increase in non-performing assets at June 30, 2024 compared to December 31, 2023 assets was primarily driven by a $0.9 million and a $0.6 million increase in residential real estate nonaccrual loans and commercial and industrial nonaccrual loans, respectively.

Previous wording

Potential problem loans are loans which management has doubts as to the ability of the borrowers to comply with the present loan repayment terms. Potential problem loans are performing loans and include our special mention and substandard-accruing commercial loans and/or loans 30-89 days past due. Potential problem loans are not included in the nonperforming assets table above and totaled $88.4 million, or 1.1% of total assets, at March 31, 2024, as follows: $67.9 million are commercial loans currently in workout that management expects will be rehabilitated; $14.9 million are residential real estate loans at 30-89 days delinquent, and $5.6 million are consumer loans at 30-89 days delinquent.

Current wording

Potential problem loans are loans which management has doubts as to the ability of the borrowers to comply with the present loan repayment terms. Potential problem loans are performing loans and include our special mention and substandard-accruing commercial loans and/or retail loans 30-89 days past due. Potential problem loans are not included in the nonperforming assets table above and totaled $69.6 million, or 0.8% of total assets, at June 30, 2024, as follows: $59.8 million are commercial loans currently in workout that management expects will be rehabilitated; $5.1 million are residential real estate loans at 30-89 days delinquent, and $4.7 million are consumer loans at 30-89 days delinquent.

Previous wording

As of March 31, 2024, we have entered into $131.2 million of short term investments of resell agreements backed by residential first-lien mortgage loans, with a weighted interest rate of 6.68%. As of December 31, 2023, we have entered into $50.0 million of short term investments of resell agreements backed by residential first-lien mortgage loans, with a weighted interest rate of 6.34%.

Current wording

As of June 30, 2024, we have entered into $137.5 million of short term investments of resell agreements backed by residential first-lien mortgage loans, with a weighted average interest rate of 6.61%. As of December 31, 2023, we have entered into $50.0 million of short term investments of resell agreements backed by residential first-lien mortgage loans, with a weighted interest rate of 6.34%.

Previous wording

We had a deferred tax asset, net of deferred tax liabilities, of $49.2 million at March 31, 2024 and $56.6 million at December 31, 2023. As of March 31, 2024, our deferred tax assets were fully realizable with no valuation allowance held against the balance. Our management concluded that it was more-likely-than-not that the entire amount will be realized.

Current wording

We had a deferred tax asset, net of deferred tax liabilities, of $47.7 million at June 30, 2024 and $56.6 million at December 31, 2023. As of June 30, 2024, our deferred tax assets were fully realizable with no valuation allowance held against the balance. Our management concluded that it was more-likely-than-not that the entire amount will be realized.

Previous wording

Deposits represent our primary source of funds. We are focused on growing our core deposits through relationship-based banking with our business and consumer clients. Total deposits were $7.31 billion at March 31, 2024, compared to $7.01 billion at December 31, 2023. We believe that our strong deposit franchise is attributable to our mission-based strategy of developing and maintaining relationships with our clients who share similar values and through maintaining a high level of service.

Current wording

Deposits represent our primary source of funds. We are focused on growing our core deposits through relationship-based banking with our business and consumer clients. Total deposits were $7.45 billion at June 30, 2024, compared to $7.01 billion at December 31, 2023. We believe that our strong deposit franchise is attributable to our mission-based strategy of developing and maintaining relationships with our clients who share similar values and through maintaining a high level of service.

Previous wording

We gather deposits through each of our three branch locations across New York City, our one branch in Washington, D.C., our one branch in San Francisco and through the efforts of our commercial banking team including our Boston group which focuses nationally on business growth. Through our branch network, online, mobile and direct banking channels, we offer a variety of deposit products including demand deposit accounts, money market deposits, NOW accounts, savings and certificates of deposit, Insured Cash Sweep accounts, Certificate of Deposit Account Registry Service accounts, and brokered certificates of deposit. We bank politically active customers, such as campaigns, PACs ("political action committees"), and state and national party committees, which we refer to as political deposits. These deposits exhibit seasonality based on election cycles. As of March 31, 2024 and December 31, 2023, we had approximately $1.44 billion and $1.19 billion, respectively, in political deposits which are primarily in demand deposits.

Current wording

We gather deposits through each of our three branch locations across New York City, our one branch in Washington, D.C., our one branch in San Francisco and through the efforts of our commercial banking team including our Boston group which focuses nationally on business growth. Through our branch network, online, mobile and direct banking channels, we offer a variety of deposit products including demand deposit accounts, money market deposits, NOW accounts, savings and certificates of deposit, Insured Cash Sweep accounts, Certificate of Deposit Account Registry Service accounts, and brokered certificates of deposit. We bank politically active customers, such as campaigns, PACs ("political action committees"), and state and national party committees, which we refer to as political deposits. These deposits exhibit seasonality based on election cycles. As of June 30, 2024 and December 31, 2023, we had approximately $1.73 billion and $1.19 billion, respectively, in political deposits on- and off-balance sheet which are primarily in demand deposits.

Previous wording

Additionally, we utilize a custodial deposit transference structure through the IntraFi ICS ("Insured Cash Sweep") network for certain deposit programs whereby we, acting as custodian of account holder funds, places a portion of such account holder funds that are not needed to support near term settlement at one or more third-party banks insured by the FDIC (each, a "Program Bank"). Accounts opened at Program Banks are established in our name as custodian, for the benefit of our account holders. We remain the issuer of all accounts under the applicable account holder agreements and have sole custodial control and transaction authority over the accounts opened at Program Banks. We maintain the records of each account holder's deposits maintained at Program Banks. These off-balance sheet deposits totaled $456.8 million at March 31, 2024 and $303.1 million at December 31, 2023. In return for record keeping services at Program Banks, the Company receives a servicing fee. For the three months ended March 31, 2024, the Company recognized $2.9 million in servicing fee income compared to $148 thousand for the three months ended December 31, 2023.

Current wording

Additionally, we utilize a custodial deposit transference structure through the IntraFi ICS ("Insured Cash Sweep") network for certain deposit programs whereby we, acting as custodian of account holder funds, places a portion of such account holder funds that are not needed to support near term settlement at one or more third-party banks insured by the FDIC (each, a "Program Bank"). Accounts opened at Program Banks are established in our name as custodian, for the benefit of our account holders. We remain the issuer of all accounts under the applicable account holder agreements and have sole custodial control and transaction authority over the accounts opened at Program Banks. We maintain the records of each account holder's deposits maintained at Program Banks. These off-balance sheet deposits totaled $1.06 billion at June 30, 2024 and $303.1 million at December 31, 2023. In return for record keeping services at Program Banks, the Company receives a servicing fee. For the three and six months ended June 30, 2024, the Company recognized $4.9 million and $9.0 million in servicing fee income. No servicing fee income was recognized during the three and six months ended June 30, 2023.

Previous wording

Total estimated uninsured deposits at March 31, 2024 and December 31, 2023 were $4.07 billion and $4.04 billion, respectively.

Current wording

Total estimated uninsured deposits at June 30, 2024 and December 31, 2023 were $4.49 billion and $4.04 billion, respectively.