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Amalgamated Financial
AMAL
#5629
Rank
$1.24 B
Marketcap
๐Ÿ‡บ๐Ÿ‡ธ United States
Country
$41.50
Share price
2.70%
Change (1 day)
61.98%
Change (1 year)
๐Ÿฆ Banks๐Ÿ’ณ Financial services
Categories
  1. Amalgamated Financial
  2. Quarterly Reports (10-Q)
  3. Financial Year FY2023 Q1

Amalgamated Financial - 10-Q quarterly report FY2023 Q1


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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2023
OR
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For transition period from          to          
Commission File Number: 001-40136
Amalgamated Financial Corp.
(Exact name of registrant as specified in its charter)
Delaware85-2757101
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
275 Seventh Avenue, New York, NY     10001
(Address of principal executive offices) (Zip Code)
(212) 255-6200
(Registrant’s telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value $0.01 per shareAMALThe Nasdaq Global Market
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒        No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b–2 of the Exchange Act.
Large accelerated filer
☐
Accelerated filer
☒
Non-accelerated filer
☐
Smaller reporting company
☐
Emerging growth company
☒
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Exchange Act Rule 12b-2). Yes ☐        No ☒
As of May 9, 2023, the registrant had 30,611,847 shares of common stock outstanding at $0.01 par value per share.


TABLE OF CONTENTS
Page
ii
PART I – FINANCIAL INFORMATION
ITEM 1.
Financial Statements (unaudited)
Consolidated Statements of Financial Condition as of March 31, 2023 and December 31, 2022
1
Consolidated Statements of Income for the Three Months Ended March 31, 2023 and 2022
2
Consolidated Statements of Comprehensive Income for the Three Months Ended March 31, 2023 and 2022
3
Consolidated Statements of Changes in Stockholders’ Equity for the Three Months Ended March 31, 2023 and 2022
4
Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2023 and 2022
6
Notes to Consolidated Statements
8
43
66
66
PART II - OTHER INFORMATION
67
67
ITEM 2.
Unregistered Sales of Equity Securities and Use of Proceeds
68
69
70
i




CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
Unless the context indicates otherwise, references to “we,” “us,” “our” and the “Company” refer to Amalgamated Financial Corp. and Amalgamated Bank. References to the “Bank” refer to Amalgamated Bank.

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements are not statements of historical or current fact nor are they assurances of future performance and generally can be identified by the use of forward-looking terminology, such as “may,” “will,” “anticipate,” “aspire,” “intend,” “could,” “should,” “would,” “believe,” “project,” “plan,” “goal,” “target,” “potential,” “pro-forma,” “seek,” “contemplate,” “expect,” “estimate,” and “continue,” or the negative thereof as well as other similar words and expressions of the future. These forward-looking statements include, but are not limited to, statements related to our projected growth, anticipated future financial performance, and management’s long-term performance goals, as well as statements relating to the anticipated effects on results of operations and financial condition from expected developments or events, or business and growth strategies, including anticipated internal growth.
Forward-looking statements are subject to risks, uncertainties and assumptions that are difficult to predict as to timing, extent, likelihood and degree of occurrence, which could cause our actual results to differ materially from those anticipated in or by such statements. Potential risks and uncertainties include, but are not limited to, the following:
•uncertain conditions in the banking industry and in national, regional and local economies in our core markets, which may have an adverse impact on our business, operations and financial performance;
•deterioration in the financial condition of borrowers resulting in significant increases in credit losses on loans and provisions for those losses;
•deposit outflows and subsequent declines in liquidity caused by factors that could include lack of confidence in the banking system, a deterioration in market conditions or the financial condition of depositors;
•changes in our deposits, including an increase in uninsured deposits;
•unfavorable conditions in the capital markets, which may cause declines in our stock price and the value of our investments;
•continued fluctuation of the interest rate environment, including changes in net interest margin or changes that affect the yield curve on investments;
•potential deterioration in real estate collateral values;
•changes in legislation, regulation, public policies, or administrative practices impacting the banking industry, including increased regulation and FDIC assessments in the aftermath of the Silicon Valley Bank, Signature Bank, and First Republic Bank failures;
•the outcome of legal or regulatory proceedings that may be instituted against us;
•our inability to maintain the historical growth rate of the loan portfolio;
•changes in loan underwriting, credit review or loss reserve policies associated with economic conditions, examination conclusions, or regulatory developments;
•the impact of competition with other financial institutions, including pricing pressures and the resulting impact on our results, including as a result of compression to net interest margin;
•any matter that would cause us to conclude that there was impairment of any asset, including intangible assets;
•increased competition for experienced members of the workforce including executives in the banking industry;
•a failure in or breach of our operational or security systems or infrastructure, or those of third party vendors or other service providers, including as a result of unauthorized access, computer viruses, phishing schemes, spam attacks, human error, natural disasters, power loss and other security breaches;
•downgrade in our credit rating;
•increased political opposition to Environmental, Social and Governance practices;
•recessionary conditions;
•physical and transitional risks related to climate change as they impact our business and the businesses that we finance; and
•descriptions of assumptions underlying or relating to any of the foregoing.

We caution readers that the foregoing list of factors is not exclusive, is not necessarily in order of importance and readers should not place undue reliance on any forward-looking statements, which should be read in conjunction with the other cautionary
ii


statements that are included elsewhere in this report. Additional factors that may cause actual results to differ materially from those contemplated by any forward-looking statements may be found in our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K filed with the SEC and available at the SEC’s website at https://sec.gov. Further, any forward-looking statement speaks only as of the date on which it is made and we do not intend to and, except as required by law, disclaim any obligation to update or revise any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events, unless required to do so under the federal securities laws.

iii


Part I
Item 1. – Financial Statements
Consolidated Statements of Financial Condition
(Dollars in thousands except for per share amounts)
March 31,
2023		December 31,
2022
Assets(unaudited)
Cash and due from banks$5,192 $5,110 
Interest-bearing deposits in banks125,705 58,430 
Total cash and cash equivalents130,897 63,540 
Securities:
Available for sale, at fair value (amortized cost of $1,755,787 and $1,944,343, respectively)
1,639,105 1,812,476 
Held-to-maturity, net of allowance for credit losses of $687 at March 31, 2023 (fair value of $1,489,155 and $1,414,871, respectively)
1,618,507 1,541,301 
Loans held for sale5,653 7,943 
Loans receivable, net of deferred loan origination costs4,198,170 4,106,002 
Allowance for credit losses(67,323)(45,031)
Loans receivable, net4,130,847 4,060,971 
Resell agreements15,431 25,754 
Federal Home Loan Bank of New York ("FHLBNY") stock, at cost3,507 29,607 
Accrued interest and dividends receivable40,844 41,441 
Premises and equipment, net9,250 9,856 
Bank-owned life insurance105,405 105,624 
Right-of-use lease asset26,516 28,236 
Deferred tax asset, net62,504 62,507 
Goodwill12,936 12,936 
Intangible assets, net2,883 3,105 
Equity investments8,170 8,305 
Other assets24,001 29,522 
                 Total assets$7,836,456 $7,843,124 
Liabilities
Deposits$7,041,361 $6,595,037 
Subordinated debt73,737 77,708 
FHLBNY advances— 580,000 
Other borrowings140,000 — 
Operating leases38,333 40,779 
Other liabilities23,867 40,645 
                 Total liabilities$7,317,298 $7,334,169 
Stockholders’ equity
Common stock, par value $0.01 per share (70,000,000 shares authorized; 30,736,141 and 30,700,198 shares issued, respectively, and 30,642,299 and 30,700,198 shares outstanding, respectively)
$307 $307 
Additional paid-in capital287,514 286,947 
Retained earnings330,673 330,275 
Accumulated other comprehensive loss, net of income taxes(97,317)(108,707)
Treasury stock, at cost (93,842 and zero shares, respectively)
(2,152)— 
                 Total Amalgamated Financial Corp. stockholders' equity519,025 508,822 
Noncontrolling interests133 133 
                 Total stockholders' equity519,158 508,955 
                 Total liabilities and stockholders’ equity$7,836,456 $7,843,124 
See accompanying notes to consolidated financial statements (unaudited)
1


Consolidated Statements of Income (unaudited)
(Dollars in thousands, except for per share amounts)
Three Months Ended
March 31,
20232022
INTEREST AND DIVIDEND INCOME
    Loans$44,806 $31,127 
    Securities39,512 19,155 
    Interest-bearing deposits in banks618 179 
                 Total interest and dividend income84,936 50,461 
INTEREST EXPENSE
    Deposits13,835 1,402 
    Borrowed funds3,821 691 
                 Total interest expense17,656 2,093 
NET INTEREST INCOME67,280 48,368 
    Provision for credit losses4,958 2,293 
                 Net interest income after provision for credit losses62,322 46,075 
NON-INTEREST INCOME
    Trust Department fees 3,929 3,491 
    Service charges on deposit accounts 2,455 2,447 
    Bank-owned life insurance 781 814 
    Gain (loss) on sale of securities(3,086)162 
    Gain (loss) on sale of loans, net3 (157)
    Equity method investments income153 432 
    Other973 233 
                 Total non-interest income5,208 7,422 
NON-INTEREST EXPENSE
    Compensation and employee benefits22,014 17,669 
    Occupancy and depreciation3,399 3,440 
    Professional fees2,230 2,815 
    Data processing4,549 5,184 
    Office maintenance and depreciation728 725 
    Amortization of intangible assets222 262 
    Advertising and promotion1,587 854 
    Federal deposit insurance premiums718 667 
    Other3,180 2,781 
                 Total non-interest expense38,627 34,397 
Income before income taxes28,903 19,100 
    Income tax expense7,565 4,935 
                 Net income$21,338 $14,165 
Earnings per common share - basic$0.69 $0.46 
Earnings per common share - diluted$0.69 $0.45 

See accompanying notes to consolidated financial statements (unaudited)
2


Consolidated Statements of Comprehensive Income (unaudited)
(Dollars in thousands)
Three Months Ended
March 31,
20232022
Net income$21,338 $14,165 
Other comprehensive income (loss), net of taxes:
Change in total obligation for postretirement benefits, prior service credit, and other benefits48 59 
Net unrealized gains (losses) on securities:
Unrealized holding gains (losses) on securities available for sale12,099 (63,704)
Reclassification adjustment for losses (gains) realized in income 3,086 (165)
Accretion of net unrealized loss on securities transferred to held-to-maturity488 — 
Net unrealized gains (losses) on securities15,673 (63,869)
Other comprehensive income (loss), before tax 15,721 (63,810)
Income tax benefit (expense)(4,331)17,555 
Total other comprehensive income (loss), net of taxes11,390 (46,255)
Total comprehensive income (loss), net of taxes$32,728 $(32,090)

















See accompanying notes to consolidated financial statements (unaudited)
3


Consolidated Statements of Changes in Stockholders’ Equity (unaudited)
(Dollars in thousands)
Three Months Ended March 31, 2023
Number of Shares of Common StockCommon
Stock		Additional
Paid-in
Capital		Retained
Earnings		Accumulated
Other
Comprehensive
Income (Loss)		Treasury Stock, at costTotal
Stockholders'
Equity		Noncontrolling
Interest		Total
Equity
Balance at January 1, 202330,700,198 $307 $286,947 $330,275 $(108,707)$— $508,822 $133 $508,955 
Cumulative effect of adoption of ASU No. 2016-13— — — (17,825)— — (17,825)— (17,825)
Balance at January 1, 2023 adjusted for change in accounting principle30,700,198 307 286,947 312,450 (108,707)— 490,997 133 491,130 
Net income— — — 21,338 — — 21,338 — 21,338 
Repurchase of common stock(128,803)— — — — (2,425)(2,425)— (2,425)
Common stock issued under Employee Stock Purchase Plan21,919 — (25)— — 413 388 — 388 
Dividends on common stock, $0.10 per share
— — — (3,115)— — (3,115)— (3,115)
Exercise of stock options, net of repurchases6,631 — (91)— — — (91)— (91)
Restricted stock units vesting, net of repurchases42,354 — (354)— — (140)(494)— (494)
Stock-based compensation expense— — 1,037 — — — 1,037 — 1,037 
Other comprehensive income, net of taxes— — — — 11,390 — 11,390 — 11,390 
Balance at March 31, 202330,642,299 $307 $287,514 $330,673 $(97,317)$(2,152)$519,025 $133 $519,158 
4


Three Months Ended March 31, 2022
Number of Shares of Common StockCommon
Stock		Additional
Paid-in
Capital		Retained
Earnings		Accumulated
Other
Comprehensive
Income (Loss)		Treasury Stock, at costTotal
Stockholders'
Equity		Noncontrolling
Interest		Total
Equity
Balance at January 1, 202231,130,143 $311 $297,975 $260,047 $5,409 $— $563,742 $133 $563,875 
Net income— — — 14,165 — — 14,165 — 14,165 
Repurchase of common stock(170,572)(1)(2,940)— — — (2,941)— (2,941)
Common stock issued under Employee Stock Purchase Plan2,905 — 52 — — — 52 — 52 
Dividends on common stock, $0.08 per share
— — — (2,490)— — (2,490)— (2,490)
Exercise of stock options, net of repurchases6,964 (305)— — — (305)— (305)
Restricted stock units vesting, net of repurchases25,831 — (229)— — — (229)— (229)
Stock-based compensation expense— — 890 — — — 890 — 890 
Other comprehensive income (loss), net of taxes— — — — (46,255)— (46,255)— (46,255)
Balance at March 31, 202230,995,271 $310 $295,443 $271,722 $(40,846)$— $526,629 $133 $526,762 
See accompanying notes to consolidated financial statements (unaudited)
5


Consolidated Statements of Cash Flows (unaudited)
(Dollars in thousands)
Three Months Ended
March 31,
20232022
CASH FLOWS FROM OPERATING ACTIVITIES
  Net income$21,338 $14,165 
  Adjustments to reconcile net income to net cash provided by operating activities:
    Depreciation and amortization869 899 
    Amortization of intangible assets222 262 
    Deferred income tax expense (benefit)3,308 (1,876)
    Provision for credit losses4,958 2,293 
    Stock-based compensation expense1,037 890 
    Net amortization on loan fees, costs, premiums, and discounts36 285 
    Net amortization on securities408 1,175 
    OTTI gain recognized in earnings— (3)
    Net income from equity method investments(153)(432)
    Net loss (gain) on sale of securities available for sale3,086 (162)
    Net loss (gain) on sale of loans(3)157 
    Net gain on redemption of bank-owned life insurance(225)(313)
    Proceeds from sales of loans held for sale3,459 5,913 
    Originations of loans held for sale(1,176)(5,298)
    Increase in cash surrender value of bank-owned life insurance(556)(501)
    Net gain on repurchase of subordinated debt(780)— 
    Decrease in accrued interest and dividends receivable597 1,411 
    Decrease in other assets6,403 2,784 
    Decrease in accrued expenses and other liabilities(7,975)(4,591)
                      Net cash provided by operating activities34,853 17,058 
CASH FLOWS FROM INVESTING ACTIVITIES
    Net increase in loans(94,742)(158,836)
    Purchase of securities available for sale(17,220)(448,390)
    Purchase of securities held-to-maturity(98,893)(146,276)
    Proceeds from sales of securities available for sale145,305 162 
    Maturities, principal payments and redemptions of securities available for sale42,144 76,842 
    Maturities, principal payments and redemptions of securities held-to-maturity21,082 42,352 
    Decrease in resell agreements10,323 48,868 
    Increase in equity method investments288 186 
    Decrease in FHLBNY stock, net26,100 — 
    Purchases of premises and equipment, net(263)(818)
    Proceeds from redemption of bank-owned life insurance980 1,105 
                      Net cash provided by (used in) investing activities35,104 (584,805)
CASH FLOWS FROM FINANCING ACTIVITIES
    Net increase in deposits446,324 617,218 
    Net increase in other borrowings140,000 — 
    Net decrease in FHLBNY advances(580,000)— 
    Repurchase of subordinated debt(3,220)— 
    Common stock issued under Employee Stock Purchase Plan388 52 
6


    Repurchase of common stock(2,425)(2,941)
    Dividends paid(3,082)(2,490)
    Payments related to repurchase of common stock for equity awards(585)(534)
                      Net cash provided by (used in) financing activities(2,600)611,305 
                      Increase in cash, cash equivalents, and restricted cash67,357 43,558 
Cash, cash equivalents, and restricted cash at beginning of year63,540 330,485 
Cash, cash equivalents, and restricted cash at end period$130,897 $374,043 
Supplemental disclosures of cash flow information:
    Interest paid during the period$15,509 $1,388 
    Income taxes paid during the period291 115 
    Loans transferred to held-for-sale— 2,490 

See accompanying notes to consolidated financial statements (unaudited)
7



Notes to Consolidated Financial Statements (unaudited)
1.    BASIS OF PRESENTATION AND CONSOLIDATION

Basis of Accounting and Changes in Significant Accounting Policies
In this discussion, unless the context indicates otherwise, references to “we,” “us,” “our” and the “Company” refer to Amalgamated Financial Corp. and Amalgamated Bank. References to the “Bank” refer to Amalgamated Bank.
The accounting and reporting policies of the Company conform to accounting principles generally accepted in the United States of America, or GAAP and predominant practices within the banking industry. The Company uses the accrual basis of accounting for financial statement purposes.    

The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. The annualized results of operations for the three months ended March 31, 2023 are not necessarily indicative of the results of operations that may be expected for the entire fiscal year. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). All significant inter-company transactions and balances are eliminated in consolidation. In the opinion of management, all adjustments necessary for a fair presentation of the consolidated financial position and the results of operations as of the dates and for the interim periods presented have been included. These unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes appearing in the Annual Report on Form 10-K for the year ended December 31, 2022 (the “2022 Annual Report”). A more detailed description of our accounting policies is included in the 2022 Annual Report, which remain significantly unchanged except for the Allowance for Credit Losses ("ACL") policy, resulting from the adoption of the Accounting Standard Update ("ASU") No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments and its amendments, (“ASU No. 2016-13”) as of January 1, 2023, as well as the addition of accounting policies related to treasury stock:

Treasury stock - Treasury stock is carried at cost. Shares sold or granted out of treasury are valued based on the weighted average cost.

There have been no other significant changes to our accounting policies, or the estimates made pursuant to those policies as described in our 2022 Annual Report.

Recently Adopted Accounting Standards

ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326) - Measurement of Credit Losses on Financial Instruments

The Company adopted ASU No. 2016-13 inclusive of subsequent amendments as of January 1, 2023. ASU No. 2016-13 amends guidance on reporting credit losses for assets held on an amortized cost basis and available-for-sale debt securities, as well as off balance sheet credit exposures. For assets held at amortized cost, ASU No. 2016-13 eliminates the probable initial recognition threshold in current GAAP and, instead, requires an entity to reflect its current estimate of all expected credit losses. The amendments in ASU No. 2016-13 replace the incurred loss impairment methodology with a methodology that reflects the measurement of expected credit losses based on relevant information about past events, including historical loss experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amounts. The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of financial assets to present the net amount expected to be collected. For available for sale debt securities, credit losses will be presented as an allowance rather than as a write-down. For the Company, the amendments affected loans, debt securities, off-balance sheet credit exposures, and any other financial assets not excluded from the scope that have the contractual right to receive cash.

The Company adopted ASU No. 2016-13 on a modified retrospective basis with a cumulative-effect adjustment to retained earnings as of the adoption date and, accordingly, the Company recorded a net of tax decrease of $17.8 million to retained earnings as of January 1, 2023. The results for prior period amounts continue to be reported in accordance with previously applicable GAAP.

The below table illustrates the impact of the adoption of ASU 2016-13.
8



Notes to Consolidated Financial Statements (unaudited)
January 1, 2023
Gross AdjustmentTax ImpactNet Adjustment to Retained Earnings
Assets:
Allowance for credit losses on held-to-maturity securities$668 $(184)$484 
Allowance for credit losses on loans21,229 (5,849)15,380 
Liabilities:
Allowance for credit losses on off-balance sheet credit exposures2,705 (744)1,961 
Total Day 1 Adjustment for Adoption of ASU 2016-13$24,602 $(6,777)$17,825 

Allowance for Credit Losses - Available for Sale Securities: Any available for sale security in an unrealized loss position is assessed for Management's intent to sell, or if it is more likely than not that it will be required to sell before the recovery of its amortized cost basis. If either criteria regarding intent or requirement to sell is met, the security's amortized cost basis is written down to fair value through income. Accrued interest receivable is excluded from the estimate of expected credit losses, as accrued interest receivable is reversed for securities placed on nonaccrual status. Securities issued by U.S. government entities are either explicitly or implicitly guaranteed by the U.S. government, and are highly rated by major ratings agencies and have a long history of no credit losses. For debt securities that do not meet the aforementioned criteria, the Company evaluates whether the decline in fair value has resulted from expected credit losses or other factors in making this assessment. Management considers the extent in which fair value is less than amortized cost, any changes to the rating of the security by a rating agency, and adverse conditions specifically related to the security, among other factors. If this assessment indicates that a credit loss exists, the present value of cash flows expected to be collected from the security are compared to the amortized cost basis of the security. If the present value of cash flows is expected to be collected is less than the amortized cost basis, a credit loss exists and an allowance for credit losses is recorded for the credit loss, limited by the amount that the fair value is less than the amortized cost basis. Any impairment that has not been recorded through an allowance for credit losses is recognized in other comprehensive income. There was no allowance for credit losses for available for sale securities as of January 1, 2023.

Allowance for Credit Losses - Held-to-maturity Securities: Management measures expected credit losses on held-to-maturity securities on a collective basis by security type. Accrued interest receivable is excluded from the estimate of expected credit losses, as accrued interest receivable is reversed for securities placed on nonaccrual status. The Company has identified the following portfolio segments and measures the allowance for credit losses using the following methods:

Mortgage-backed - Certain residential securities held by the Company are issued by U.S. government entities and agencies. These securities are either explicitly or implicitly guaranteed by the U.S. government, and are highly rated by major rating agencies and have a long history of no credit losses. Non-GSE residential securities held by the Company carry ratings no lower than A. These investments are secured by pools of commercial or residential certificates.

Asset-backed securities ("ABS") - ABS held by the Company are secured by pools of consumer products such as student loans, consumer loans, and consumer residential solar loans.

Property assessed clean energy ("PACE") - PACE held by the Company are secured low loan to value long-term funding for energy efficient and renewable energy projects for residential or commercial projects.

Other securities - Other securities held by the Company include corporate securities, municipal securities and small investments community reinvestment act investments secured by loans.

Allowance for Credit Losses - Loans: The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of a financial asset or a group of financial assets so that the balance sheet reflects the net amount the Company expects to collect. Amortized cost is the principal balance outstanding, net of purchase premiums and discounts, and deferred fees and costs. Accrued interest receivable on loans is excluded from the estimate of expected credit losses, as accrued interest receivable is reversed for loans placed on nonaccrual status. Subsequent changes (favorable and unfavorable) in expected credit losses are
9



Notes to Consolidated Financial Statements (unaudited)
recognized immediately in net income as a credit loss expense or a reversal of credit loss expense. Loans are charged off against the allowance when management believes the uncollectibility of a loan balance is confirmed. Expected recoveries do not exceed the aggregate of amounts previously charged-off and expected to be charged-off.

Management calculates the estimation of the allowance for credit losses on loans on a quarterly basis. The Company’s methodology to measure the allowance for credit losses incorporates both quantitative and qualitative information to assess lifetime expected credit losses at the portfolio segment level. The quantitative component of the allowance model calculates future loan level balances by considering the loan segment baseline loss rate based on a peer group and severity rate. Expected credit losses are estimated over the contractual term of the loans, adjusted for forecasted prepayments when appropriate. The baseline loss rate is adjusted for relevant macroeconomic variables by loan segment that consider forecasted economic conditions. The adjusted loss rate is calculated for an eight quarter forecast period then reverts to the historical loss rate on a straight-line basis over four quarters. The loan level cash flows are discounted at the effective interest rate to calculate a loan level allowance which is aggregated at the loan segment level to arrive at the estimated allowance.

Economic parameters are developed using available information relating to past events, current conditions, and reasonable and supportable forecasts. Historical credit experience provides the basis for the estimation of expected credit losses, with qualitative adjustments made to loan segments for differences in current loan-specific risk characteristics such as differences in underwriting standards, portfolio mix, delinquency levels and terms, as well as for changes in environmental conditions, such as changes in unemployment rates, property values or other relevant factors.

The allowance for credit losses on loans is measured on a collective (pool) basis when similar risk characteristics exist. The Company has identified the following portfolio segments and measures the allowance for credit losses using the methods described above.

Commercial and Industrial Loans - Loans in this classification are made to businesses and include term loans, lines of credit, and senior secured loans to corporations. Generally, these loans are secured by assets of the business and repayment is expected from the cash flows of the business. A weakened economy, and resultant decreased consumer and/or business spending, will have an effect on the credit quality in this loan class.

Multifamily Mortgage Loans - Loans in this classification include income producing residential investment properties of five or more families. Loans are made to established owners with a proven and demonstrable record of strong performance. Repayment is derived generally from the rental income generated from the property and may be supplemented by the owners’ personal cash flow. Credit risk arises with an increase in vacancy rates, property mismanagement and the predominance of non-recourse loans that are customary in the industry.

Commercial Real Estate Loans - Loans in this classification include income producing investment properties and owner-occupied real estate used for business purposes. The underlying properties are located largely in the Company’s primary market area. The cash flows of the income producing investment properties are adversely impacted by a downturn in the economy as evidenced by increased vacancy rates, which in turn, will have an effect on credit quality. In the case of owner-occupied real estate used for business purposes, a weakened economy and resultant decreased consumer and/or business spending will have an adverse effect on credit quality.

Construction and Land Development Loans - Loans in this classification primarily include land loans to local individuals, contractors and developers for developing the land for sale or for the purpose of making improvements thereon. Repayment is derived primarily from sale of the lots/units including any pre-sold units. Credit risk is affected by market conditions, time to sell at an adequate price and cost overruns. To a lesser extent, this class includes commercial development projects that the Company finances, which in most cases are interest only during construction, and then convert to permanent financing. Construction delays, cost overruns, market conditions and the availability of permanent financing, to the extent such permanent financing is not being provided by the Bank, all affect the credit risk in this loan class.

Residential Real Estate Loans - Loans in this classification are generally secured by owner-occupied residential real estate and repayment is dependent on the credit quality of the individual borrower. Loans in this class are secured by both first liens and second liens. The overall health of the economy, including unemployment rates and housing prices, can have an effect on the credit quality in this loan class.

10



Notes to Consolidated Financial Statements (unaudited)
Consumer Solar Loans - Loans in this classification may be either secured or unsecured. This portfolio is comprised of residential solar loans. Repayment is dependent on the credit quality of the individual borrower and, if applicable, sale of the collateral securing the loan. Therefore, the overall health of the economy, including unemployment rates and housing prices, will have an effect on the credit quality in this loan class.

Consumer and Other Loans - Loans in this classification may be either secured or unsecured. This portfolio is comprised of student loans and other consumer products. Repayment is dependent on the credit quality of the individual borrower and, if applicable, sale of the collateral securing the loan. Therefore, the overall health of the economy, including unemployment rates and housing prices, will have an effect on the credit quality in this loan class.

Loans that are determined to have unique risk characteristics are evaluated on an individual basis by Management. Loans evaluated individually are not included in the collective evaluation. Factors that may be considered are borrower delinquency trends and nonaccrual status, probability of foreclosure or note sale, changes in the borrower’s circumstances or cash collections, borrower’s industry, or other facts and circumstances of the loan or collateral.

Individually Evaluated Loans with an ACL: For collateral-dependent loans where the Company has determined that foreclosure of the collateral is probable, or where the borrower is experiencing financial difficulty and the Company expects repayment of the loan to be provided substantially through the operation or sale of the collateral, the ACL is measured based on the difference between the fair value of the collateral, less the estimated costs to sell, and the amortized cost basis of the loan as of the measurement date. The fair value of real estate collateral is determined based on recent appraised values. The fair value of non-real estate collateral, may be determined based on an appraisal, net book value per the borrower’s financial statements, aging reports, or by reference to market activity, adjusted or discounted based on management’s historical knowledge, changes in market conditions from the time of the valuation and management’s expertise and knowledge of the borrower and its business. For non-collateral dependent loans, ACL is measured based on the difference between the present value of expected cash flows and the amortized cost basis of the loan as of the measurement date.

Allowance for Credit Losses on Off-Balance Sheet Credit Exposures: The Company estimates expected credit losses over the contractual period in which the Company is exposed to credit risk via a contractual obligation to extend credit, unless that obligation is unconditionally cancellable by the Company for its security and loan portfolios. The allowance for credit losses on off-balance sheet credit exposures is recorded in other liabilities on the consolidated statements of financial condition, and adjusted through the credit loss expense which is recorded in the provision for credit losses on the consolidated statements of income. The estimate includes consideration of the likelihood that funding will occur and an estimate of expected credit losses on commitments expected to be funded over its estimated life, which is the same as the expected loss factor as determined based on the corresponding portfolio segment. At January 1, 2023, the Day 1 adjustment to allowance for credit losses on off-balance sheet credit exposures was $2.7 million, of which $2.6 million related to obligations on the loans portfolio, and $0.1 million related to obligations on the securities portfolio.

ASU 2022-02, Financial Instruments - Credit Losses (Topic 326) - Troubled Debt Restructurings and Vintage Disclosures

On March 31, 2022, the Financial Accounting Standards Board ("FASB") issued ASU 2022-02, which eliminates the troubled debt restructuring ("TDR") accounting model for creditors that have adopted Topic 326, “Financial Instruments – Credit Losses.” Specifically, rather than applying the recognition and measurement guidance for TDRs, this ASU requires entities to evaluate receivable modifications, consistent with the accounting for other loan modifications, to determine whether a modification made to a borrower results is a new loan or a continuation of the existing loan. In addition, under the new ASU, entities are no longer required to use a discounted cash flow ("DCF") method to measure the ACL as a result of a modification or restructuring with a borrower experiencing financial difficulty. If a DCF method is used, the post-modification-derived effective interest rate is to be used, instead of the original interest rate as stipulated under the current GAAP. This ASU also enhances the disclosure requirements related to certain modifications of receivables made to borrowers experiencing financial difficulty. This ASU amends the guidance on “vintage disclosures” to require the disclosure of current-period gross write-offs by year of origination. The Company adopted ASU 2022-02 on January 1, 2023 on a prospective basis. The adoption of the standard did not have a material impact on the financial statements. Refer to the Loans receivable, net footnote for updated disclosures for the three months ended March 31, 2023.

Reclassifications

11



Notes to Consolidated Financial Statements (unaudited)
Certain reclassifications have been made to prior year amounts to conform to the current year presentation, however such reclassifications did not change stockholders' equity or net income.
12



Notes to Consolidated Financial Statements (unaudited)
2.    ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
The following is a summary of the accumulated comprehensive income (loss) balances, net of income taxes:
Balance as of Balance as of January 1,
2023		Current
Period
Change		Income Tax
Effect		Balance as of March 31, 2023
(In thousands)
Unrealized gains (losses) on benefits plans$(1,652)$48 $(13)$(1,617)
Unrealized gains (losses) on available for sale securities(95,539)15,185 (4,184)(84,538)
Unaccreted unrealized loss on securities transferred to held-to-maturity(11,516)488 (134)(11,162)
Total$(108,707)$15,721 $(4,331)$(97,317)
Balance as of January 1, 2022Current
Period
Change		Income Tax
Effect		Balance as of March 31, 2022
(In thousands)
Unrealized gains (losses) on benefits plans$(2,102)$59 $(16)$(2,059)
Unrealized gains (losses) on available for sale securities7,511 (63,869)17,571 (38,787)
Total$5,409 $(63,810)$17,555 $(40,846)
Other comprehensive income (loss) components and related income tax effects were as follows:
Three Months Ended
March 31,
20232022
(In thousands)
Postretirement Benefit Plans
Change in obligation for postretirement benefits and for prior service credit$40 $44 
Reclassification adjustment for prior service expense included in compensation and employee benefits7 7 
Change in obligation for other benefits1 8 
Change in total obligation for postretirement benefits and for prior service credit and for other benefits48 59 
Income tax benefit (expense)(13)(16)
Net change in total obligation for postretirement benefits and prior service credit and for other benefits35 43 
Securities
Unrealized holding gains (losses) on available for sale securities12,099 (63,704)
Reclassification adjustment for losses (gains) realized in gain (loss) on sale of securities3,086 (162)
Reclassification adjustment for gains on OTTI securities recognized in non-interest income - other— (3)
Accretion of net unrealized loss on securities transferred to held-to-maturity recognized in interest income from securities488 — 
Change in unrealized gains (losses) on available for sale securities15,673 (63,869)
Income tax benefit (expense)(4,318)17,571 
Net change in unrealized gains (losses) on securities11,355 (46,298)
Total$11,390 $(46,255)

13



Notes to Consolidated Financial Statements (unaudited)
3.    INVESTMENT SECURITIES
The amortized cost and fair value of investment securities available for sale and held-to-maturity as of March 31, 2023 are as follows:
March 31, 2023
(In thousands)Amortized
Cost		Gross
Unrealized
Gains		Gross
Unrealized
Losses		Fair
Value
Available for sale:
Mortgage-related:
Government sponsored entities ("GSE") residential CMOs ("collateralized mortgage obligations")$417,326 $29 $(33,961)$383,394 
GSE commercial certificates & CMOs174,968 27 (7,155)167,840 
Non-GSE residential certificates120,591 — (15,042)105,549 
Non-GSE commercial certificates107,310 — (10,044)97,266 
820,195 56 (66,202)754,049 
Other debt:
U.S. Treasury199 — (6)193 
Asset backed securities ("ABS")786,515 122 (30,453)756,184 
Trust preferred10,989 — (911)10,078 
Corporate137,889 — (19,288)118,601 
935,592 122 (50,658)885,056 
Total available for sale$1,755,787 $178 $(116,860)$1,639,105 
Amortized CostGross Unrecognized GainsGross Unrecognized LossesFair Value
Held-to-maturity:
Mortgage-related:
GSE residential CMOs$68,356 $— $(3,497)$64,859 
GSE commercial certificates90,114 — (9,235)80,879 
GSE residential certificates424 — (12)412 
Non-GSE commercial certificates32,630 — (2,989)29,641 
Non-GSE residential certificates49,525 — (5,001)44,524 
241,049 — (20,734)220,315 
Other debt:
ABS286,581 — (11,049)275,532 
Commercial PACE262,398 — (29,652)232,746 
Residential PACE733,997 — (53,492)680,505 
Municipal95,169 59 (15,171)80,057 
1,378,145 59 (109,364)1,268,840 
Allowance for credit losses(687)
Total held-to-maturity$1,618,507 $59 $(130,098)$1,489,155 
14



Notes to Consolidated Financial Statements (unaudited)
As of March 31, 2023, available for sale securities with a fair value of $909.5 million and held-to-maturity securities with a fair value of $437.2 million were pledged. The majority of the securities were pledged to the FHLBNY to secure outstanding advances, letters of credit and to provide additional borrowing potential. In addition, securities were pledged to provide capacity to borrow from the Federal Reserve Bank and to collateralize municipal deposits.

The amortized cost and fair value of investment securities available for sale and held-to-maturity as of December 31, 2022 are as follows:    
15



Notes to Consolidated Financial Statements (unaudited)
December 31, 2022
(In thousands)Amortized CostGross Unrealized GainsGross Unrealized LossesFair Value
Available for sale:
Mortgage-related:
GSE residential CMOs$427,529 $24 $(38,293)$389,260 
GSE commercial certificates & CMOs222,620 — (8,834)213,786 
Non-GSE residential certificates123,139 — (16,059)107,080 
Non-GSE commercial certificates108,286 — (10,804)97,482 
881,574 24 (73,990)807,608 
Other debt:
U.S. Treasury199 — (7)192 
ABS901,746 34 (39,617)862,163 
Trust preferred10,988 — (845)10,143 
Corporate149,836 — (17,466)132,370 
1,062,769 34 (57,935)1,004,868 
Total available for sale$1,944,343 $58 $(131,925)$1,812,476 
Amortized CostGross Unrecognized GainsGross Unrecognized LossesFair Value
Held-to-maturity:
Mortgage-related:
GSE residential CMOs$69,391 $— $(4,054)$65,337 
GSE commercial certificates90,335 — (11,186)79,149 
GSE residential certificates428 — (17)411 
Non-GSE commercial certificates32,635 9 (3,148)29,496 
Non-GSE residential certificates50,468 — (5,245)45,223 
243,257 09 (23,650)219,616 
Other debt:
ABS288,682 — (15,175)273,507 
Commercial PACE255,424 — (26,782)228,642 
Residential PACE656,453 — (44,833)611,620 
Municipal95,485 — (15,999)79,486 
Other2,000 — — 2,000 
1,298,044 — (102,789)1,195,255 
Total held-to-maturity$1,541,301 $9 $(126,439)$1,414,871 
There were no transfers to or from securities held-to-maturity during the three months ended March 31, 2023 or the three months ended March 31, 2022.
The following table summarizes the amortized cost and fair value of debt securities available for sale and held-to-maturity, exclusive of mortgage-backed securities, by their contractual maturity as of March 31, 2023. Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without penalty:
16



Notes to Consolidated Financial Statements (unaudited)
Available for SaleHeld-to-maturity
Amortized
Cost		Fair ValueAmortized
Cost		Fair Value
(In thousands)
Due within one year$199 $193 $— $— 
Due after one year through five years67,197 59,366 9,424 9,042 
Due after five years through ten years349,001 332,811 10,557 9,756 
Due after ten years519,195 492,686 1,358,164 1,250,042 
$935,592 $885,056 $1,378,145 $1,268,840 

Proceeds received and gains and losses realized on sales of available for sale securities are summarized below:
Three Months Ended,
March 31, 2023March 31, 2022
(In thousands)
Proceeds$145,305 $162 
Realized gains$— $162 
Realized losses(3,086)— 
               Net realized gains (losses)$(3,086)$162 
There were no sales of held-to-maturity securities during the three months ended March 31, 2023 or the three months ended March 31, 2022.
The Company controls and monitors inherent credit risk in its securities portfolio through due diligence, diversification, concentration limits, periodic securities reviews, and by investing in low risk securities. This includes high quality Non Agency Securities, low loan-to-value PACE Bonds and a significant portion of the securities portfolio in U.S. GSE obligations. GSEs include the Federal Home Loan Mortgage Corporation (“FHLMC”), the Federal National Mortgage Association (“FNMA”), the Government National Mortgage Association (“GNMA”) and the Small Business Administration (“SBA”). GNMA is a wholly owned U.S. Government corporation whereas FHLMC and FNMA are private. Mortgage-related securities may include mortgage pass-through certificates, participation certificates and CMOs.
17



Notes to Consolidated Financial Statements (unaudited)
The following summarizes the fair value and unrealized losses for those available for sale and unrecognized losses for those held-to-maturity securities as of March 31, 2023 and December 31, 2022, respectively, segregated between securities that have been in an unrealized or unrecognized loss position for less than twelve months and those that have been in a continuous unrealized or unrecognized loss position for twelve months or longer at the respective dates:
March 31, 2023
Less Than Twelve Months
Twelve Months or Longer
Total
(In thousands)Fair ValueUnrealized
Losses		Fair ValueUnrealized
Losses		Fair ValueUnrealized
Losses
Available for sale:
Mortgage-related:
GSE residential CMOs$114,581 $3,870 $263,412 $30,091 $377,993 $33,961 
GSE commercial certificates & CMOs57,752 1,225 85,061 5,930 142,813 7,155 
Non-GSE residential certificates9,949 456 95,600 14,586 105,549 15,042 
Non-GSE commercial certificates32,811 1,206 64,455 8,838 97,266 10,044 
Other debt:
U.S. Treasury— — 193 6 193 6 
ABS72,764 1,720 665,109 28,733 737,873 30,453 
Trust preferred— — 10,078 911 10,078 911 
Corporate30,297 3,792 86,504 15,496 116,801 19,288 
Total available for sale$318,154 $12,269 $1,270,412 $104,591 $1,588,566 $116,860 
Less Than Twelve MonthsTwelve Months or LongerTotal
Fair ValueUnrecognized
Losses		Fair ValueUnrecognized
Losses		Fair ValueUnrecognized
Losses
Held-to-maturity:
Mortgage-related:
GSE CMOs$41,924 $1,880 $22,935 $1,617 $64,859 $3,497 
GSE commercial certificates35,961 1,617 44,918 7,618 80,879 9,235 
GSE residential certificates412 12 — — 412 12 
Non GSE commercial certificates— — 29,520 2,989 29,520 2,989 
Non GSE residential certificates7,008 450 37,516 4,551 44,524 5,001 
Other debt:
ABS57,468 2,433 218,064 8,616 275,532 11,049 
Commercial PACE232,746 29,652 — — 232,746 29,652 
Residential PACE680,505 53,492 — — 680,505 53,492 
Municipal13,691 703 50,808 14,468 64,499 15,171 
Total held-to-maturity$1,069,715 $90,239 $403,761 $39,859 $1,473,476 $130,098 

18



Notes to Consolidated Financial Statements (unaudited)
December 31, 2022
Less Than Twelve MonthsTwelve Months or LongerTotal
(In thousands)Fair ValueUnrealized
Losses		Fair ValueUnrealized
Losses		Fair ValueUnrealized
Losses
Available for sale:
Mortgage-related:
GSE residential CMOs$231,562 $13,937 $151,285 $24,356 $382,847 $38,293 
GSE commercial certificates & CMOs153,325 6,729 60,461 2,105 213,786 8,834 
Non-GSE residential certificates72,527 8,969 34,553 7,090 107,080 16,059 
Non-GSE commercial certificates62,243 4,842 35,239 5,962 97,482 10,804 
Other debt:
U.S. Treasury192 7 — — 192 7 
ABS530,269 17,290 299,425 22,327 829,694 39,617 
Trust preferred— — 10,143 845 10,143 845 
Corporate89,054 9,772 43,316 7,694 132,370 17,466 
Total available for sale$1,139,172 $61,546 $634,422 $70,379 $1,773,594 $131,925 
Less Than Twelve MonthsTwelve Months or LongerTotal
Fair ValueUnrecognized
Losses		Fair ValueUnrecognized
Losses		Fair ValueUnrecognized
Losses
Held-to-maturity:
Mortgage-related:
GSE CMOs$54,475 $2,891 $10,862 $1,163 $65,337 $4,054 
GSE commercial certificates48,934 3,404 30,215 7,782 79,149 11,186 
GSE residential certificates411 17 — — 411 17 
Non GSE commercial certificates11,192 656 18,283 2,492 29,475 3,148 
Non GSE residential certificates39,426 4,784 5,797 461 45,223 5,245 
Other debt:
ABS224,279 11,078 49,228 4,097 273,507 — 15,175 
Commercial PACE228,642 26,782 — — 228,642 26,782 
Residential PACE611,620 44,833 — — 611,620 44,833 
Municipal48,190 5,866 31,296 10,133 79,486 15,999 
Total held-to-maturity$1,267,169 $100,311 $145,681 $26,128 $1,412,850 $126,439 

Available for sale securities

As discussed in Note 1, upon adoption of the CECL standard, no allowance for credit losses was recorded on available for sale securities. During the period ended March 31, 2023, a Corporate bond related to Silicon Valley Bank ("SIVB") was placed on nonaccrual status following credit concerns over the issuer. As a result, Management charged-off the $1.2 million unrealized loss position given Management's intent to sell the Corporate bond and unlikely recovery of the unrealized position, resulting in a provision for credit losses of $1.2 million.

As of March 31, 2023, with the exception of the SIVB bond discussed above, none of the Company’s available-for-sale debt securities were in an unrealized loss position due to credit and therefore no allowance for credit losses on available-for-sale debt securities was required. The temporary impairment of fixed income securities is primarily attributable to changes in overall market interest rates and/or changes in credit/liquidity spreads since the investments were acquired. In general, as market interest rates rise and/or credit/liquidity spreads widen, the fair value of fixed rate securities will decrease, as market interest rates fall and/or credit spreads tighten, the fair value of fixed rate securities will increase.
19



Notes to Consolidated Financial Statements (unaudited)

With respect to the Company’s security investments that are temporarily impaired as of March 31, 2023, management does not intend to sell these investments and does not believe it will be necessary to do so before anticipated recovery. If either criteria regarding intent or requirement to sell is met, the security's amortized cost basis is written down to fair value through income. The Company expects to collect all amounts due according to the contractual terms of these investments. Therefore, the Company does not hold an allowance for credit losses for available for sale securities at March 31, 2023.



Held-to-maturity securities

Management conducts an evaluation of expected credit losses on held-to-maturity securities on a collective basis by security type. Management monitors the credit quality of debt securities held-to-maturity through reasonable and supportable forecasts, reviews of credit trends on underlying assets, credit ratings, and other factors. Holdings of securities issued by GSEs with unrealized losses are either explicitly or implicitly guaranteed by the U.S. government, and are highly rated by major rating agencies and have a long history of no credit losses.

With the exception of PACE securities, which are generally not rated, these securities were rated investment grade by at least one nationally recognized statistical rating organization with no ratings below investment grade. All issues were current as to their interest payments. We have had insignificant losses on PACE bonds that we have invested in and are not aware of any significant losses in the PACE bonds sector given the low loan-to-value position and the superior lien position on the property. Management considers that the temporary impairment of these investments as of March 31, 2023 is primarily due to an increase in interest rates and spreads since the time these investments were acquired.

Accrued interest receivable on securities totaling $22.4 million and $23.2 million at March 31, 2023 and December 31, 2022, respectively, was included in other assets in the consolidated balance sheet and excluded from the amortized cost and estimated fair value totals in the table above.

The following table presents the activity in the allowance for credit losses for securities held-to-maturity for the three months ended March 31, 2023:

(In thousands)Non-GSE commercial certificatesCommercial PACEResidential PACETotal
Allowance for credit losses:
Beginning balance$— $— $— — 
Adoption of ASU No. 2016-1385 255 328 668 
Provision for (recovery of) credit losses(1)7 39 45 
Charge-offs(26)— — (26)
Recoveries— — — — 
Ending balance$58 $262 $367 $687 

20



Notes to Consolidated Financial Statements (unaudited)
4.    LOANS RECEIVABLE, NET
With the adoption of ASU 2016-13 on January 1, 2023, all loan balances in this footnote for the period ended March 31, 2023 are presented at amortized cost, net of deferred loan origination costs. Loan balances for the period ended December 31, 2022 are presented at unpaid principal balance net of partial charge-offs.
Loans receivable are summarized as follows:
March 31,
2023		December 31,
2022
(In thousands)
Commercial and industrial$923,853 $925,641 
Multifamily1,062,826 967,521 
Commercial real estate327,477 335,133 
Construction and land development37,828 37,696 
   Total commercial portfolio2,351,984 2,265,991 
Residential real estate lending1,390,135 1,371,779 
Consumer solar410,725 416,849 
Consumer and other45,326 47,150 
   Total retail portfolio1,846,186 1,835,778 
Total loans receivable4,198,170 4,101,769 
Net deferred loan origination costs— 4,233 
Total loans receivable, net of deferred loan origination costs (fees)4,198,170 4,106,002 
Allowance for credit losses(67,323)(45,031)
Total loans receivable, net$4,130,847 $4,060,971 






21



Notes to Consolidated Financial Statements (unaudited)
The following table presents information regarding the past due status of the Company’s loans as of March 31, 2023:
30-89 Days
Past Due		Non-
Accrual		90 Days or
More
Delinquent
and Still
Accruing
Interest		Total Past
Due		CurrentTotal Loans
Receivable
(In thousands)
Commercial and industrial$18,440 $9,521 $— $27,961 $895,892 $923,853 
Multifamily7,703 2,710 — 10,413 1,052,413 1,062,826 
Commercial real estate609 4,745 1,299 6,653 320,824 327,477 
Construction and land development552 8,803 — 9,355 28,473 37,828 
Total commercial portfolio27,304 25,779 1,299 54,382 2,297,602 2,351,984 
Residential real estate lending12,957 2,016 — 14,973 1,375,162 1,390,135 
Consumer solar5,209 2,021 — 7,230 403,495 410,725 
Consumer and other1,180 140 — 1,320 44,006 45,326 
     Total retail portfolio19,346 4,177 — 23,523 1,822,663 1,846,186 
$46,650 $29,956 $1,299 $77,905 $4,120,265 $4,198,170 

At March 31, 2023, the Company had two loans with a total balance of $1.3 million that were 90 days or more delinquent and still accruing interest. These loans were in the process of refinancing at period end.

The following table presents information regarding the past due status of the Company’s loans as of December 31, 2022:
30-89 Days
Past Due
Non-
Accrual
90 Days or
More
Delinquent
and Still
Accruing
Interest
Total Past
Due
Current
Total Loans
Receivable
(In thousands)
Commercial and industrial$27 $9,629 $— $9,656 $915,985 $925,641 
Multifamily— 3,828 — 3,828 963,693 967,521 
Commercial real estate11,718 4,851 — 16,569 318,564 335,133 
Construction and land development16,426 — — 16,426 21,270 37,696 
     Total commercial portfolio28,171 18,308 — 46,479 2,219,512 2,265,991 
Residential real estate lending1,185 1,807 — 2,992 1,368,787 1,371,779 
Consumer solar3,320 1,584 — 4,904 411,945 416,849 
Consumer and other225 — — 225 46,925 47,150 
     Total retail portfolio4,730 3,391 — 8,121 1,827,657 1,835,778 
$32,901 $21,699 $— $54,600 $4,047,169 $4,101,769 

The following table presents information regarding loan modifications granted to borrowers experiencing financial difficulty during the three months ended March 31, 2023:
22



Notes to Consolidated Financial Statements (unaudited)
Term Extension
Three Months Ended March 31, 2023
(Dollars in thousands)Amortized Cost% of Portfolio
Commercial and industrial$626 0.1 %
Commercial real estate866 0.3 %
Construction and land development6,887 18.2 %
The following table describes the financial effect of the modifications made to borrowers experiencing financial difficulty:
Term Extension
Three Months Ended March 31, 2023
Commercial and industrial
Modification added a weighted average 1.0 years to the life of the modified loan.
Commercial real estate
Modification added a weighted average 0.5 years to the life of the modified loan.
Construction and land development
Modifications added a weighted average 0.8 years to the life of the modified loans.

Four loans were permanently modified in the three months ended March 31, 2023, and no loans that were modified had a payment default during the three months ended March 31, 2023

In order to manage credit quality, we view the Company’s loan portfolio by various segments. For commercial loans, we assign individual credit ratings ranging from 1 (lowest risk) to 10 (highest risk) as an indicator of credit quality. These ratings are based on specific risk factors including (i) historical and projected financial results of the borrower, (ii) market conditions of the borrower’s industry that may affect the borrower’s future financial performance, (iii) business experience of the borrower’s management, (iv) nature of the underlying collateral, if any, including the ability of the collateral to generate sources of repayment, and (v) history of the borrower’s payment performance. These specific risk factors are then utilized as inputs in our credit model to determine the associated allowance for credit loss. Non-rated loans generally include residential mortgages and consumer loans.

The below classifications follow regulatory guidelines and can be generally described as follows:
•pass loans are of satisfactory quality;
•special mention loans have a potential weakness or risk that may result in the deterioration of future repayment;
•substandard loans are inadequately protected by the current net worth and paying capacity of the borrower or of the collateral pledged (these loans have a well-defined weakness, and there is a distinct possibility that the Company will sustain some loss); and
•doubtful loans, based on existing circumstances, have weaknesses that make collection or liquidation in full highly questionable and improbable.
In addition, residential loans are classified utilizing an inter-agency methodology that incorporates the extent of delinquency. Assigned risk rating grades are continuously updated as new information is obtained.





23



Notes to Consolidated Financial Statements (unaudited)
The following tables summarize the Company’s loan portfolio by credit quality indicator as of March 31, 2023:
(In thousands)20232022202120202019 & PriorRevolving loansRevolving Loans Converted to TermTotal
Commercial and Industrial:
Pass$8,078 $194,890 $214,012 $95,418 $152,107 $223,578 $— $888,083 
Special Mention— — — 4,373 6,866 — — 11,239 
Substandard— — — 5,474 15,117 2,214 — 22,805 
Doubtful— — — — 1,726 — — 1,726 
Total commercial and industrial$8,078 $194,890 $214,012 $105,265 $175,816 $225,792 $— $923,853 
Current period gross charge-offs$— $— $— $— $— $— $— $— 
Multifamily:
Pass$100,019 $384,039 $46,554 $139,404 $373,701 $3 $— $1,043,720 
Special Mention— — — — 14,075 — — 14,075 
Substandard— — — — 5,031 — — 5,031 
Doubtful— — — — — — — — 
Total multifamily$100,019 $384,039 $46,554 $139,404 $392,807 $3 $— $1,062,826 
Current period gross charge-offs$— $— $— $— $1,127 $— $— $1,127 
Commercial real estate:— 
Pass$1,405 $33,013 $49,462 $36,579 $169,537 $2,701 $— $292,697 
Special Mention— — — — 30,035 — — 30,035 
Substandard— — — 866 3,879 — — 4,745 
Doubtful— — — — — — — — 
Total commercial real estate$1,405 $33,013 $49,462 $37,445 $203,451 $2,701 $— $327,477 
Current period gross charge-offs$— $— $— $— $— $— $— $— 
Construction and land development:
Pass$— $13,292 $— $— $8,123 $— $— $21,415 
Special Mention— — — — — — — — 
Substandard— — — — — 16,413 — 16,413 
Doubtful— — — — — — — — 
Total construction and land development$— $13,292 $— $— $8,123 $16,413 $— $37,828 
Current period gross charge-offs$— $— $— $— $— $— $— $— 
Residential real estate lending:
Pass$30,490 $424,795 $349,540 $141,657 $440,298 $2,443 $— $1,389,223 
Special Mention— — — — — — — — 
Substandard— — — 294 618 — — 912 
Doubtful— — — — — — — — 
Total residential real estate lending$30,490 $424,795 $349,540 $141,951 $440,916 $2,443 $— $1,390,135 
Current period gross charge-offs$— $— $— $— $57 $1 $— $58 
Consumer solar:
Pass$— $5,642 $74,386 $68,549 $260,564 $— $— $409,141 
Special Mention— — — — — — — — 
Substandard— — 31 268 1,285 — — 1,584 
Doubtful— — — — — — — — 
Total consumer solar$— $5,642 $74,417 $68,817 $261,849 $— $— $410,725 
Current period gross charge-offs$— $— $393 $225 $1,189 $— $— $1,807 
Consumer and other:
Pass$— $— $31,006 $— $14,181 $— $— $45,187 
Special Mention— — — — — — — — 
Substandard— — — — 139 — — 139 
Doubtful— — — — — — — — 
Total consumer and other$— $— $31,006 $— $14,320 $— $— $45,326 
24



Notes to Consolidated Financial Statements (unaudited)
Current period gross charge-offs$— $— $— $— $18 $— $— $18 
Total Loans:
Pass$139,992 $1,055,671 $764,960 $481,607 $1,418,511 $228,725 $— $4,089,466 
Special Mention— — — 4,373 50,976 — — 55,349 
Substandard— — 31 6,902 26,069 18,627 — 51,629 
Doubtful— — — — 1,726 — — 1,726 
Total loans$139,992 $1,055,671 $764,991 $492,882 $1,497,282 $247,352 $— $4,198,170 
Current period gross charge-offs$— $— $393 $225 $2,391 $1 $— $3,010 
The following tables summarize the Company’s loan portfolio by credit quality indicator as of December 31, 2022:
(In thousands)
PassSpecial MentionSubstandardDoubtfulTotal
Commercial and industrial$893,637 $6,983 $23,275 $1,746 $925,641 
Multifamily947,661 13,696 6,164 — 967,521 
Commercial real estate299,953 24,679 10,501 — 335,133 
Construction and land development21,270 14,002 2,424 — 37,696 
Residential real estate lending1,369,972 — 1,807 — 1,371,779 
Consumer and other462,415 — 1,584 — 463,999 
Total loans$3,994,908 $59,360 $45,755 $1,746 $4,101,769 
The activities in the allowance by portfolio for the three months ended March 31, 2023 are as follows:
(In thousands)Commercial and IndustrialMultifamilyCommercial Real EstateConstruction and Land DevelopmentResidential Real Estate LendingConsumer SolarConsumer and OtherTotal
Allowance for credit losses:
Beginning balance - ALLL$12,916 $7,104 $3,627 $825 $11,338 $6,867 $2,354 $45,031 
Adoption of ASU No. 2016-133,816 (1,183)(1,321)(466)3,068 16,166 1,149 21,229 
Beginning balance - ACL16,732 5,921 2,306 359 14,406 23,033 3,503 66,260 
Provision for (recovery of) credit losses(263)2,236 149 (5)263 1,325 (93)3,612 
Charge-offs— (1,127)— — (58)(1,807)(18)(3,010)
Recoveries4 — — — 238 211 8 461 
Ending Balance - ACL$16,473 $7,030 $2,455 $354 $14,849 $22,762 $3,400 $67,323 

The amortized cost basis of loans on nonaccrual status and the related allowance as of March 31, 2023 are as follows:

25



Notes to Consolidated Financial Statements (unaudited)
Nonaccrual with No AllowanceNonaccrual with AllowanceReserve
(In thousands)
Commercial and industrial$674 $8,847 $5,079 
Multifamily334 2,376 524 
Commercial real estate4,745 — — 
Construction and land development8,803 — — 
     Total commercial portfolio14,556 11,223 5,603 
Residential real estate lending2,016 — — 
Consumer solar2,021 — — 
Consumer and other140 — — 
     Total retail portfolio4,177 — — 
$18,733 $11,223 $5,603 

The below table summarizes collateral dependent loans which were individually evaluated to determine expected credit losses as of March 31, 2023:
Real Estate Collateral DependentAssociated Allowance for Credit Losses
(In thousands)
Multifamily$2,710 $524 
Commercial real estate4,745 — 
Construction and land development13,989 — 
$21,444 $524 

The activities in the allowance by portfolio for the three months ended March 31, 2022 are as follows:
(In thousands)Commercial and IndustrialMultifamilyCommercial Real EstateConstruction and Land DevelopmentResidential Real Estate LendingConsumer and OtherTotal
Allowance for loan losses:
Beginning balance$10,652 $4,760 $7,273 $405 $9,008 $3,768 $35,866 
Provision for (recovery of) loan losses1,511 (112)(433)248 (284)1,363 2,293 
Charge-offs— (416)— — (39)(868)(1,323)
Recoveries6 — — 1 651 48 706 
Ending Balance$12,169 $4,232 $6,840 $654 $9,336 $4,311 $37,542 

As of March 31, 2023 and December 31, 2022, mortgage loans with an unpaid principal balance of $993.3 million and $819.4 million, respectively, were pledged to the FHLBNY to secure outstanding advances and letters of credit.

There were $1.6 million in related party loans outstanding as of March 31, 2023 compared to $1.6 million related party loans as of December 31, 2022.




26



Notes to Consolidated Financial Statements (unaudited)
Impaired Loans (prior to the adoption of ASU 2016-13)

The following table provides information regarding the methods used to evaluate the Company’s loans for impairment by portfolio prior to the adoption of ASU 2016-13, and the Company’s allowance by portfolio based upon the method of evaluating loan impairment as of as of December 31, 2022.
(In thousands)Commercial and IndustrialMultifamilyCommercial Real EstateConstruction and Land DevelopmentResidential Real Estate LendingConsumer and OtherTotal
Loans:
Individually evaluated for impairment$14,716 $3,828 $4,851 $2,424 $1,982 $— $27,801 
Collectively evaluated for impairment910,925 963,693 330,282 35,272 1,369,797 463,999 4,073,968 
Total loans$925,641 $967,521 $335,133 $37,696 $1,371,779 $463,999 $4,101,769 
Allowance for loan losses:
Individually evaluated for impairment$5,433 $180 $— $— $55 $— $5,668 
Collectively evaluated for impairment7,483 6,924 3,627 825 11,283 9,221 39,363 
Total allowance for loan losses$12,916 $7,104 $3,627 $825 $11,338 $9,221 $45,031 
The following is additional information regarding the Company's impaired loans and the allowance related to such loans prior to the adoption of ASU 2016-13, as of and for the year ended December 31, 2022.
December 31, 2022
(In thousands)
Recorded
Investment
Average
Recorded
Investment
Unpaid
Principal
Balance
Related
Allowance
Loans without a related allowance:
    Residential real estate lending$764 $5,636 $1,761 $— 
    Multifamily334 167 334 — 
    Construction and land development2,424 4,950 7,476 — 
    Commercial real estate4,851 4,453 5,023 — 
    Commercial and industrial3,791 1,896 3,881 — 
12,164 17,102 18,475 — 
Loans with a related allowance:
    Residential real estate lending1,218 8,352 1,278 55 
    Multifamily3,494 3,201 3,494 180 
    Commercial and industrial10,925 11,855 11,975 5,433 
15,637 23,408 16,747 5,668 
Total individually impaired loans:
    Residential real estate lending1,982 13,988 3,039 55 
    Multifamily3,828 3,368 3,828 180 
    Construction and land development2,424 4,950 7,476 — 
    Commercial real estate4,851 4,453 5,023 — 
    Commercial and industrial14,716 13,751 15,856 5,433 
$27,801 $40,510 $35,222 $5,668 
27



Notes to Consolidated Financial Statements (unaudited)
5.    DEPOSITS
Deposits are summarized as follows:
March 31, 2023December 31, 2022
AmountWeighted Average RateAmountWeighted Average Rate
(In thousands)
Non-interest-bearing demand deposit accounts$3,015,558 0.00 %$3,331,067 0.00 %
NOW accounts199,518 0.87 %206,434 0.73 %
Money market deposit accounts2,702,464 1.32 %2,445,396 0.94 %
Savings accounts371,240 0.95 %386,190 0.75 %
Time deposits157,697 1.25 %151,699 2.57 %
Brokered CDs594,884 4.52 %74,251 3.84 %
$7,041,361 0.99 %$6,595,037 0.52 %

The scheduled maturities of time deposits and brokered CDs as of March 31, 2023 are as follows:
(In thousands)Balance
2023$675,298 
202433,282 
20259,713 
20268,497 
20277,681 
Thereafter18,110 
$752,581 
Time deposits of $250,000 or more totaled $31.0 million as of March 31, 2023 and $36.2 million as of December 31, 2022.
The Bank offers time deposits through the Certificate of Deposit Account Registry Service (“CDARS”) for the purpose of providing FDIC insurance to bank customers with balances in excess of FDIC insurance limits. CDARS deposits totaled approximately $42.3 million and $28.3 million as of March 31, 2023 and December 31, 2022, respectively, and are included in Time deposits above.
Our total deposits included deposits from Workers United and its related entities, a related party, in the amounts of $74.8 million as of March 31, 2023 and $52.2 million as of December 31, 2022.
Included in total deposits are state and municipal deposits totaling $38.9 million and $88.3 million as of March 31, 2023 and December 31, 2022, respectively. Such deposits are secured by letters of credit issued by the FHLBNY or by securities pledged with the FHLBNY.
28



Notes to Consolidated Financial Statements (unaudited)
6.    BORROWED FUNDS
FHLBNY advances are collateralized by the FHLBNY stock owned by the Bank plus a pledge of other eligible assets comprised of securities and mortgage loans. Assets are pledged to collateral capacity. As of March 31, 2023, the value of the other eligible assets had an estimated market value net of haircut totaling $1.33 billion (comprised of securities of $581.2 million and mortgage loans of $746.0 million). The fair value of assets pledged to the FHLBNY is required to exceed outstanding advances. There were no outstanding FHLB advances as of March 31, 2023 and $580.0 million in outstanding FHLBNY advances as of December 31, 2022. For the three months ended March 31, 2023, and 2022, interest expense on FHLBNY advances was $3.0 million and zero, respectively.
In addition to FHLBNY advances, the Company uses other borrowings for short-term borrowing needs. Federal funds lines of credit are extended to the Company by nonaffiliated banks with which a correspondent banking relationship exists. At March 31, 2023, and December 31, 2022 there was no outstanding balance related to federal funds purchased. In addition, following the failures of SIVB and Signature Bank in March 2023, the Federal Reserve created a new Bank Term Funding Program ("BTFP") as an additional source of liquidity against high-quality securities, offering loans of up to one year to eligible institutions pledging qualifying assets as collateral. At March 31, 2023, there was an outstanding balance of $140.0 million related to the BTFP, and no outstanding balance at December 31, 2022. For the three months ended March 31, 2023, and 2022, interest expense on other borrowings was $0.2 million and zero, respectively.
29



Notes to Consolidated Financial Statements (unaudited)
7.    SUBORDINATED DEBT
On November 8, 2021, the Company completed a public offering of $85.0 million of aggregated principal amount of 3.250% Fixed-to-Floating Rate subordinated notes due 2031 (the "Notes"). The fixed rate period is defined from and including November 8, 2021 to, but excluding, November 15, 2026, or the date of earlier redemption. The floating rate period is defined from and including November 15, 2026 to, but excluding, November 15, 2031, or the date of earlier redemption. The floating rate per annum is equal to three-month term SOFR (the "benchmark rate") plus a spread of 230 basis points for each quarterly interest period during the floating rate period, provided however, that if the benchmark rate is less than zero, the benchmark rate shall be deemed to be zero. The subordinated notes will mature on November 15, 2031.
The Company may, at its option, beginning with the interest payment date of November 15, 2026, and on any interest payment date thereafter, redeem the Notes, in whole or in part, from time to time, subject to obtaining prior approval of the Board of Governors of the Federal Reserve System (the "Federal Reserve Board") to the extent such approval is then required under the capital adequacy rules of the Federal Reserve Board, at a redemption price equal to 100% of the principal amount of the Notes being redeemed, plus accrued and unpaid interest to, but excluding, the date of redemption.
Interest expense on subordinated debt for the three months ended March 31, 2023 and 2022 was $0.6 million and $0.7 million, respectively.
Gains on repurchases of subordinated debt for the three months ended March 31, 2023 and 2022 were $0.8 million and zero, respectively, and are recorded in Non-interest income - other on the consolidated statements of income.
On July 26, 2022, September 29, 2022, and March 17, 2023 the Company repurchased $3.25 million, $3.0 million, $4.0 million, respectively, of the subordinated notes due on November 15, 2031.

30



Notes to Consolidated Financial Statements (unaudited)
8.    EARNINGS PER SHARE

Under the two-class method, earnings available to common stockholders for the period are allocated between common stockholders and participating securities according to participation rights in undistributed earnings. Our time-based and performance-based restricted stock units are not considered participating securities as they do not receive dividend distributions until satisfaction of the related vesting requirements. As of March 31, 2023 and March 31, 2022, we had 50 thousand and 44 thousand anti-dilutive shares, respectively.

Following is a table setting forth the factors used in the earnings per share computation follow:

Three Months
Ended March 31,
20232022
(In thousands, except per share amounts)
Net income attributable to Amalgamated Financial Corp.$21,338 $14,165 
Dividends paid on preferred stock— — 
Income attributable to common stock$21,338 $14,165 
Weighted average common shares outstanding, basic30,706 31,107 
Basic earnings per common share$0.69 $0.46 
Income attributable to common stock$21,338 $14,165 
Weighted average common shares outstanding, basic30,706 31,107 
Incremental shares from assumed conversion of options and RSUs233 349 
Weighted average common shares outstanding, diluted30,939 31,456 
Diluted earnings per common share$0.69 $0.45 
31



Notes to Consolidated Financial Statements (unaudited)
9.    EMPLOYEE BENEFIT PLANS
Long Term Incentive Plans

Stock Options:

The Company does not currently maintain an active stock option plan that is available for issuing new options. As of December 31, 2020, all options are fully vested and the Company will not incur any further expense related to options.
A summary of the status of the Company’s options as of March 31, 2023 follows:
Number of OptionsWeighted Average Exercise PriceWeighted Average Remaining Contractual Term
Intrinsic Value (in thousands)
Outstanding, December 31, 2022426,880 $13.09 3.3years
Granted— — —
Forfeited/ Expired— — —
Exercised(29,320)14.56 —
Outstanding, March 31, 2023397,560 12.99 3.0years$1,870 
Vested and Exercisable, March 31, 2023397,560 $12.99 3.0years$1,870 

The range of exercise prices is $11.00 to $14.65 per share.

As noted above, there was no compensation cost attributable to the options for the three months ended March 31, 2023 or for the three months ended March 31, 2022 as all options had been fully expensed as of December 31, 2020. The fair value of all awards outstanding as of March 31, 2023 and December 31, 2022 was $1.9 million and $4.2 million, respectively. No cash was received for options exercised in the three months ended March 31, 2023 or for the three months ended March 31, 2022. The Company repurchased 3,999 shares and 4,019 shares for options exercised in the three months ended March 31, 2023 and March 31, 2022, respectively.

Restricted Stock Units:

The Amalgamated Financial Corp. 2021 Equity Incentive Plan (the “Equity Plan”) provides for the grant of stock-based incentive awards to employees and directors of the Company. The number of shares of common stock of the Company available for stock-based awards in the Equity Plan is 1,250,000 of which 271,214 shares were available for issuance as of March 31, 2023.

Restricted stock units ("RSUs") represent an obligation to deliver shares to an employee or director at a future date if certain vesting conditions are met. RSUs are subject to a time-based vesting schedule, the satisfaction of performance conditions, or the satisfaction of market conditions, and are settled in shares of the Company’s common stock. RSUs do not provide dividend equivalent rights from the date of grant and do not provide voting rights. RSUs accrue dividends based on dividends paid on common shares, but those dividends are paid in cash upon satisfaction of the specified vesting requirements on the underlying RSU.

A summary of the status of the Company’s time-based vesting RSUs as of March 31, 2023 follows:
SharesGrant Date Fair Value
Unvested, December 31, 2022331,023 $17.72 
Awarded96,443 23.43 
Forfeited/Expired(5,812)15.06 
Vested(40,144)16.46 
Unvested, March 31, 2023381,510 $19.33 
32



Notes to Consolidated Financial Statements (unaudited)

A summary of the status of the Company’s performance-based vesting RSUs as of March 31, 2023 follows:
SharesGrant Date Fair Value
Unvested, December 31, 202296,970 $16.37 
Awarded62,945 19.54 
Forfeited/Expired(6,013)15.08 
Vested(23,948)14.82 
Unvested, March 31, 2023129,954 $16.37 

During the three months ended March 31, 2023, the Company granted 29,923 performance-based RSUs at a fair value of $23.42 per share, respectively which vest subject to the achievement of the Company’s corporate goal for the three-year period from January 1, 2023 to December 31, 2025. The corporate goal is based on the Company achieving a target increase in Tangible Book Value, adjusted for certain factors. The minimum and maximum awards that are achievable are 0 and 44,885 shares, respectively.

During the three months ended March 31, 2023, the Company granted 29,747 market-based RSUs at a fair value of $23.56 per share which vest subject to the Bank’s relative total shareholder return compared to a group of peer banks over a three-year period from February 15, 2023 to February 14, 2026. The minimum and maximum awards that are achievable are 0 and 44,621 shares, respectively.

During the three months ended March 31, 2023, the Company granted 619 and 2,656 shares at a fair value of $14.45 and $15.23 per share, respectively, related to the vesting of performance-based RSUs to satisfy the achievement of corporate goals above target.

As of March 31, 2023, the Company reserved 194,931 shares for issuance upon vesting of performance-based RSUs assuming the Company’s employees achieve the maximum share payout.

The Company repurchased 21,738 shares and 14,505 shares for RSUs vested in the three months ended March 31, 2023 and 2022, respectively.

Of the 511,464 unvested RSUs and PSUs on March 31, 2023, the minimum units that will vest, solely due to a service test, are 381,510. The maximum units that will vest, assuming the highest payout on performance and market-based units, are 576,441.

Compensation expense attributable to RSUs and PSUs was $0.9 million for the three months ended March 31, 2023, and $0.5 million for the three months ended March 31, 2022, and other expenses for directors were $0.1 million and $0.1 million, respectively. As of March 31, 2023, there was $7.7 million of total unrecognized compensation cost related to the non-vested RSUs and PSUs granted. This expense may increase or decrease depending on the expected number of performance-based shares to be issued. This expense is expected to be recognized over 3.4 years.


Employee Stock Purchase Plan

On April 28, 2021, the Company's stockholders approved the Amalgamated Financial Corp. Employee Stock Purchase Plan (the "ESPP") which was implemented on March 2, 2022. The aggregate number of shares of common stock that may be purchased and issued under the ESPP will not exceed 500,000 of previously authorized shares. Under the terms of the ESPP, employees may authorize the withholding of up to 15% of their eligible compensation to purchase the Company's shares of common stock, not to exceed $25,000 of the fair market value of such common stock for any calendar year. The purchase price per shares acquired under the ESPP will never be less than 85% of the fair market value of the Company's common stock on the last day of the offering period. The Company's Board of Directors in its discretion may terminate the ESPP at any time with respect to any shares for which options have not been granted.

The Compensation Committee of the Board of Directors (the "Committee") has the right to amend the ESPP without the approval of our stockholders; provided, that no such change may impair the rights of a participant with respect to any outstanding offering period without the consent of such participant, other than a change determined by the Committee to be necessary to comply with
33



Notes to Consolidated Financial Statements (unaudited)
applicable law. A participant may not dispose of shares acquired under the ESPP until six months following the grant date of such shares, or any earlier date as of which the Committee has determined that the participant would qualify for a hardship distribution from the Company’s 401(k) Plan. Accordingly, the fair value award associated with their discounted purchase price is expensed at the time of purchase. The below following summarizes the shares purchased under the ESPP since the inception of the plan:

Number of Shares
Shares available for purchase at December 31, 2022478,081 
Purchases during the three months ended:
March 31, 2023(21,919)
Remaining shares available for purchase at March 31, 2023456,162 

The expense related to the discount on purchased shares for the three months ended March 31, 2023 and March 31, 2022 was $58.1 thousand and $7.8 thousand, respectively, and is recorded within compensation and employee benefits expense on the Consolidated Statements of Income.
34



Notes to Consolidated Financial Statements (unaudited)
10.     FAIR VALUE OF FINANCIAL INSTRUMENTS
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Assumptions are developed based on prioritizing information within a fair value hierarchy that gives the highest priority to quoted prices in active markets and the lowest priority to unobservable data. A description of the disclosure hierarchy and the types of financial instruments recorded at fair value that management believes would generally qualify for each category are as follows:
Level 1 - Valuations are based on quoted prices in active markets for identical assets or liabilities. Accordingly, valuation of these assets and liabilities does not entail a significant degree of judgment. Examples include most U.S. Government securities and exchange-traded equity securities.
Level 2 - Valuations are based on either quoted prices in markets that are not considered to be active or significant inputs to the methodology that are observable, either directly or indirectly. Financial instruments in this level would generally include mortgage-related securities and other debt issued by GSEs, non-GSE mortgage-related securities, corporate debt, certain redeemable fund investments and certain trust preferred securities.
Level 3 - Valuations are based on inputs to the methodology that are unobservable and significant to the fair value measurement. These inputs reflect management’s own judgments about the assumptions that market participants would use in pricing the assets and liabilities.

Assets Measured at Fair Value on a Recurring Basis
Available for sale securities
The Company’s available for sale securities are reported at fair value. Investments in fixed income securities are generally valued based on evaluations provided by an independent pricing service. These evaluations represent an exit price or their opinion as to what a buyer would pay for a security, typically in an institutional round lot position, in a current sale. The pricing service utilizes evaluated pricing techniques that vary by asset class and incorporate available market information and, because many fixed income securities do not trade on a daily basis, applies available information through processes such as benchmark curves, benchmarking of available securities, sector groupings and matrix pricing. Model processes, such as option adjusted spread models, are used to value securities that have prepayment features. In those limited cases where pricing service evaluations are not available for a fixed income security, management will typically value those instruments using observable market inputs in a discounted cash flow analysis.
The following summarizes those financial instruments measured at fair value on a recurring basis in the Consolidated Statements of Financial Condition as of the dates indicated, categorized by the relevant class of investment and level of the fair value hierarchy:
March 31, 2023
(In thousands)Level 1Level 2Level 3Total
Available for sale securities:
Mortgage-related:
GSE residential CMOs$— $383,394 $— $383,394 
GSE commercial certificates & CMOs— 167,840 — 167,840 
Non-GSE residential certificates— 105,549 — 105,549 
Non-GSE commercial certificates— 97,266 — 97,266 
Other debt:
U.S. Treasury193 — — 193 
ABS— 756,184 — 756,184 
Trust preferred— 10,078 — 10,078 
Corporate— 118,601 — 118,601 
Total assets carried at fair value$193 $1,638,912 $— $1,639,105 
35



Notes to Consolidated Financial Statements (unaudited)
December 31, 2022
(In thousands)Level 1Level 2Level 3Total
Available for sale securities:
Mortgage-related:
GSE residential CMOs$— $389,260 $— $389,260 
GSE commercial certificates & CMOs— 213,786 — 213,786 
Non-GSE residential certificates— 107,080 — 107,080 
Non-GSE commercial certificates— 97,482 — 97,482 
Other Debt:
U.S. Treasury192 — — 192 
ABS— 862,163 — 862,163 
Trust preferred— 10,143 — 10,143 
Corporate— 132,370 — 132,370 
Total assets carried at fair value$192 $1,812,284 $— $1,812,476 

Assets Measured at Fair Value on a Non-recurring Basis
Certain financial assets and financial liabilities are measured at fair value on a non-recurring basis. That is, they are subject to fair value adjustments in certain circumstances. Financial assets measured at fair value on a non-recurring basis include certain individually evaluated loans (or impaired loans prior to the adoption of ASU 2016-13) reported at the fair value of the underlying collateral if repayment is expected solely from the collateral.
The following tables summarize assets measured at fair value on a non-recurring basis in the Consolidated Statements of Financial Condition as of the dates indicated, categorized by the relevant class of investment and level of the fair value hierarchy:
March 31, 2023
(In thousands)Carrying ValueLevel 1Level 2Level 3Estimated Fair Value
Fair Value Measurements:
Individually analyzed loans$1,852 $— $— $1,852 $1,852 
$1,852 $— $— $1,852 $1,852 
December 31, 2022
(In thousands)Carrying ValueLevel 1Level 2Level 3Estimated Fair Value
Fair Value Measurements:
Impaired loans$3,315 $— $— $3,315 $3,315 
$3,315 $— $— $3,315 $3,315 


36



Notes to Consolidated Financial Statements (unaudited)
Financial Instruments Not Measured at Fair Value
For those financial instruments that are not recorded at fair value in the consolidated statements of financial condition, but are measured at fair value for disclosure purposes, management follows the same fair value measurement principles and guidance as for instruments recorded at fair value. For a description of the methods, factors and significant assumptions utilized in estimating the fair values for significant categories of financial instruments not measured at fair value, refer to footnote 14, Fair Value of Financial Instruments, included in the Annual Report on Form 10-K for the year ended December 31, 2022. An additional category of financial instrument not measured at fair value that was not previously included in the Annual Report on Form 10-K is summarized below:
•Other borrowings - Other borrowings are valued using a present value technique that incorporates current rates offered on borrowings of comparable remaining maturity. Other borrowings are categorized as Level 2.
There are significant limitations in estimating the fair value of financial instruments for which an active market does not exist. Due to the degree of management judgment that is often required, such estimates tend to be subjective, sensitive to changes in assumptions and imprecise. Such estimates are made as of a point in time and are impacted by then-current observable market conditions; also such estimates do not give consideration to transaction costs or tax effects if estimated unrealized gains or losses were to become realized in the future. Because of inherent uncertainties of valuation, the estimated fair value may differ significantly from the value that would have been used had a ready market for the investment existed and the difference could be material. Lastly, consideration is not given to nonfinancial instruments, including various intangible assets, which could represent substantial value. Fair value estimates are not necessarily representative of the Company’s total enterprise value.
The following table summarizes the financial statement basis and estimated fair values for significant categories of financial instruments:
March 31, 2023
(In thousands)Carrying ValueLevel 1Level 2Level 3Estimated Fair Value
Financial assets:
Cash and cash equivalents$130,897 $130,897 $— $— $130,897 
Held-to-maturity securities1,618,507 — 575,904 913,251 1,489,155 
Loans held for sale5,653— — 5,6535,653
Loans receivable, net4,130,847 — — 3,743,621 3,743,621 
Resell agreements15,431 — — 15,431 15,431 
Accrued interest and dividends receivable40,844138 12,67928,027 40,844
Financial liabilities:
Deposits payable on demand6,288,780 — 6,288,780 — 6,288,780 
Time deposits and brokered CDs752,581 — 750,820 — 750,820 
Other borrowings140,000 — 139,420 — 139,420 
Subordinated debt73,737 — 59,358 — 59,358 
Accrued interest payable3,365 — 3,365 — 3,365 
    
37



Notes to Consolidated Financial Statements (unaudited)
December 31, 2022
(In thousands)
Carrying
Value
Level 1
Level 2
Level 3
Estimated
Fair Value
Financial assets:
Cash and cash equivalents$63,540 $63,540 $— $— $63,540 
Held-to-maturity securities1,541,301 — 574,609 840,262 1,414,871 
Loans held for sale7,943 — 7,943 7,943 
Loans receivable, net4,060,971 — — 3,718,308 3,718,308 
Resell agreements25,754 — — 25,754 25,754 
Accrued interest and dividends receivable41,441 17 12,197 29,227 41,441 
Financial liabilities:
Deposits payable on demand6,369,087 — 6,369,087 — 6,369,087 
Time deposits and brokered CDs225,950 — 225,805 — 225,805 
FHLBNY advances580,000 — 580,000 — 580,000 
Subordinated debt77,708 — 68,966 — 68,966 
Accrued interest payable1,218 — 1,218 — 1,218 
38



Notes to Consolidated Financial Statements (unaudited)
11.     COMMITMENTS, CONTINGENCIES AND OFF BALANCE SHEET RISK
Credit Commitments
The Company is party to various credit related financial instruments with off balance sheet risk. The Company, in the normal course of business, issues such financial instruments in order to meet the financing needs of its customers. These financial instruments include commitments to extend credit and standby letters of credit. Such commitments involve, to varying degrees, elements of credit and interest rate risk in excess of the amounts recognized in the consolidated statements of financial condition.
The following financial instruments were outstanding whose contract amounts represent credit risk as of the related periods:
March 31, 2023December 31, 2022
(In thousands)
Commitments to extend credit$585,692 $723,902 
Standby letters of credit29,125 29,568 
Total$614,817 $753,470 

Commitments to extend credit are contracts to lend to a customer as long as there is no violation of any condition established in the contract. These commitments have fixed expiration dates and other termination clauses and generally require the payment of nonrefundable fees. Since a portion of the commitments are expected to expire without being drawn upon, the contractual principal amounts do not necessarily represent future cash requirements. The Company’s maximum exposure to credit risk is represented by the contractual amount of these instruments. These instruments represent ultimate exposure to credit risk only to the extent they are subsequently drawn upon by customers.
Standby letters of credit are conditional lending commitments issued by the Company to guarantee the financial performance of a customer to a third party. The credit risk involved in issuing standby letters of credit is essentially the same as that involved in extending loan facilities to customers. The balance sheet carrying value of standby letters of credit approximates any nonrefundable fees received but not yet recorded as income. The Company considers this carrying value, which is not material, to approximate the estimated fair value of these financial instruments.
The Company reserves for the credit risk inherent in off balance sheet credit commitments. This allowance, which is included in other liabilities, amounted to approximately $4.3 million as of March 31, 2023, compared to a reserve of $1.6 million as of December 31, 2022. The provision for credit losses related to off balance sheet credit commitments was $0.1 million for the three months ended March 31, 2023, and the expense related to off balance sheet credit commitments in other non-interest expense was $0.3 million for the three months ended March 31, 2022.
Investment Obligations
The Company is a party to agreements with Pace Funding Group LLC, which operates Home Run Financing, for the purchase of PACE assessment securities until September 2023. As of March 31, 2023, the Company had purchased $519.7 million of these obligations and had an estimated remaining commitment of $112.0 million. As of December 31, 2022, we had purchased $451.7 million of PACE assessment securities from Pace Funding Group LLC and had a remaining commitment of $150.0 million. The PACE assessments have equal-lien priority with property taxes and generally rank senior to first lien mortgages. These investments are currently held in the Company's held-to-maturity investment portfolio. The Company evaluates these obligations for credit risk and the recorded reserve is immaterial.
Other Commitments and Contingencies
In the ordinary course of business, there are various legal proceedings pending against the Company. Based on the opinion of counsel, management believes that the aggregate liabilities, if any, arising from such actions would not have a material adverse effect on the consolidated financial position or results of operations of the Company. As part of the Company's ongoing investments in VIE projects, we also have commitments to provide financing, which are included in footnote 14.
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Notes to Consolidated Financial Statements (unaudited)
12.    LEASES
The Bank as a lessee has operating leases primarily consisting of real estate arrangements where the Company operates its headquarters, branches and business production offices. All leases identified as in scope are accounted for as operating leases as of March 31, 2023. These leases are typically long-term leases and generally are not complicated arrangements or structures. Several of the leases contain renewal options at a rate comparable to the fair market value based on comparable analysis to similar properties in the Bank’s geographies.
Real estate operating leases are presented as a right-of-use (“ROU”) asset and a related operating lease liability on the Consolidated Statements of Financial Condition. The ROU asset represents the Company’s right to use the underlying asset for the lease term and the operating lease liabilities represent the obligation to make lease payments arising from the lease. The Company applied its incremental borrowing rate (“IBR”) as the discount rate to the remaining lease payments to derive a present value calculation for initial measurement of the operating lease liability. The IBR reflects the interest rate the Company would have to pay to borrow on a collateralized basis over a similar term for an amount equal to the lease payments. Lease expense is recognized on a straight-line basis over the lease term.
The following table summarizes our lease cost and other operating lease information:
Three Months Ended
March 31, 2023		Three Months Ended
March 31, 2022
(In thousands)
Operating lease cost$1,777 $2,251 
Cash paid for amounts included in the measurement of Operating leases liability$2,813 $2,630 
Weighted average remaining lease term on operating leases (in years)3.64.6
Weighted average discount rate used for operating leases liability3.24 %3.25 %
Note: Sublease income and variable income or expense considered immaterial

The following table presents the remaining commitments for operating lease payments for the next five years and thereafter, as well as a reconciliation to the discounted operating leases liability recorded in the Consolidated Statements of Financial Condition as of March 31, 2023:

(In thousands)As of March 31, 2023
2023$8,480 
202411,324 
202510,593 
20269,200 
2027959 
Thereafter— 
Total undiscounted operating lease payments40,556 
Less: present value adjustment2,223 
Total Operating leases liability$38,333 




40



Notes to Consolidated Financial Statements (unaudited)
13.     GOODWILL AND INTANGIBLE ASSETS
Goodwill

In accordance with GAAP, the Company performs an annual test as of June 30 to identify potential impairment of goodwill, or more frequently if events or circumstances indicate a potential impairment may exist. If the carrying amount of the Company, as a sole reporting unit, including goodwill, exceeds its fair value, an impairment loss is recognized in an amount equal to that excess up to the amount of the recorded goodwill.

The Company performed its annual test based upon market data as of June 30, 2022 and estimates and assumptions that the Company believes most appropriate for the analysis. Based on the qualitative analysis performed in accordance with ASC 350, the Company determined it more likely than not that goodwill was not impaired as of June 30, 2022. Changes in certain assumptions used in the Company's assessment could result in significant differences in the results of the impairment test. Should market conditions or management’s assumptions change significantly in the future, an impairment to goodwill is possible.

At March 31, 2023 and December 31, 2022, the carrying amount of goodwill was $12.9 million.
Intangible Assets
The following table reflects the estimated amortization expense, comprised entirely by the Company’s core deposit intangible asset, for the next five years and thereafter:
(In thousands)Total
2023$666 
2024730 
2025574 
2026419 
2027265 
Thereafter229 
Total$2,883 

Accumulated amortization of the core deposit intangible was $5.1 million as of March 31, 2023.

Amortization expense recognized on the core deposit intangible was $0.2 million and $0.3 million for the three months ended March 31, 2023 and March 31, 2022, respectively.




41



Notes to Consolidated Financial Statements (unaudited)
14.     VARIABLE INTEREST ENTITIES
Tax Credit Investments

The Company makes investments in unconsolidated entities that construct, own and operate solar generation facilities. An unrelated third party is the managing member and has control over the significant activities of the variable interest entities ("VIE"). The Company generates a return through the receipt of tax credits allocated to the projects, as well as operational distributions. The primary risk of loss is generally mitigated by policies requiring that the project qualify for the expected tax credits prior to the Company making its investment. Any loans to the VIE are secured. As of March 31, 2023, the Company's maximum exposure to loss is $63.9 million.
March 31, 2023December 31, 2022
(In thousands)
Unconsolidated Variable Interest Entities
Tax credit investments included in equity investments$3,164 $3,299 
Loans and letters of credit commitments60,727 60,857 
Funded portion of loans and letters of credit commitments47,398 47,683 
Remaining equity investment commitments19,201 19,201 
The following table summarizes the tax benefits conveyed by the Company’s solar generation VIE investments:
Three Months Ended
March 31,
20232022
(In thousands)
Tax credits and other tax benefits recognized$813 $668 



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Item 2.      Management’s Discussion and Analysis of Financial Condition and Results of Operations.

General
In this discussion, unless the context indicates otherwise, references to “we,” “us,” “our” and the “Company” refer to Amalgamated Financial Corp. and Amalgamated Bank. References to the “Bank” refer to Amalgamated Bank.

The following is a discussion of our consolidated financial condition as of March 31, 2023, as compared to December 31, 2022, and our results of operations for the three month periods ended March 31, 2023 and March 31, 2022. 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, 2022 (the “2022 Annual Report”), filed with the Securities and Exchange Commission on March 9, 2023. 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.
In addition to historical information, this discussion includes certain forward-looking statements regarding business matters and events and trends that may affect our future results. For additional information regarding forward-looking statements and our related cautionary disclosures, see the “Cautionary Note Regarding Forward-Looking Statements” beginning on page ii of this report.

Overview
Our business
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, 2023. As of March 31, 2023, our total assets were $7.84 billion, our total loans, net of deferred fees and allowance were $4.13 billion, our total deposits were $7.04 billion, and our stockholders' equity was $519.2 million. As of March 31, 2023, our trust business held $39.73 billion in assets under custody and $13.86 billion in assets under management.
We offer a complete suite of commercial and retail banking, investment management and trust and custody services. Our commercial banking and trust businesses are national in scope and we also offer a full range of products and services to both commercial and retail customers through our three branch offices across New York City, one branch office in Washington, D.C., one branch office in San Francisco, one commercial office in Boston and our digital banking platform. Our corporate divisions include Commercial Banking, Trust and Investment Management and Consumer Banking. Our product line includes residential mortgage loans, commercial and industrial ("C&I") loans, commercial real estate ("CRE") loans, multifamily mortgages, consumer loans (predominantly consumer residential solar) and a variety of commercial and consumer deposit products, including non-interest bearing accounts, interest-bearing demand products, savings accounts, money market accounts and certificates of deposit. We also offer online banking and bill payment services, online cash management, safe deposit box rentals, debit card and ATM card services and the availability of a nationwide network of ATMs for our customers.
We currently offer a wide range of trust, custody and investment management services, including asset safekeeping, corporate actions, income collections, proxy services, account transition, asset transfers, and conversion management. We also offer a broad range of investment products, including both index and actively-managed funds spanning equity, fixed-income, real estate and alternative investment strategies to meet the needs of our clients. Our products and services are tailored to our target customer base that prefers a financial partner that is socially responsible, values-oriented and committed to creating positive change in the world. These customers include advocacy-based non-profits, social welfare organizations, national labor unions, political organizations, foundations, socially responsible businesses, and other for-profit companies that seek to balance their profit-making activities with activities that benefit their other stakeholders, as well as the members and stakeholders of these commercial customers. In 2021, we introduced ResponsiFunds which are Environmental, Social and Governance ("ESG") impact products designed to align our clients' investment growth goals with their organizational values.
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Our goal is to be the go-to financial partner for people and organizations who strive to make a meaningful impact in our society and who care about their communities, the environment, and social justice. The growth of our business is fundamental to our social mission and how we deliver impact and value for our stakeholders. The Company has obtained B CorporationTM certification, a distinction earned after being evaluated under rigorous standards of social and environmental performance, accountability, and transparency. The Company is also the largest of twelve commercial financial institutions in the United States that are members of the Global Alliance for Banking on Values, a network of banking leaders from around the world committed to advancing positive change in the banking sector. In 2021, we were recognized for our leadership on the global stage for our work on climate change with governance positions in the United Nations ("UN") convened Net Zero Banking Alliance and the Global Partnership for Carbon Accounting Financials ("PCAF") and an advisory role for the Glasgow Finance Alliance for Net Zero.
New Developments
In March 2023, the failures of Santa Clara, California-based Silicon Valley Bank (“SIVB”) and New York, New York-based Signature Bank have generated concerns regarding the overall health and liquidity of the banking sector. SIVB was placed into receivership on March 10, 2023, and Signature Bank was placed into receivership on March 12, 2023, with the Federal Deposit Insurance Corporation ("FDIC") being appointed receiver for both failed banks. On March 12, 2023, the Board of Governors of the Federal Reserve System, Department of Treasury and the FDIC issued a joint statement concerning actions they had taken in response to the SIVB and Signature Bank failures. The Federal Reserve Board announced that it would make available additional funding to eligible depository institutions through the creation of a new Bank Term Funding Program. Subsequently, on May 1, 2023, First Republic Bank was also placed into FDIC receivership. These failures represented the second, third, and fourth largest bank failures in U.S. history. As a result, there is increased scrutiny on the banking industry, particularly in the area of liquidity monitoring. In response, we have taken numerous precautionary actions to monitor and limit liquidity risk, including increased deposit monitoring and reporting, proactive customer outreach, increased pledging of loans and securities to the Federal Home Loan Bank of New York and increased pledging of securities at the Federal Reserve Bank discount window to increase our borrowing capacity, pledging of securities to the Bank Term Funding Program, increased issuance of brokered certificates of deposit, and increasing our target cash balances.
Critical and Significant Accounting Policies and Estimates

Our consolidated financial statements are prepared based on the application of accounting policies generally accepted in the United States, or GAAP, and conform to general practices within the banking industry. Our significant accounting policies are more fully described in Note 1 of our audited consolidated financial statements included in our 2022 Annual Report. The allowance for credit losses is a critical accounting policy, which has changed due to the adoption of ASU 2016-13 effective January 1, 2023. Our CECL policy is described under “Recently Adopted Accounting Standards” in Note 1 of our condensed financial statements, in addition to our accounting policy related to treasury stock.

Apart from the aforementioned additions, there have been no other significant changes to our significant accounting policies, or the estimates made pursuant to those policies as described in our 2022 Annual Report.

Uncertainties Regarding the Allowance for Credit Loss Estimate

Estimating the timing and amounts of future losses is subject to significant management judgment as these projected cash flows rely upon the estimates discussed within the CECL policy and factors that are reflective of current or future expected conditions. These estimates depend on the duration of current overall economic conditions, industry, borrower, or portfolio specific conditions. Volatility in certain credit metrics and differences between expected and actual outcomes are to be expected. Customers may not repay their loans according to the original terms, and the collateral securing the payment of those loans may be insufficient to pay any remaining loan balance. Bank regulators periodically review our allowance for credit losses and may require us to increase our provision for credit losses or loan charge-offs.

Impact on Financial Condition and Results of Operations

If our assumptions prove to be incorrect, the allowance for credit losses may not be sufficient to cover expected losses in the loan portfolio, resulting in additions to the allowance. Future additions or reductions to the allowance may be necessary based on changes in economic, market or other conditions. Changes in estimates could result in a material change in the allowance through charges to earnings and would materially decrease our net income. We may experience significant credit losses if borrowers experience financial difficulties, which could have a material adverse effect on our operating results. In addition, various regulatory agencies, as an integral part of the examination process, periodically review the allowance for credit losses. Such
44


agencies may require the Bank to recognize adjustments to the allowance based on their judgments of the information available to them at the time of their examination.
45


Recent Accounting Pronouncements

Accounting Standards Effective in 2023 and onward

On January 7, 2021, the FASB has issued Accounting Standards Update No. 2021-01, Reference Rate Reform (Topic 848): Scope. The new guidance amends the scope of ASU 2020-04, Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which was aimed at easing the potential accounting burden expected when global capital markets move away from the London Interbank Offered Rate ("LIBOR") (the benchmark interest rate banks use to make short-term loans to each other) and provided temporary, optional expedients and exceptions for applying accounting guidance to contract modifications and hedging relationships, subject to meeting certain criteria, that reference LIBOR or another reference rate expected to be discontinued. As the majority of our securities tied to LIBOR are expected to transition to the Secured Overnight Financing Rate ("SOFR") or pay off before the transition date and given that we do not have a substantial amount of commercial loans or any derivative transactions tied to LIBOR, the Adoption of ASU 2021-01 is not expected to have a material impact on our operating results or financial condition.
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Results of Operations
General
Our results of operations depend substantially on net interest income, which is the difference between interest income on interest-earning assets, consisting primarily of interest income on loans, investment securities and other short-term investments and interest expense on interest-bearing liabilities, consisting primarily of interest expense on deposits and borrowings. Our results of operations are also dependent on non-interest income, consisting primarily of income from Trust Department fees, service charges on deposit accounts, net gains on sales of investment securities and income from bank-owned life insurance (“BOLI”). Other factors contributing to our results of operations include our provisions for credit losses, income taxes, and non-interest expenses, such as salaries and employee benefits, occupancy and depreciation expenses, professional fees, data processing fees and other miscellaneous operating costs.

Net income for the first quarter of 2023 was $21.3 million, or $0.69 per diluted share, compared to $14.2 million, or $0.45 per diluted share, for the first quarter of 2022. The $7.1 million increase was primarily due to a $20.3 million increase in interest income on securities and a $13.7 million increase in interest income on loans offset by an increase in interest expense of $15.6 million primarily related to deposits, a $4.2 million increase in non-interest expense, and a $2.7 million increase in income tax expense, and a $2.2 million decrease in non-interest income.

Net Interest Income
Net interest income, representing interest income less interest expense, is a significant contributor to our revenues and earnings. We generate interest income from interest, dividends and prepayment fees on interest-earning assets, including loans, investment securities and other short-term investments. We incur interest expense from interest paid on interest-bearing liabilities, including interest-bearing deposits, Federal Home Loan Bank of New York ("FHLBNY") advances, federal funds purchased and other borrowings. To evaluate net interest income, we measure and monitor (i) yields on our loans and other interest-earning assets, (ii) the costs of our deposits and other funding sources, (iii) our net interest spread and (iv) our net interest margin. Net interest spread is equal to the difference between rates earned on interest-earning assets and rates paid on interest-bearing liabilities. Net interest margin is equal to the annualized net interest income divided by average interest-earning assets. Because non-interest-bearing sources of funds, such as non-interest-bearing deposits and stockholders’ equity, also fund interest-earning assets, net interest margin includes the benefit of these non-interest-bearing sources.
Changes in the market interest rates and interest rates we earn on interest-earning assets or pay on interest-bearing liabilities, as well as the volume and types of interest-earning assets, interest-bearing and non-interest-bearing liabilities, are usually the largest drivers of periodic changes in net interest spread, net interest margin and net interest income.
Three Months Ended March 31, 2023 and 2022
The following table sets forth information related to our average balance sheet, average yields on assets, and average costs of liabilities for the periods indicated:
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Three Months Ended
March 31, 2023		Three Months Ended
March 31, 2022
(In thousands)Average
Balance		Income /
Expense		Yield /
Rate		Average
Balance		Income /
Expense		Yield /
Rate
   Interest-earning assets:
Interest-bearing deposits in banks$90,962 $618 2.76 %$423,878 $179 0.17 %
Securities(1)
3,361,750 39,193 4.73 %3,192,642 18,435 2.34 %
Resell Agreements18,644 319 6.94 %219,221 720 1.33 %
Total loans, net (2)(3)
4,129,460 44,806 4.40 %3,315,155 31,127 3.81 %
   Total interest-earning assets7,600,816 84,936 4.53 %7,150,896 50,461 2.86 %
   Non-interest-earning assets:
Cash and due from banks4,015 9,226 
Other assets217,020 232,649 
   Total assets$7,821,851 $7,392,771 
   Interest-bearing liabilities:
Savings, NOW and money market deposits3,091,228 $9,555 1.25 %2,896,086 $1,247 0.17 %
Time deposits 149,814 297 0.80 %199,340 155 0.32 %
Brokered CDs367,684 3,983 4.39 %— — 0.00 %
   Total interest-bearing deposits3,608,726 13,835 1.55 %3,095,426 1,402 0.18 %
Federal Home Loan Bank advances254,221 3,010 4.80 %— — 0.00 %
Other Borrowings93,657 811 3.51 %84,597 691 3.31 %
   Total borrowings347,878 3,821 4.45 %84,597 691 3.31 %
   Total interest-bearing liabilities3,956,604 17,656 1.81 %3,180,023 2,093 0.27 %
   Non-interest-bearing liabilities:
Demand and transaction deposits3,286,964 3,549,483 
Other liabilities75,798 102,874 
   Total liabilities7,319,366 6,832,380 
   Stockholders' equity502,485 560,391 
   Total liabilities and stockholders' equity$7,821,851 $7,392,771 
   Net interest income / interest rate spread$67,280 2.72 %$48,368 2.59 %
   Net interest-earning assets / net interest margin$3,644,212 3.59 %$3,970,873 2.74 %
Total deposits / total cost of deposits$6,895,690 0.81 %$6,644,909 0.09 %
Total borrowings / total cost of funds$7,243,568 0.99 %$6,729,506 0.13 %
(1) Includes FHLBNY stock in the average balance, and dividend income on FHLBNY stock in interest income
(2) Amounts are net of deferred origination costs. With the adoption of the CECL standard on January 1, 2023, the average balance of the allowance for credit losses on loans was reclassified for all presented periods to other assets to allow for comparability.
(3) Includes prepayment penalty income in 1Q2023 and 1Q2022 of $0 and $399 thousand, respectively

Net interest income was $67.3 million for the first quarter of 2023, compared to $48.4 million for the first quarter of 2022. The $18.9 million increase from the first quarter of 2022 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.

Our net interest spread was 2.72% for the three months ended March 31, 2023, compared to 2.59% for the same period in 2022, an increase of 13 basis points. Our net interest margin was 3.59% for the first quarter of 2023, an increase of 85 basis points from 2.74% in the first quarter of 2022. No prepayment penalties were earned in loan income in the first quarter of 2023, compared to a two basis point contribution to net interest margin in the first quarter of 2022.

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The yield on average earning assets was 4.53% for the three months ended March 31, 2023, compared to 2.86% for the same period in 2022, an increase of 167 basis points. This increase was driven primarily by the rising rate environment and an increase in average loan and securities balances.

The average rate on interest-bearing liabilities was 1.81% for the three months ended March 31, 2023, an increase of 154 basis points from the same period in 2022, which was primarily due to the increase in other borrowings expense with the increase in the average balance of FHLBNY advances, and the rising rate environment that led to an increase in interest expense paid for deposits. Non-interest-bearing deposits represented 48% of average deposits for the three months ended March 31, 2023.

Rate-Volume Analysis
Increases and decreases in interest income and interest expense result from changes in average balances (volume) of interest-earning assets and interest-bearing liabilities, as well as changes in weighted average interest rates. The table below presents the effect of volume and rate changes on interest income and expense. Changes in volume are changes in the average balance multiplied by the previous period’s average rate. Changes in rate are changes in the average rate multiplied by the average balance from the previous period. The net changes attributable to the combined impact of both rate and volume have been allocated proportionately to the changes due to volume and the changes due to rate:
Three Months Ended
March 31, 2023 over March 31, 2022
(In thousands)VolumeChanges Due To
Rate		Net Change
   Interest-earning assets:
Interest-bearing deposits in banks$(596)$1,035 $439 
Securities and FHLBNY stock1,879 18,879 20,758 
Resell Agreements(864)463(401)
Total loans, net8,142 5,537 13,679 
   Total interest income8,561 25,914 34,475 
   Interest-bearing liabilities:
Savings, NOW and money market deposits566 7,742 8,308 
Time deposits(78)220 142 
Brokered CDs3,983 — 3,983 
   Total deposits4,471 7,962 12,433 
FHLBNY advances1,479 1,531 3,010 
Other borrowings78 42 120 
Total borrowings1,557 1,573 3,130 
   Total interest expense6,028 9,535 15,563 
Change in net interest income$2,533 $16,379 $18,912 
Provision for Credit Losses

We establish an allowance for credit losses through a provision for credit losses charged as an expense in our Consolidated Statements of Income. On January 1, 2023, we adopted the CECL standard for calculating the allowance for credit losses and the provision for credit losses. For further discussion of the adoption of and methodology under the CECL standard, refer to Note 1 to the Consolidated Financial Statements in Item 1 of this Form 10-Q.
Three Months Ended March 31, 2023 and 2022

Our provision for credit losses totaled an expense of $5.0 million for the first quarter of 2023 compared to an expense of $2.3 million for the same period in 2022. The provision for credit losses on loans totaled $3.7 million, the provision for credit losses on securities totaled $1.2 million, and the provision for credit losses on off-balance sheet credit exposures was $0.1 million. Overall, the expense increase in the first quarter of 2023 was primarily driven by a $1.2 million impairment charge on a Silicon Valley Bank senior note and an additional $1.1 million of provision expense related to the charge-off of a multifamily loan. The
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remaining provision expense of $2.7 million in the current quarter was primarily driven by solar charge-offs, portfolio growth, and changes in the economic forecasts used to calculate the allowance.
For a further discussion of the allowance, see “Allowance for Credit Losses” below.
Non-Interest Income
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, and other real estate owned, income from equity method investments, and other income.
The following table presents our non-interest income for the periods indicated:
Three Months Ended
March 31,
(In thousands)20232022
Trust Department fees $3,929 $3,491 
Service charges on deposit accounts 2,455 2,447 
Bank-owned life insurance 781 814 
Gain (loss) on sale of securities(3,086)162 
Gain (loss) on sale of loans, net3 (157)
Equity method investments153 432 
Other973 233 
      Total non-interest income $5,208 $7,422 
Three Months Ended March 31, 2023 and 2022

Non-interest income was $5.2 million for the first quarter of 2023, compared to $7.4 million for the first quarter in 2022. The decrease of $2.2 million in the first quarter of 2023 compared to the corresponding quarter in 2022 was primarily due to a loss of $3.1 million on sale of securities, $0.6 million of which relates to the loss on the sale of a portion of a Silicon Valley Bank senior note, and the remainder as part of strategic sales in order to reinvest in higher yielding securities. This was partially offset by an increase in other income of $0.8 million primarily attributed to a gain on the repurchase of subordinated debt, and an increase in Trust Department fees of $0.4 million.

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 2023, an increase of $0.4 million, or 12.5%, from same period in 2022.

Non-Interest Expense
Non-interest expense includes compensation and employee benefits, occupancy and depreciation expense, professional fees (including legal, accounting and other professional services), data processing, office maintenance and depreciation, amortization of intangible assets, advertising and promotion, federal deposit insurance premiums, and other expenses. The following table presents non-interest expense for the periods indicated:
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Three Months Ended
March 31,
(In thousands)20232022
Compensation and employee benefits, net$22,014 $17,669 
Occupancy and depreciation 3,399 3,440 
Professional fees 2,230 2,815 
Data processing 4,549 5,184 
Office maintenance and depreciation 728 725 
Amortization of intangible assets222 262 
Advertising and promotion 1,587 854 
Federal deposit insurance premiums718 667 
Other 3,180 2,781 
      Total non-interest expense $38,627 $34,397 

Three Months Ended March 31, 2023 and 2022
Non-interest expense for the first quarter of 2023 was $38.6 million, an increase of $4.2 million from the first quarter of 2022. The increase of $4.2 million from the first quarter of 2022 was driven by a $4.3 million increase in compensation and benefits expense related to an expected increase in compensation related to corporate incentive payments and temporary personnel costs.

Income Taxes

Three Months Ended March 31, 2023 and 2022

We had a provision for income tax expense of $7.6 million for the first quarter of 2023, compared to $4.9 million for the first quarter of 2022. Our effective tax rate for the first quarter of 2023 was 26.2%, compared to 25.8% for the first quarter of 2022.


Financial Condition

Balance Sheet

Our total assets were $7.84 billion at March 31, 2023, compared to $7.84 billion at December 31, 2022. Notable changes within individual balance sheet line items include a $69.9 million increase in loans receivable, net, and an increase in cash of $67.4 million, offset by a $96.2 million decrease in investment securities, a $26.1 million decrease in Federal Home Loan Bank of New York stock, and a $10.4 million decrease in resell agreements.
Investment Securities

The primary goal of our securities portfolio is to maintain an available source of liquidity and an efficient investment return on excess capital, while maintaining a low-risk profile. We also use our securities portfolio to manage interest rate risk, meet Community Reinvestment Act (“CRA”) goals, support the Company's mission, and to provide collateral for certain types of deposits or borrowings. An Investment Committee chaired by our Chief Financial Officer manages our investment securities portfolio according to written investment policies approved by our Board of Directors. Investments in our securities portfolio may change over time based on management’s objectives and market conditions.

We seek to minimize credit risk in our securities portfolio through diversification, concentration limits, restrictions on high risk investments (such as subordinated positions), comprehensive pre-purchase analysis and stress testing, ongoing monitoring and by investing a significant portion of our securities portfolio in U.S. Government sponsored entity (“GSE”) obligations. GSEs include the Federal Home Loan Mortgage Corporation (“FHLMC”), the Federal National Mortgage Association (“FNMA”), the Government National Mortgage Association (“GNMA”) and the Small Business Administration (“SBA”). GNMA is a wholly-owned U.S. Government corporation whereas FHLMC and FNMA are private. Mortgage-related securities may include mortgage pass-through certificates, participation certificates and collateralized mortgage obligations (“CMOs”). We invest in non-GSE securities, including property assessed clean energy, or PACE, bonds, in order to generate higher returns, improve portfolio
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diversification and reduce interest rate and prepayment risk. With the exception of small legacy CRA investments, Trust Preferred securities, and certain corporate bonds, all of our non-GSE securities are senior positions that are the top of the capital structure.

Our investment securities portfolio consists of securities classified as available for sale and held-to-maturity. There were no trading securities in our investment portfolio at March 31, 2023 or at December 31, 2022. All available for sale securities are carried at fair value and may be used for liquidity purposes should management consider it to be in our best interest.

At March 31, 2023 and December 31, 2022, we had available for sale securities of $1.64 billion and $1.81 billion, respectively.
At March 31, 2023, our held-to-maturity securities portfolio primarily consisted of Property Assessed Clean Energy ("PACE") bonds, tax-exempt municipal securities, GSE commercial and residential certificates and other debt. We carry these securities at amortized cost. We had held-to-maturity securities of $1.62 billion at March 31, 2023, and $1.54 billion at December 31, 2022.
With the adoption of the CECL standard as of January 1, 2023, 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 $12.9 million at March 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 January 1, 2023 was $0.7 million. The provision for credit losses for held-to-maturity securities for the three months ended March 31, 2023 was $45 thousand.
For available-for-sale debt securities in an unrealized loss position, the Company first assesses whether it intends to sell, or it is more likely than not that it will be required to sell the security before the recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the security's amortized cost basis is written down to fair value through income. For debt securities available-for-sale that do not meet the aforementioned criteria, the Company evaluates whether the decline in fair value has resulted from credit losses or other factors. In making this assessment, management considers the extent to which fair value is less than amortized cost, any changes to the rating of the security by a rating agency, and adverse conditions specifically related to the security, among other factors. If this assessment indicates that a expected credit loss exists, the present value of cash flows expected to be collected from the security are compared to the amortized cost basis of the security. If the present value of cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and an allowance for credit losses is recorded for the credit loss, limited by the amount that the fair value is less than the amortized cost basis. Any impairment that has not been recorded through an allowance for credit losses is recognized in other comprehensive income. There was no allowance for credit losses for available for sale securities at January 1, 2023.
Changes in the allowance for credit losses are recorded as credit loss expense (or reversal). Losses are charged against the allowance when management believes the uncollectibility of an available-for-sale security is confirmed or when either of the criteria regarding intent or requirement to sell is met.
Accrued interest receivable on available-for-sale debt securities totaled $9.5 million at March 31, 2023 and is excluded from the estimate of credit losses, as accrued interest receivable is reversed for securities placed on nonaccrual status.
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The following table is a summary of our investment portfolio, using market value for available for sale securities and amortized cost excluding the allowance for credit losses for held-to-maturity securities, as of the dates indicated.
March 31, 2023December 31, 2022
(In thousands)Amount% of
Portfolio		Amount% of
Portfolio
Available for sale:
Mortgage-related:
GSE residential CMOs $383,394 11.8 %$389,260 11.6 %
GSE commercial certificates & CMOs167,840 5.2 %213,786 6.4 %
Non-GSE residential certificates 105,549 3.2 %107,080 3.2 %
Non-GSE commercial certificates 97,266 3.0 %97,482 2.9 %
Other debt:
U.S. Treasury 193 0.0 %192 0.0 %
ABS 756,184 23.2 %862,163 25.7 %
Trust preferred 10,078 0.3 %10,143 0.3 %
Corporate 118,601 3.6 %132,370 3.9 %
       Total available for sale 1,639,105 50.3 %1,812,476 54.0 %
Held-to-maturity:
Mortgage-related:
GSE residential CMOs$68,356 2.1 %$69,391 2.1 %
GSE commercial certificates 90,114 2.8 %90,335 2.7 %
GSE residential certificates424 0.0 %428 0.0 %
Non GSE commercial certificates32,630 1.0 %32,635 1.0 %
Non GSE residential certificates49,525 1.5 %50,468 1.5 %
Other debt:
ABS286,581 8.8 %288,682 8.6 %
Commercial PACE262,398 8.1 %255,424 7.6 %
Residential PACE733,997 22.5 %656,453 19.6 %
Municipal95,169 2.9 %95,485 2.8 %
Other— 0.0 %2,000 0.1 %
Total held-to-maturity1,619,194 49.7 %1,541,301 46.0 %
Total securities $3,258,299 100.0 %$3,353,777 100.0 %
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The following table show contractual maturities and yields for the available-for sale and held-to-maturity securities portfolios:
Contractual Maturity as of March 31, 2023
One Year or LessOne to Five YearsFive to Ten YearsDue after Ten Years
(In thousands)Amortized
Cost
Weighted Average
Yield (1)
Amortized
Cost
Weighted Average
Yield (1)
Amortized
Cost
Weighted Average
Yield (1)
Amortized
Cost
Weighted Average
Yield (1)
Available for sale:
Mortgage-related:
GSE residential CMOs $— 0.0 %$— 0.0 %$48,850 2.4 %$368,476 3.4 %
GSE commercial certificates & CMOs— 0.0 %22,394 2.8 %111,741 5.1 %40,833 2.6 %
Non-GSE residential certificates — 0.0 %— 0.0 %— 0.0 %120,591 2.7 %
Non-GSE commercial certificates — 0.0 %— 0.0 %— 0.0 %107,310 3.3 %
Other debt:
 U.S. Treasury 199 1.3 %— 0.0 %— 0.0 %— 0.0 %
ABS — 0.0 %5,122 2.2 %262,198 6.5 %519,195 5.6 %
Trust preferred — 0.0 %6,994 5.7 %3,995 5.7 %— 0.0 %
Corporate — 0.0 %55,081 4.1 %82,808 4.0 %— 0.0 %
Held-to-maturity:
Mortgage-related:
GSE CMOs— 0.0 %— 0.0 %— 0.0 %68,356 2.9 %
GSE commercial certificates — 0.0 %4,881 2.9 %14,024 3.3 %71,209 2.6 %
GSE residential certificates— 0.0 %— 0.0 %— 0.0 %424 3.9 %
Non GSE commercial certificates — 0.0 %— 0.0 %— 0.0 %32,630 2.1 %
Non GSE residential certificates — 0.0 %— 0.0 %— 0.0 %49,525 3.1 %
Other debt:
ABS— 0.0 %— 0.0 %6,997 5.1 %279,584 5.6 %
Commercial PACE— 0.0 %— 0.0 %— 0.0 %262,398 4.9 %
Residential PACE— 0.0 %— 0.0 %— 0.0 %733,997 4.8 %
Municipal— 0.0 %9,424 3.7 %3,560 2.3 %82,185 2.7 %
Total securities $199 1.3 %$103,896 3.8 %$534,173 5.3 %$2,736,713 4.4 %
(1) Estimated yield based on book price (amortized cost divided by par) using estimated prepayments and no change in interest rates.


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The following table shows a breakdown of our asset-backed securities by sector and ratings as of March 31, 2023:
Expected Avg.
Life in Years
Credit Ratings
Highest Rating if split rated
(In thousands)Amount%%
Floating		% AAA% AA% A% BBB%Not
Rated 		Total
CLO Commercial & Industrial$585,075 56 %2.9100 %98 %2 %0 %0 %0 %100 %
Consumer188,092 18 %5.60 %13 %26 %60 %1 %0 %100 %
Mortgage186,111 18 %2.184 %100 %0 %0 %0 %0 %100 %
Student83,487 8 %4.572 %100 %0 %0 %0 %0 %100 %
Total Securities:$1,042,765 100 %3.477 %83 %6 %11 %0 %0 %100 %

Our securities portfolio primarily consists of high quality investments in mortgage-backed securities to government sponsored entities and other asset-backed securities and PACE investments. 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 83% carry AAA credit ratings and 17% carry A credit ratings or higher. Approximately 50% of this portfolio is classified as “available for sale.”

Loans
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 $4.13 billion as of March 31, 2023 compared to $4.06 billion as of December 31, 2022. Within our commercial loan portfolio, our primary focus has been on C&I, multifamily and CRE lending. 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.
In the first quarter of 2023, we purchased $0.8 million of home improvement loans and $4.1 million of consumer solar loans.
The following table sets forth the composition of our loan portfolio, as of March 31, 2023 and December 31, 2022:
(In thousands)
March 31, 2023December 31, 2022
Amount
% of total loans
Amount% of total loans
Commercial portfolio:
Commercial and industrial$923,853 22.0 %$925,641 22.5 %
Multifamily mortgages1,062,826 25.3 %967,521 23.6 %
Commercial real estate mortgages327,477 7.8 %335,133 8.2 %
Construction and land development mortgages37,828 0.9 %37,696 0.9 %
   Total commercial portfolio2,351,984 56.0 %2,265,991 55.2 %
Retail portfolio:
Residential real estate lending1,390,135 33.1 %1,371,779 33.4 %
Consumer solar(1)
410,725 9.8 %416,849 10.2 %
Consumer and other(1)
45,326 1.1 %47,150 1.1 %
   Total retail portfolio1,846,186 44.0 %1,835,778 44.8 %
   Total loans 4,198,170 100.0 %4,101,769 100.0 %
Net deferred loan origination costs(2)
— 4,233 
Allowance for credit losses(3)
(67,323)(45,031)
    Total loans, net $4,130,847 $4,060,971 

(1) The Company adopted the CECL standard on January 1, 2023. As a result, the classification of loan segments was updated, and all loan balances for presented periods have been reclassified.
(2) With the adoption of the CECL standard, loans balances as of March 31, 2023 are presented at amortized cost, net of deferred loan origination costs.
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(3) With the adoption of the CECL standard, the allowance for credit losses on both loans and securities as of March 31, 2023 is calculated under the current expected credit losses model. For December 31, 2022, no allowance was calculated on securities, and the allowance on loans presented is the allowance for loan losses calculated using the incurred loss model.

Commercial loan portfolio
Our commercial loan portfolio comprised 56.0% of our total loan portfolio at March 31, 2023 and 55.2% of our total loan portfolio at December 31, 2022. The major categories of our commercial loan portfolio are discussed below:
C&I. Our C&I loans are generally made to small and medium-sized manufacturers and wholesale, retail and service-based businesses to provide either working capital or to finance major capital expenditures. 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, 2023 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.
Our C&I loans totaled $923.9 million at March 31, 2023, which comprised 22.0% of our total loan portfolio. During the three months ended March 31, 2023, the C&I loan portfolio decreased by 0.2% from $925.6 million at December 31, 2022.
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 largest geographic concentration. Our multifamily loans have been underwritten under stringent guidelines on loan-to-value and debt service coverage ratios that are designed to mitigate credit and concentration risk in this loan category.
Our multifamily loans totaled $1.06 billion at March 31, 2023, which comprised 25.3% of our total loan portfolio. During the three months ended March 31, 2023, the multifamily loan portfolio increased by 9.9% from $967.5 million at December 31, 2022.
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 $327.5 million at March 31, 2023, which comprised 7.8% of our total loan portfolio. During the three months ended March 31, 2023, the CRE loan portfolio decreased by 2.3% from $335.1 million at December 31, 2022.

Retail loan portfolio
Our retail loan portfolio comprised 44.0% of our total loan portfolio at March 31, 2023 and 44.8% of our loan portfolio at December 31, 2022. The major categories of our retail loan portfolio are discussed below.

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, 2023, 81% 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, 17% were purchased from two third parties on or after July 2014, and 2% were purchased by us from other originators before 2010. Our residential real estate lending loans totaled $1.39 billion at March 31, 2023, which comprised 75.3% of our retail loan portfolio and 33.1% of our total loan portfolio. As of March 31, 2023, our residential real estate lending loans increased by 1.3% from $1.37 billion at December 31, 2022.
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 $410.7 million at March 31, 2023, which comprised 9.8% of our total loan portfolio, compared to $416.8 million, or 10.2% of our total loan portfolio, at December 31, 2022.
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 $45.3 million at March 31, 2023, which comprised 1.1% of our total loan portfolio, compared to $47.2 million, or 1.1% of our total loan portfolio, at December 31, 2022.
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Maturities of Loans
The information in the following table is based on the contractual maturities of individual loans, including loans that may be subject to renewal at their contractual maturity. Renewal of these loans is subject to review and credit approval, as well as modification of terms upon maturity. Actual repayments of loans may differ from the maturities reflected below because borrowers have the right to prepay obligations with or without prepayment penalties. The following tables summarize the loan maturity distribution by type and related interest rate characteristics at March 31, 2023:
(In thousands)One year or lessAfter one but
within five years		After five years but within 15 yearsAfter 15 yearsTotal
March 31, 2023:
Commercial Portfolio:
Commercial and industrial$115,953 $298,918 $293,978 $215,004 $923,853 
Multifamily128,188 545,133 383,309 6,196 1,062,826 
Commercial real estate103,085 147,380 70,352 6,660 327,477 
Construction and land development36,192 1,636 — — 37,828 
Retail Portfolio:
Residential real estate lending26 1,697 161,873 1,226,539 1,390,135 
Consumer solar— 1,113 40,563 369,049 410,725 
Consumer and other 827 2,598 30,358 11,543 45,326 
   Total Loans $384,271 $998,475 $980,433 $1,834,991 $4,198,170 

(In thousands)After one but
within five years		After 5 years but within 15 yearsMore than 15 yearsTotal
Gross loan maturing after one year with:
Fixed interest rates$740,917 $880,024 $1,206,869 $2,827,810 
Floating or adjustable interest rates257,879 100,323 623,496 981,698 
Total Loans$998,796 $980,347 $1,830,365 $3,809,508 


Allowance for Credit Losses
We maintain the allowance at a level we believe is sufficient to absorb current expected credit losses in our loan portfolio. For further discussion of the adoption of and methodology under the CECL standard, refer to refer to Note 1 to the Consolidated Financial Statements in Item 1 of this Form 10-Q.
The following tables presents, by loan type, the changes in the allowance for credit losses at March 31, 2023 under the CECL standard, and the allowance for loans losses at March 31, 2022 under the incurred loss methodology:
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Three Months Ended
March 31,
(In thousands)20232022
 
Balance at beginning of period $45,031 $35,866 
Adoption of ASU 2016-1321,229 — 
Loan charge-offs:
Commercial portfolio:
  Commercial and industrial — — 
  Multifamily 1,127 416 
  Commercial real estate — — 
  Construction and land development — — 
Retail portfolio:
  Residential real estate lending58 39 
Consumer solar1,983 847 
  Consumer and other 18 21 
      Total loan charge-offs 3,186 1,323 
Recoveries of loans previously charged-off:
Commercial portfolio:
  Commercial and industrial 4 6 
  Multifamily — — 
  Commercial real estate — — 
  Construction and land development — 1 
Retail portfolio:
  Residential real estate lending238 651 
Consumer solar387 35 
  Consumer and other 8 13 
      Total loan recoveries 637 706 
Net charge-offs 2,549 617 
Provision for credit losses 3,612 2,293 
Balance at end of period $67,323 $37,542 
During the quarter, the allowance for credit losses on loans increased $22.3 million to $67.3 million at March 31, 2023 from $45.0 million at December 31, 2022. The adoption of the CECL standard increased the allowance for credit losses on loans by $21.2 million to recognize the Day 1 cumulative effect, primarily attributed to our consumer solar portfolio. The ratio of allowance to total loans was 1.61% at March 31, 2023 and 1.10% at December 31, 2022. Considering the Day 1 cumulative effect, the ratio of allowance to total loans at January 1, 2023 was 1.61%. The allowance for credit losses on held-to-maturity securities was $0.7 million to recognize the Day 1 cumulative effect, primarily attributed to commercial and residential PACE securities. Additionally, the allowance for expected credit losses on off-balance sheet loan exposures was increased by $2.7 million to recognize the Day 1 cumulative impact of adopting the CECL standard.
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Allocation of Allowance for Credit Losses
The following table presents the allocation of the allowance and the percentage of the total amount of loans in each loan category listed as of the dates indicated:
At March 31, 2023At December 31, 2022
(In thousands)Amount % of total loansAmount % of total loans
Commercial Portfolio:
Commercial and industrial$16,473 22.0 %$12,916 22.5 %
Multifamily7,030 25.3 %7,104 23.6 %
Commercial real estate2,455 7.8 %3,627 8.2 %
Construction and land development354 0.9 %825 0.9 %
Total commercial portfolio$26,312 56.0 %$24,472 55.2 %
Retail Portfolio:
Residential real estate lending$14,849 33.1 %$11,338 33.4 %
Consumer Solar22,762 9.8 %33.1 %6,867 10.2 %
Consumer and other3,400 1.1 %2,354 1.1 %
Total retail portfolio$41,011 44.0 %$20,559 44.8 %
Total allowance for credit losses$67,323 $45,031 

Nonperforming Assets
Nonperforming assets include all loans categorized as nonaccrual, other real estate owned and other repossessed assets. The accrual of interest on loans is discontinued, or the loan is placed on nonaccrual, when the full collection of principal and interest is in doubt. Interest on loans is generally recognized on the accrual basis. Interest is not accrued on loans that are more than 90 days delinquent on payments, and any interest that was accrued but unpaid on such loans is reversed from interest income at that time, or when deemed to be uncollectible. Interest subsequently received on such loans is recorded as interest income or alternatively as a reduction in the amortized cost of the loan if there is significant doubt as to the collectability of the unpaid principal balance. Loans are returned to accrual status when principal and interest amounts contractually due are brought current and future payments are reasonably assured.

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The following table sets forth our nonperforming assets as of March 31, 2023 and December 31, 2022:
(In thousands)March 31, 2023December 31, 2022
Loans 90 days past due and accruing$1,299 $— 
Nonaccrual loans held for sale5,653 6,914 
Nonaccrual loans - Commercial25,779 18,308 
Nonaccrual loans - Retail4,177 3,391 
Nonaccrual securities1,835 36 
Total nonperforming assets$38,743 $28,649 
Nonaccrual loans:
  Commercial and industrial $9,521 $9,629 
  Multifamily 2,710 3,828 
  Commercial real estate 4,745 4,851 
  Construction and land development 8,803 — 
    Total commercial portfolio25,779 18,308 
  Residential real estate lending2,016 1,807 
  Consumer solar2,021 1,584 
  Consumer and other 140 — 
    Total retail portfolio4,177 3,391 
  Total nonaccrual loans$29,956 $21,699 
Nonperforming assets to total assets0.49 %0.44 %
Nonaccrual assets to total assets0.45 %0.36 %
Nonaccrual loans to total loans 0.71 %0.53 %
Allowance for credit losses on loans to nonaccrual loans224.74 %207.53 %
Allowance for credit losses on loans to total loans1.61 %1.10 %
Annualized net charge-offs (recoveries) to average loans0.25 %0.16 %

Nonperforming assets totaled $38.7 million, or 0.49% of period-end total assets at March 31, 2023, an increase of $10.1 million, compared with $28.6 million, or 0.44% of period-end total assets at December 31, 2022. The increase in non-performing assets at March 31, 2023 compared to December 31, 2022 assets was primarily driven by a Silicon Valley Bank senior note and one construction loan placed on nonaccrual status in the first quarter of 2023, offset by a $1.1 million charge-off on a multifamily loan.
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 $101.8 million, or 1.2% of total assets, at March 31, 2023, as follows: $99.4 million are commercial loans currently in workout that management expects will be rehabilitated; $12.4 million are residential 1-4 family or retail loans at 30 days delinquent, of which $11.0 million were subsequently brought current.
Resell Agreements
As of March 31, 2023, we have entered into $15.4 million of short term investments of resell agreements backed by residential first-lien mortgage loans, with a weighted interest rate of 4.38%. As of December 31, 2022, we have entered into $25.8 million of short term investments of resell agreements backed by residential first-lien mortgage loans, with a weighted interest rate of 6.86%.
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Deferred Tax Asset
We had a deferred tax asset, net of deferred tax liabilities, of $62.5 million at March 31, 2023 and $62.5 million at December 31, 2022. As of March 31, 2023, 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.
We will evaluate the recoverability of our net deferred tax asset on a periodic basis and record decreases (increases) as a deferred tax provision (benefit) in the Consolidated Statements of Income as appropriate.
Deposits
Deposits represent our primary source of funds. We are focused on growing our core deposits through relationship-based banking with our business and consumer clients. Total deposits were $7.04 billion at March 31, 2023, compared to $6.60 billion at December 31, 2022. We believe that our strong deposit franchise is attributable to our mission-based strategy of developing and maintaining relationships with our clients who share similar values and through maintaining a high level of service.
We 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, 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, 2023 and December 31, 2022, we had approximately $678.1 million and $643.6 million, respectively, in political deposits which are primarily in demand deposits.
Total estimated uninsured deposits at March 31, 2023 and December 31, 2022 were $4.38 billion and $4.52 billion, respectively.
Maturities of time certificates of deposit and other time deposits of $100,000 or more outstanding at March 31, 2023 are summarized as follows:
Maturities as of March 31, 2023
(In thousands)Balance
Within three months $582,516 
After three but within six months 36,346 
After six months but within twelve months 28,155 
After twelve months 43,806 
$690,823 
Evaluation of Interest Rate Risk
Our simulation models incorporate various assumptions, which we believe are reasonable but which may have a significant impact on results such as: (1) the timing of changes in interest rates, (2) shifts or rotations in the yield curve, (3) loan and securities prepayment speeds for different interest rate scenarios, (4) interest rates and balances of indeterminate-maturity deposits for different scenarios, and (5) new volume and yield assumptions for loans, securities and deposits. Because of limitations inherent in any approach used to measure interest rate risk, simulation results are not intended as a forecast of the actual effect of a change in market interest rates on our results but rather to better plan and execute appropriate asset-liability management strategies and manage our interest rate risk.
Potential changes to our net interest income and economic value of equity in hypothetical rising and declining rate scenarios calculated as of March 31, 2023 are presented in the following table. The projections assume immediate, parallel shifts downward of the yield curve of 100 basis points and immediate, parallel shifts upward of the yield curve of 100, 200, 300, and 400 basis points.
The results of this simulation analysis are hypothetical and should not be relied on as indicative of expected operating results. A variety of factors might cause actual results to differ substantially from what is depicted. For example, if the timing and magnitude of interest rate changes differ from those projected, our net interest income might vary significantly. Non-parallel yield
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curve shifts such as a flattening or steepening of the yield curve or changes in interest rate spreads, would also cause our net interest income to be different from that depicted. An increasing interest rate environment could reduce projected net interest income if deposits and other short-term liabilities re-price faster than expected or faster than our assets re-price. Actual results could differ from those projected if we grow assets and liabilities faster or slower than estimated, if we experience a net outflow of deposit liabilities or if our mix of assets and liabilities otherwise changes. Actual results could also differ from those projected if we experience substantially different repayment speeds in our loan portfolio than those assumed in the simulation model. Finally, these simulation results do not contemplate all the actions that we may undertake in response to potential or actual changes in interest rates, such as changes to our loan, investment, deposit, funding or hedging strategies.
Change in Market Interest Rates as of March 31, 2023Estimated Increase (Decrease) in:
Immediate ShiftEconomic Value of
Equity		Economic Value of
Equity ($)		Year 1 Net Interest
Income		Year 1 Net Interest
Income ($)
+400 basis points-29.2%(384,305)-18.4%(45,717)
+300 basis points-20.0%(262,848)-11.2%(27,851)
+200 basis points-11.8%(154,963)-5.7%(14,072)
+100 basis points-4.2%(55,214)-2.2%(5,368)
-100 basis points-3.2%(41,861)-0.9%(2,223)
Liquidity
Liquidity refers to our ability to maintain cash flow that is adequate to fund our operations, support asset growth, maintain reserve requirements and meet present and future obligations of deposit withdrawals, lending obligations and other contractual obligations through either the sale or maturity of existing assets or by obtaining additional funding through liability management. Our liquidity risk management policy provides the framework that we use to maintain adequate liquidity and sources of available liquidity at levels that enable us to meet all reasonably foreseeable short-term, long-term and strategic liquidity demands. The Asset and Liability Management Committee is responsible for oversight of liquidity risk management activities in accordance with the provisions of our liquidity risk policy and applicable bank regulatory capital and liquidity laws and regulations. Our liquidity risk management process includes (i) ongoing analysis and monitoring of our funding requirements under various balance sheet and economic scenarios, (ii) review and monitoring of lenders, depositors, brokers and other liability holders to ensure appropriate diversification of funding sources and (iii) liquidity contingency planning to address liquidity needs in the event of unforeseen market disruption impacting a wide range of variables. We continuously monitor our liquidity position in order for our assets and liabilities to be managed in a manner that will meet our immediate and long-term funding requirements. We manage our liquidity position to meet the daily cash flow needs of customers, while maintaining an appropriate balance between assets and liabilities to meet the return on investment objectives of our stockholders. We also monitor our liquidity requirements in light of interest rate trends, changes in the economy, and the scheduled maturity and interest rate sensitivity of our securities and loan portfolios and deposits. Liquidity management is made more complicated because different balance sheet components are subject to varying degrees of management control. For example, the timing of maturities of our investment portfolio is fairly predictable and subject to a high degree of control when we make investment decisions. Net deposit inflows and outflows, however, are far less predictable and are not subject to the same degree of certainty.
In addition to assessing liquidity risk on a consolidated basis, we monitor the parent company’s liquidity. The parent company’s routine funding requirements consist primarily of operating expenses, dividends paid to shareholders, debt service, repurchases of common stock and funds used for acquisitions. The parent company obtains funding to meet its obligations from dividends collected from its subsidiaries and the issuance of debt and capital securities. Dividend payments to the parent company by its subsidiary bank are subject to regulatory review and statutory limitations and, in some instances, regulatory approval. The Company maintains sufficient funding to meet expected capital and debt service obligations for 24 months without the support of dividends from subsidiaries and assuming access to the wholesale markets is maintained. The Company maintains sufficient liquidity to meet its capital and debt service obligations for 12 months under adverse conditions without the support of dividends from subsidiaries or access to the wholesale markets.
Our liquidity position is supported by management of our liquid assets and liabilities and access to alternative sources of funds. Our short-term and long-term liquidity requirements are primarily to fund on-going operations, including payment of interest on deposits and debt, extensions of credit to borrowers and capital expenditures. These liquidity requirements are met primarily through our deposits, FHLBNY advances and other borrowings and the principal and interest payments we receive on loans and
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investment securities. Cash, interest-bearing deposits in third-party banks, securities available for sale and maturing or prepaying balances in our investment and loan portfolios are our most liquid assets. Other sources of liquidity that are available to us include the sale of loans we hold for investment, the ability to acquire additional national market non-core deposits, borrowings through the Federal Reserve’s discount window, federal fund purchases and the issuance of debt or equity securities. In addition, following the failures of SIVB and Signature Bank, the Federal Reserve created a new Bank Term Funding Program ("BTFP") as an additional source of liquidity against high-quality securities, offering loans of up to one year to eligible institutions pledging qualifying assets as collateral. We believe that the sources of available liquidity are adequate to meet our current and reasonably foreseeable future liquidity needs.
At March 31, 2023, our cash and equivalents, which consist of cash and amounts due from banks and interest-bearing deposits in other financial institutions, amounted to $130.9 million, or 1.7% of total assets, compared to $63.5 million, or 0.8% of total assets at December 31, 2022. The $67.4 million, or 106.1%, increase is due to strategic investment securities sales. Our available for sale securities at March 31, 2023 were $1.64 billion, or 20.9% of total assets, compared to $1.81 billion, or 23.1% of total assets at December 31, 2022. Investment securities with an aggregate fair value of $120.9 million at March 31, 2023 were pledged to secure public deposits and repurchase agreements.
The liability portion of the balance sheet serves as our primary source of liquidity. Customer deposits have historically provided a sizeable source of relatively stable and low-cost funds. We are also a member of the FHLBNY, from which we can borrow for leverage or liquidity purposes. The FHLBNY requires that securities and qualifying loans be pledged to secure any advances. At March 31, 2023, we had no advances from the FHLBNY and a remaining credit availability of $1.33 billion. In addition, we maintain borrowing capacity of approximately $368.1 million with the Federal Reserve’s discount window or BTFP that is secured by certain securities from our portfolio which are not pledged for other purposes. Our cash and borrowing capacity totaled $1.9 billion of immediately available funds, in addition to unpledged securities with two-day availability of $868.0 million for total liquidity within two-days of $2.7 billion, which provided coverage for 62% of total uninsured deposits.
The outstanding balance related to borrowings from the BTFP at March 31, 2023 was $140.0 million, and is recorded in Other borrowings on the consolidated statements of financial condition.
Capital Resources

Total stockholders’ equity at March 31, 2023 was $519.2 million, compared to $509.0 million at December 31, 2022, an increase of $10.2 million. The increase was primarily driven by $21.3 million of net income for the quarter and an $11.4 million improvement in accumulated other comprehensive loss due to the tax effected mark-to-market on our securities portfolio, offset by a $17.8 million tax effected charge to retained earnings related to the adoption of the CECL standard. We did not elect to utilize the optional three-year phase-in period for the Day 1 adverse regulatory capital effects upon adopting the CECL standard.
We are subject to various regulatory capital requirements administered by federal banking regulators. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by federal banking regulators that, if undertaken, could have a direct material effect on our financial statements.

Regulatory capital rules adopted in July 2013 and fully phased in as of January 1, 2019, which are referred to as the Basel III rules, impose minimum capital requirements for bank holding companies and banks. The Basel III rules apply to all national and state banks and savings associations regardless of size and bank holding companies and savings and loan holding companies with consolidated assets of more than $3 billion. In order to avoid restrictions on capital distributions or discretionary bonus payments to executives, a covered banking organization must maintain the fully phased in “capital conservation buffer” of 2.5% on top of its minimum risk-based capital requirements. This buffer must consist solely of common equity Tier 1 risk-based capital, but the buffer applies to all three measurements (common equity Tier 1 risk-based capital, Tier 1 capital and total capital). The capital conservation is equal to 2.5% of risk-weighted assets.
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The following table shows the regulatory capital ratios for the Bank and the Company at the dates indicated:
Actual
For Capital
Adequacy Purposes(1)
To Be Considered
Well Capitalized
AmountRatioAmountRatioAmountRatio
(In thousands)
March 31, 2023
Consolidated:
   Total capital to risk weighted assets$730,475 15.00 %$389,704 8.00 %N/AN/A
   Tier 1 capital to risk weighted assets596,000 12.23 %292,278 6.00 %N/AN/A
   Tier 1 capital to average assets596,000 7.50 %317,763 4.00 %N/AN/A
   Common equity tier 1 to risk weighted assets596,000 12.23 %219,209 4.50 %N/AN/A
Bank:
Total capital to risk weighted assets$719,520 14.84 %$387,874 8.00 %$484,843 10.00 %
Tier I capital to risk weighted assets658,769 13.59 %290,906 6.00 %387,874 8.00 %
Tier I capital to average assets658,769 8.29 %317,852 4.00 %397,315 5.00 %
Common equity tier 1 to risk weighted assets658,769 13.59 %218,179 4.50 %315,148 6.50 %
December 31, 2022
Consolidated:
   Total capital to risk weighted assets$721,324 14.87 %$387,957 8.00 %N/AN/A
   Tier 1 capital to risk weighted assets597,022 12.31 %290,967 6.00 %N/AN/A
   Tier 1 capital to average assets597,022 7.52 %317,738 4.00 %N/AN/A
   Common equity tier 1 to risk weighted assets597,022 12.31 %218,226 4.50 %N/AN/A
Bank:
   Total capital to risk weighted assets$715,458 14.75 %$388,107 8.00 %$485,134 10.00 %
   Tier 1 capital to risk weighted assets668,864 13.79 %291,080 6.00 %388,107 8.00 %
   Tier 1 capital to average assets668,864 8.44 %317,111 4.00 %396,389 5.00 %
   Common equity tier 1 to risk weighted assets668,864 13.79 %218,310 4.50 %315,337 6.50 %
(1) Amounts are shown exclusive of the capital conservation buffer of 2.50%.
As of March 31, 2023, the Bank was categorized as “well capitalized” under the prompt corrective action measures and met the capital conservation buffer requirements.

Contractual Obligations
We have entered into contractual obligations in the normal course of business that involve elements of credit risk, interest rate risk and liquidity risk. The following table summarizes these relations as of March 31, 2023:
March 31, 2023
(In thousands)TotalLess than 1 year1-3 years3-5 yearsMore than 5 years
Subordinated Debt$73,737 $— $— $— $73,737 
Operating Leases40,556 8,480 31,117 959 — 
Purchase Obligations25,557 4,612 9,224 5,871 5,850 
Certificates of Deposit752,581 675,298 51,492 7,681 18,110 
$892,431 $688,390 $91,833 $14,511 $97,697 


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Investment Obligations

We are a party to agreements with Pace Funding Group LLC, which operates Home Run Financing, for the purchase of PACE, assessment securities until September 2023. As of March 31, 2023, we had purchased $519.7 million of these obligations and had an estimated remaining commitment of $112.0 million. The PACE assessments have equal-lien priority with property taxes and generally rank senior to first lien mortgages. The PACE assessments are held in the Company's held-to-maturity investment portfolio.

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Item 3.    Quantitative and Qualitative Disclosures about Market Risk.
Material changes in our market risk as of March 31, 2023 from that presented in the 2022 Annual Report are described in Part II, Item 1A of this Form 10-Q below. Our interest rate sensitivity position at March 31, 2023 is set forth in the table labeled “Evaluation of Interest Rate Risk” in Management’s Discussion and Analysis of Financial Condition and Results of Operation of this Quarterly Report on Form 10-Q and incorporated herein by this reference.

Item 4.    Controls and Procedures.
Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we have evaluated the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e), as of March 31, 2023. Based on such evaluations, our principal executive officer and principal financial officer concluded that, as of such date, our disclosure controls and procedures were effective.

Changes in Internal Control Over Financial Reporting
The Company adopted new internal controls and modified existing internal controls upon the adoption of the CECL Standard for its allowance for credit losses which are substantially similar in nature to the internal controls used prior to the adoption of the CECL Standard for its allowance for loan losses. There was no change in our internal control over financial reporting (as such term is defined in Exchange Act Rule 13a-15(f)) that occurred during the quarter ended March 31, 2023 that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II
Item 1.    Legal Proceedings.

We are subject to certain pending and threatened legal proceedings that arise out of the ordinary course of business. Additionally, we, like all banking organizations, are subject to regulatory examinations and investigations. Based upon management’s current knowledge, following consultation with legal counsel, in the opinion of management, there is no pending or threatened legal matter that would result in a material adverse effect on our consolidated financial condition or results of operation, either individually or in the aggregate.

Item 1A.    Risk Factors.

Investing in shares of our common stock involves certain risks, including those identified and described in Item 1A. of our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, as filed with the SEC on March 9, 2023, as well as cautionary statements contained in this report, including those under the caption “Cautionary Note Regarding Forward-Looking Statements,” risks and matters described elsewhere in this report and in our other filings with the SEC.

Material changes to the risk factors previously disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 are listed below:

Our business may be affected by stress and volatility in the banking sector related to recent bank failures.

The March 2023 failures of Santa Clara, California-based Silicon Valley Bank (“SIVB”) and New York, New York-based Signature Bank, as well as the failure of San Francisco, California-based First Republic Bank in May 2023 have generated concerns regarding the overall health and liquidity of the banking sector. SIVB was placed into receivership on March 10, 2023, Signature Bank was placed into receivership on March 12, 2023, and First Republic Bank was placed into receivership on May 1, 2023. The failures represented the second, third, and fourth largest bank failures in U.S. history. On March 12, 2023, the Board of Governors of the Federal Reserve System, Department of Treasury and the FDIC issued a joint statement concerning actions they had taken in response to the SIVB and Signature Bank failures. The Federal Reserve Board announced that it would make available additional funding to eligible depository institutions through the creation of a new Bank Term Funding Program. Despite these actions, concern about the banking sector could continue into the future, which could lead to difficulties in attracting and maintaining deposits and customers. In addition, the FDIC is likely to increase the costs of insurance assessments and impose special assessments on some or all banks in order to replenish the Deposit Insurance Fund, the amounts of which are outside of our control. Any of these events could materially and adversely affect our business, results of operations or financial condition.

We could see increased credit risk due to recent bank failures.

Our net income for the first quarter of 2023 reflected a $1.2 million impairment charge to provision expense on an SIVB senior note and a $0.6 million loss related to the sale of a portion of the SIVB senior note. Because the financial system contains many interdependencies, the failures of additional banks and financial institutions that are counterparties to commercial agreements with us could lead to additional credit losses, threaten our investments, and adversely affect our ability to meet our own contractual obligations, originate new loans, invest in securities, or fulfill obligations to customers and depositors. If any of our customers are unable to access deposits or lending arrangements with other financial institutions, they could experience a downgrade in their credit quality or lose their ability to repay their obligations to us. These negative events may cause us to incur losses and may adversely affect our capital, liquidity and financial condition.

We are subject to liquidity risk.

We require liquidity to meet our deposit and debt obligations as they come due. Our access to funding sources in amounts adequate to finance our activities or on terms that are acceptable to us could be impaired by factors that affect us specifically or the financial services industry or economy generally. Factors that could detrimentally impact our access to liquidity sources include a downturn in the geographic markets in which our loans are concentrated, difficult credit markets, adverse regulatory or judicial actions against labor unions, political organizations or not-for profits, adverse regulatory actions against us, declines in the value of our investments, and ongoing instability and concerns in the banking sector following recent high-profile bank failures.

Liquidity constraints may require that we sell investment securities at a loss, negatively impacting our net income and earnings. As of March 31, 2023, our net unrealized losses on available for sale securities totaled $116.7 million. Our access to deposits may also be affected by the liquidity needs of our depositors, particularly in an inflationary environment where they may be compelled to withdraw deposits in order to cover rising expenses. As a part of our liquidity management, we must ensure we can
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respond effectively to potential volatility in our customers’ deposit balances. For instance, our political campaigns, PACs, and state and national party committee clients totaled $678.1 million in deposits as of March 31, 2023 and may increase or decrease their deposit balances significantly as we approach an election campaign, resulting in short-term volatility in their deposit balances held with us through election cycles. Although we have been able to replace maturing or withdrawn deposits and advances historically as necessary, we might not be able to replace such funds in the future, especially if a large number of our depositors or those depositors with a high concentration of deposits sought to withdraw their accounts. We could encounter difficulty meeting a significant deposit outflow which could negatively impact our profitability or reputation. Any long-term decline in deposit funding would adversely affect our liquidity. While we believe our funding sources are adequate to meet any significant unanticipated deposit withdrawal, we may not be able to manage the risk of deposit volatility effectively. A failure to maintain adequate liquidity could materially and adversely affect our business, results of operations or financial condition.

The recent bank failures of SIVB, Signature Bank, and First Republic Bank caused substantial market disruption that has not yet stabilized, leading to ongoing concerns about the liquidity of the financial services industry. Ongoing destabilization could exacerbate deposit outflows. In particular, continuing negative media attention and the rapid spread of rumors, concerns and misinformation on social media could cause panic among investors, depositors, customers and the general public. Deposit outflows could increase if customers with uninsured deposits look for alternative placements for their funds to weather banking sector volatility and instability. An increase in deposit outflows could require us to seek alternate sources of liquidity to fund our operations and meet withdrawal demands. These alternate sources of liquidity could include higher-cost borrowings (as a result of competition for liquidity and rising interest rates), which could negatively affect our financial performance. Regulators could impose new requirements on banks, which could limit future growth. These changes may be more difficult or expensive than we anticipate.

Shares of our common stock could face volatility due to banking sector uncertainty.

The recent bank failures have negatively impacted the price of securities issued by financial institutions, which underscores the sensitivity of bank holding company public trading prices to generalized concerns about the health of the banking industry as a whole, regardless of the health of a particular institution. Ongoing stress in the banking sector could adversely impact the market price of our common stock and our business, financial condition and results of operations. We cannot predict if investors will find our common stock less attractive as a result of these market stresses. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile.


Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

The following table contains information regarding purchases of our common stock during the three months ended March 31, 2023 by or on behalf of the Company or any “affiliate purchaser” as defined in Rule 10b-18(a)(3) under the Exchange Act:

Issuer Purchases of Equity Securities
Period (Settlement Date)
Total number of shares purchased (1)
Average price paid per shareTotal number of shares purchased as part of publicly announced plans or programs
Approximate dollar value that may yet be purchased under plans or programs (2)
January 1 through January 31, 20234,436 $23.04 — $28,098,365 
February 1 through February 28, 202315,777 22.79 — $28,098,365 
March 1 through March 31, 2023144,327 18.85 138,803 $25,494,421 
    Total164,540 $19.34 138,803 

(1) Includes shares withheld by the Company to pay the costs associated with tax witholdings related to the exercise of stock options and RSU and PSU vesting. There were 25,737 shares withheld for taxes during the quarter.

(2) Effective February 25, 2022, the Company’s Board of Directors approved an increase to the share repurchase program authorizing the repurchase of an aggregate amount up to $40 million of the Company's outstanding common stock. The authorization did not require the Company to acquire any specified number of shares and can be suspended or discontinued without prior notice. Under this authorization, $2.6 million of common stock was purchased during the first quarter of 2023.
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Item 6. Exhibits.

Exhibit No.Description of Exhibit
3.1
Certificate of Incorporation of Amalgamated Financial Corp. (incorporated by reference to Exhibit 3.1 to Amalgamated Financial Corp.’s Current Report on Form 8-K filed with the SEC on March 1, 2021).
3.2
Bylaws of Amalgamated Financial Corp. (incorporated by reference to Exhibit 3.2 to Amalgamated Financial Corp.’s Current Report on Form 8-K filed with the SEC on March 1, 2021).
4.1
Pursuant to Item 601(b)(4)(iii)(A), other instruments that define the rights of holders of the long-term indebtedness of Amalgamated Financial Corp. and its subsidiaries that does not exceed 10% of its consolidated assets have not been filed; however, Amalgamated Financial Corp. agrees to furnish a copy of any such agreement to the SEC upon request.
31.1
31.2
32.1
101
Interactive data files for the Quarterly Report on Form 10-Q of Amalgamated Financial Corp. for the quarter ended March 31, 2023, formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) Consolidated Statements of Financial Condition at March 31, 2023 and December 31, 2022, (ii) Consolidated Statements of Income for the quarters ended March 31, 2023 and 2022, (iii) Consolidated Statements of Comprehensive Income for the quarters ended March 31, 2023 and 2022, (iv) Consolidated Statements of Changes in Shareholders’ Equity for the quarters ended March 31, 2023 and 2022, (v) Consolidated Statements of Cash Flows for the quarters ended March 31, 2023 and 2022 and (vi) Notes to Consolidated Financial Statements (unaudited).
104
The cover page of Amalgamated Financial Corp.’s Form 10-Q Report for the quarter ended March 31, 2023, formatted in iXBRL (included with the Exhibit 101 attachments).
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
AMALGAMATED FINANCIAL CORP.
May 9, 2023By:/s/ Priscilla Sims Brown
Priscilla Sims Brown
President and Chief Executive Officer
(Principal Executive Officer)
May 9, 2023By:/s/ Jason Darby
Jason Darby
Chief Financial Officer
(Principal Financial Officer)
May 9, 2023By:/s/ Leslie Veluswamy
Leslie Veluswamy
Chief Accounting Officer
(Principal Accounting Officer)
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What is the market capitalization of a company?

The market capitalization sometimes referred as Marketcap, is the value of a publicly listed company.
In most cases it can be easily calculated by multiplying the share price with the amount of outstanding shares.

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