Jason Darby: Yeah, absolutely. So this was — this is a credit that is an agency deal, and it’s been a little bit stressed by the higher rate environment. We saw a fairly quick uptick or, I should say, a downtick in the debt service coverage ratio, albeit no payments have been missed and the loan is still accruing between the agent and ourselves as we took a look at the current credit metrics, it warranted a movement to a substandard grade. Now that said, there is a lot of interested parties in this particular credit, there is an amendment that’s being worked on in the current quarter. We think there might be a couple of new lenders and some new money in the deal, and we’re also working on potentially reducing our own exposure at the same time.
So all things equal, Chris, it’s a conservative position on the loan. It’s a big loan from the bank. We obviously don’t want to be overly optimistic with regard to how we graded it at the end of the year, but at the same time, you can imagine the amount of attention that it’s getting from not just from us, but from the other parties involved in the deal. And the fact that there is new potential lenders coming into the deal, I think there’s a really good opportunity for this to find its way to a strong amendment with the reduced rate and an improvement on the ability — the company’s ability to cash flow. And with any luck as we get towards the end of the year, this could potentially move back around into a pass grade. But for now, that’s the current status of the loan and a lot remains to be seen here in the first quarter regarding the amendment process.
Christopher O’Connell: Got it. And do you guys have a specific reserves set against that?
Jason Darby: There is no specific reserve set against it, mainly because it’s accruing. There may well be a small specific that is generated by the CECL model that — that relates to the accruing part of it, but I don’t exactly know what that number is. But if there is something, it’s going to be reasonably small. But it obviously will and drive some of the overall coverage factors in our CECL model. And so, the coverage on that particular asset class through CECL went up during the quarter.
Christopher O’Connell: Got it. And for the net charge-offs this quarter on the one construction loan, was that mostly previously reserved for?
Jason Darby: It was about 25% to 30% reserved for in the prior quarter. So we charged off about $4.7 million on this one construction loan. We had about $1.3 million reserved for in prior quarters. So we took an additional $3 million or so charge through the provision in the current quarter to charges loan off. Now we made an election that charge it off, we might have been able to take a little bit less of an overall position on this, but we made an election to charge it off simply because the outlook on repayment is murky and probably long in duration. And rather than have that loan really kind of go through debt by a thousand cuts in terms of additional charges or reserves all throughout next year. We really want to have that be removed from our non-performing metrics, how to flow through the P&L. And as we work it out over time, potentially get some type of recovery that we can work through in future years to come.
Christopher O’Connell: Got it. I guess, was there any other driver of the decline in the allowance ratio on — not the dollar amount, but on a percentage basis?
Jason Darby: Yeah. We do our annual refresh. We’re a first year CECL adopter, but we do a refresh of our baseline loss rates at the end of the year. And we did see a little bit of improvement in a couple of the different asset classes. So that had part of it. But the biggest driver of the decline was the release of that specific reserve through the charge-offs that 1.3 million was probably the biggest influencer of that decline to, I think, it was a 1.47 coverage ratio from 1.55.
Christopher O’Connell: Got it. And as you guys are kind of pretty well on track to hit your Tier 1 leverage ratio target, just given the recent moves in the market, how are you guys thinking about any buyback utilization going forward?
Jason Darby: So buyback utilization remains a arrow in the quiver, Chris. It’s certainly part of our capital plan. Where we buy is somewhat subjective. And we’ll take a close look at where the prices relative to our tangible book value, but certainly, it’s going to be available for us to go to, but I don’t necessarily see us being at the same pace in terms of buybacks that we were in the earlier part of 2023 at least not for the immediate future.
Christopher O’Connell: Okay, got it. That’s helpful. That’s all I had. Thanks for taking my questions.
Jason Darby: Thanks, Chris.
Operator: There are no further questions in the queue. I’d like to hand the call back to Priscilla Sims Brown for closing remarks.
Priscilla Sims Brown: Thank you, operator, and thank you all today for your questions and your continued interest. We appreciate all of that and the opportunity to discuss our fourth quarter, which demonstrates the strength and competitive advantages that Amalgamated enjoys as we look to the year ahead. While the market environment remains challenging, we’re in a solid position we believe, and our deposit franchise continues to deliver strong inflows as the presidential cycle is in full swing as well as across our key customer segments where we are uniquely positioned to win. We like the pipeline. We think it’s strong and it has delivered, as you’ve seen. We’re also the leader in sustainable lending, which will provide growth and margin expansion as we replace older, lower yielding loans and securities with higher yielding sustainable loans.
