Moving on to the rate composition of our portfolio, you can see that the floating portion decreased to 13% compared to 15% in the third quarter. This reflects our efforts to position the balance sheet for a decreasing rate environment and achieve the right balance between yield and duration, while maintaining the high credit quality of the portfolio. As we have done in previous quarters, I would like to reference the impact of the interest rates on the valuation of debt securities available for sale. As of the end of the fourth quarter, the market value of this portfolio had improved $35 million after-tax compared to the decrease of $19 million in the third quarter. The quarter-over-quarter improvement was primarily driven by market rate moves and it’s consistent with our interest rate sensitivity analysis for down 100 basis point shock.
We had an increase of $9.4 million after-tax for the full year of 2023. It is also important to comment that our tangible common equity ratio ended at a solid 7.3% after considering the impact of changes in valuation of our AFS portfolio. Note that 82% of the total portfolio has government guarantee, while the remainder is rated investment grade. Continuing on to Slide 9, let’s talk about our loan portfolio. At the end of the fourth quarter, total gross loans were $7.3 billion, up 1.9% compared to the end of the third quarter. The increases were primarily driven by increases in single-family residential loans, land development, commercial loans as well as construction loans. Consumer loans as of the end of 4Q ‘23 were $403 million, a decrease of $36 million or 8.2% quarter-over-quarter.
This includes $211 million in higher-yielding indirect consumer loans compared to $255 million in the third quarter, which were a tactical move for us to increase yields in prior periods. As we mentioned last quarter, we are focusing on organic growth and have not been purchasing any new production since the end of 2022. We estimate that at current prepayment speeds, this portfolio will run off by the first quarter of 2026. As Jerry mentioned, during the fourth quarter, we completed the sale of the high CRE exposure and exited the nonperforming loan relationships both in New York as part of the company’s strategy to exit its remaining New York City loan portfolio. The CRE loan sale resulted in a loss on sale of approximately $2 million in 4Q23 and the nonperforming loan was modified and paid off.
Our loan portfolio had a yield of 7.09% in 4Q ‘23. This includes the loan recovery recorded during the period. To provide a more comparable figure, the yield of the loan portfolio excluding this recovery was 6.93%. Moving onto Slide 10, here we show our CRE portfolio in further detail. We have a conservative weighted average loan to value of 58% and debt service coverage of 1.3 times as well as a strong sponsorship peer profile based on a AUM, net worth and years of experience for each sponsor. As of the end of the 4Q23, we have 31% of our CRE portfolio in top tier borrowers. We have no significant tenant concentration in our CRE retail loan portfolio, as the top 15 tenants represent 22% of the total. Major tenants include recognized national and regional grocery stores, pharmacies, food and clothing retailers and banks.
Our underwriting methodology for CRE includes sensitivity analysis for multiple risk factors, like interest rates and their impact over debt service coverage ratio, vacancy and tenant retention. As Jerry mentioned during the first quarter, we classified $401 million of our multi-family loans in Houston as held for sale. The transaction is expected to close later this month and had an impact to tangible common equity of a reduction of approximately 23 basis points on day one and to common equity Tier 1 of an improvement by approximately 12 basis points. With the process of the sale, we expect to reduce in 1Q ’24, higher cost non-relationship institutional funding of $260 million at an average rate of 5.6% and invest the remaining process in fixed rate — fixed rate earning assets.
Now turning to Slide 11. Let’s take a closer look at credit quality. Overall, credit quality remains sound and reserve coverage is strong despite charges recorded during the quarter. Non-performing assets totaled $54.6 million at the end of the fourth quarter of 2023, an increase of $1.2 million compared to the third quarter and an increase of $17 million compared to the fourth quarter of 2022. The increase in the fourth quarter was primarily due to [accrual of] (ph) two commercial Texas loans totaling $12.3 million with $4.1 million in allocated reserves and one commercial Florida loan totaling $7 million with $3.9 million allocated reserves. Often by the exit of the CRE year loans totaling $23.3 million with an associated charge-off of $10.3 million, of which $8.5 million wasn’t specific reserve in previous quarters.
