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Transfers and Servicing of Financial Assets | 12 Months Ended
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Dec. 31, 2024
Transfers and Servicing [Abstract] |
Transfers and Servicing of Financial Assets | Transfers and Servicing of Financial Assets Gains and losses on sales of loans are included in Other income on the accompanying Consolidated Statements of Income. During the year ended December 31, 2024, the Company recognized net (losses) on sales of loans of $(11.8) million, which included the impact from the write-off of the factored receivables customer relationship intangible asset in connection with the sale of the factored receivables portfolio, as discussed below. Excluding this charge, the Company recognized net gains on sale of loans of $7.9 million during the year ended December 31, 2024. During the years ended December 31, 2023, and 2022, the Company recognized net gains on sales of loans of $2.0 million, and $3.9 million, respectively. Additional information regarding the types of loans sold and the nature of the transactions is discussed in the following paragraphs. Multi-family Securitization On September 30, 2024, the Company completed a multi-family securitization, in which it transferred $303.9 million of multi-family loans ($302.5 million carrying amount plus $1.4 million accrued interest receivable) to a third-party depositor, who placed the multi-family loans into a third-party trust, in exchange for net cash proceeds of $311.6 million. Through a two-step process, pass-through certificates were issued, which are secured by the multi-family loans and guaranteed by Freddie Mac. The transfer of the multi-family loans was accounted for as a sale in accordance with ASC 860, Transfers and Servicing. Servicing rights were not retained. Per the terms of the securitization agreement, the Company assumed an obligation to reimburse Freddie Mac for any payments made under Freddie Mac’s guarantee of the certificates. The reimbursement obligation covers losses up to 12% of the aggregate UPB of the multi-family loans at the time of sale, and is secured in full by an irrevocable letter of credit issued by the FHLB. Essentially, this reimbursement obligation represents a first credit loss enhancement provided by the Company to Freddie Mac. Based on the credit quality of the multi-family loans at the time of sale, among other factors, the Company estimated the fair value of its reimbursement obligation to be $3.3 million. Including the reimbursement obligation, the transaction resulted in a net gain on sale of $4.4 million. The carrying amount of the reimbursement obligation remained at $3.3 million at December 31, 2024, and is included in Accrued expenses and other liabilities on the Consolidated Balance Sheets. The Company was not required to make any guarantee payments to Freddie Mac during the fourth quarter of 2024. Until the Company’s obligation to reimburse Freddie Mac for the first 12% of losses is reduced to 25% of the initial amount, it may have the option to exercise certain contingent repurchase rights over the transferred multi-family loans, unless it elects to waive or assign those rights. At both the time of sale, and as of December 31, 2024, the Company does not intend to repurchase any of the multi-family loans. Payroll Finance Portfolio and Sale of Factored Receivables Portfolio In March 2024, the Company initiated a plan to actively sell its payroll finance and factored receivables loan portfolios, along with the related customer contracts. This decision was a direct result of the Company’s continuous reassessment of its strategic model in an effort to identify opportunities to improve its core financial products and services. Accordingly, the aggregate $220.2 million balance of the payroll finance and factored receivables loans was reclassified and transferred, at March 31, 2024, from held for investment to held for sale on the accompanying Consolidated Balance Sheets. Upon the transfer, the $5.4 million ACL that was previously recorded against the payroll finance and factored receivables loans was reversed into earnings. On September 27, 2024, the Company sold its factored receivables loan portfolio of $124.1 million, and the related customer contracts, for proceeds of $129.2 million. After the write-off of the factored receivables customer relationship intangible asset, which had a net carrying amount of $19.7 million, less $1.3 million of selling costs, the sale of assets resulted in a $16.0 million net loss on sale. The entire net loss is included in Other income on the Consolidated Statements of Income and in the Corporate and Reconciling category for segment reporting purposes in accordance with the Company’s methodology. In December 2024, after re-evaluating its strategic priorities as part of its annual budgeting and forecasting process, the Company decided to terminate the plan of sale of its payroll finance portfolio and instead hold the loans as an investment for the foreseeable future. Accordingly, the $133.2 million balance of the payroll finance loans was reclassified and transferred, at December 31, 2024, from held for sale to held for investment on the accompanying Consolidated Balance Sheets. Upon the transfer, a $0.3 million ACL was re-established against the payroll finance loans. Other Commercial and Consumer Loan Sales Under certain circumstances, the Company may decide to sell commercial or consumer loans that were not originated or otherwise acquired with the intent to sell. Excluding both the multi-family securitization and the factored receivables sale, during the years ended December 31, 2024, 2023, and 2022, the Company sold loans not originated for sale of $146.5 million, $625.1 million, and $676.4 million, respectively, which resulted in net gains on sale of $0.5 million, $0.9 million, and $3.3 million, respectively. Residential Mortgage Sales and Servicing The Company originates and sells residential mortgage loans in the normal course of business, primarily to government-sponsored entities through established programs and securitizations. During the years ended December 31, 2024, 2023, and 2022, the Company sold $9.1 million, $12.8 million, and $35.8 million, respectively, of residential mortgage loans originated for sale, which resulted in net (losses) gains on sale of $(0.7) million, $1.1 million, and $0.6 million, respectively. The Company may retain servicing rights on its residential mortgage loans sold in the normal course of business. For the years ended December 31, 2024, 2023, and 2022, residential mortgage loans sold with servicing rights retained were $4.4 million, $6.5 million, and $32.1 million, respectively. At December 31, 2024, and 2023, the aggregate UPB of residential mortgage loans serviced for others was $0.4 billion and $1.8 billion, respectively. The following table summarizes the change in the carrying amount for mortgage servicing rights:
| Years ended December 31,
(In thousands) | 2024 |  | 2023 |  | 2022
Balance, beginning of period | $ | 8,523 |  |  | $ | 9,515 |  |  | $ | 9,237 |
Acquired from Sterling | — |  |  | — |  |  | 859 |
Additions | 36 |  |  | 71 |  |  | 289 |
Amortization | (670) |  |  | (1,063) |  |  | (870) |
Sales | (6,655) |  |  | — |  |  | — |
Balance, end of period | $ | 1,234 |  |  | $ | 8,523 |  |  | $ | 9,515 |
Mortgage servicing rights, which are included in Accrued interest receivable and other assets on the accompanying Consolidated Balance Sheets, are initially measured at fair value and subsequently measured using the amortization method. During the fourth quarter of 2023, the Company committed to and initiated a plan to actively market and sell the majority of its mortgage servicing portfolio. Upon making this determination, the Company treated the related mortgage servicing rights as assets held for disposition, and ceased the recognition of any future amortization expense. On February 12, 2024, the Company completed the sale, which comprised 9,184 individual residential mortgage loans with an aggregate UPB of $1.4 billion. In connection with the sale, the Company received net cash proceeds of $18.4 million and derecognized $6.7 million of mortgage servicing rights. The resulting $11.7 million net gain on sale of mortgage servicing rights is included in Other income on the Consolidated Statements of Income and in Consumer Banking for segment reporting purposes. Residential mortgage loan servicing fees, net of mortgage servicing rights amortization, which are included in Loan and lease related fees on the accompanying Consolidated Statements of Income, was $1.3 million, $4.0 million, and $5.9 million for the years ended December 31, 2024, 2023, and 2022, respectively.

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- Definition The entire disclosure for a transferor's continuing involvement in financial assets that it has transferred in a securitization or asset-backed financing arrangement, the nature of any restrictions on assets reported by an entity in its statement of financial position that relate to a transferred financial asset (including the carrying amounts of such assets), how servicing assets and servicing liabilities are reported, and (for securitization or asset-backed financing arrangements accounted for as sales) when a transferor has continuing involvement with the transferred financial assets and transfers of financial assets accounted for as secured borrowings, how the transfer of financial assets affects an entity's financial position, financial performance, and cash flows. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 946 -SubTopic 210 -Name Accounting Standards Codification -Section S99 -Paragraph 1 -Subparagraph (SX 210.6-04(11)) -Publisher 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