AMAL

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How AMAL rewrote its risk factors

10-K ITEM 1A · FY2024 → FY2025

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New in FY2025

The majority of our loan portfolio is secured by real estate, 33.2% of which is multifamily and 7.3% of which is commercial real estate.
There are continuing concerns related to, among other things, the level of U.S. government debt and fiscal actions that may be taken to address that debt, price fluctuations of key natural resources, U.S. intervention in Venezuela and its oil industry, U.S. military strikes and sanctions on Iran, the potential resurgence of economic and political tensions with China, the Russian invasion of Ukraine and increasing oil prices due to Russian supply disruptions, and the Israel-Hamas conflict, each of which may have a destabilizing effect on financial markets and economic activity.
Economic pressure on consumers, including due to factors such as inflation and increased cost of goods due to tariff structures on imports, as well as overall economic uncertainty may result in changes in consumer and business spending, borrowing and saving habits.
Artificial Intelligence ("AI") models may amplify existing risks, given the increased complexity of financial modeling and the challenges in explaining the models.
Fiscal challenges facing the U.S. government, such as the federal budget deficit concerns and the potential for political conflict over legislation to fund U.S. government operations and raise the U.S. government's debt limit may increase the possibility of a default by the U.S. government on its debt obligations, additional related credit-rating downgrades, or an economic recession in the U.S.
In response to a February 2026 Supreme Court ruling that the President does not have authority to impose sweeping global tariffs under the International Emergency Economic Powers Act, the President signed an executive order imposing additional global tariffs.
It remains unclear whether and how federal agencies will enforce conflicting mandates on tariffs, and whether parties harmed by tariffs will have recourse against the federal government.
Tariffs, retaliatory tariffs or other trade restrictions on products and materials that customers import or export, or a trade war or other related governmental actions related to tariffs, international trade agreements or policies or other trade restrictions continue to have the potential to negatively impact our customers' costs, demand for their products, or the U.S. economy or certain sectors thereof and, thus, could adversely impact our business, financial condition and results of operations.
To the extent this uncertainty in U.S. trade policy and other changes in the global political environment have a negative impact on us, our customers or on the markets in which we operate, our business, results of operations and financial condition could be materially and adversely impacted.
In addition, at December 31, 2025, 82.4% of the properties securing our CRE, multifamily, or construction loans outstanding were located in the states of New York and California, and in Washington, D.C.
On January 28, 2026 the FOMC issued a statement that it decided to maintain short-term interest rates at a range of 3.5% to 3.75%, and future rate changes will be data dependent; implying they are holding rates constant for the immediate future.
As of December 31, 2025, the fair value of our investment securities portfolio was approximately $3.22 billion.
The process for determining whether impairment of a security has experienced an OTTI usually requires complex, subjective judgments about the future financial performance and liquidity of the issuer, any collateral underlying the security as well as our intent and ability to hold the security for a sufficient period of time to allow for any anticipated recovery in fair value in order to assess the probability of receiving all contractual principal and interest payments on the security.
The weakening of these standards for any reason, such as an attempt to attract riskier higher yielding loans, a lack of discipline or diligence by our employees in underwriting and monitoring loans, the inability of our employees to adequately adapt policies and procedures to changes in economic or any other conditions affecting borrowers and the quality of our loan portfolio, may result in loan defaults, foreclosures and additional charge-offs and may necessitate that we significantly increase our allowance, each of which could adversely affect our net income.
As of December 31, 2025, commercial real estate mortgage loans comprised approximately 7.3% of our loan portfolio.
Commercial real estate mortgage loans generally involve a greater degree of credit risk than one-to-four family residential real estate mortgage loans because they typically have larger balances and are more affected by adverse conditions in the economy.
New York State's Housing Stability and Tenant Protection Act of 2019, impacts about one million rent regulated apartment units.
In 2024, New York State passed legislation that effectively extends limits on rent hikes and “good cause” eviction requirements to many market-rate tenants in New York City and participating municipalities.
At December 31, 2025, our total multifamily loan exposure in New York State is approximately $1.01 billion, of which approximately $821.5 million, or 81%, represents our portfolio’s composition of rent stabilized and rent controlled apartments in the New York City multifamily market.
Our estimated allowance for credit losses may prove to be insufficient to absorb actual losses in our loan portfolio, which may adversely affect our business, financial condition and results of operations.
As of December 31, 2025, our ACL totaled $57.6 million, which represents approximately 1.16% of our total loans, net.
We are exposed to the risk of fraudulent activity, which continues to evolve in scope and sophistication.
Fraud may take various forms, including check and debit card fraud, ATM tampering, phishing and other social engineering attacks, and the use of stolen or falsified credentials to impersonate customers.
In addition, individuals or entities may properly identify themselves but seek to establish relationships for fraudulent purposes, and we may incur losses from fraud committed against third parties.
Criminals increasingly obtain personally identifiable information from external sources, including third‑party data breaches.
As a result, we have made and expect to continue making significant investments in fraud detection and prevention systems; however, these measures may not be effective in all cases.
Fraudulent activity could result in financial losses, increased operating and compliance costs, reputational harm, regulatory scrutiny or penalties, litigation, business disruption, and could materially adversely affect our business, financial condition, and results of operations.
We rely on third parties to provide internal and customer‑facing services, which may expose us to operational, compliance, and strategic risks.
Federal banking regulators expect banks to maintain risk‑based controls to ensure third parties comply with applicable laws and regulations.
In June 2023, the federal banking agencies issued “Interagency Guidance on Third‑Party Relationships: Risk Management”, requiring banks to “analyze the risks associated with each third-party relationship and to calibrate its risk management processes.” In July 2024, regulators also issued a joint statement addressing banks’ arrangements with third parties to deliver deposit products and services, concurrent with a request for information on bank‑fintech arrangements, following concerns regarding customer funds deposited through non‑bank entities without adequate controls.
In extending credit, entering into other transactions, and monitoring our loan and lease portfolio, we rely on financial and other information provided by customers, counterparties, and third parties, including financial statements, credit reports, and representations regarding their accuracy and completeness.
If such information is inaccurate, incomplete, fraudulent, misleading, or not received on a timely basis, we could experience credit losses, reputational harm, or other adverse effects that may materially impact our business, financial condition, or results of operations.
We are required to contribute to the Consolidated Retirement Fund, a multi‑employer defined benefit pension plan covering both unionized and non‑unionized employees, and our related expense totaled $8.2 million in 2025.
Our future obligations may increase due to changes in the plan’s funded status, investment performance, participant demographics, the financial condition of contributing employers, or actuarial assumptions, and a withdrawal or partial withdrawal could result in significant withdrawal liability, which could materially adversely affect our business, financial condition and results of operations.
Climate‑related disasters may adversely affect our business, asset quality, and earnings.
These risks include acute, event‑driven weather events such as hurricanes, storms, freezes, wildfires, floods, and other large‑scale catastrophes, which could disrupt our operations and those of our customers and third‑party vendors.
Such events may impair the value of our assets and collateral securing our loans, cause volatility in our investment portfolio, and negatively impact economic and market conditions.
In addition, our expenses may increase due to changing consumer preferences and evolving legislation and regulatory requirements related to the transition to a low‑carbon economy.
The potential costs associated with climate‑related risks—including strategic planning, regulatory scrutiny, litigation, technology investments, and disaster‑related losses—are difficult to predict and could have a material adverse effect on our business, financial condition, and results of operations.
As of December 31, 2025, we had a portfolio of $327.4 million in commercial PACE assessments and $953.2 million in residential PACE assessments.

and 40 more.

Gone since FY2024

The majority of our loan portfolio is secured by real estate, 8.8% of which is commercial real estate.
There are continuing concerns related to, among other things, the level of U.S. government debt and fiscal actions that may be taken to address that debt, price fluctuations of key natural resources, the potential resurgence of economic and political tensions with China, the Russian invasion of Ukraine and increasing oil prices due to Russian supply disruptions, and the Israel-Hamas conflict, each of which may have a destabilizing effect on financial markets and economic activity.
Economic pressure on consumers, including due to factors such as inflation and increased cost of goods due to tariffs on imports, as well as overall economic uncertainty may result in changes in consumer and business spending, borrowing and saving habits.
Artifical Intelligence ("AI") models may amplify existing risks, given the increased complexity of financial modelling and the challenges in explaining the models.
Fiscal challenges facing the U.S. government, such as the downgrade of the sovereign credit ratings of the U.S. by Fitch Ratings, could have an adverse impact on value of investments in GSEs and on the financial markets, interest rates and economic conditions in the U.S. and worldwide.
Federal budget deficit concerns and the potential for political conflict over legislation to fund U.S. government operations and raise the U.S. government's debt limit may increase the possibility of a default by the U.S. government on its debt obligations, additional related credit-rating downgrades, or an economic recession in the U.S.
Tariffs, retaliatory tariffs or other trade restrictions on products and materials that customers import or export, or a trade war or other related governmental actions related to tariffs, international trade agreements or policies or other trade restrictions have the potential to negatively impact our customers' costs, demand for their products, or the U.S. economy or certain sectors thereof and, thus, could adversely impact our business, financial condition and results of operations.
The U.S. recently has threatened or imposed tariffs on imports including aluminum, steel, and energy products from major trading partners including China, Mexico and Canada.
In response, these trading partners have threatened or imposed retaliatory tariffs on certain U.S. imports and announced investigations into U.S.-based companies.
Disputes over trade, flows of undocumented immigrants, fentanyl, Taiwanese independence and China’s expanding military presence may result in additional tariffs, sanctions and trade restrictions.
As a result of Russia’s invasion of Ukraine, the U.S. has imposed material financial and economic sanctions and export controls against certain Russian organizations and/or individuals, with similar actions either implemented or planned by the European Union (“EU”) and the U.K. and other jurisdictions.
Additionally, an armed conflict involving Hamas and Israel, as well as further escalation of tensions between Israel and various countries in the Middle East and North Africa, may cause additional detrimental effects on the global economy, including capital markets.
To the extent changes in the global political environment have a negative impact on us or on the markets in which we operate, our business, results of operations and financial condition could be materially and adversely impacted.
In addition, at December 31, 2024, 85.9% of the properties securing our CRE, multifamily, or construction loans outstanding were located in the states of New York and California, and in Washington, D.C.
On January 31, 2025 the FOMC issued a statement that it decided to maintain short-term interest rates at a range of 4.25% to 4.50%, and it now projects just two interest rate cuts in 2025, compared to earlier projections for four rate cuts.
As of December 31, 2024, the fair value of our investment securities portfolio was approximately $3.18 billion.
The process for determining whether impairment of a security is OTTI usually requires complex, subjective judgments about the future financial performance and liquidity of the issuer, any collateral underlying the security as well as our intent and ability to hold the security for a sufficient period of time to allow for any anticipated recovery in fair value in order to assess the probability of receiving all contractual principal and interest payments on the security.
The weakening of these standards for any reason, such as an attempt to attract higher yielding loans, a lack of discipline or diligence by our employees in underwriting and monitoring loans, the inability of our employees to adequately adapt policies and procedures to changes in economic or any other conditions affecting borrowers and the quality of our loan portfolio, may result in loan defaults, foreclosures and additional charge-offs and may necessitate that we significantly increase our allowance, each of which could adversely affect our net income.
As of December 31, 2024, commercial real estate mortgage loans comprised approximately 8.8% of our loan portfolio.
Commercial real estate mortgage loans generally involve a greater degree of credit risk than residential real estate mortgage loans because they typically have larger balances and are more affected by adverse conditions in the economy.
In 2019, the New York State legislature passed the Housing Stability and Tenant Protection Act of 2019, impacting about one million rent regulated apartment units.
At December 31, 2024, our total multifamily loan exposure in New York State is approximately $951.4 million, of which approximately $697.3 million, or 73%, represents our portfolio’s composition of rent stabilized and rent controlled apartments in the New York multifamily market.
Our estimated allowance for credit losses and fair value adjustments with respect to loans acquired in our acquisitions may prove to be insufficient to absorb actual losses in our loan portfolio, which may adversely affect our business, financial condition and results of operations.
As of December 31, 2024, our ACL totaled $60.1 million, which represents approximately 1.29% of our total loans, net.
Fraudulent activity has taken many forms, ranging from check fraud, mechanical devices attached to ATM machines, social engineering and phishing attacks to obtain personal information or impersonation of our clients through the use of falsified or stolen credentials and debit card fraud.
Additionally, an individual or business entity may properly identify themselves, particularly when banking online, yet seek to establish a business relationship for the purpose of perpetrating fraud.
Further, in addition to fraud committed against us, we may suffer losses as a result of fraudulent activity committed against third parties.
Increased deployment of technologies, such as chip card technology, defray and reduce aspects of fraud; however, criminals are turning to other sources to steal personally identifiable information, such as unaffiliated healthcare providers and government entities, in order to impersonate the consumer to commit fraud.
Many of these data compromises are widely reported in the media.
Further, as a result of the increased sophistication of fraud activity, we have increased our spending on systems and controls to detect and prevent fraud.
This will result in continued ongoing investments in the future.
Nevertheless, these investments may prove insufficient and fraudulent activity could result in losses to us or our customers; loss of business and/or customers; damage to our reputation; the incurrence of additional expenses (including the cost of notification to consumers, credit monitoring and forensics, and fees and fines imposed by the card networks); disruption to our business; our inability to grow our online services or other businesses; additional regulatory scrutiny or penalties; or our exposure to civil litigation and possible financial liability any of which could have a material adverse effect on our business, financial condition and results of operations.
We rely on third parties for internal and customer-facing services.
The use of third parties may pose operational, compliance, and strategic risks to banks.
The federal banking regulators expect banks implement controls to ensure that third parties perform their activities in compliance with applicable laws and regulations.
In June 2023, the federal banking agencies issued “Interagency Guidance on Third-Party Relationships: Risk Management”, which requires banks to “analyze the risks associated with each third-party relationship and to calibrate its risk management processes”.
In addition, in July 2024, federal banking regulators issued a joint statement on banks’ arrangements with third parties to deliver bank deposit products and services.
The joint statement was released concurrently with a request for information on bank-fintech arrangements involving banking products and services distributed to consumers and businesses through third parties, including payment and lending products in addition to deposit products, in the wake of issues with customers depositing non-FDIC insured funds through non-banks without proper controls.
In deciding whether to extend credit or enter into other transactions, and in evaluating and monitoring our loan and lease portfolio on an ongoing basis, we may rely on information furnished by or on behalf of customers and counterparties, including financial statements, credit reports and other financial information.
We may also rely on representations of those customers or counterparties or of other third parties, such as independent auditors, as to the accuracy and completeness of that information.

and 53 more.

Sentence-level comparison of Item 1A in the two most recent 10-Ks (FY2024 ↗, FY2025 ↗). A reworded sentence counts as one dropped and one added, so heavy edits read as low “kept”. Headings and page furniture are stripped; nothing is summarised by a model.

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