Greetings, ladies and gentlemen, and welcome to the Amalgamated Financial Corporation fourth quarter and full year 2021 earnings conference call. During today's presentation, all parties will be in a listen-only mode. Following the presentation, the conference will be opened for questions with instructions to follow at that time. As a reminder, this conference call is being recorded. I would now like to turn the call over to Mr. Jason Darby, Chief Financial Officer. Please go ahead, sir.
Thank you, operator, and good morning, everyone. We appreciate your participation in our fourth quarter 2021 earnings call. With me today is Priscilla Sims Brown, President and Chief Executive Officer. As a reminder, a telephonic replay of this call will be available on the investors section of our website for an extended period of time. Additionally, a slide deck to complement today's discussion is also available on the investors section of our website. Before we begin, let me remind everyone that this call may contain certain statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. We caution investors that actual results may differ from the expectations indicated or implied by any such forward-looking statements or information.
Investors should refer to slide two of our earnings slide deck as well as our 2020 10-K filed on March 15th, 2021 for a list of risk factors that could cause actual results to differ materially from those indicated or implied by such statements. Additionally, during today's call, we will discuss certain non-GAAP measures which we believe are useful in evaluating our performance. The presentation of this additional information should not be considered in isolation or as a substitute for results prepared in accordance with US GAAP. A reconciliation of these non-GAAP measures to the most comparable GAAP measure can be found in our earnings release as well as on our website. Let me now turn the call over to Priscilla.
Thank you, Jason, and good morning, everyone. We appreciate your time and interest today. This morning I will take a few highlights of our fourth quarter 2021 results, as well as provide an update on our strategic plan designed to deliver sustained and profitable organic growth. The early signs of which can be seen in our results this quarter. Jason will then provide an update on our pending acquisition of Amalgamated Bank of Chicago and conclude with a more in-depth review of our fourth quarter financial results. To start, our early results clearly highlight the potential that exists within Amalgamated as we execute on our strategic plan. Along these lines, there are four key points that I would like you to take away from this morning's call.
First, we delivered a 6.2% net loan growth, not including PACE assessments, compared to the linked quarter as our early focus on driving loan growth during the second half of 2021 has started to take hold. Second, we recruited a talented and experienced leader for our commercial real estate business to manage our team and lending platform, protect our existing book of business, improve credit quality and gain new share. Third, we grew deposits 2% from the linked quarter while our political deposit franchise held steady at $1 billion, which exceeded our expectations given the natural contraction that we typically experience following an election. Our cost of deposits also held steady at 9 basis points. Fourth, we took important and necessary steps that began as early as in the second half of 2021 to further improve the credit quality of our loan portfolio.
As a result, during the quarter we saw our non-accrual loans decline by $17.3 million to $28.2 million or 85 basis points of total loans, and we saw our classified or criticized assets improve by $79.9 million. While I'm pleased with our results, I know that there is much more work left to accomplish. As I outlined in our third quarter call, we've established a four-pillar strategy which is designed to accelerate growth, expand our profitability, and improve our returns. This strategy is focused on, first, building our business through our mission. Second, focusing on customer segments that share our values and where we can take market share. Third, developing and expanding our product offerings to grow our lending platform and our trust business. And fourth, improving the management of our data and technology to drive better efficiencies and effectiveness.
On today's call, I would like to focus on our third pillar, and specifically our efforts to grow our lending platform as we strive to enhance the franchise value of Amalgamated and fund future development projects through profitability. A clear opportunity is to service our customers from a lending perspective. In connection, as we demonstrate continued success and growth in our baseline lending platform, I also see more opportunities to expand sections of our lending platform into our markets where we have traditionally only focused on deposit gathering. Boston is a terrific example as we originally entered this market with a main focus of gathering deposits. We believe we can build a commercial real estate lending platform, and drive loan volume there. To be successful, we need to attract bankers and underwriters with proven acumen and results in the CRE market.
To that end, I'm very pleased to report that we have recruited a seasoned producer and a leader for our commercial real estate and multifamily banking team. Additionally, this leader was also able to bring over a key team member, greatly improving the ability to make an immediate impact. As the largest asset class on our balance sheet at year-end, this is a key focus for us and one that we intend to return to pre-pandemic origination levels in the year ahead. We've also repositioned our existing lending talent in order for them to use their valuable expertise across our New York City, Boston, D.C., San Francisco, and soon to be Chicago footprint.
We see commercial and consumer solar, sustainability project finance, and commercial pace as segments we are expertly knowledgeable and highly competitive in, and we plan to aggressively add to our talent base in these segments during 2022. Additional segments where we are building expertise is in CDFI, not-for-profit, and social advocacy. We are becoming increasingly confident in the strides we're making to expand our lending platform and see high single-digit loan growth, not including the impact of ABOC as achievable in the year ahead. Importantly, our growth is increasingly focused on entering new sustainable markets and taking share, which presents an open-ended growth opportunity that is less subject to economic or cyclical decline. As we redeploy our liquidity into organic loans, we will continue to see margins improve and earnings power accelerate.
We're also continuing with connecting our consumer and trust business and our commercial banking business to better serve our customers across offerings. We are acutely focused on addressing the revenue and profitability of our trust business over the next year as we ramp our ESG-oriented responsive funds products and address the fee structure in our core pension fund business. To conclude, we ended the year strongly, and we are well-positioned to accelerate growth and profitability into the year ahead. We have shown meaningful organic loan growth for the first time since the second quarter of 2020, and are optimistic that growth will continue in 2022. I am very pleased that we were able to attract a talented lending team to Amalgamated, which demonstrates the unique opportunity we offer in the market.
We have a brand and a reach in our socially responsible markets, which rivals the big banks within an institution where people can lead and make a real impact. This is very appealing, and we establish Amalgamated as an employer of choice in the major markets where we do business. Our immediate focus in 2022 is to add experienced bankers and underwriters who can help us grow our platform and accelerate growth in our focus markets and segments. Lastly, our acquisition of the Amalgamated Bank of Chicago will provide market expansion into the Midwest while offering significant revenue and cost synergies when the deal closes in the next few months. We expect the transaction to close early in the second quarter, which is a bit later than our earlier aspirations.
That said, we have been working closely with the ABOC team to prepare for the integration once the deal closes, and we're very pleased with the receptivity from ABOC employees to the potential for a combined bank once we merge. Let me now turn the call over to Jason.
Thank you, Priscilla. We are pleased with ABOC's financial performance, which has been in line with our expectations for the year. We are also seeing ABOC loan growth through the fourth quarter, which validates our expectations from the acquisition. What we already have found is that ABOC has deep relationships with their customers, and a larger balance sheet will provide immediate lending opportunities that are very attractive. Longer term, we see an opportunity to export our lending expertise in sustainability and other mission-driven segments to the ABOC client base and geographic market, which we expect will expand ABOC's lending reach and help to accelerate its loan growth as we look to the second half of 2022.
Turning to our fourth quarter results, net income was $15.9 million or $0.50 per diluted share, compared to $14.4 million or $0.46 per diluted share for the third quarter of 2021, representing an 8.7% increase in earnings per share. The $1.5 million increase was primarily due to a $3.7 million increase in net interest income and a $5.7 million increase in non-interest income. These increases were partially offset by a $2 million increase in non-interest expense, of which $0.9 million was related to the pending ABOC acquisition, as well as a $3.6 million provision expense compared to a $2.3 million provision recovery in the preceding quarter.
Starting on slide seven, deposits at December 31st, 2021 were $6.4 billion, an increase of $131.8 million from the third quarter of 2021, and an increase of $1.1 billion as compared to December 31st, 2020. Non-interest-bearing deposits represent 52% of deposits for the quarter ended December 31st, 2021, contributing to an average cost of deposits of 9 basis points in the fourth quarter of 2021, unchanged from the previous quarter. Deposits held by politically active customers such as campaigns, PACs, advocacy-based organizations, and state and national party committees were $989.6 million as of December 31st, 2021, an increase of $386.8 million as compared to $602.8 million as of December 31st, 2020.
Turning to slide 10, our total net loans at December 31st, 2021 were $3.3 billion, an increase of $189.9 million as compared to the linked quarter. The increase in loans was primarily driven by advances in commercial sustainability lending, consumer solar lending, and CRA-eligible residential lending. The yield on our total loans was 4.01% compared to 3.84% in the third quarter of 2021. Adjusting for prepayment penalties, our loan yield was up 15 basis points in the fourth quarter as compared to the previous quarter. During the quarter, we received $1.0 million in accrued but unpaid interest on a reinstated loan.
Adjusted for this, our yield in total loans was 3.89%. On slide 12, our net interest margin was 2.77% for the fourth quarter of 2021, an increase of 7 basis points from 2.70% in the third quarter of 2021, and a decrease of 29 basis points from 3.06% in the fourth quarter of 2020. Adjusted for the reinstated loan noted above, our net interest margin was 2.71%. We estimate that our excess liquidity this quarter from balance sheet growth has suppressed our NIM by 20 basis points. Turning to non-interest income, it was $12.4 million for the fourth quarter of 2021 compared to $6.7 million in the linked quarter and $10 million for the fourth quarter of 2020.
The sequential increase of $5.7 million was primarily due to $5.3 million of equity method investment income related to a new investment in a solar initiative. The increase of $2.4 million as compared to the same quarter last year was primarily due to the solar investment income, offset by decreases in gain on sale of loans in the corresponding quarter in 2020. As can be seen on slide 13, for our first solar investments made in 2020, we have recognized the benefit of the tax credits in 2020 and also the related accelerated depreciation impacts in the current year. During 2022, we expect to recognize gains related to cash distributions from our solar equity method investments, as well as over the remaining life of the investments through 2025.
These impacts did not include any benefits from the new solar equity investment made in the fourth quarter. Noninterest expense for the fourth quarter of 2021 was $35.0 million, an increase of $2 million from the third quarter of 2021 and an increase of $2.3 million from the fourth quarter of 2020. The increase of $2 million from the preceding quarter includes $0.9 million of ABOC related costs, as well as a $0.7 million increase in data processing expenses related to the modernization of the trust department.
The increase of $2.3 million from the fourth quarter of 2020 is due to the ABOC related costs, as well as an increase of data processing expenses related to the modernization of the trust department, increased transaction processing costs post COVID-19 and other technology upgrades. As I mentioned during the previous quarter call, our non-performing asset metrics are a key focus. Turning to slide 16, non-performing assets totaled $54.6 million or 0.77% of period-end total assets at December 31st, 2021. A decrease of $27.6 million compared with $82.2 million or 1.38% of period-end total assets at December 31st, 2020.
The decrease in nonperforming was primarily driven by the payoff of $11.2 million of nonaccrual construction loans, $3.5 million of multifamily loans, and $2.6 million of C&I loans, as well as a sale of $4.5 million of nonperforming residential loans and a partial charge-off and transfer of a $3.2 million multifamily loan to held for sale. Importantly, nonaccrual loans decreased by $17.3 million or 38% to $28.2 million. The allowance for loan losses decreased $5.7 million to $35.9 million at December 31, 2021 from $41.6 million at December 31, 2020, primarily due to improvements in credit quality.
At December 31st, 2021, we had $53.2 million of impaired loans for which a specific allowance of $5.1 million was made, compared to $80.5 million of impaired loans at December 31st, 2020, for which a specific allowance of $6.2 million was made. The ratio of allowance to total loans was 1.08% at December 31st, 2021, and 1.19% at December 31st, 2020. Provision for loan losses totaled an expense of $3.6 million for the fourth quarter of 2021 compared to a recovery of $2.3 million in the third quarter of 2021.
The expense in the fourth quarter of 2021 was primarily driven by an increase in loan balances as well as a $1.9 million net charge off on a multifamily loan, partially offset by improved credit quality and qualitative factors. Moving along to slide 17, our GAAP and core return on tangible average common equity were 11.2% and 12.2% respectively for the fourth quarter of 2021. Importantly, we remain well capitalized to support our future growth initiatives. Looking ahead in anticipation of rising rates in 2022, we are well positioned to benefit from our asset sensitivity. Generally speaking, a parallel 25 basis point increase in rates will result in an approximately $6 million increase in annual net interest income.
Turning to slide 19, we are initiating full year 2022 guidance which includes core pre-tax, pre-provision earnings of $75 million-$85 million, which excludes the tax credit related impact of solar tax equity income and losses. Net interest income of $184 million-$192 million, which includes prepayment penalty income. This guidance does not include any contribution from our pending ABOC acquisition from which we anticipate additional accretion. With that, I'd like to ask the operator to open up the line for any questions. Operator?
Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate that your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key. One moment please while we poll for questions. Thank you. Our first question comes from Alex Twerdahl with Piper Sandler. Please proceed with your question.
Good morning.
Morning.
First off, wanted to ask, Priscilla, in your prepared remarks, you talked about the immediate focus for 2022 is adding lenders. I was just wondering, you know, how many lenders do you have in mind to add? You know, help us contextualize a little bit sort of how that would compare to the existing number of lenders in the company.
Sure. First of all, I think I would characterize it as also just rationalizing the community that we currently have. Do you have handy, Jason, the number of lenders that we, the actual number of lenders that we have?
I don't have handy the actual number of lenders, but you know what I can comment on is sort of on a run rate basis. You know, we already did a net add in the fourth quarter of six lenders. They're not just necessarily lenders, Alex. We're looking to add producers, but we're also looking to add support folks in the u nderwriting portfolio management. You know, I think our key hires right now, which we talked about in the third quarter, was really addressing that CRE and multifamily space, and we were able to hire a leader for that area and also an additional banker that came in. When we talk about, w hen we talk about going forward, sorry, Priscilla, were you trying to jump in or was that just me?
Yeah, I just wanted to add, put a finer point on the specific number of lenders. I think we're up plus seven in the plan. We would intend to add a net of seven.
Awesome. I presume that'll be over the course of the year. I'm just wondering, you know, certainly adding the lenders and adding the support staff is certainly gonna come with some expense. What kind of expense guide is incorporated in that, in that guidance that you gave for 2022?
Jason, I'll make a quick comment and then I turn it over to you. You know, as you know, we talk a lot and monitor the efficiency ratio, and we are committed to keeping that at 65%. Expenses for the quarter at $34.5 with revenue offsets will enable us to achieve that efficiency ratio. Jason, do you have anything to add to that?
Yeah. I think that's well said. I mean, we have a guardrail, you know, Alex, for no higher than a 65% core efficiency ratio. You know, much of our staffing strategy is tethered to the growth in the net interest income and, you know, more specifically, growth in the interest income related to the lending area. So investments we're gonna make are gonna be kind of managed along the productivity and the profitability that's being derived from that business. You know, when I think about potential investment, I would expect our salaries line is going to increase, and we've held fairly steady at about $73.5 million.
You know, we see at least, you know, $500,000 of incremental, you know, per quarter when we start to think about talent overall. Certainly, you know, lending is gonna make up a significant portion of that.
Great. Just I wanted to drill in on the rate guidance that you gave, Jason. Just I think it's the 25 basis points close to $6 million of NII. Can you help us just get to the components of that and just remind us how much of the loan portfolio is variable that should reprice with hikes? My assumption is that you'd keep the deposit beta and those in that guidance pretty close to zero unless it's [audio distortion].
Yeah. I mean, the guidance just assumes that it's a parallel rate shift and that everything shifts, all rates shift at the same time. I didn't really go through in the guidance and give a blended between our variable and our fixed rate, if that helps. I was trying to be a little bit more general in my terms there. The $6 million really kind of would be assuming that the rate would adjust over the course of an entire year. Depending on when rates actually adjust and when you know when we start to realize that incremental benefit, I mean, that $6 million would be realized over time.
You know, I don't have any more specifics really to offer on that other than that's sort of how we did the estimate.
Okay. Thanks for taking my questions.
Thank you. Our next question comes from Janet Lee with JP Morgan. Please proceed with your question.
Hello. I just want to follow up on NII guidance, and I want to make sure that I understand the underlying assumptions correctly. When you say no change in Fed rate target, but you also say a parallel shift, are you assuming zero rate hikes through the end of 2022, or am I being confused with your guidance?
Yeah. Sorry if it's confusing. The guidance is assuming no rate hikes, right? Based on our growth assumptions and our balance sheet mix, assuming no change in rates, we'd come in between $184 million and $192 million, depending on how we hit our targets. You know, with the parallel.
Right.
With the parallel shift rates or the shock that I was just referring to, those numbers would move incrementally higher. I think I didn't answer the question properly on the from Alex, but you know, our deposit beta, we're assuming that as relatively unchanged at the I think, at the parallel rate shift.
Right. Got it. If we bake in the current forward curve that assumes about four rate hikes through the end of 2022, can we roughly think that would add, you know, $6 million annualized times, like, four, or is that what?
I mean, yeah. That's the basic math way to think about it. Obviously, those rate hikes won't all happen on day one of the year. You know, on an annual basis, if they all were to, that's the way we would generally think about it, yes.
Got it. Makes sense. On loan growth guidance, so you've basically sort of raised your loan growth target for 2022. I believe last quarter you said mid to high single digits l oan growth, now high single digits. What has changed? What over the past quarter that made you to become more optimistic about your loan growth? And can you just walk us through where you expect most growth to come from?
Certainly. Priscilla, do you wanna take the front end of that question on the optimism?
Yeah, I'd be happy to. It's a little bit of what we've talked about, Janet. Thanks for the question. You know, I am personally very happy with our sales leadership and our sales team. We've already begun to execute well on the strategy. You heard us talk about the new hires, but I like the way we're organizing the team. We think we'll get that high single-digit loan growth because of the strength of the pipeline that we see and the talent we've brought on. We'll see it in CRE, we'll see it in multifamily, we'll see it in sustainability and the other impact areas. We see nice pipeline in all of these areas.
Yeah. I'll add to that, you know, the growth we saw this quarter, we're really happy about it. You know, some of it's timing. We'd love to have a little bit of that pull through in the third quarter, but you know, it did come through in the fourth quarter for us and so that was really nice. You know, I don't think we're gonna grow at a 6% per quarter basis, but to Priscilla's point, the pipeline looks really stable, right? I mean, we spent a lot of time in the second half of the year, you know, kind of reinvigorating the sales process, making sure we have a sale to close cycle, what our bankers are doing, what they're focused on from a productivity point of view.
We're starting to see that in a longer pipeline that, you know, we can start to count on and forecast a little bit better. I think that's the first thing. The other thing, Janet, I think maybe to your question is, you know, we're seeing growth across kind of multiple areas. It's not all concentrated, and Priscilla touched on it a bit. Even in the quarter alone, you know, on our consumer side, you know, consumer solar was up about $45 million or roughly 20%. You know, we've got some new flow arrangements, you know, with existing providers to our capacity there. So we have some good optimism on growth going forward.
With that, you know, in the C&I space, mainly our sustainability continues to be a key driver. You know, we were able to close a $36 million solar tax equity deal, which, you know, we're real happy about. You know, we got some increases going on now in our sustainability and CDFI type lending. So, you know, again, those are different segments within that C&I impact lending that we feel are real opportunities going forward. I think again, what Priscilla talked about, you know, CRE starting to move and also on the multifamily side, you know, that's been an area where it's been in real decline. We're already actually starting to see things in the pipeline from the new folks that we've brought in. That gives us cause for optimism.
We're trying to keep it measured, right? We don't wanna get ahead of ourselves, but you know, we do think that we're in a spot where we can keep building on this momentum.
Okay. That's really helpful. Just to follow up on your NII guidance of, I believe that was $184 million-$192 million for 2022. You've obviously decreased your cash quite a bit in the fourth quarter. What level of cash are you assuming for your guidance? How should we think about the trajectory of NIM over the course of 2022?
Yeah, you know, cash, it's a bit of a mix, right? Our overall balance sheet growth is only about 5%. You know, when you think about kind of the loan growth targets exceeding the balance sheet growth, the obvious function is the decrease in cash. We're targeting, you know, $100 million of cash in terms of you know, kind of a year-end balance. You know, we'll manage to that over the course of the year, but that's sort of where we're trying to go.
There's a little bit of overall balance sheet growth that's baked into our model, but also a little bit of mix shifting to be able to kind of deploy out of that cash and into you know into loan and you know loan development for the NII drivers. I'm sorry, did I answer the whole question? I might have missed a piece you asked in there.
Just the trajectory of NIM, is it?
Oh, yeah.
At the bottom, is it gonna?
Yeah. I think the trajectory. I focus a little bit more on growing the NII, just mainly because that sort of drops right into the revenue line. On the margin side, I do think, you know, we're at the kind of plateau level. You know, and again, I'm not really thinking even as much as, you know, what would happen to our margin on rate, more just on the shift from, you know, from low interest earning cash and sort of short-term low interest earning securities into more, you know, meaningful yields within the loan portfolio.
I do see, you know, or I do hope that we'll have a rising NIM that's complemented by the increase in the NII to go along with that.
Great. Thanks for taking my questions.
As a reminder, if you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate that your line is in the question queue. Our next question comes from Chris O'Connell with KBW. Please proceed with your question.
Morning.
Morning, Chris.
Just wanted to start off on the growth this quarter. Obviously, you know, really strong across the board here. Just wondering, was there any, you know, purchases or, you know, SNC, or participations kind of involved in the loan growth this quarter? Or would you kinda characterize it as all organic?
There's a fair amount of purchase, you know, but what I'm more happy about is there's actually a fair amount of organic as well. You know, I think if I were to roughly break it out, it'd probably be about 60% of that would be organic and 40% would be in a purchase type of capacity. You know, again, some of this is historical. It's not like we went out and bought, you know, new packages just to kind of settle on loan growth. It's been more development of existing relationships. Like this consumer flow that I talked about before, you know, we've been able to increase that capacity and that trickled to that $45 million of growth this quarter.
We did have a warehouse participation that we did this quarter as well, which added a little bit of growth. That's not what I would just call organic. Outside of that, you know, I think we've had a decent mix of kind of the way we've tried to manage liquidity through the purchasing and also, you know, a jump start in or kind of a continuance really of our impact organic lending.
Great. That's helpful. Appreciate the slide and the guidance on the tax credit investments going forward here for 2022. Just wondering, like, where do you guys see the tax rate shaking out for the year?
On an effective tax? Are you talking about effective tax?
Yeah.
Yeah. We've got it marked right now at about 25.45%. That's what we're projecting for AETR. You know, I think last year we were pretty close to that. We had a little bit of a return provision adjustment that flowed through in the fourth quarter that was related to some of the early solar tax initiatives that we, you know, that we kind of first got into in 2020. I think now that we have kind of a, you know, a full understanding of how to manage those investments. I think our tax rate should remain very consistent throughout 2022.
Great. As you guys are kind of, you know, looking at the asset growth for 2022, it seems like, you know, loan growth should be strong and cash coming down. How are you thinking about the overall securities book kind of filling the gap there and then, you know, the split between kind of PACE versus more normal securities?
Yeah. You know, we'll continue to use the securities portfolio to deploy excess liquidity. You know, we also have some resell agreements out there in the short run while we develop and continue to book loans. I think when we think about the rest of the year, we actually are hopeful that the AFS portion of our security portfolio comes down a bit. You know, if all of our projections sort of work out the way we want, we'll be able to trade out a little bit of some of the shorter term securities that we've been in to try to take some yield. T hat wouldn't necessarily be a bad thing. Obviously you're trading into higher yielding loan rates.
On the flip side, you know, we do see another $160 million-$170 million of net growth in the PACE world. You know, that's a combination of our C-PACE and our PACE. I think overall securities would be up, you know, slightly about $75 million, but the mix would be, you know, a rundown on the AFS and a ramp up of the HTM, which contains the PACE securities.
Okay, great. That's helpful. How are you guys looking at, or what are you kind of expecting, you know, for political deposit growth going forward? Balances were, you know, more or less flat this quarter, and it seemed to be, you know, up a little bit to start off the year.
Yeah. Political deposits this year, obviously we're gonna be coming into a congressional election year. We're actually predicting somewhere in the range of $500 million of additional deposits that we're gonna be generating out of the political business, you know, between this, you know, really this quarter and the end of the third quarter. And then we expect a subsequent runoff of that in fourth quarter of about $600 million. You know, we think we're gonna end up, you know, probably around $900 million, on a baseline basis kind of going forward with political deposits, which, you know, continues to sort of grow that fundamental core of the political deposits.
There will be some lumpiness in our deposit growth during the first few quarters of this year as the election cycle ramps up.
Okay. That's helpful. Thank you. Last question from me is just how are you guys thinking about, you know, the trend of the reserve to loans going forward?
In terms of the overall coverage ratio?
Yeah, exactly.
Yeah. Okay. Right now I actually think we're in a good spot. I think we finished at 108%. You know, somewhere in that 110%-115% range is probably good guidance. You know, I think 115% would probably be more where we would end up. You know, again, just a reminder, we're not a CECL adopter yet, so there's potential for us to have a bit of a reserve build throughout this year, you know, as we start to model out what the CECL impact would be for us. In general, you know, kind of where we are right now, from a coverage ratio, you know, I like where we're at.
I love, you know, kind of the new ratios relative to our coverage on nonperforming and nonaccrual loans. You know, I think we'll manage to that number the best we can and particularly, you know, it's a function of loan growth, right? If we have loan growth then, you know, we obviously incremental increases in the allowance. From a coverage point of view, I think ranging it between 110 and 115 is probably a good estimate.
Okay, great. That's all I had. Thank you.
You're welcome.
Thank you. There are no further questions at this time. I'd like to turn the floor back over to management for any closing remarks.
Great. Thank you, operator, and Janet, Alex, Chris, for all your questions and the questions that I'm sure will come throughout the day. We do appreciate your time, and we appreciate your continued interest. We think that we have the opportunity to really continue to build momentum from here. I've been speaking with many of our customers about emerging strategies for our loan and trust business and about the acquisition of ABOC. I've seen that that's been met with a lot of enthusiasm and genuine interest on their part as well. When we talk about doing good for more customers and developing new customer relationships that we can offer those same mission-driven services to, we think it's pretty exciting.
There's also just a real energy around where we're headed from here, and I trust you'll continue to follow us and join us on the journey. I look forward to coming back to you next quarter and talking to you about the early results of implementing our new strategies, more details on incorporating ABOC into the Amalgamated family, and about the other initiatives that we look forward to share with you at that time. Thank you again for your time, and we look forward to continuing the dialogue.