Amalgamated Bank Reports Fourth Quarter and Full Year 2020 Financial Results

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NEW YORK, Jan. 28, 2021 (GLOBE NEWSWIRE) -- Amalgamated Bank (Nasdaq: AMAL) (“Amalgamated” or the “Bank”) today announced financial results for the fourth quarter and full year ended December 31, 2020.

Fourth Quarter 2020 Highlights

  • Net income of $13.8 million, or $0.44 per diluted share, compared to $12.5 million, or $0.40 per diluted share, for the third quarter of 2020 and $12.0 million, or $0.37 per diluted share for the fourth quarter of 2019

  • Core net income (non-GAAP)[1] of $13.8 million, or $0.44 per diluted share, compared to $16.8 million, or $0.54 per diluted share for the third quarter of 2020 and $12.6 million, or $0.39 per diluted share, for the fourth quarter of 2019

  • Deposit decline of $682.3 million, primarily due to the election cycle, to $5.3 billion compared to a balance of $6.0 billion on September 30, 2020

  • Total loans of $3.4 billion, compared to a balance of $3.6 billion on September 30, 2020

  • Growth in PACE assessments of $53.6 million, or 58.1% annualized, from a balance of $367.4 million on September 30, 2020

  • Cost of deposits was 0.13%, compared to 0.14% for the third quarter of 2020 and 0.36% for the fourth quarter of 2019

  • Net interest margin was 3.06%, compared to 2.88% for the third quarter of 2020 and 3.43% for the fourth quarter of 2019

  • Common Equity Tier 1, Total Risk-Based, and Tier 1 Leverage capital ratios were 13.11%, 14.25%, and 7.97%, respectively, at December 31, 2020

  • Total nonperforming assets were $82.2 million or 1.38% of total assets as of December 31, 2020, compared to $80.6 million or 1.22% of total assets at September 30, 2020 and $66.7 million, or 1.25% of total assets at December 31, 2019

Full Year 2020 Highlights

  • Net income of $46.2 million, or $1.48 per diluted share, as compared to $47.2 million, or $1.47 per diluted share, for the full year of 2019

  • Core net income (non-GAAP)[1] of $50.3 million, or $1.61 per diluted share, as compared to $48.2 million, or $1.49 per diluted share, for the full year of 2019

  • Deposit growth of $697.7 million, or 15.0%, compared to December 31, 2019

  • Loan growth of $8.5 million, or 0.2%, compared to December 31, 2019

  • Growth in PACE assessments of $157.2 million, or 59.6%, from a balance of $263.8 million on December 31, 2019

  • Cost of deposits was 0.19%, compared to 0.35% for the full year of 2019

  • Net interest margin was 3.11%, compared to 3.55% for the full year of 2019

Keith Mestrich, President and Chief Executive Officer of Amalgamated Bank, commented, “As I look back on our fourth quarter and full year 2020 results, I am not only pleased, but proud of all that we have accomplished in such challenging, unprecedented times, highlighted by our net income growth of 10.5% to $13.8 million in the fourth quarter as compared to $12.5 million in the third quarter of 2020. Additionally, we expanded our position this election cycle as demonstrated in our political deposit balance as of year-end of $602.8 million which compares to the 2018 cycle trough of $181.9 million. While we expect political deposits to modestly run off further through the first quarter, our results greatly exceeded our expectations. Our ability to succeed, proven during the ongoing pandemic, is largely attributed to the strong foundation we have built over our near 100-year history, and, in recent years, the work we have completed to strengthen the Bank’s operations, management team, and credit profile of our loan portfolio. Our team has worked diligently through the current crisis to proactively address issues in our portfolio and position the Bank for success as we expect the credit metrics of our loan portfolio to improve throughout 2021. Looking to the year ahead, there is much to be excited about as we continue to build upon our reputation as America’s Socially Responsible Bank and execute our growth strategy designed to increase the franchise value of Amalgamated. I look forward to working with the team that I am so very proud of as I transition into my new role as Special Advisor to the Board at the beginning of February.”

_________________________

[1] Reconciliations of non-GAAP financial measures to the most comparable GAAP measure are set forth on the last two pages of the financial information accompanying this press release and may also be found on our website, www.amalgamatedbank.com.

COVID-19 Update

Amalgamated’s primary concern during the COVID-19 pandemic is for the health and well-being of the Bank’s employees, customers, and communities. Our employees continue to operate in a work from home environment, and we continue to perform well, effectively transitioning many customers to our digital platform, allowing for further consolidation of our branch network.

We have offered payment deferrals as an option for our consumer and commercial borrowers who are experiencing financial stress as a result of COVID-19 impacts. As of December 31, 2020, the following loan balances are still on deferral, accruing interest, and no loan has been on deferral longer than six months.

Total Loans

Deferrals as of:

% of Portfolio
(1)

$ millions

12/31/20

12/31/20

9/30/2020

Multifamily

$

947

$

15

$

124

1.5

%

CRE & Construction

429

2

97

0.5

%

C&I

677

4

5

0.6

%

Residential

1,239

18

63

1.5

%

Consumer & Student

191

2

4

1.0

%

Total

$

3,843

$

41

$

293

1.2

%

(1) Loan portfolio % is for deferral balances as of 12/31/2020

The table below shows the credit risk rating of loans that have exited deferral status as of December 31, 2020, including those loans that did not resume payments and have been moved to non-accrual. These loans do not include other special mention or substandard loans that were never granted a payment deferral:

$ millions

Pass
Rated

Special
Mention

Substandard(2)

Total

Multifamily

$

52

$

109

$

18

$

179

CRE & Construction

30

39

49

118

C&I

10

15

3

28

Residential

87

16

103

Consumer & Student

Total

$

179

$

163

$

86

$

428

(2) Substandard loans include $16 million of residential and $4 million of multifamily loans that have been placed on non-accrual

Results of Operations, Quarter Ended December 31, 2020

Net income for the fourth quarter of 2020 was $13.8 million, or $0.44 per diluted share, compared to $12.5 million, or $0.40 per diluted share, for the third quarter of 2020 and $12.0 million, or $0.37 per diluted share, for the fourth quarter of 2019. The $1.3 million increase for the 2020 fourth quarter, compared to the 2020 third quarter, was primarily due to a $5.2 million decrease in non-interest expense, partially offset by a $2.7 million decrease in non-interest income and a $1.2 million increase in the provision for loan losses.

Core net income (non-GAAP) for the fourth quarter of 2020 was $13.8 million, or $0.44 per diluted share, compared to $16.8 million, or $0.54 per diluted share, for the third quarter of 2020 and $12.6 million, or $0.39 per diluted share, for the fourth quarter of 2019. Core net income for the fourth quarter of 2020 included no adjustments to GAAP net income, and the third quarter of 2020 excluded $0.6 million of non-interest income gains on the sale of securities, $6.4 million in expense related to the closure of six branches and severance costs, and the tax effect of such adjustments. Core net income for the fourth quarter of 2019 excluded $0.2 million of non-interest income gains on the sale of securities, $1.1 million in expense related to the closure of one branch and severance costs, and the tax effect of such adjustments.

Net interest income was $45.7 million for the fourth quarter of 2020, compared to $45.2 million for the third quarter of 2020 and $42.3 million for the fourth quarter of 2019. The year-over-year increase of $3.4 million was primarily attributable to a decrease in interest expense due to a decrease in deposit rates paid and FHLB advances, and an increase in average securities of $734.3 million and average loans of $97.1 million, with such growth more than offsetting the lower yields earned on such assets. These impacts were partially offset by an increase in average interest-bearing deposits of $224.5 million.

Net interest margin was 3.06% for the fourth quarter of 2020, an increase of 18 basis points from 2.88% in the third quarter of 2020, and a decrease of 37 basis points from 3.43% in the fourth quarter of 2019. The accretion of the loan mark from the loans we acquired in our New Resource Bank acquisition contributed two basis points to our net interest margin in the third and fourth quarters of 2020, compared to five basis points in the fourth quarter of 2019. Prepayment penalties earned through loan income contributed 13 basis points to our net interest margin in the fourth quarter of 2020, compared to seven and two basis points in the third quarter of 2020 and the fourth quarter of 2019, respectively.

Provisions for loan losses totaled an expense of $4.6 million for the fourth quarter of 2020 compared to an expense of $0.1 million for the same period in 2019. The provision expense in the fourth quarter of 2020 was primarily driven by an $11.0 million charge-off primarily related to an indirect C&I loan, of which $8.3 million was reserved for in previous quarters, and by specific reserves on multifamily loans of $2.0 million.

Non-interest income was $10.0 million for the fourth quarter of 2020, compared to $12.8 million in the third quarter of 2020 and $7.8 million for the same period in 2019. This decrease of $2.7 million in the fourth quarter of 2020 compared to the previous quarter was primarily due to a decrease of $2.5 million in tax credits on equity investments in solar projects. The increase of $2.2 million in the fourth quarter of 2020 compared to the fourth quarter of 2019 was primarily due to $1.8 million in tax credits on equity investments in solar projects in the fourth quarter of 2020 and an increase of $1.3 million in gains on the sale of loans. These increases were partially offset by a $0.9 million decrease in Trust Department fees primarily related to the decrease in revenue from a real estate fund that is liquidating assets, the movement of funds to lower yielding products and market volatility. Our real-estate fund is expected to stop earnings fees in 2021; this fund generated $0.4 million in fees, included within Trust Department fees, during the three months ended December 31, 2020. Additionally, we expect a loss in equity method investments of approximately $5.6 million during 2021; this loss is due to the timing of the $7.4 million in tax benefits earned during 2020. These impacts do not include any benefits of new solar equity investments that we may make in the future.

Non-interest expense for the fourth quarter of 2020 was $32.7 million, a decrease of $5.2 million from the third quarter of 2020 and a decrease of $0.8 million from the fourth quarter of 2019. The decrease of $5.2 million from the previous quarter was primarily due to a $6.5 million decrease in occupancy and depreciation expenses related to closing six branches in New York City, partially offset by an increase of $1.8 million in professional fees related to the formation of a bank holding company, the transition of our CEO and other strategic initiatives.

Our provision for income tax expense was $4.6 million for the fourth quarter of 2020, compared to $4.3 million for the third quarter of 2020 and $4.4 million for the fourth quarter of 2019. Our effective tax rate for the fourth quarter of 2020 was 25.2%, compared to 25.4% for the third quarter of 2020 and 27.0% for the fourth quarter of 2019.

Results of Operations, Full Year Ended December 31, 2020

Net income for the year ended December 31, 2020 was $46.2 million, or $1.48 per average diluted share, compared to $47.2 million, or $1.47 per average diluted share, for year ended December 31, 2019. The $1.1 million decrease was primarily due to a $21.0 million increase in the provision for loan losses and a $6.1 million increase in non-interest expense, partially offset by a $13.4 million increase in net interest income and an $11.4 million increase in non-interest income.

Core net income (non-GAAP) for the year ended December 31, 2020 of $50.3 million, or $1.61 per diluted share, compared to $48.2 million or $1.49 per diluted share, for the year ended December 31, 2019. Core net income for the twelve months ended December 31, 2020 excludes branch closure expenses and the gain on sale of a closed branch, gains on the sale of securities, severance costs, and the tax effect of such adjustments.

Net interest income was $180.0 million for the year ended December 31, 2020, compared to $166.6 million for the year ended December 31, 2019. This increase of $13.4 million was primarily attributable to a decrease in interest expense due to a decrease in borrowings and deposit rate paid, and an increase in average securities of $552.5 million and average loans of $250.7 million, with such growth more than offsetting the lower yields earned on such assets. These impacts are partially offset by an increase in average interest-bearing deposits of $295.7 million.

Provisions for loan losses totaled an expense of $24.8 million for the year ended December 31, 2020, compared to an expense of $3.8 million for the year ended December 31, 2019. The provision expense for the year ended December 31, 2020 was primarily driven by a $4.4 million increase in allowance related to negative economic factors and payment deferrals in our loan portfolio, $17.0 million in charge offs primarily related to hotel, construction loans, and indirect C&I loans (of which $4.4 million was previously reserved for in 2019), a $4.6 million increase related to loan downgrades and other factors.

Non-interest income was $40.6 million for the year ended December 31, 2020, compared to $29.2 million for the year ended December 31, 2019, an increase of $11.4 million. This increase was primarily due to $7.4 million in tax credits on equity investments in solar projects, an increase of $2.5 million on gains on the sale of originated loans, a $1.5 million change in gain on the sale of securities, a $1.4 million gain on the sale of a branch reported in other non-interest income, and a $1.4 million increase in Bank-owned life insurance income due to the receipt of multiple death benefit payouts. These increases were partially offset by a $3.4 million decrease in Trust Department fees primarily related to the impact of low asset values in the first half of 2020 due to market fluctuations and the real estate fund that is liquidating its assets noted above.

Non-interest expense for the year ended December 31, 2020 was $133.9 million, an increase of $6.1 million from $127.8 million for the year ended December 31, 2019. The increase was primarily due to a $5.3 million increase in occupancy and depreciation expense related to branch closures and a $1.5 million increase in other expenses due to FDIC insurance rebates in 2019 that ceased in 2020.

We had income tax expense of $15.8 million for the year ended December 31, 2020, compared to $17.0 million for the year ended December 31, 2019. Our effective tax rate was 25.4% for the year ended December 31, 2020, compared to 26.4% for the year ended December 31, 2019.

Financial Condition

Total assets were $6.0 billion at December 31, 2020, compared to $5.3 billion at December 31, 2019. The increase of $0.7 billion was driven primarily by a $516.8 million increase in investment securities, of which $157.2 million was from PACE assessments, and a $154.8 million increase in resell agreements backed by Government Guaranteed loans. In the twelve months ended December 31, 2020, the Bank also made $26.1 million of investments in solar projects with federal tax benefits.

Total loans, net at December 31, 2020 were $3.4 billion, an increase of $8.5 million, or 0.2% annualized, compared to December 31, 2019. Loan growth in 2020 was primarily driven by a $202.9 million increase in C&I loans including $97.7 million of government guaranteed and Paycheck Protection Program loans, and a $27.6 million increase in consumer loans. These increases were partially offset by a $127.8 million decrease in residential loans and a $78.4 million decrease in commercial real estate and multifamily loans.

Deposits at December 31, 2020 were $5.3 billion, an increase of $0.7 billion, or 15.0% annualized, as compared to $4.6 billion as of December 31, 2019. Deposits held by politically active customers, such as campaigns, PACs, advocacy-based organizations, and state and national party committees were $603 million as of December 31, 2020, an increase of $24 million compared to $579 million as of December 31, 2019. Noninterest-bearing deposits represent 53% of average deposits and 49% of ending deposits for the year ended December 31, 2020, contributing to an average cost of deposits of 0.13% in the fourth quarter of 2020, a one basis point decrease from the previous quarter.

Nonperforming assets totaled $82.2 million, or 1.38% of period-end total assets at December 31, 2020, an increase of $15.1 million, compared with $66.7 million, or 1.25% of period-end total assets at December 31, 2019. The increase in non-performing assets at December 31, 2020 compared to the December 31, 2019 was primarily driven by the addition of $13.5 million of non-accruing residential first-lien mortgages related to the COVID-19 pandemic. These loans were moved to non-accrual after not resuming payments after six months of payment deferrals. Loans that were rated special mention or substandard increased by $305.7 million as of December 31, 2020 compared to December 31, 2019. This change was primarily due to an increase in CRE/multifamily loans categorized as special mention or substandard of $179.5 million and $84.4 million, respectively; these increases were primarily due to impacts of COVID-19 on rental income of these properties.

The allowance for loan losses increased $7.8 million to $41.6 million at December 31, 2020 from $33.8 million at December 31, 2019, primarily due to increases in allowance related to the coronavirus pandemic. At December 31, 2020, we had $73.7 million of impaired loans for which a specific allowance of $6.2 million was made, compared to $65.4 million of impaired loans at December 31, 2019 for which a specific allowance of $7.5 million was made. The ratio of allowance to total loans was 1.19% at December 31, 2020 and 0.98% at December 31, 2019.

Capital

As of December 31, 2020, our Common Equity Tier 1 Capital Ratio was 13.11%, Total Risk-Based Capital Ratio was 14.25%, and Tier-1 Leverage Capital Ratio was 7.97%, compared to 13.01%, 14.01% and 8.90%, respectively, as of December 31, 2019. Stockholders’ equity at December 31, 2020 was $535.8 million, compared to $490.5 million at December 31, 2019. The increase in stockholders’ equity was driven by $46.2 million of net income and a $14.0 million increase in accumulated other comprehensive income due to the mark to market on our securities portfolio, offset by a $7.0 million decrease due to share repurchases in the first quarter and a $10.1 million decrease due to dividends to shareholders.

Our tangible book value per share was $16.66 as of December 31, 2020 compared to $14.93 as of December 31, 2019.

Conference Call

As previously announced, Amalgamated Bank will host a conference call to discuss its fourth quarter and full year 2020 results today, January 28, 2021 at 10:00am (Eastern Time). The conference call can be accessed by dialing 1-877-407-9716 (domestic) or 1-201-493-6779 (international) and asking for the Amalgamated Bank Fourth Quarter 2020 Earnings Call. A telephonic replay will be available approximately two hours after the call and can be accessed by dialing 1-844-512-2921, or for international callers 1-412-317-6671 and providing the access code 13714757. The telephonic replay will be available until 11:59 pm (Eastern Time) on February 4, 2021.

Interested investors and other parties may also listen to a simultaneous webcast of the conference call by logging onto the investor relations section of our website at http://ir.amalgamatedbank.com/. The online replay will remain available for a limited time beginning immediately following the call.

The presentation materials for the call can be accessed on the investor relations section of our website at http://ir.amalgamatedbank.com/.

About Amalgamated Bank

Amalgamated Bank is a New York-based full-service commercial bank and a chartered trust company with a combined network of six branches in New York City, Washington D.C., San Francisco, and Boston. Amalgamated was formed in 1923 as Amalgamated Bank of New York by the Amalgamated Clothing Workers of America, one of the country's oldest labor unions. Amalgamated provides commercial banking and trust services nationally and offers a full range of products and services to both commercial and retail customers. Amalgamated is a proud member of the Global Alliance for Banking on Values and is a certified B Corporation®. As of December 31, 2020, our total assets were $6.0 billion, total net loans were $3.4 billion, and total deposits were $5.3 billion. Additionally, as of December 31, 2020, the trust business held $36.8 billion in assets under custody and $15.4 billion in assets under management.

Non-GAAP Financial Measures

This release (and the accompanying financial information and tables) refers to certain non-GAAP financial measures including, without limitation, “Core operating revenue,” “Core non-interest expense,” “Core net income,” “Tangible common equity,” “Core return on average assets,” “Core return on average tangible common equity,” and “Core efficiency ratio.”

Our management utilizes this information to compare our operating performance for December 31, 2020 versus certain periods in 2019 and to prepare internal projections. We believe these non-GAAP financial measures facilitate making period-to-period comparisons and are meaningful indications of our operating performance. In addition, because intangible assets such as goodwill and other discrete items unrelated to our core business, which are excluded, vary extensively from company to company, we believe that the presentation of this information allows investors to more easily compare our results to those of other companies.

The presentation of non-GAAP financial information, however, is not intended to be considered in isolation or as a substitute for GAAP financial measures. We strongly encourage readers to review the GAAP financial measures included in this release and not to place undue reliance upon any single financial measure. In addition, because non-GAAP financial measures are not standardized, it may not be possible to compare the non-GAAP financial measures presented in this release with other companies’ non-GAAP financial measures having the same or similar names. Reconciliations of non-GAAP financial disclosures to comparable GAAP measures found in this release are set forth in the final pages of this release and also may be viewed on our website, amalgamatedbank.com.

Terminology

Certain terms used in this release are defined as follows:

“Core operating revenue” is defined as total net interest income plus non-interest income excluding gains and losses on sales of securities and gains on the sale of owned property. We believe the most directly comparable GAAP financial measure is the total of net interest income and non-interest income.

“Core non-interest expense” is defined as total non-interest expense excluding costs related to branch closures and restructuring/severance costs. We believe the most directly comparable GAAP financial measure is total non-interest expense.

“Core net income” is defined as net income after tax excluding gains and losses on sales of securities, gains on the sale of owned property, costs related to branch closures, restructuring/severance costs, and taxes on notable pre-tax items. We believe the most directly comparable GAAP financial measure is net income.

“Tangible common equity” and “Tangible book value” and are defined as stockholders’ equity excluding, as applicable, minority interests, preferred stock, goodwill and core deposit intangibles. We believe that the most directly comparable GAAP financial measure is total stockholders’ equity.

“Core return on average assets” is defined as “Core net income” divided by average total assets. We believe the most directly comparable performance ratio derived from GAAP financial measures is return on average assets calculated by dividing net income by average total assets.

“Core return on average tangible common equity” is defined as “Core net income” divided by “Average tangible common equity.” We believe the most directly comparable performance ratio derived from GAAP financial measures is return on average equity calculated by dividing net income by average total stockholders’ equity.

“Core efficiency ratio” is defined as “Core non-interest expense” divided by “Core operating revenue.” We believe the most directly comparable performance ratio derived from GAAP financial measures is an efficiency ratio calculated by dividing total non-interest expense by the sum of net interest income and total non-interest income.

Forward-Looking Statements

Statements included in this release that are not historical in nature are intended to be, and are hereby identified as, forward-looking statements within the meaning of the Private Securities Litigation Reform Act, Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements generally can be identified through the use of forward-looking terminology such as “may,” “will,” “anticipate,” “should,” “would,” “believe,” “contemplate,” “expect,” “estimate,” “continue,” “in the future,” “may” and “intend,” as well as other similar words and expressions of the future, and in this press release include statements about expected performance of our loan portfolio and payment deferrals, the wind-down of our real estate fund and the expected charges and anticipated consolidation of our branch network and our solar tax equity investments. Forward-looking statements are subject to known and unknown risks, uncertainties and other factors, any or all of which could cause actual results to differ materially from the results expressed or implied by such forward-looking statements. These risks and uncertainties include, but are not limited to: (i) deterioration in the financial condition of borrowers resulting in significant increases in loan losses and provisions for those losses; (ii) continuation of the historically low short-term interest rate environment; (iii) the inability of Amalgamated Bank to maintain the historical growth rate of its loan portfolio; (iv) changes in loan underwriting, credit review or loss reserve policies associated with economic conditions, examination conclusions, or regulatory developments; (v) effectiveness of Amalgamated Bank’s asset management activities in improving, resolving or liquidating lower-quality assets; (vi) the impact of competition with other financial institutions, including pricing pressures and the resulting impact on Amalgamated Bank’s results, including as a result of compression to net interest margin; (vii) greater than anticipated adverse conditions in the national or local economies including in Amalgamated Bank’s core markets, including, but not limited to, the negative impacts and disruptions resulting from the outbreak of the novel coronavirus, or COVID-19, which may continue to have an adverse impact on our business, operations and performance, and could continue to have a negative impact on our credit portfolio, share price, borrowers, and on the economy as a whole, both domestically and globally (viii) fluctuations or unanticipated changes in interest rates on loans or deposits or that affect the yield curve; (ix) the results of regulatory examinations; (x) potential deterioration in real estate values; (xi) changes in legislation, regulation, policies, or administrative practices, whether by judicial, governmental, or legislative action, including, but not limited to, the Coronavirus Aid, Relief, and Economic Security Act, or the “CARES Act”; (xi) the risk that the preliminary financial information reported herein and our current preliminary analysis will be different when our review is finalized; (xii) our inability to timely identify a new Chief Executive Officer in light of, among other things, competition for experienced executives in the banking industry; and (xiii) unexpected challenges and potential operational disruptions related to our Chief Executive Officer’s transition. Additional factors which could affect the forward-looking statements can be found in Amalgamated’s Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K filed with the FDIC and available on the FDIC's website at https://efr.fdic.gov/fcxweb/efr/index.html. Amalgamated Bank disclaims any obligation to update or revise any forward-looking statements contained in this release, which speak only as of the date hereof, whether as a result of new information, future events or otherwise, except as required by law.

Media Contact:
Kaye Verville
The Levinson Group
kaye@mollylevinson.com
202-244-1785

Investor Contact:
Jamie Lillis
Solebury Trout
shareholderrelations@amalgamatedbank.com
800-895-4172


Consolidated Statements of Income

Three Months Ended

Twelve Months Ended

December 31,

September 30,

December 31,

December 31,

($ in thousands)

2020

2020

2019

2020

2019

INTEREST AND DIVIDEND INCOME

(unaudited)

(unaudited)

(unaudited)

Loans

$

35,544

$

35,602

$

35,202

$

141,983

$

139,995

Securities

11,816

11,473

11,426

47,588

44,197

Federal Home Loan Bank of New York stock

36

56

134

227

813

Interest-bearing deposits in banks

66

152

193

697

949

Total interest and dividend income

47,462

47,283

46,955

190,495

185,954

INTEREST EXPENSE

Deposits

1,807

2,049

4,065

10,452

14,461

Borrowed funds

640

27

4,856

Total interest expense

1,807

2,049

4,705

10,479

19,317

NET INTEREST INCOME

45,655

45,234

42,250

180,016

166,637

Provision for (recovery of) loan losses

4,589

3,394

83

24,791

3,837

Net interest income after provision for loan losses

41,066

41,840

42,167

155,225

162,800

NON-INTEREST INCOME

Trust Department fees

3,533

3,622

4,481

15,222

18,598

Service charges on deposit accounts

2,811

2,130

2,383

9,201

8,544

Bank-owned life insurance

363

1,227

405

3,085

1,649

Gain (loss) on sale of investment securities available for sale, net

619

218

1,605

83

Gain (loss) on sale of loans, net

1,320

903

53

2,520

13

Gain (loss) on other real estate owned, net

(176

)

(482

)

(564

)

Equity method investments

1,825

4,297

7,411

Other

188

154

236

2,042

878

Total non-interest income

10,040

12,776

7,776

40,604

29,201

NON-INTEREST EXPENSE

Compensation and employee benefits

17,082

17,547

18,089

69,421

70,276

Occupancy and depreciation

3,385

9,908

5,007

23,040

17,721

Professional fees

4,033

2,202

3,248

11,205

11,934

Data processing

3,174

2,916

2,545

11,330

10,880

Office maintenance and depreciation

776

863

889

3,314

3,540

Amortization of intangible assets

342

342

344

1,370

1,374

Advertising and promotion

1,003

1,172

911

3,514

2,908

Other

2,875

2,927

2,457

10,692

9,194

Total non-interest expense

32,670

37,877

33,490

133,886

127,827

Income before income taxes

18,436

16,739

16,453

61,943

64,174

Income tax expense (benefit)

4,646

4,259

4,445

15,755

16,972

Net income

13,790

12,480

12,008

46,188

47,202

Net income attributable to noncontrolling interests

Net income attributable to Amalgamated Bank and subsidiaries

$

13,790

$

12,480

$

12,008

$

46,188

$

47,202

Earnings per common share - basic

0.44

0.40

0.38

1.48

1.49

Earnings per common share - diluted

0.44

0.40

0.37

1.48

1.47


Consolidated Statements of Financial Condition

December 31,

December 31,

($ in thousands)

2020

2019

Assets

(unaudited)

Cash and due from banks

$

7,736

$

7,596

Interest-bearing deposits in banks

31,033

114,942

Total cash and cash equivalents

38,769

122,538

Securities:

Available for sale, at fair value (amortized cost of $1,513,409 and $1,217,087, respectively)

1,539,862

1,224,770

Held-to-maturity (fair value of $502,425 and $292,837, respectively)

494,449

292,704

Loans held for sale

11,178

2,328

Loans receivable, net of deferred loan origination costs (fees)

3,488,895

3,472,614

Allowance for loan losses

(41,589

)

(33,847

)

Loans receivable, net

3,447,306

3,438,767

Resell agreements

154,779

Accrued interest and dividends receivable

23,970

19,088

Premises and equipment, net

12,977

17,778

Bank-owned life insurance

105,888

80,714

Right-of-use lease asset

36,104

47,299

Deferred tax asset

35,370

31,441

Goodwill and other intangible assets

18,295

19,665

Other assets

59,684

28,246

Total assets

$

5,978,631

$

5,325,338

Liabilities

Deposits

$

5,338,711

$

4,640,982

Borrowed funds

75,000

Operating leases

53,173

62,404

Other liabilities

50,926

56,408

Total liabilities

5,442,810

4,834,794

Commitments and contingencies

Stockholders’ equity

Common stock, par value $.01 per share (70,000,000 shares authorized; 31,049,525 and 31,523,442 shares issued and outstanding, respectively)

310

315

Additional paid-in capital

300,989

305,738

Retained earnings

217,213

181,132

Accumulated other comprehensive income (loss), net of income taxes

17,176

3,225

Total Amalgamated Bank stockholders' equity

535,688

490,410

Noncontrolling interests

133

134

Total stockholders' equity

535,821

490,544

Total liabilities and stockholders’ equity

$

5,978,631

$

5,325,338


Select Financial Data

As of and for the

As of and for the

Three Months Ended

Twelve Months Ended

December 31,

September 30,

December 31,

December 31,

2020

2020

2019

2020

2019

Selected Financial Ratios and Other Data:

Earnings

Basic

$

0.44

$

0.40

$

0.38

1.48

1.49

Diluted

0.44

0.40

0.37

1.48

1.47

Core Earnings (non-GAAP)

Basic

$

0.44

$

0.54

$

0.40

1.62

1.52

Diluted

0.44

0.54

0.39

1.61

1.49

Book value per common share (excluding minority interest)

17.25

16.82

15.56

17.25

15.56

Tangible book value per share (non-GAAP)

16.66

16.22

14.93

16.66

14.93

Common shares outstanding

31,049,525

31,049,525

31,523,442

31,049,525

31,523,442

Weighted average common shares outstanding, basic

31,049,525

31,049,525

31,529,014

31,132,652

31,733,195

Weighted average common shares outstanding, diluted

31,145,436

31,075,400

32,125,683

31,228,563

32,205,248


Select Financial Data

As of and for the

As of and for the

Three Months Ended

Twelve Months Ended

December 31,

September 30,

December 31,

December 31,

2020

2020

2019

2020

2019

Selected Performance Metrics:

Return on average assets

0.89

%

0.76

%

0.93

%

0.76

%

0.96

%

Core return on average assets (non-GAAP)

0.89

%

1.03

%

0.97

%

0.83

%

0.98

%

Return on average equity

10.34

%

9.62

%

9.75

%

9.07

%

10.03

%

Core return on average tangible common equity (non-GAAP)

10.72

%

13.44

%

10.68

%

10.27

%

10.70

%

Loan yield

4.04

%

3.97

%

4.10

%

4.03

%

4.27

%

Securities yield

2.21

%

2.24

%

3.28

%

2.53

%

3.36

%

Deposit cost

0.13

%

0.14

%

0.36

%

0.19

%

0.35

%

Net interest margin

3.06

%

2.88

%

3.43

%

3.11

%

3.55

%

Efficiency ratio (1)

58.66

%

65.29

%

66.95

%

60.69

%

65.27

%

Core efficiency ratio (non-GAAP)

58.66

%

54.84

%

65.11

%

57.60

%

64.57

%

Asset Quality Ratios:

Nonaccrual loans to total loans

1.75

%

1.41

%

0.90

%

1.75

%

0.90

%

Nonperforming assets to total assets

1.38

%

1.22

%

1.25

%

1.38

%

1.25

%

Allowance for loan losses to nonaccrual loans

68

%

95

%

109

%

68

%

109

%

Allowance for loan losses to total loans

1.19

%

1.34

%

0.98

%

1.19

%

0.98

%

Annualized net charge-offs (recoveries) to average loans

1.24

%

0.59

%

-0.01

%

0.48

%

0.22

%

Capital Ratios:

Tier 1 leverage capital ratio

7.97

%

7.39

%

8.90

%

7.97

%

8.90

%

Tier 1 risk-based capital ratio

13.11

%

12.76

%

13.01

%

13.11

%

13.01

%

Total risk-based capital ratio

14.25

%

14.01

%

14.01

%

14.25

%

14.01

%

Common equity tier 1 capital ratio

13.11

%

12.76

%

13.01

%

13.11

%

13.01

%

(1) Efficiency ratio is calculated by dividing total non-interest expense by the sum of net interest income and total non-interest income


Loan and Held-to-Maturity Securities Portfolio Composition

($ in thousands)

At December 31, 2020

At September 30, 2020

At December 31, 2019

Amount

% of total loans

Amount

% of total loans

Amount

% of total loans

Commercial portfolio:

Commercial and industrial

$

677,192

19.4

%

$

660,914

18.4

%

$

474,342

13.7

%

Multifamily

947,177

27.2

%

974,962

27.1

%

976,380

28.2

%

Commercial real estate

372,736

10.7

%

388,757

10.8

%

421,947

12.2

%

Construction and land development

56,087

1.6

%

61,687

1.7

%

62,271

1.8

%

Total commercial portfolio

2,053,192

58.9

%

2,086,320

58.0

%

1,934,940

55.9

%

Retail portfolio:

Residential real estate lending

1,238,697

35.6

%

1,329,021

37.0

%

1,366,473

39.4

%

Consumer and other

190,676

5.5

%

179,507

5.0

%

163,077

4.7

%

Total retail

1,429,373

41.1

%

1,508,528

42.0

%

1,529,550

44.1

%

Total loans

3,482,565

100.0

%

3,594,848

100.0

%

3,464,490

100.0

%

Net deferred loan origination fees (costs)

6,330

7,604

8,124

Allowance for loan losses

(41,589

)

(48,072

)

(33,847

)

Total loans, net

$

3,447,306

$

3,554,380

$

3,438,767

Held-to-maturity securities portfolio:

PACE assessments

421,036

85.2

%

367,393

83.3

%

263,805

90.1

%

Other securities

73,413

14.8

%

73,556

16.7

%

28,899

9.9

%

Total held-to-maturity securities

494,449

100.0

%

440,949

100.0

%

292,704

100.0

%


Net Interest Income Analysis

Three Months Ended

Three Months Ended

Three Months Ended

December 31, 2020

September 30, 2020

December 31, 2019

($ in thousands)

Average
Balance

Income /
Expense

Yield /
Rate

Average
Balance

Income /
Expense

Yield /
Rate

Average
Balance

Income /
Expense

Yield /
Rate

Interest earning assets:

Interest-bearing deposits in banks

$

299,881

$

66

0.09

%

$

632,268

$

152

0.10

%

$

85,965

$

193

0.89

%

Securities and FHLB stock

2,133,957

11,852

2.21

%

2,045,231

11,529

2.24

%

1,399,657

11,560

3.28

%

Total loans, net (1)(2)

3,503,929

35,544

4.04

%

3,569,313

35,602

3.97

%

3,406,806

35,202

4.10

%

Total interest earning assets

5,937,767

47,462

3.18

%

6,246,812

47,283

3.01

%

4,892,428

46,955

3.81

%

Non-interest earning assets:

Cash and due from banks

7,594

9,239

8,852

Other assets

237,628

234,248

238,421

Total assets

$

6,182,989

$

6,490,299

$

5,139,701

Interest bearing liabilities:

Savings, NOW and money market deposits

2,356,137

$

1,384

0.23

%

$

2,376,701

$

1,427

0.24

%

$

2,003,888

$

2,762

0.55

%

Time deposits

268,896

423

0.63

%

321,696

622

0.77

%

396,631

1,303

1.30

%

Total deposits

2,625,033

1,807

0.27

%

2,698,397

2,049

0.30

%

2,400,519

4,065

0.67

%

Federal Home Loan Bank advances

0.00

%

0.00

%

128,604

636

1.96

%

Other Borrowings

0.00

%

0.00

%

978

4

1.62

%

Total interest bearing liabilities

2,625,033

1,807

0.27

%

2,698,397

2,049

0.30

%

2,530,101

4,705

0.74

%

Non-interest bearing liabilities:

Demand and transaction deposits

2,947,075

3,191,858

2,024,521

Other liabilities

80,529

84,138

96,335

Total liabilities

5,652,637

5,974,393

4,650,957

Stockholders' equity

530,352

515,906

488,744

Total liabilities and stockholders' equity

$

6,182,989

$

6,490,299

$

5,139,701

Net interest income / interest rate spread

$

45,655

2.91

%

$

45,234

2.71

%

$

42,250

3.07

%

Net interest earning assets / net interest margin

$

3,312,734

3.06

%

$

3,548,415

2.88

%

$

2,362,327

3.43

%

Total Cost of Deposits

0.13

%

0.14

%

0.36

%

(1) Amounts are net of deferred origination costs / (fees) and the allowance for loan losses

(2) Includes prepayment penalty interest income in 4Q20, 3Q20 and 4Q19 of $1,986,500, $1,110,011 and $262,196 respectively


Net Interest Income Analysis

Twelve Months Ended

Twelve Months Ended

December 31, 2020

December 31, 2019

($ in thousands)

Average
Balance

Income /
Expense

Yield /
Rate

Average
Balance

Income /
Expense

Yield /
Rate

Interest earning assets:

Interest-bearing deposits in banks

$

371,112

$

697

0.19

%

$

75,487

$

949

1.26

%

Securities and FHLB stock

1,890,824

47,815

2.53

%

1,338,339

45,010

3.36

%

Total loans, net (1)(2)

3,527,261

141,983

4.03

%

3,276,603

139,995

4.27

%

Total interest earning assets

5,789,197

190,495

3.29

%

4,690,429

185,954

3.96

%

Non-interest earning assets:

Cash and due from banks

25,220

8,159

Other assets

229,825

239,336

Total assets

$

6,044,242

$

4,937,924

Interest bearing liabilities:

Savings, NOW and money market deposits

$

2,297,841

$

7,303

0.32

%

$

1,902,414

$

9,068

0.48

%

Time deposits

335,433

3,149

0.94

%

435,157

5,393

1.24

%

Total deposits

2,633,274

10,452

0.40

%

2,337,571

14,461

0.62

%

Federal Home Loan Bank advances

1,585

27

1.70

%

202,837

4,835

2.38

%

Other Borrowings

0.00

%

890

21

2.36

%

Total interest bearing liabilities

2,634,859

10,479

0.40

%

2,541,298

19,317

0.76

%

Non-interest bearing liabilities:

Demand and transaction deposits

2,798,106

1,832,083

Other liabilities

102,282

93,816

Total liabilities

5,535,247

4,467,197

Stockholders' equity

508,995

470,727

Total liabilities and stockholders' equity

$

6,044,242

$

4,937,924

Net interest income / interest rate spread

$

180,016

2.89

%

$

166,637

3.20

%

Net interest earning assets / net interest margin

$

3,154,338

3.11

%

$

2,149,131

3.55

%

Total Cost of Deposits

0.19

%

0.35

%

(1) Amounts are net of deferred origination costs / (fees) and the allowance for loan losses

(2) Includes prepayment penalty interest income in Dec YTD 2020 and Dec YTD 2019 of $4,148,555 and $888,234 respectively


Deposit Portfolio Composition

($ in thousands)

December 31, 2020

September 30, 2020

December 31, 2019

Non-interest bearing demand deposit accounts

$

2,603,274

$

3,357,715

$

2,179,247

NOW accounts

205,653

192,066

230,919

Money market deposit accounts

1,914,391

1,853,373

1,508,674

Savings accounts

343,368

339,516

328,587

Time deposits

272,025

278,330

393,555

Brokered CD

Total deposits

$

5,338,711

$

6,021,000

$

4,640,982


Three Months Ended

Three Months Ended

Three Months Ended

December 31, 2020

September 30, 2020

December 31, 2019

($ in thousands)

Average
Balance

Average
Rate Paid

Average
Balance

Average
Rate Paid

Average
Balance

Average
Rate Paid

Non-interest bearing demand deposit accounts

$

2,947,075

0.00

%

$

3,191,858

0.00

%

$

2,024,521

0.00

%

NOW accounts

194,555

0.08

%

196,422

0.09

%

227,285

0.47

%

Money market deposit accounts

1,823,391

0.27

%

1,839,230

0.28

%

1,442,567

0.64

%

Savings accounts

338,192

0.12

%

341,049

0.12

%

334,036

0.18

%

Time deposits

268,896

0.61

%

321,696

0.77

%

393,261

1.29

%

Brokered CD

0.00

%

0.00

%

3,370

3.13

%

Total deposits

$

5,572,109

0.13

%

$

5,890,255

0.14

%

$

4,425,040

0.36

%


Asset Quality

($ in thousands)

December 31, 2020

September 30, 2020

December 31, 2019

Loans 90 days past due and accruing

$

1,404

$

9,522

$

446

Nonaccrual loans excluding held for sale loans and restructured loans

40,039

17,515

5,992

Nonaccrual loans held for sale

Troubled debt restructured loans - nonaccrual

20,885

33,306

25,019

Troubled debt restructured loans - accruing

19,553

19,919

34,367

Other real estate owned

306

306

809

Impaired securities

47

44

65

Total nonperforming assets

$

82,234

$

80,612

$

66,698

Nonaccrual loans:

Commercial and industrial

$

12,444

$

25,785

$

15,564

Multifamily

9,575

Commercial real estate

3,433

3,500

3,693

Construction and land development

11,184

10,688

3,652

Total commercial portfolio

36,636

39,973

22,909

Residential real estate lending

Residential 1-4 family 1st mortgages

23,349

9,408

6,922

Residential 1-4 family 2nd mortgages

307

342

852

Consumer and other

632

1,098

328

Total retail portfolio

24,288

10,848

8,102

Total nonaccrual loans

$

60,924

$

50,821

$

31,011

Nonperforming assets to total assets

1.38

%

1.22

%

1.25

%

Nonaccrual assets to total assets

1.02

%

0.77

%

0.60

%

Nonaccrual loans to total loans

1.75

%

1.41

%

0.90

%

Allowance for loan losses to nonaccrual loans

68

%

95

%

109

%


Credit Quality

($ in thousands)

At December 31, 2020

Pass

Special Mention

Substandard

Doubtful

Total

Commercial and industrial

$

627,553

$

16,407

$

32,770

$

462

$

677,192

Multifamily

775,605

138,090

33,482

947,177

Commercial real estate

276,712

41,420

54,604

372,736

Construction and land development

28,967

15,936

11,184

56,087

Residential real estate lending

1,215,881

22,816

1,238,697

Consumer and other

190,044

632

190,676

Total loans

$

3,114,762

$

211,853

$

155,488

$

462

$

3,482,565


($ in thousands)

At September 30, 2020

Pass

Special Mention

Substandard

Doubtful

Total

Commercial and industrial

$

608,099

$

17,107

$

35,244

$

464

$

660,914

Multifamily

963,834

6,022

5,106

974,962

Commercial real estate

383,087

1,439

4,231

388,757

Construction and land development

40,531

10,468

10,688

61,687

Residential real estate lending

1,319,649

9,372

1,329,021

Consumer and other

178,409

1,098

179,507

Total loans

$

3,493,609

$

35,036

$

65,739

$

464

$

3,594,848


($ in thousands)

At December 31, 2019

Pass

Special Mention

Substandard

Doubtful

Total

Commercial and industrial

$

427,279

$

14,445

$

32,151

$

467

$

474,342

Multifamily

976,380

976,380

Commercial real estate

418,254

3,693

421,947

Construction and land development

58,619

3,652

62,271

Residential real estate lending

1,359,089

7,384

1,366,473

Consumer and other

162,749

328

163,077

Total loans

$

3,402,370

$

14,445

$

47,208

$

467

$

3,464,490


Reconciliation of GAAP to Non-GAAP Financial Measures
The information provided below presents a reconciliation of each of our non-GAAP financial measures to the most directly comparable GAAP financial measure.

As of and for the

As of and for the

Three Months Ended

Twelve Months Ended

December 31,

September 30,

December 31,

December 31,

($ in thousands)

2020

2020

2019

2020

2019

Core operating revenue

Net Interest income

$

45,655

$

45,234

$

42,250

$

180,016

$

166,637

Non-interest income

10,040

12,776

7,776

40,604

29,201

Less: Branch sale loss (gain) (1)

(1,394

)

Less: Securities gain, net

(619

)

(218

)

(1,605

)

(83

)

Core operating revenue

$

55,695

$

57,391

$

49,808

$

217,621

$

195,755

Core non-interest expenses

Non-interest expense

$

32,670

$

37,877

$

33,490

$

133,886

$

127,827

Less: Branch closure expense (2)

(6,279

)

(957

)

(8,330

)

(1,008

)

Less: Severance (3)

(125

)

(101

)

(201

)

(419

)

Core non-interest expense

$

32,670

$

31,473

$

32,432

$

125,355

$

126,400

Core net income

Net Income (GAAP)

$

13,790

$

12,480

$

12,008

$

46,188

$

47,202

Less: Branch sale loss (gain) (1)

(1,394

)

Less: Securities loss (gain)

(619

)

(218

)

(1,605

)

(83

)

Add: Branch closure expense (2)

6,279

957

8,330

1,008

Add: Severance (3)

125

101

201

419

Less: Tax on notable items

(1,472

)

(227

)

(1,407

)

(359

)

Core net income (non-GAAP)

$

13,790

$

16,793

$

12,621

$

50,313

$

48,187

Tangible common equity

Stockholders' Equity (GAAP)

$

535,821

$

522,497

$

490,544

$

535,821

$

490,544

Less: Minority Interest (GAAP)

(133

)

(133

)

(134

)

(133

)

(134

)

Less: Goodwill (GAAP)

(12,936

)

(12,936

)

(12,936

)

(12,936

)

(12,936

)

Less: Core deposit intangible (GAAP)

(5,358

)

(5,701

)

(6,728

)

(5,358

)

(6,728

)

Tangible common equity (non-GAAP)

$

517,394

$

503,727

$

470,746

$

517,394

$

470,746

Average tangible common equity

Average Stockholders' Equity (GAAP)

$

530,352

$

515,906

$

488,744

$

508,995

$

470,727

Less: Minority Interest (GAAP)

(133

)

(134

)

(134

)

(134

)

(134

)

Less: Goodwill (GAAP)

(12,936

)

(12,936

)

(12,936

)

(12,936

)

(12,936

)

Less: Core deposit intangible (GAAP)

(5,525

)

(5,868

)

(6,895

)

(6,037

)

(7,400

)

Average tangible common equity (non-GAAP)

$

511,758

$

496,968

$

468,779

$

489,888

$

450,257

Core return on average assets

Core net income (numerator) (non-GAAP)

13,790

16,793

12,621

50,313

48,187

Divided: Total average assets (denominator) (GAAP)

6,182,989

6,490,299

5,139,701

6,044,242

4,937,924

Core return on average assets (non-GAAP)

0.89%

1.03%

0.97%

0.83%

0.98%

Core return on average tangible common equity

Core net income (numerator) (non-GAAP)

13,790

16,793

12,621

50,313

48,187

Divided: Average tangible common equity (denominator) (GAAP)

511,758

496,968

468,779

489,888

450,257

Core return on average tangible common equity (non-GAAP)

10.72%

13.44%

10.68%

10.27%

10.70%

Core efficiency ratio

Core non-interest expense (numerator)

32,670

31,473

32,432

125,355

126,400

Core operating revenue (denominator)

55,695

57,391

49,808

217,621

195,755

Core efficiency ratio

58.66%

54.84%

65.11%

57.60%

64.57%

(1) Fixed Asset branch sale in March 2020
(2) Occupancy and other expense related to closure of branches during our branch rationalization
(3) Salary and COBRA reimbursement expense for positions eliminated