Amalgamated Bank Reports Third Quarter 2020 Financial Results

·31 min read

NEW YORK, Oct. 28, 2020 (GLOBE NEWSWIRE) -- Amalgamated Bank (Nasdaq: AMAL) (Amalgamated or the Bank) today announced financial results for the third quarter ended September 30, 2020.

Third Quarter 2020 Highlights

  • Net income of $12.5 million, or $0.40 per diluted share, compared to $10.4 million, or $0.33 per diluted share, for the second quarter of 2020 and $13.2 million, or $0.41 per diluted share for the third quarter of 2019

  • Core net income (non-GAAP) 1 of $16.8 million, or $0.54 per diluted share, compared to $10.6 million, or $0.34 per diluted share for the second quarter of 2020 and $13.3 million, or $0.41 per diluted share, for the third quarter of 2019

  • Deposit growth of $150.7 million, or 10.3% annualized, to approximately $6.0 billion compared to a balance of $5.9 billion on June 30, 2020

  • Total loans of $3.6 billion, compared to a balance of $3.7 billion on June 30, 2020

  • PACE assessment growth of $44.0 million, or 54.4% annualized, from a balance of $323.4 million on June 30, 2020

  • Cost of deposits was 0.14%, compared to 0.20% for the second quarter of 2020 and 0.37% for the third quarter of 2019

  • Net interest margin was 2.88%, compared to 3.10% for the second quarter of 2020 and 3.50% for the third quarter of 2019

  • Common Equity Tier 1, Total Risk-Based, and Tier 1 Leverage capital ratios were 12.76%, 14.01%, and 7.39%, respectively, at September 30, 2020

  • Total nonperforming assets were $80.6 million or 1.22% of total assets as of September 30, 2020, compared to $74.3 million or 1.15% of total assets at June 30, 2020 and $71.6 million, or 1.42% of total assets at September 30, 2019

Keith Mestrich, President and Chief Executive Officer of Amalgamated Bank, commented, I am very pleased with our third quarter results and the progress we have made growing the Bank through such a challenging time. We have responded to the unprecedented events that we continue to face, instituting protocols that allowed us to seamlessly transition to a remote work environment in the face of COVID-19. As the pandemic evolved, the Bank continued to succeed, adapting and adjusting to support our customers and communities. The nearly 100-year foundation upon which Amalgamated was built has allowed us to weather multiple economic cycles and deliver profitable growth despite the low interest rate environment that we currently face.

Mr. Mestrich, continued, As I look back at the Bank today, I am very proud of the fact that Amalgamated is financially and operationally much stronger than when I stepped into my role in 2014, while upholding and fostering the core values and commitment to social responsibility that makes Amalgamated a leading and distinctly unique financial institution. This is demonstrated in our third quarter results in which we grew deposits by $150.7 million, or 10.3% on an annualized basis. We continued to diligently execute on our expense management initiatives during the quarter as we completed our branch closures which we expect to lower our non-interest expense by approximately $4 million annually. Lastly, our credit culture remains intact as our loan deferrals declined by $264 million to 6% of our portfolio. Likewise, our provision expense declined to $3.4 million for the third quarter, comparing favorably to the $8.2 million of provision recorded in the second quarter.

____________________________________

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

Amalgamateds primary concern during the COVID-19 pandemic is for the health and well-being of the Banks employees, customers, and communities. Our employees continue to operate from 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 the week ending October 24, 2020, we have provided payment deferrals on the following amount of loan balances.

 

Total Loans

Deferrals as of:

% of

 

9/30/20

10/24/20

9/30/20

6/30/20

Portfolio (2)

Multifamily

$

975

 

$

96

 

$

124

 

$

192

 

 

10

%

CRE + Construction

 

450

 

 

34

 

 

97

 

 

124

 

 

8

%

C&I

 

661

 

 

13

 

 

5

 

 

36

 

 

2

%

Residential

 

1,329

 

 

54

 

 

63

 

 

103

 

 

4

%

Consumer & Student

 

180

 

 

4

 

 

4

 

 

10

 

 

2

%

Total

$

3,595

 

$

201

 

$

293

 

$

465

 

 

6

%

(2) Loan portfolio % is for deferral balances as of 10/24

Results of Operations, Quarter Ended September 30 , 20 20

Net income for the third quarter of 2020 was $12.5 million, or $0.40 per diluted share, compared to $13.2 million, or $0.41 per diluted share, for the third quarter of 2019. The $0.7 million decrease in net income for the third quarter of 2020, compared to the third quarter of 2019, is primarily due to a $6.0 million increase non-interest expense and a $4.0 million increase in provision for loan losses, partially offset by a $5.1 million increase in non-interest income and a $3.5 million increase in net interest income.

Core net income (non-GAAP) for the third quarter of 2020 was $16.8 million, or $0.54 per diluted share, compared to $10.6 million, or $0.34 per diluted share, for the second quarter of 2020 and $13.3 million, or $0.41 per diluted share, for the third quarter of 2019. Core net income for the third quarter of 2020 excludes $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.

Net interest income was $45.2 million for the third quarter of 2020, compared to $44.4 million for the second quarter of 2020 and $41.8 million for the third quarter of 2019. The year-over-year increase of $3.5 million was primarily attributable to a decrease in interest expense due to a decrease in deposit rates paid and FHLB advances and other borrowings, and an increase in average securities of $750.3 million and average loans of $205.5 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 $411.1 million.

Net interest margin was 2.88% for the third quarter of 2020, a decrease of 22 basis points from 3.10% in the second quarter of 2020, and a decrease of 62 basis points from 3.50% in the third 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 quarter of 2020, compared to three and seven basis points in the second quarter of 2020 and the third quarter of 2019, respectively. Prepayment penalties earned through loan income contributed seven basis points to our net interest margin in the third quarter of 2020, compared to two and zero basis points in the second quarter of 2020 and the third quarter of 2019, respectively.

Provisions for loan losses totaled an expense of $3.4 million for the third quarter of 2020 compared to a recovery of $0.6 million for the same period in 2019. The provision expense in the third quarter of 2020 was primarily driven by $5.3 million in charge-offs primarily related to a construction loan and a hotel loan which was partially reserved for in the previous quarter. Specific reserves on non-accrual C&I loans increased by $1.1 million.

Non-interest income was $12.8 million for the third quarter of 2020, compared to $7.7 million for the same period in 2019, an increase of $5.1 million. This increase was primarily due to a $4.3 million tax credit on an equity investment in a solar project, a $0.6 million gain on the sale of securities, and a $0.8 million increase in Bank-owned life insurance income due to the receipt of a death benefit payout and a $0.8 million increase in the gain on sale of residential loans. These increases were partially offset by a $1.3 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 wind down in 2021; this fund generated $0.5 million in fees, included within Trust Department fees, during the three months ended September 30, 2020. Additionally, we expect a loss of approximately $2.3 million in the fourth quarter of 2020 which is related to the $4.3 million solar equity investment gain taken this quarter; this loss is due to the timing of the tax benefit in the third quarter and the expected write-down of the equity invested in the fourth quarter. The write-down of the investment will continue into 2021, with a negative pre-tax impact of $2.0 million to non-interest income for the year. These impacts do not include any benefits of new solar equity investments made in the future.

Non-interest expense for the third quarter of 2020 was $37.9 million, an increase of $6.0 million from $31.9 million in the third quarter of 2019. The increase was primarily due to $6.3 million in occupancy and depreciation expenses related to closing six branches in New York City and $0.5 million in advertising and promotion at the Democratic National Convention.

Our provision for income tax expense was $4.3 million for the third quarter of 2020, compared to $3.4 million for the second quarter of 2020 and $4.9 million for the third quarter of 2019. Our effective tax rate for the third quarter of 2020 was 25.4%, compared to 24.9% for the second quarter of 2020 and 27.1% for the third quarter of 2019.

Results of Operations, Nine Months Ended September 30 , 20 20

Net income for the nine months ended September 30, 2020 was $32.4 million, or $1.04 per average diluted share, compared to $35.2 million, or $1.09 per average diluted share, for same period in 2019. The $2.8 million decrease was primarily due to a $16.4 million increase in the provision for loan losses and a $6.9 million increase in non-interest expense, partially offset by a $10.0 million increase in net interest income and a $9.1 million increase in non-interest income.

Core net income (non-GAAP) for the nine months ended September 30, 2020 of $36.5 million, or $1.17 per diluted share, compared to $35.6 million or $1.10 per diluted share, for the same period last year. Core net income for the first nine months of 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 $134.4 million for the nine months ended September 30, 2020, compared to $124.4 million for the same period in 2019. This increase of $10.0 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 $539.6 million and average loans of $263.4 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 $319.7 million.

Provisions for loan losses totaled an expense of $20.2 million for the nine months ended September 30, 2020, compared to an expense of $3.8 million for the same period in 2019. The provision expense for the nine months ended September 30, 2020 was primarily driven by a $6.5 million increase in allowance related to negative economic factors and payment deferrals in our loan portfolio, $6.0 million in charge offs primarily related to hotel and construction loans, a $7.7 million increase in specific reserves on indirect C&I loans and other factors.

Non-interest income was $30.6 million for the nine months ended September 30, 2020, compared to $21.4 million for the same period in 2019, an increase of $9.1 million. This increase is primarily due to a $5.6 million tax credit on an equity investment in solar projects, a $1.4 million gain on the sale of a branch reported in other non-interest income, a $1.6 million change in gain on the sale of securities, a $1.5 million increase in Bank-owned life insurance income due to the receipt of multiple death benefit payouts, and an increase of $1.2 million in gains on the sale of residential loans. These increases were partially offset by a $2.4 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 nine months ended September 30, 2020 was $101.2 million, an increase of $6.9 million from $94.3 million for the nine months ended September 30, 2019. The increase was primarily due to the $8.3 million increase in branch closure expense reported in occupancy and depreciation expense, partially offset by a $1.5 million decrease in professional fees.

We had income tax expense of $11.1 million for the nine months ended September 30, 2020, compared to $12.5 million for the same period in 2019. Our effective tax rate was 25.5% for the nine months ended September 30, 2020, compared to 26.3% for the same period in 2019.

Financial Condition

Total assets were $6.6 billion at September 30, 2020, compared to $5.3 billion at December 31, 2019. The increase of $1.3 billion was driven primarily by a $620.5 million increase in cash and cash equivalents, a $430.4 million increase in investment securities, and a $115.9 million increase in loans receivable, net. In the first nine months of 2020, the Bank also made $13.8 million of investments in solar projects with federal tax benefits and had $103.2 million of reverse repurchase agreements backed by Government Guaranteed loans.

Total loans, net at September 30, 2020 were $3.6 billion, an increase of $115.9 million, or 4.5% annualized, compared to December 31, 2019. Loan growth in the first nine months of 2020 was primarily driven by a $186.6 million increase in C&I loans including $95.0 million of government guaranteed and Paycheck Protection Program loans, and a $16.4 million increase in consumer loans. These increases were partially offset by a $37.5 million decrease in residential loans and a $34.6 million decrease in commercial real estate and multifamily loans.

Deposits at September 30, 2020 were $6.0 billion, an increase of $1.4 billion, or 39.7% 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 $1.2 billion as of September 30, 2020, an increase of $633.2 million compared to $578.6 million as of December 31, 2019. Noninterest-bearing deposits represent 54% of average deposits and 56% of ending deposits for the nine months ended September 30, 2020, contributing to an average cost of deposits of 0.14% in the third quarter of 2020, a six basis point decrease from the linked quarter.

Nonperforming assets totaled $80.6 million, or 1.22% of period-end total assets at September 30, 2020, an increase of $13.9 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 September 30, 2020 compared to the year-ended December 31, 2019 was primarily driven by the addition of one $8.0 million non-accruing construction loan and one $8.1 million accruing construction loan that was past due at September 30, 2020 and has been subsequently paid off in full in October 2020.

The allowance for loan losses increased $14.3 million to $48.1 million at September 30, 2020 from $33.8 million at December 31, 2019, primarily due to increases in the specific reserves for indirect C&I loans and an increase in allowance related to the coronavirus pandemic.   At September 30, 2020, we had $86.9 million of impaired loans for which a specific allowance of $12.7 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 1.34% at September 30, 2020 and 0.98% at December 31, 2019.

Capital

As of September 30, 2020, our Common Equity Tier 1 Capital Ratio was 12.76%, Total Risk-Based Capital Ratio was 14.01%, and Tier-1 Leverage Capital Ratio was 7.39%, compared to 13.01%, 14.01% and 8.90%, respectively, as of December 31, 2019. Stockholders equity at September 30, 2020 was $522.5 million, compared to $490.5 million at December 31, 2019. The increase in stockholders equity was driven by $32.4 million of net income and a $12.1 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 $7.5 million decrease due to dividends to shareholders.

Our tangible book value per share was $16.22 as of September 30, 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 third quarter 2020 results today, October 28, 2020 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 Third 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 13711002. The telephonic replay will be available until 11:59 pm (Eastern Time) on November 4, 2020.

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 September 30, 2020, our total assets were $6.6 billion, total net loans were $3.6 billion, and total deposits were $6.0 billion. Additionally, as of September 30, 2020, the trust business held $33.1 billion in assets under custody and $14.3 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 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.

F orward - 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, and the expected charges and anticipated future expense savings resulting from branch closures 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 Banks 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 Banks 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 Banks 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 related to our Chief Executive Officers transition. Additional factors which could affect the forward-looking statements can be found in Amalgamateds 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

(Dollars in thousands, except for per share amount)

 

 

Three Months Ended

 

Nine Months Ended

 

September 30,

 

June 30,

 

September 30,

 

September 30,

 

2020

 

2020

 

2019

 

2020

 

2019

 

(Unaudited)

 

 

 

 

 

 

 

 

INTEREST AND DIVIDEND INCOME

 

 

 

 

 

 

 

 

 

Loans

$

35,602

 

 

$

35,225

 

 

$

35,768

 

 

$

106,440

 

 

$

106,623

 

Securities

 

11,473

 

 

 

11,746

 

 

 

10,542

 

 

 

35,772

 

 

 

30,941

 

Federal Home Loan Bank of New York stock

 

56

 

 

 

66

 

 

 

178

 

 

 

190

 

 

 

679

 

Interest-bearing deposits in banks

 

152

 

 

 

83

 

 

 

209

 

 

 

631

 

 

 

756

 

 

 

 

 

 

 

 

 

 

 

Total interest and dividend income

 

47,283

 

 

 

47,120

 

 

 

46,697

 

 

 

143,033

 

 

 

138,999

 

 

 

 

 

 

 

 

 

 

 

INTEREST EXPENSE

 

 

 

 

 

 

 

 

 

Deposits

 

2,049

 

 

 

2,681

 

 

 

3,952

 

 

 

8,645

 

 

 

10,396

 

Borrowed funds

 

-

 

 

 

-

 

 

 

988

 

 

 

27

 

 

 

4,216

 

 

 

 

 

 

 

 

 

 

 

Total interest expense

 

2,049

 

 

 

2,681

 

 

 

4,940

 

 

 

8,672

 

 

 

14,612

 

 

 

 

 

 

 

 

 

 

 

NET INTEREST INCOME

 

45,234

 

 

 

44,439

 

 

 

41,757

 

 

 

134,361

 

 

 

124,387

 

Provision for (recovery of) loan losses

 

3,394

 

 

 

8,221

 

 

 

(558

)

 

 

20,202

 

 

 

3,755

 

 

 

 

 

 

 

 

 

 

 

Net interest income after provision for loan losses

 

41,840

 

 

 

36,218

 

 

 

42,315

 

 

 

114,159

 

 

 

120,632

 

 

 

 

 

 

 

 

 

 

 

NON-INTEREST INCOME

 

 

 

 

 

 

 

 

 

Trust Department fees

 

3,622

 

 

 

3,980

 

 

 

4,888

 

 

 

11,688

 

 

 

14,117

 

Service charges on deposit accounts

 

2,130

 

 

 

1,850

 

 

 

2,222

 

 

 

6,391

 

 

 

6,161

 

Bank-owned life insurance

 

1,227

 

 

 

1,111

 

 

 

415

 

 

 

2,722

 

 

 

1,243

 

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

 

619

 

 

 

486

 

 

 

(50

)

 

 

1,605

 

 

 

(135

)

Gain (loss) on sale of loans, net

 

903

 

 

 

162

 

 

 

81

 

 

 

1,200

 

 

 

(40

)

Gain (loss) on other real estate owned, net

 

(176

)

 

 

(283

)

 

 

-

 

 

 

(482

)

 

 

(564

)

Equity method investments

 

4,297

 

 

 

1,289

 

 

 

-

 

 

 

5,586

 

 

 

-

 

Other

 

154

 

 

 

76

 

 

 

103

 

 

 

1,855

 

 

 

643

 

 

 

 

 

 

 

 

 

 

 

Total non-interest income

 

12,776

 

 

 

8,671

 

 

 

7,659

 

 

 

30,565

 

 

 

21,425

 

 

 

 

 

 

 

 

 

 

 

NON-INTEREST EXPENSE

 

 

 

 

 

 

 

 

 

Compensation and employee benefits

 

17,547

 

 

 

17,334

 

 

 

17,765

 

 

 

52,338

 

 

 

52,187

 

Occupancy and depreciation

 

9,908

 

 

 

4,241

 

 

 

4,298

 

 

 

19,655

 

 

 

12,714

 

Professional fees

 

2,202

 

 

 

1,988

 

 

 

3,120

 

 

 

7,173

 

 

 

8,686

 

Data processing

 

2,916

 

 

 

2,977

 

 

 

2,856

 

 

 

8,157

 

 

 

8,334

 

Office maintenance and depreciation

 

863

 

 

 

818

 

 

 

934

 

 

 

2,538

 

 

 

2,651

 

Amortization of intangible assets

 

342

 

 

 

342

 

 

 

344

 

 

 

1,027

 

 

 

1,031

 

Advertising and promotion

 

1,172

 

 

 

672

 

 

 

684

 

 

 

2,511

 

 

 

1,998

 

Other

 

2,927

 

 

 

2,696

 

 

 

1,885

 

 

 

7,817

 

 

 

6,735

 

 

 

 

 

 

 

 

 

 

 

Total non-interest expense

 

37,877

 

 

 

31,068

 

 

 

31,886

 

 

 

101,216

 

 

 

94,336

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes

 

16,739

 

 

 

13,821

 

 

 

18,088

 

 

 

43,508

 

 

 

47,721

 

Income tax expense (benefit)

 

4,259

 

 

 

3,447

 

 

 

4,893

 

 

 

11,109

 

 

 

12,527

 

 

 

 

 

 

 

 

 

 

 

Net income

 

12,480

 

 

 

10,374

 

 

 

13,195

 

 

 

32,399

 

 

 

35,194

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to noncontrolling interests

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to Amalgamated Bank and subsidiaries

$

12,480

 

 

$

10,374

 

 

$

13,195

 

 

$

32,399

 

 

$

35,194

 

 

 

 

 

 

 

 

 

 

 

Earnings per common share - basic

$

0.40

 

 

$

0.33

 

 

$

0.41

 

 

$

1.04

 

 

$

1.11

 

 

 

 

 

 

 

 

 

 

 

Earnings per common share - diluted

$

0.40

 

 

$

0.33

 

 

$

0.41

 

 

$

1.04

 

 

$

1.09

 

 

 

 

 

 

 

 

 

 

 


Consolidated Statements of Financial Condition

 

 

 

(Dollars in thousands)

 

 

 

 

 

 

 

 

September 30,

 

December 31,

 

2020

 

2019

Assets

(Unaudited)

 

 

Cash and due from banks

$

6,793

 

 

$

7,596

 

Interest-bearing deposits in banks

 

736,268

 

 

 

114,942

 

Total cash and cash equivalents

 

743,061

 

 

 

122,538

 

Securities:

 

 

 

Available for sale, at fair value (amortized cost of $1,482,671 and $1,217,087, respectively)

 

1,506,900

 

 

 

1,224,770

 

Held-to-maturity (fair value of $453,955 and $292,837, respectively)

 

440,949

 

 

 

292,704

 

 

 

 

 

Loans held for sale, at fair value

 

28,676

 

 

 

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

 

3,602,452

 

 

 

3,472,614

 

Allowance for loan losses

 

(48,072

)

 

 

(33,847

)

Loans receivable, net

 

3,554,380

 

 

 

3,438,767

 

 

 

 

 

Resell agreements

 

103,222

 

 

 

-

 

Accrued interest and dividends receivable

 

22,738

 

 

 

19,088

 

Premises and equipment, net

 

13,252

 

 

 

17,778

 

Bank-owned life insurance

 

80,502

 

 

 

80,714

 

Right-of-use lease asset

 

36,917

 

 

 

47,299

 

Deferred tax asset

 

34,180

 

 

 

31,441

 

Goodwill and other intangible assets

 

18,637

 

 

 

19,665

 

Other assets

 

35,029

 

 

 

30,574

 

Total assets

$

6,618,443

 

 

$

5,325,338

 

Liabilities

 

 

 

Deposits

$

6,021,000

 

 

$

4,640,982

 

Borrowed funds

 

-

 

 

 

75,000

 

Operating leases

 

54,921

 

 

 

62,404

 

Other liabilities

 

20,025

 

 

 

56,408

 

Total liabilities

 

6,095,946

 

 

 

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

 

300,779

 

 

 

305,738

 

Retained earnings

 

205,952

 

 

 

181,132

 

Accumulated other comprehensive (loss), net of taxes:

 

 

 

Net unrealized (loss) on securities available for sale, net of taxes

 

17,483

 

 

 

5,544

 

Net unrealized income on post retirement obligations, net of taxes

 

(2,160

)

 

 

(2,319

)

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

 

15,323

 

 

 

3,225

 

Total Amalgamated Bank stockholders' equity

 

522,364

 

 

 

490,410

 

Noncontrolling interests

 

133

 

 

 

134

 

Total stockholders' equity

 

522,497

 

 

 

490,544

 

Total liabilities and stockholders equity

$

6,618,443

 

 

$

5,325,338

 

 

 

 

 


Select Financial Data

 

 

 

 

 

 

 

 

 

 

 

 

As of and for the Three Months Ended

 

As of and for the Nine Months Ended

 

September 30,

 

June 30,

 

September 30,

 

September 30,

 

2020

 

2020

 

2019

 

2020

 

2019

Selected Financial Ratios and Other Data

 

 

 

 

 

 

 

 

 

 

Earnings per share

 

 

 

 

 

 

 

 

 

 

Basic

$

0.40

 

 

$

0.33

 

 

$

0.41

 

 

$

1.04

 

 

$

1.11

 

Diluted

 

0.40

 

 

 

0.33

 

 

 

0.41

 

 

 

1.04

 

 

 

1.09

 

Core Earnings per share (non-GAAP)

 

 

 

 

 

 

 

 

 

 

Basic

$

0.54

 

 

$

0.34

 

 

$

0.42

 

 

$

1.17

 

 

$

1.12

 

Diluted

 

0.54

 

 

 

0.34

 

 

 

0.41

 

 

 

1.17

 

 

 

1.10

 

Book value per common share

 

16.82

 

 

 

16.22

 

 

 

15.37

 

 

 

16.82

 

 

 

15.37

 

(excluding minority interest)

 

 

 

 

 

 

 

 

 

 

Tangible book value per share (non-GAAP)

 

16.22

 

 

 

15.61

 

 

 

14.74

 

 

 

16.22

 

 

 

14.74

 

Common shares outstanding

 

31,049,525

 

 

 

31,049,525

 

 

 

31,633,691

 

 

 

31,049,525

 

 

 

31,633,691

 

Weighted average common shares

 

31,049,525

 

 

 

31,022,517

 

 

 

31,809,083

 

 

 

31,160,963

 

 

 

31,802,004

 

outstanding, basic

 

 

 

 

 

 

 

 

 

 

Weighted average common shares

 

31,075,400

 

 

 

31,034,666

 

 

 

32,176,439

 

 

 

31,240,093

 

 

 

32,251,333

 

outstanding, diluted

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


Select Financial Data

 

 

 

 

 

As of and for the Three

 

As of and for the Nine

 

Months Ended

 

Months Ended

 

September 30,

 

June 30,

 

September 30,

 

September 30,

 

2020

 

2020

 

2019

 

2020

 

2019

 

 

 

 

 

 

 

 

 

 

Selected Performance Metrics:

 

 

 

 

 

 

 

 

 

Return on average assets

0.76

%

 

0.69

%

 

1.05

%

 

0.72

%

 

0.97

%

Core return on average assets (non-GAAP)

1.03

%

 

0.70

%

 

1.06

%

 

0.81

%

 

0.98

%

Return on average equity

9.62

%

 

8.56

%

 

10.86

%

 

8.62

%

 

10.13

%

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

13.44

%

 

9.07

%

 

11.43

%

 

10.11

%

 

10.71

%

Loan yield

3.97

%

 

3.97

%

 

4.22

%

 

4.02

%

 

4.36

%

Securities yield

2.24

%

 

2.59

%

 

3.28

%

 

2.66

%

 

3.33

%

Deposit cost

0.14

%

 

0.20

%

 

0.37

%

 

0.21

%

 

0.34

%

Net interest margin

2.88

%

 

3.10

%

 

3.50

%

 

3.13

%

 

3.60

%

Efficiency ratio (1)

65.29

%

 

58.50

%

 

64.53

%

 

61.37

%

 

64.70

%

Core efficiency ratio (non-GAAP) (1)

54.84

%

 

57.68

%

 

64.26

%

 

57.24

%

 

64.38

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Asset Quality Ratios:

 

 

 

 

 

 

 

 

 

Nonaccrual loans to total loans

1.41

%

 

1.24

%

 

0.53

%

 

1.41

%

 

0.53

%

Nonperforming assets to total assets

1.22

%

 

1.15

%

 

1.42

%

 

1.22

%

 

1.42

%

Allowance for loan losses to nonaccrual loans

95

%

 

109

%

 

183

%

 

95

%

 

183

%

Allowance for loan losses to total loans

1.34

%

 

1.36

%

 

0.96

%

 

1.34

%

 

0.96

%

Net charge-offs (recoveries) to average loans

0.59

%

 

0.06

%

 

-0.07

%

 

0.22

%

 

0.29

%

 

 

 

 

 

 

 

 

 

 

Capital Ratios:

 

 

 

 

 

 

 

 

 

Tier 1 leverage capital ratio

7.39

%

 

7.69

%

 

9.03

%

 

7.39

%

 

9.03

%

Tier 1 risk-based capital ratio

12.76

%

 

12.32

%

 

13.49

%

 

12.76

%

 

13.49

%

Total risk-based capital ratio

14.01

%

 

13.57

%

 

14.55

%

 

14.01

%

 

14.55

%

Common equity tier 1 capital ratio

12.76

%

 

12.32

%

 

13.49

%

 

12.76

%

 

13.49

%

 

 

 

 

 

 

 

 

 

 

(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 September 30, 2020

 

At June 30, 2020

 

At December 31, 2019

 

Amount

 

% of total loans

 

Amount

 

% of total loans

 

Amount

 

% of total loans

Commercial portfolio:

 

 

 

 

 

 

 

 

 

 

 

Commercial and industrial

$

660,914

 

 

18.4

%

 

$

617,579

 

 

16.8

%

 

$

474,342

 

 

13.7

%

Multifamily

 

974,962

 

 

27.1

%

 

 

972,129

 

 

26.4

%

 

 

976,380

 

 

28.2

%

Commercial real estate

 

388,757

 

 

10.8

%

 

 

404,064

 

 

11.0

%

 

 

421,947

 

 

12.2

%

Construction and land development

 

61,687

 

 

1.7

%

 

 

65,259

 

 

1.8

%

 

 

62,271

 

 

1.8

%

Total commercial portfolio

 

2,086,320

 

 

58.0

%

 

 

2,059,031

 

 

56.0

%

 

 

1,934,940

 

 

55.9

%

 

 

 

 

 

 

 

 

 

 

 

 

Retail portfolio:

 

 

 

 

 

 

 

 

 

 

 

Residential real estate lending

 

1,329,021

 

 

37.0

%

 

 

1,432,645

 

 

38.9

%

 

 

1,366,473

 

 

39.4

%

Consumer and other

 

179,507

 

 

5.0

%

 

 

187,980

 

 

5.1

%

 

 

163,077

 

 

4.7

%

Total retail

 

1,508,528

 

 

42.0

%

 

 

1,620,625

 

 

44.0

%

 

 

1,529,550

 

 

44.1

%

Total loans

 

3,594,848

 

 

100.0

%

 

 

3,679,656

 

 

100.0

%

 

 

3,464,490

 

 

100.0

%

 

 

 

 

 

 

 

 

 

 

 

 

Net deferred loan origination fees (costs)

 

7,604

 

 

 

 

 

8,336

 

 

 

 

 

8,124

 

 

 

Allowance for loan losses

 

(48,072

)

 

 

 

 

(50,010

)

 

 

 

 

(33,847

)

 

 

Total loans, net

$

3,554,380

 

 

 

 

$

3,637,982

 

 

 

 

$

3,438,767

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Held-to-maturity securities portfolio:

 

 

 

 

 

 

 

 

 

 

 

PACE assessments

$

367,393

 

 

83.3

%

 

$

323,391

 

 

87.3

%

 

$

263,805

 

 

90.1

%

Other securities

 

73,556

 

 

16.7

%

 

 

47,107

 

 

12.7

%

 

 

28,899

 

 

9.9

%

Total held-to-maturity securities

$

440,949

 

 

100.0

%

 

$

370,498

 

 

100.0

%

 

$

292,704

 

 

100.0

%

 

 

 

 

 

 

 

 

 

 

 

 


Net Interest Income Analysis

 

 

 

 

 

 

 

Three Months Ended

 

Three Months Ended

 

Three Months Ended

 

September 30, 2020

 

June 30, 2020

 

September 30, 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$632,268 $152 0.10% $364,932 $83 0.09% $72,143 $209 1.15%Securities and FHLB stock 2,045,231 11,528 2.24% 1,834,892 11,812 2.59% 1,294,930 10,720 3.28%Total loans, net (1) 3,569,313 35,602 3.97% 3,571,160 35,225 3.97% 3,363,837 35,768 4.22%Total interest earning assets 6,246,812 47,282 3.01% 5,770,984 47,120 3.28% 4,730,910 46,697 3.92%Non-interest earning assets: Cash and due from banks 9,239 74,877 6,985 Other assets 234,248 224,531 228,076 Total assets$6,490,299 $6,070,392 $4,965,971 Interest bearing liabilities: Savings, NOW and money market deposits$2,376,701 $1,426 0.24% $2,313,772 $1,755 0.31% $1,869,675 $2,478 0.53%Time deposits 321,696 622 0.77% 370,969 926 1.00% 417,591 1,474 1.40%Total deposits 2,698,397 2,048 0.30% 2,684,741 2,681 0.40% 2,287,266 3,952 0.69%Federal Home Loan Bank advances - - 0.00% - - 0.00% 166,363 987 2.35%Other Borrowings - - 0.00% - - 0.00% 163 1 2.43%Total interest bearing liabilities 2,698,397 2,048 0.30% 2,684,741 2,681 0.40% 2,453,792 4,940 0.80%Non-interest bearing liabilities: Demand and transaction deposits 3,191,858 2,746,529 1,936,915 Other liabilities 84,138 151,591 93,056 Total liabilities 5,974,393 5,582,861 4,483,763 Stockholders' equity 515,906 487,531 482,208 Total liabilities and stockholders' equity$6,490,299 $6,070,392 $4,965,971 Net interest income / interest rate spread $ 45,234 2.71% $ 44,439 2.88% $ 41,757 3.12%Net interest earning assets / net interest margin$ 3,548,415 2.88% $ 3,086,243 3.10% $ 2,277,118 3.50% Total Cost of Deposits 0.14% 0.20% 0.37% (1) Amounts are net of deferred origination costs / (fees) and the allowance for loan losses* Net interest margin includes prepayment penalty income in 3Q20, 2Q20 and 3Q19 of $1,110,011, $239,190 and $0 respectively


Net Interest Income Analysis

Nine Months Ended

Nine Months Ended

September 30, 2020

September 30, 2019

(In thousands)

Average Balance

Income / Expense

Yield / Rate

Average Balance

Income / Expense

Yield / Rate

Interest earning assets:

Interest-bearing deposits in banks

$

395,029

$

631

0.21

%

$

71,956

$

756

1.40

%

Securities and FHLB stock

1,809,188

35,962

2.66

%

1,269,637

31,620

3.33

%

Total loans, net (1)

3,535,096

106,440

4.02

%

3,271,700

106,623

4.36

%

Total interest earning assets

5,739,313

143,033

3.33

%

4,613,293

138,999

4.03

%

Non-interest earning assets:

Cash and due from banks

31,138

7,926

Other assets

227,205

248,707

Total assets

$

5,997,656

$

4,869,926

Interest bearing liabilities:

Savings, NOW and money market deposits

$

2,278,267

$

5,919

0.35

%

$

1,868,218

$

6,307

0.45

%

Time deposits

357,774

2,726

1.02

%

448,140

4,089

1.22

%

Total deposits

2,636,041

8,645

0.44

%

2,316,358

10,396

0.60

%

Federal Home Loan Bank advances

2,117

27

1.70

%

227,853

4,199

2.46

%

Other Borrowings

-

-

0.00

%

861

17

2.64

%

Total interest bearing liabilities

2,638,158

8,672

0.44

%

2,545,072

14,612

0.77

%

Non-interest bearing liabilities:

Demand and transaction deposits

2,748,088

1,767,232

Other liabilities

109,586

92,966

Total liabilities

5,495,832

4,405,270

Stockholders' equity

501,824

464,656

Total liabilities and stockholders' equity

$

5,997,656

$

4,869,926

Net interest income / interest rate spread

$

134,361

2.89

%

$

124,387

3.26

%

Net interest earning assets / net interest margin

$

3,101,155

3.13

%

$

2,068,221

3.60

%

Total Cost of Deposits

0.21

%

0.34

%

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

* Net interest margin includes prepayment penalty income in Sep YTD 2020 and Sep YTD 2019 of $2,110,769 and $626,038 respectively


Deposit Portfolio Composition

(in thousands)

September 30, 2020

June 30, 2020

September 30, 2019

Noninterest-bearing demand deposit accounts

$

3,357,715

$

3,089,004

$

1,963,232

NOW accounts

192,066

198,653

235,933

Money market deposit accounts

1,853,373

1,876,540

1,377,747

Savings accounts

339,516

342,477

337,590

Time deposits

278,330

363,645

402,877

Brokered CD

-

-

5,000

Total deposits

$

6,021,000

$

5,870,319

$

4,322,379

* Total deposit balance as of September 30, 2020 excludes off balance sheet Insured Cash Sweep (ICS) balance of $83.9 million


Three Months Ended

Three Months Ended

Three Months Ended

September 30, 2020

June 30, 2020

September 30, 2019

(In thousands)

Average Balance

Average Rate Paid

Average Balance

Average Rate Paid

Average Balance

Average Rate Paid

Noninterest-bearing demand deposit accounts

$

3,191,858

0.00

%

$

2,746,529

0.00

%

$

1,936,915

0.00

%

NOW accounts

196,422

0.09

%

237,279

0.17

%

227,525

0.46

%

Money market deposit accounts

1,839,230

0.28

%

1,741,466

0.36

%

1,303,766

0.62

%

Savings accounts

341,049

0.12

%

335,027

0.12

%

338,383

0.23

%

Time deposits

321,696

0.77

%

370,969

1.00

%

410,310

1.40

%

Brokered CD

-

0.00

%

-

0.00

%

7,281

2.76

%

Total deposits

$

5,890,255

0.14

%

$

5,431,270

0.20

%

$

4,224,180

0.37

%


Asset Quality

September 30,

June 30,

September 30,

(In thousands)

2020

2020

2019

Loans 90 days past due and accruing

$

9,522

$

-

$

36

Nonaccrual loans excluding held for sale loans and restructured loans

17,515

18,901

8,874

Nonaccrual loans held for sale

-

-

-

Troubled debt restructured loans - nonaccrual

33,306

26,776

9,495

Troubled debt restructured loans - accruing

19,919

28,031

52,555

Other real estate owned

306

503

526

Impaired securities

44

46

67

Total nonperforming assets

$

80,612

$

74,257

$

71,553

Nonaccrual loans:

Commercial and industrial

$

25,785

$

15,742

$

3,089

Multifamily

-

-

-

Commercial real estate

3,500

13,768

3,693

Construction and land development

10,688

3,652

3,702

Total commercial portfolio

39,973

33,162

10,484

Residential real estate lending

9,750

11,835

7,433

Consumer and other

1,098

680

452

Total retail portfolio

10,848

12,515

7,885

Total nonaccrual loans

$

50,821

$

45,677

$

18,369

Nonperforming assets to total assets

1.22

%

1.15

%

1.42

%

Nonaccrual assets to total assets

0.77

%

0.71

%

0.38

%

Nonaccrual loans to total loans

1.41

%

1.24

%

0.53

%

Allowance for loan losses to nonaccrual loans

95

%

109

%

183

%

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 Three

As of and for the Nine

Months Ended

Months Ended

(in thousands)

September 30,

June 30,

September 30,

September 30,

2020

2020

2019

2020

2019

Core operating revenue

Net interest income (GAAP)

$

45,234

$

44,439

$

41,757

$

134,361

$

124,387

Non interest income (GAAP)

12,776

8,671

7,659

30,565

21,425

Less: Branch sale loss (gain)(1)

-

34

-

(1,394

)

-

Less: Securities loss (gain)

(619

)

(486

)

50

(1,605

)

135

Core operating revenue (non-GAAP)

$

57,391

$

52,658

$

49,466

$

161,927

$

145,947

Core non-interest expenses

Non-interest expense (GAAP)

$

37,877

$

31,068

$

31,886

$

101,216

$

94,336

Less: Branch closure expense(2)

(6,279

)

(695

)

(51

)

(8,330

)

(51

)

Less: Severance (3)

(125

)