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Amalgamated Financial Corp. Reports First Quarter 2021 Financial Results

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NEW YORK, April 22, 2021 (GLOBE NEWSWIRE) -- Amalgamated Financial Corp. (the “Company” or “Amalgamated”) (Nasdaq: AMAL), the holding company for Amalgamated Bank (the “Bank”), today announced financial results for the first quarter ended March 31, 2021.

On March 1, 2021 (the “Effective Date”), the Company acquired all of the outstanding stock of the Bank in a statutory share exchange transaction (the “Reorganization”) effected under New York law and in accordance with the terms of a Plan of Acquisition dated September 4, 2020. In this release, unless the context indicates otherwise, references to “we,” “us,” and “our” refer to the Company and the Bank. However, if the discussion relates to a period before the Effective Date, the terms refer only to the Bank.

First Quarter 2021 Highlights

  • Net income of $12.2 million, or $0.39 per diluted share, compared to $13.8 million, or $0.44 per diluted share, for the fourth quarter of 2020 and $9.5 million, or $0.30 per diluted share for the first quarter of 2020

  • Core net income (non-GAAP)[1] of $13.0 million, or $0.41 per diluted share, compared to $13.8 million, or $0.44 per diluted share for the fourth quarter of 2020 and $9.2 million, or $0.29 per diluted share, for the first quarter of 2020

  • Deposit increase of $381.4 million to $5.7 billion compared to a balance of $5.3 billion on December 31, 2020

  • Loan decrease of $224.5 million to $3.2 billion due to increased prepayment activity, compared to a balance of $3.4 billion on December 31, 2020

  • Growth in PACE assessments of $30.6 million, or 29.5% annualized, from a balance of $421.0 million on December 31, 2020

  • Cost of deposits was 0.11%, compared to 0.13% for the fourth quarter of 2020 and 0.33% for the first quarter of 2020

  • Net interest margin was 2.85%, compared to 3.06% for the fourth quarter of 2020 and 3.46% for the first quarter of 2020

  • Common Equity Tier 1, Total Risk-Based, and Tier 1 Leverage capital ratios were 13.70%, 14.74%, and 8.06%, respectively, at March 31, 2021

  • Total nonperforming assets were $81.0 million or 1.27% of total assets as of March 31, 2021, compared to $82.2 million or 1.38% of total assets at December 31, 2020 and $65.6 million, or 1.14% of total assets at March 31, 2020

Lynne Fox, Board Chair and Interim President and Chief Executive Officer of Amalgamated, commented, “Our first quarter results demonstrate our strong financial footing which positions Amalgamated for continued success as we look forward. A highlight of the quarter was our deposit growth of $381.4 million, driven by a rebound in political deposits combined with new relationships in our core markets. Our deposit franchise clearly highlights the attractive position that Amalgamated holds as we work to service the needs of values-based institutions and strengthen our reputation as ‘America’s socially responsible bank’. I am also very pleased with the credit quality of our loan portfolio combined with the actions that we took in 2020 which have allowed the Bank to begin releasing reserves. This is a testament to the conservative credit culture that has been built and which has served us well through the pandemic. I am very proud of the strong financial foundation that Amalgamated holds and which our new President and Chief Executive Officer will inherit. This last quarter we publicly endorsed HR 40, which sets up a commission to explore reparations for African Americans, and just this week helped orchestrate a commitment by financial institutions at the White House Climate Summit to double down on their commitment to Net Zero financed emissions. We believe these are the first steps to move the country forward in building an equitable economy that creates opportunity for all individuals to thrive. The future is very bright for Amalgamated as we embark upon the next chapter in our journey and further expand our socially-responsible initiatives.”
_________________________
[1] Reconciliations of non-GAAP financial measures to the most comparable GAAP measure are set forth on the last page 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 our employees, customers, and communities. Our employees continue to operate primarily in a work from home environment, and we continue to perform well, effectively transitioning many customers to our digital platform.

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 March 31, 2021, the Company had $8.5 million in loans on payment deferral and still accruing interest, of which $4.9 million were residential loans and the remaining $3.6 million were commercial or consumer loans.

Results of Operations, Quarter Ended March 31, 2021

Net income for the first quarter of 2021 was $12.2 million, or $0.39 per diluted share, compared to $13.8 million, or $0.44 per diluted share, for the fourth quarter of 2020 and $9.5 million, or $0.30 per diluted share, for the first quarter of 2020. The $1.6 million decrease for the first quarter of 2021, compared to the previous quarter was primarily due to a $6.0 million decrease in non-interest income and a $3.8 million decrease in net interest income, partially offset by a $7.9 million decrease in provision for loan losses.

Core net income (non-GAAP) for the first quarter of 2021 was $13.0 million, or $0.41 per diluted share, compared to $13.8 million, or $0.44 per diluted share, for the fourth quarter of 2020 and $9.2 million, or $0.29 per diluted share, for the first quarter of 2020. Core net income for the first quarter of 2021 excluded $1.1 million of severance expense related to the modernization of our Trust Department and its related tax impact. Core net income for the fourth quarter of 2020 included no adjustments to GAAP income and the first quarter of 2020 excluded $1.4 million of non-interest income from the gain on the sale of an owned property, $0.5 million of non-interest income gains on the sale of securities, $1.4 million in expense related to the closure of two branches and severance costs, and the tax effect of such adjustments.

Net interest income was $41.8 million for the first quarter of 2021, compared to $45.7 million for the fourth quarter of 2020 and $44.7 million for the first quarter of 2020. The $3.8 million decrease from the previous quarter was primarily attributable to a decrease in average loans of $210.2 million from the prepayment of residential and commercial loans and a 21 basis point decrease in yield due to lower prepayment penalties and lower yields on originations, partially offset by higher income on securities and lower interest expense on deposits. The $2.8 million decrease from the corresponding quarter in the previous year was primarily attributable to a decrease in average loans of $170.7 million from the prepayment of residential and commercial loans and a 30 basis point decrease in yield due to lower prepayment penalties and lower yields on originations, partially offset by lower interest expense on deposits.

Net interest margin was 2.85% for the first quarter of 2021, a decrease of 21 basis points from 3.06% in the fourth quarter of 2020, and a decrease of 61 basis points from 3.46% in the first quarter of 2020. 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 first quarter of 2021, compared to two and four basis points in the fourth and first quarter of 2020, respectively. Prepayment penalties earned through loan income contributed four basis points to our net interest margin in the first quarter of 2021, compared to 13 and six basis points in the fourth and first quarters of 2020, respectively.

Provisions for loan losses totaled a recovery of $3.3 million for the first quarter of 2021 compared to an expense of $4.6 million and $8.6 million for the fourth and first quarter of 2020, respectively. The recovery in the first quarter of 2021 was primarily driven by a release of allowance for loan loss due to lower loan balances and the upgrade of one construction loan to a pass rating.

Non-interest income was $4.0 million for the first quarter of 2021, compared to $10.0 million in the fourth quarter of 2020 and $9.1 million for the first quarter in 2020. This decrease of $6.0 million in the first quarter of 2021, compared to the previous quarter, was primarily due to the expected equity method investment losses related to investments in solar initiatives. The decrease of $5.1 million in the first quarter of 2021 compared to the corresponding quarter in 2020 was primarily due to a loss of $3.8 million related to equity investments in solar initiatives in the first quarter of 2021 compared to no income or loss in the same quarter of 2020. The Company primarily recognized the benefit of the tax credits in 2020, the initial year of the equity investment. We expect additional losses in equity method investments of approximately $1.8 million during the remainder of 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 first quarter of 2021 was $32.8 million, an increase of $0.1 million from the fourth quarter of 2020 and an increase of $0.5 million from the first quarter of 2020. The increase of $0.1 million from the previous quarter was primarily due to a $1.1 million charge for severance related to the modernization of our Trust Department, partially offset by decreases in advertising and professional service expenses.

Our provision for income tax expense was $4.1 million for the first quarter of 2021, compared to $4.6 million for the fourth quarter of 2020 and $3.4 million for the first quarter of 2020. Our effective tax rate for the first quarter of 2021 was 25.4%, compared to 25.2% for the fourth quarter of 2020 and 26.3% for the first quarter of 2020.

Financial Condition

Total assets were $6.4 billion at March 31, 2021, compared to $6.0 billion at December 31, 2020. The increase of $0.4 billion was driven primarily by a $466.2 million increase in cash and cash equivalents and a $185.9 million increase in investment securities, of which $30.6 million was from PACE assessments, which was partially offset by a $224.5 million decrease in loans receivable, net.

Total loans, net at March 31, 2021 were $3.2 billion, a decrease of $224.5 million, or 26.4% annualized, compared to December 31, 2020. The decline in loans was primarily driven by a $100.8 million decrease in residential loans due to increased refinancing activity by existing customers, a $73.4 million decrease in commercial real estate and multifamily loans due to refinancing activity by existing customers, and a $64.6 million decrease in C&I loans due to the payoff of one large loan.

Deposits at March 31, 2021 were $5.7 billion, an increase of $381.4 million, or 29.0% annualized, as compared to $5.3 billion as of December 31, 2020. Deposits held by politically active customers, such as campaigns, PACs, advocacy-based organizations, and state and national party committees were $692.0 million as of March 31, 2021, an increase of $89.0 million compared to $602.8 million as of December 31, 2020. Noninterest-bearing deposits represent 50% of average deposits and 49% of ending deposits for the quarter ended March 31, 2021, contributing to an average cost of deposits of 0.11% in the first quarter of 2021, a two basis point decrease from the previous quarter.

Nonperforming assets totaled $81.0 million, or 1.27% of period-end total assets at March 31, 2021, a decrease of $1.2 million, compared with $82.2 million, or 1.38% of period-end total assets at December 31, 2020. The decrease in non-performing assets at March 31, 2021 compared to December 31, 2020 was primarily driven by the decrease of $4.4 million of non-accruing construction and multifamily loans, partially offset by an increase of $2.7 million of those loans transferring into other real estate owned. Loans that were rated special mention or worse decreased by $34.0 million as of March 31, 2021, compared to December 31, 2020. This change was primarily due to a decrease in CRE/multifamily loans categorized as special mention or worse of $21.0 million and a decrease in construction loans of $10.8 million.

The allowance for loan losses decreased $4.9 million to $36.7 million at March 31, 2021 from $41.6 million at December 31, 2020, primarily due to decreases in loan balances and improvement in the risk rating on one construction loan. At March 31, 2021, we had $75.6 million of impaired loans for which a specific allowance of $4.9 million was made, compared to $73.7 million of impaired loans at December 31, 2020 for which a specific allowance of $6.2 million was made. The ratio of allowance to total loans was 1.13% at March 31, 2021 and 1.19% at December 31, 2020.

Capital

As of March 31, 2021, our Common Equity Tier 1 Capital Ratio was 13.70%, Total Risk-Based Capital Ratio was 14.74%, and Tier-1 Leverage Capital Ratio was 8.06%, compared to 13.11%, 14.25% and 7.97%, respectively, as of December 31, 2020. Stockholders’ equity at March 31, 2021 was $540.2 million, compared to $535.8 million at December 31, 2020. The increase in stockholders’ equity was driven by $12.2 million of net income, partially offset by a $4.0 million decrease in accumulated other comprehensive income due to the mark to market on our securities portfolio and $0.9 million decrease in additional paid-in capital.

Our tangible book value per share was $16.75 as of March 31, 2021 compared to $16.66 as of December 31, 2020.

Conference Call
As previously announced, Amalgamated Financial Corp. will host a conference call to discuss its first quarter 2021 results today, April 22, 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 Financial Corp. First Quarter 2021 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 13718094. The telephonic replay will be available until April 29, 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 Financial Corp.

Amalgamated Financial Corp. is a Delaware public benefit corporation and a bank holding company engaged in commercial banking and financial services through its wholly-owned subsidiary, 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 Bank 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 Bank provides commercial banking and trust services nationally and offers a full range of products and services to both commercial and retail customers. Amalgamated Bank is a proud member of the Global Alliance for Banking on Values and is a certified B Corporation®. As of March 31, 2021, our total assets were $6.4 billion, total net loans were $3.2 billion, and total deposits were $5.7 billion. Additionally, as of March 31, 2021, our trust business held $37.5 billion in assets under custody and $15.7 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 March 31, 2021 versus certain periods in 2020 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) our inability to maintain the historical growth rate of the 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 our 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 our 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 our 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”; (xii) the risk that the preliminary financial information reported herein and our current preliminary analysis will be different when our review is finalized; (xiii) our inability to timely identify a new Chief Financial Officer in light of, among other things, competition for experienced executives in the banking industry; and (xiiii) unexpected challenges and potential operational disruptions related to our executive officer transition. Additional factors which could affect the forward-looking statements can be found in our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K filed with the SEC and available on the SEC's website at https://www.sec.gov/. We disclaim 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.

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


Consolidated Statements of Income (unaudited)

Three Months Ended

March 31,

December 31,

March 31,

($ in thousands)

2021

2020

2020

INTEREST AND DIVIDEND INCOME

Loans

$

31,109

$

35,544

$

35,612

Securities

12,170

11,816

12,554

Federal Home Loan Bank of New York stock

48

36

69

Interest-bearing deposits in banks

90

66

396

Total interest and dividend income

43,417

47,462

48,631

INTEREST EXPENSE

Deposits

1,573

1,807

3,915

Borrowed funds

27

Total interest expense

1,573

1,807

3,942

NET INTEREST INCOME

41,844

45,655

44,689

Provision for (recovery of) loan losses

(3,261

)

4,589

8,588

Net interest income after provision for loan losses

45,105

41,066

36,101

NON-INTEREST INCOME

Trust Department fees

3,827

3,533

4,085

Service charges on deposit accounts

2,178

2,811

2,411

Bank-owned life insurance

788

363

384

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

21

499

Gain (loss) on sale of loans, net

707

1,320

135

Gain (loss) on other real estate owned, net

(23

)

Equity method investments

(3,682

)

1,825

Other

161

188

1,627

Total non-interest income

4,000

10,040

9,118

NON-INTEREST EXPENSE

Compensation and employee benefits

18,039

17,082

17,458

Occupancy and depreciation

3,501

3,385

5,506

Professional fees

3,661

4,033

2,983

Data processing

3,005

3,174

2,264

Office maintenance and depreciation

655

776

856

Amortization of intangible assets

302

342

342

Advertising and promotion

597

1,003

667

Other

3,033

2,875

2,194

Total non-interest expense

32,793

32,670

32,270

Income before income taxes

16,312

18,436

12,949

Income tax expense (benefit)

4,123

4,646

3,404

Net income

12,189

13,790

9,545

Net income attributable to Amalgamated Financial Corp.

$

12,189

$

13,790

$

9,545

Earnings per common share - basic

0.39

0.44

0.30

Earnings per common share - diluted

0.39

0.44

0.30


Consolidated Statements of Financial Condition

($ in thousands)

March 31, 2021

December 31, 2020

Assets

(unaudited)

Cash and due from banks

$

7,387

$

7,736

Interest-bearing deposits in banks

497,536

31,033

Total cash and cash equivalents

504,923

38,769

Securities:

Available for sale, at fair value (amortized cost of $1,667,925 and $1,513,409, respectively)

1,688,924

1,539,862

Held-to-maturity (fair value of $530,207 and $502,425, respectively)

531,274

494,449

Loans held for sale

16,661

11,178

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

3,259,504

3,488,895

Allowance for loan losses

(36,662

)

(41,589

)

Loans receivable, net

3,222,842

3,447,306

Resell agreements

152,268

154,779

Accrued interest and dividends receivable

21,465

23,970

Premises and equipment, net

12,970

12,977

Bank-owned life insurance

105,666

105,888

Right-of-use lease asset

34,453

36,104

Deferred tax asset, net

26,061

36,079

Goodwill

12,936

12,936

Other intangible assets

5,057

5,359

Equity investments

8,101

11,735

Other assets

41,625

47,240

Total assets

$

6,385,226

$

5,978,631

Liabilities

Deposits

$

5,720,067

$

5,338,711

Operating leases

51,057

53,173

Other liabilities

73,880

50,926

Total liabilities

5,845,004

5,442,810

Commitments and contingencies

Stockholders’ equity

Common stock, par value $.01 per share (70,000,000 shares authorized; 31,168,783 and 31,049,525 shares issued and outstanding, respectively)

312

310

Additional paid-in capital

300,079

300,989

Retained earnings

226,887

217,213

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

12,811

17,176

Total Amalgamated Financial Corp. stockholders' equity

540,089

535,688

Noncontrolling interests

133

133

Total stockholders' equity

540,222

535,821

Total liabilities and stockholders’ equity

$

6,385,226

$

5,978,631


Select Financial Data

As of and for the

Three Months Ended

March 31,

December 31,

March 31,

(Shares in thousands)

2021

2020

2020

Selected Financial Ratios and Other Data:

Earnings

Basic

$

0.39

$

0.44

$

0.30

Diluted

0.39

0.44

0.30

Core net income (non-GAAP)

Basic

$

0.42

$

0.44

$

0.29

Diluted

0.41

0.44

0.29

Book value per common share (excluding minority interest)

17.33

17.25

15.26

Tangible book value per share (non-GAAP)

16.75

16.66

14.64

Common shares outstanding

31,169

31,050

31,000

Weighted average common shares outstanding, basic

31,082

31,050

31,411

Weighted average common shares outstanding, diluted

31,524

31,145

31,806


Select Financial Data

As of and for the

Three Months Ended

March 31,

December 31,

March 31,

2021

2020

2020

Selected Performance Metrics:

Return on average assets

0.79

%

0.89

%

0.71

%

Core return on average assets (non-GAAP)

0.85

%

0.89

%

0.68

%

Return on average equity

9.11

%

10.34

%

7.65

%

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

10.05

%

10.72

%

7.66

%

Average equity to average assets

8.71

%

8.58

%

9.25

%

Tangible common equity to assets

8.18

%

8.65

%

7.89

%

Loan yield

3.83

%

4.04

%

4.13

%

Securities yield

2.18

%

2.21

%

3.29

%

Deposit cost

0.11

%

0.13

%

0.33

%

Net interest margin

2.85

%

3.06

%

3.46

%

Efficiency ratio (1)

71.53

%

58.66

%

59.97

%

Core efficiency ratio (non-GAAP) (1)

69.18

%

58.66

%

59.44

%

Asset Quality Ratios:

Nonaccrual loans to total loans

1.78

%

1.75

%

0.96

%

Nonperforming assets to total assets

1.27

%

1.38

%

1.14

%

Allowance for loan losses to nonaccrual loans

63.32

%

68.26

%

124.66

%

Allowance for loan losses to total loans

1.13

%

1.19

%

1.19

%

Annualized net charge-offs (recoveries) to average loans

0.20

%

1.24

%

0.01

%

Capital Ratios:

Tier 1 leverage capital ratio

8.06

%

7.97

%

8.47

%

Tier 1 risk-based capital ratio

13.70

%

13.11

%

12.74

%

Total risk-based capital ratio

14.74

%

14.25

%

13.96

%

Common equity tier 1 capital ratio

13.70

%

13.11

%

12.74

%

(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 March 31, 2021

At December 31, 2020

At March 31, 2020

Amount

% of total loans

Amount

% of total loans

Amount

% of total loans

Commercial portfolio:

Commercial and industrial

$

612,581

18.8

%

$

677,192

19.5

%

$

532,351

15.0

%

Multifamily

882,231

27.2

%

947,177

27.2

%

936,350

26.4

%

Commercial real estate

364,308

11.2

%

372,736

10.7

%

408,766

11.5

%

Construction and land development

50,267

1.5

%

56,087

1.6

%

65,706

1.9

%

Total commercial portfolio

1,909,387

58.7

%

2,053,192

59.0

%

1,943,173

54.8

%

Retail portfolio:

Residential real estate lending

1,137,851

35.0

%

1,238,697

35.5

%

1,416,796

39.9

%

Consumer and other

206,451

6.3

%

190,676

5.5

%

189,152

5.3

%

Total retail

1,344,302

41.3

%

1,429,373

41.0

%

1,605,948

45.2

%

Total loans

3,253,689

100.0

%

3,482,565

100.0

%

3,549,121

100.0

%

Net deferred loan origination fees (costs)

5,815

6,330

8,214

Allowance for loan losses

(36,662

)

(41,589

)

(42,348

)

Total loans, net

$

3,222,842

$

3,447,306

$

3,514,987

Held-to-maturity securities portfolio:

PACE assessments

451,643

85.0

%

421,036

85.2

%

255,298

89.2

%

Other securities

79,631

15.0

%

73,413

14.8

%

30,953

10.8

%

Total held-to-maturity securities

$

531,274

100.0

%

494,449

100.0

%

286,251

100.0

%

Net Interest Income Analysis

Three Months Ended

March 31, 2021

December 31, 2020

March 31, 2020

(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

$

380,390

$

90

0.10

%

$

299,881

$

66

0.09

%

$

185,281

$

396

0.86

%

Securities and FHLB stock

2,271,218

12,218

2.18

%

2,133,957

11,852

2.21

%

1,544,848

12,623

3.29

%

Total loans, net (1)(2)

3,293,775

31,109

3.83

%

3,503,929

35,544

4.04

%

3,464,438

35,612

4.13

%

Total interest earning assets

5,945,383

43,417

2.96

%

5,937,767

47,462

3.18

%

5,194,567

48,631

3.77

%

Non-interest earning assets:

Cash and due from banks

7,307

7,594

9,539

Other assets

279,308

237,628

222,757

Total assets

$

6,231,998

$

6,182,989

$

5,426,863

Interest bearing liabilities:

Savings, NOW and money market deposits

$

2,512,892

$

1,222

0.20

%

$

2,356,137

$

1,384

0.23

%

$

2,143,247

$

2,737

0.51

%

Time deposits

280,057

351

0.51

%

268,896

423

0.63

%

381,053

1,178

1.24

%

Total deposits

2,792,949

1,573

0.23

%

2,625,033

1,807

0.27

%

2,524,300

3,915

0.62

%

Federal Home Loan Bank advances

495

0.00

%

0.00

%

6,374

27

1.70

%

Total interest bearing liabilities

2,793,444

1,573

0.23

%

2,625,033

1,807

0.27

%

2,530,674

3,942

0.63

%

Non-interest bearing liabilities:

Demand and transaction deposits

2,786,581

2,947,075

2,300,999

Other liabilities

109,420

80,529

93,309

Total liabilities

5,689,445

5,652,637

4,924,982

Stockholders' equity

542,553

530,352

501,881

Total liabilities and stockholders' equity

$

6,231,998

$

6,182,989

$

5,426,863

Net interest income / interest rate spread

$

41,844

2.73

%

$

45,655

2.91

%

$

44,689

3.14

%

Net interest earning assets / net interest margin

$

3,151,939

2.85

%

$

3,312,734

3.06

%

$

2,663,893

3.46

%

Total Cost of Deposits

0.11

%

0.13

%

0.33

%

(1) Amounts are net of deferred origination costs / (fees) and the allowance for loan losses
(2) Includes prepayment penalty interest income in 1Q2021, 4Q2020, and 1Q2020 of $641,887, $1,986,500, and $761,568 respectively


Deposit Portfolio Composition

(In thousands)

March 31, 2021

December 31, 2020

March 31, 2020

Non-interest bearing demand deposit accounts

$

2,819,627,000

$

2,603,274,000

$

2,423,760,000

NOW accounts

206,145,000

205,653,000

234,268,000

Money market deposit accounts

2,067,886,000

1,914,391,000

1,708,818,000

Savings accounts

361,731,000

343,368,000

329,583,000

Time deposits

264,678,000

272,025,000

380,128,000

Total deposits

$

5,720,067,000

$

5,338,711,000

$

5,076,557,000


Three Months Ended

March 31, 2021

December 31, 2020

March 31, 2020

(In thousands)

Average
Balance

Average Rate Paid

Average
Balance

Average Rate Paid

Average
Balance

Average Rate Paid

Non-interest bearing demand deposit accounts

$

2,786,581

0.00

%

$

2,947,075

0.00

%

$

2,300,999

0.00

%

NOW accounts

198,117

0.08

%

194,555

0.08

%

231,707

0.40

%

Money market deposit accounts

1,963,707

0.23

%

1,823,391

0.27

%

1,587,242

0.60

%

Savings accounts

351,068

0.11

%

338,192

0.12

%

324,298

0.18

%

Time deposits

280,057

0.51

%

268,896

0.62

%

381,053

1.24

%

Total deposits

$

5,579,530

0.11

%

$

5,572,109

0.13

%

$

4,825,299

0.33

%


Asset Quality

(In thousands)

March 31, 2021

December 31, 2020

March 31, 2020

Loans 90 days past due and accruing

$

2,424

$

1,404

$

3,856

Nonaccrual loans excluding held for sale loans and restructured loans

37,324

40,039

7,537

Nonaccrual loans held for sale

Troubled debt restructured loans - nonaccrual

20,578

20,885

26,435

Troubled debt restructured loans - accruing

17,656

19,553

26,968

Other real estate owned

2,988

306

786

Impaired securities

61

47

64

Total nonperforming assets

$

81,031

$

82,234

$

65,646

Nonaccrual loans:

Commercial and industrial

$

12,347

$

12,444

$

15,949

Multifamily

7,660

9,575

Commercial real estate

4,133

3,433

3,634

Construction and land development

8,605

11,184

3,652

Total commercial portfolio

32,745

36,636

23,235

Residential real estate lending

24,300

23,656

10,057

Consumer and other

857

632

680

Total retail portfolio

25,157

24,288

10,737

Total nonaccrual loans

$

57,902

$

60,924

$

33,972

Nonaccrual loans to total loans

1.78

%

1.75

%

0.96

%

Nonperforming assets to total assets

1.27

%

1.38

%

1.14

%

Allowance for loan losses to nonaccrual loans

63.32

%

68.26

%

124.66

%

Allowance for loan losses to total loans

1.13

%

1.19

%

1.19

%

Annualized net charge-offs (recoveries) to average loans

0.20

%

1.24

%

0.01

%

Credit Quality

March 31, 2021

($ in thousands)

Pass

Special Mention

Substandard

Doubtful

Total

Commercial and industrial

$

566,421

$

17,622

$

28,079

$

459

$

612,581

Multifamily

742,746

108,016

28,296

3,173

882,231

Commercial real estate

257,178

32,878

74,252

364,308

Construction and land development

33,971

7,691

8,605

50,267

Residential real estate lending

1,113,551

24,300

1,137,851

Consumer and other

205,594

857

206,451

Total loans

$

2,919,461

$

166,207

$

164,389

$

3,632

$

3,253,689


December 31, 2020

($ in thousands)

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

1,215,417

23,280

1,238,697

Consumer and other

190,044

632

190,676

Total loans

$

3,114,298

$

211,853

$

155,952

$

462

$

3,482,565


March 31, 2020

($ in thousands)

Pass

Special Mention

Substandard

Doubtful

Total

Commercial and industrial

$

480,816

$

15,797

$

35,271

$

467

$

532,351

Multifamily

936,350

936,350

Commercial real estate

403,397

1,445

3,924

408,766

Construction and land development

54,115

7,939

3,652

65,706

Residential real estate lending

1,407,720

9,076

1,416,796

Consumer and other

188,472

680

189,152

Total loans

$

3,470,870

$

25,181

$

52,603

$

467

$

3,549,121


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 Months Ended

(in thousands)

March 31, 2021

December 31, 2020

March 31, 2020

Core operating revenue

Net Interest income

$

41,844

$

45,655

$

44,689

Non-interest income

4,000

10,040

9,118

Less: Branch sale loss (gain) (1)

(1,428

)

Less: Securities gain, net

(18

)

(499

)

Core operating revenue

$

45,826

$

55,695

$

51,880

Core non-interest expenses

Non-interest expense

$

32,793

$

32,670

$

32,270

Less: Branch closure expense (2)

(1,356

)

Less: Severance (3)

(1,090

)

(76

)

Core non-interest expense

$

31,703

$

32,670

$

30,838

Core net income

Net Income (GAAP)

$

12,189

$

13,790

$

9,545

Less: Branch sale (gain) (1)

(1,428

)

Less: Securities loss (gain)

(18

)

(499

)

Add: Branch closure expense (2)

1,356

Add: Severance (3)

1,090

76

Less: Tax on notable items

(271

)

130

Core net income (non-GAAP)

$

12,990

$

13,790

$

9,180

Tangible common equity

Stockholders' Equity (GAAP)

$

540,222

$

535,821

$

473,269

Less: Minority Interest (GAAP)

(133

)

(133

)

(134

)

Less: Goodwill (GAAP)

(12,936

)

(12,936

)

(12,936

)

Less: Core deposit intangible (GAAP)

(5,057

)

(5,358

)

(6,386

)

Tangible common equity (non-GAAP)

$

522,096

$

517,394

$

453,813

Average tangible common equity

Average Stockholders' Equity (GAAP)

$

542,553

$

530,352

$

501,881

Less: Minority Interest (GAAP)

(133

)

(133

)

(134

)

Less: Goodwill (GAAP)

(12,936

)

(12,936

)

(12,936

)

Less: Core deposit intangible (GAAP)

(5,205

)

(5,525

)

(6,553

)

Average tangible common equity (non-GAAP)

$

524,279

$

511,758

$

482,258

Core return on average assets

Core net income (numerator) (non-GAAP)

12,990

13,790

9,180

Divided: Total average assets (denominator) (GAAP)

6,231,998

6,182,989

5,426,863

Core return on average assets (non-GAAP)

0.85

%

0.89

%

0.68

%

Core return on average tangible common equity

Core net income (numerator) (non-GAAP)

12,990

13,790

9,180

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

524,279

511,758

482,258

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

10.05

%

10.72

%

7.66

%

Core efficiency ratio

Core non-interest expense (numerator)

31,703

32,670

30,838

Core operating revenue (denominator)

45,826

55,695

51,880

Core efficiency ratio

69.18

%

58.66

%

59.44

%

(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