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Amalgamated Financial Corp. Reports Fourth Quarter 2021 Financial Results

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NEW YORK, Jan. 27, 2022 (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 fourth quarter ended December 31, 20211.

Fourth Quarter 2021 Highlights

  • Net income of $15.9 million, or $0.50 per diluted share, compared to $14.4 million, or $0.46 per diluted share, for the third quarter of 2021 and $13.8 million, or $0.44 per diluted share for the fourth quarter of 2020.

  • Total assets exceeded $7.0 billion for the first time.

  • Deposits increased $131.8 million to $6.4 billion on a linked quarter basis.

  • Political deposits remained strong and stable at $989.6 million as of December 31, 2021.

  • Cost of deposits was 0.09%, down four basis points from the fourth quarter of 2020.

  • Net loans, not including PACE assessments, increased $189.9 million, or 6.2%, to $3.3 billion, on a linked quarter basis.

  • Total PACE assessments grew $206.4 million, or 49%, on a year over year basis to $627.4 million. Of which, Commercial PACE assessments grew $158.4 million to $175.7 million from $17.3 million on a year over year basis and $6.6 million during the quarter.

  • Net interest margin improved to 2.77% compared to 2.70% for the third quarter of 2021 while declining from 3.06% for the fourth quarter of 2020.

  • Nonaccrual loans improved to $28.2 million or 0.85% of total loans as of December 31, 2021, compared to $45.5 million or 1.46% of total loans on a linked quarter basis.

  • Credit quality improved with classified or criticized assets declining by $79.9 million or 26% to $230.9 million on a linked quarter basis and by $137.4 million or 37% on a year over year basis.

  • Regulatory capital remains above bank “well capitalized” standards, including on a pro-forma basis as of December 31, 2021 after giving effect to the pending Amalgamated Bank of Chicago (“ABOC”) acquisition.

  • Subordinated debt of $85.0 million raised to help fund the ABOC acquisition, now targeted to close early in the second quarter of 2022.

Priscilla Sims Brown, President and Chief Executive Officer, commented, “I am very proud of our results as they clearly highlight the potential that exists within Amalgamated as we execute on our strategic plan. Importantly, we delivered meaningful loan growth, compared to the linked quarter, as our early focus on driving loan growth during the second half of 2021 has started to take hold. We also recruited a talented and experienced leader for our Commercial Real Estate business to manage our team and lending platform, protect our existing book of business, improve credit quality, and gain new share in our markets. This is a key focus and a strategic priority for the year ahead as we strive to deliver our goal of high single digit loan growth in 2022 and sustained profitability. Of note, our deposit franchise remains a competitive advantage for Amalgamated with one of the lowest cost of funds in the industry at 9 basis points. During the fourth quarter, we grew deposits 2% from the linked quarter while our political deposit franchise held steady at approximately $1.0 billion, which exceeded our expectations given the natural contraction that we typically experience following a national election year.”

Brown continued, “We ended the year strongly, with momentum and are well positioned to accelerate growth and profitability into the year ahead. I am very pleased that we were able to attract talent to Amalgamated which demonstrates the unique opportunity we offer in the market. We have a brand and reach in our socially responsible markets which rivals the big banks within an institution where people can lead and make a real impact. This is very appealing as we establish Amalgamated as an employer of choice in the major markets where we do business. Our immediate focus in 2022 is to add experienced bankers and underwriters who can help us to grow our platform and accelerate growth in our focus markets and segments. Our acquisition of Amalgamated Bank of Chicago will provide market expansion into the Midwest while offering significant revenue and cost synergies when the deal closes over the next few months. We have been working closely with the ABOC team to prepare for the integration once the deal closes and are very pleased with the receptivity from the ABOC employees to the potential for the combined bank once we merge.”

Results of Operations, Quarter Ended December 31, 2021

Net income for the fourth quarter of 2021 was $15.9 million, or $0.50 per diluted share, compared to $14.4 million, or $0.46 per diluted share, for the third quarter of 2021 and $13.8 million, or $0.44 per diluted share, for the fourth quarter of 2020. The $1.5 million increase for the fourth quarter of 2021 was primarily due to a $3.7 million increase in net interest income and a $5.7 million increase in non-interest income. These increases were partially offset by a $2.0 million increase in non-interest expense, of which $0.9 million was related to the pending ABOC acquisition, as well as $3.6 million provision expense compared to a $2.3 million provision recovery in the preceding quarter.

Core net income (non-GAAP)2 for the fourth quarter of 2021 was $16.8 million, or $0.53 per diluted share, compared to $14.4 million, or $0.46 per diluted share, for the third quarter of 2021 and $13.8 million, or $0.44 per diluted share, for the fourth quarter of 2020. Excluded from core net income for the fourth quarter of 2021 was $0.1 million of non-interest income losses on the sale of securities and $0.9 million of non-interest expenses related to our planned acquisition of ABOC and $0.1 million of severance costs, and for the third quarter of 2021 was $0.4 million of non-interest income gains on the sale of securities and $0.4 million of non-interest expenses related to our planned acquisition of ABOC. There were no such exclusions from core net income for the fourth quarter of 2020.

Net interest income was $47.1 million for the fourth quarter of 2021, compared to $43.4 million for the third quarter of 2021 and $45.7 million for the fourth quarter of 2020. The $3.7 million increase from the preceding quarter reflected higher interest income on securities and loans, as well as lower interest expense on deposits. The $1.4 million increase from the fourth quarter of 2020 was primarily attributable to higher interest income on securities and lower interest expense on deposits, offset by a decrease in average loans from the prepayment of residential and commercial loans.

Net interest margin was 2.77% for the fourth quarter of 2021, an increase of seven basis points from 2.70% in the third quarter of 2021, and a decrease of 29 basis points from 3.06% in the fourth quarter of 2020. Prepayment penalties earned in loan income contributed two basis points to our net interest margin in the fourth quarter of 2021, compared to one basis point in the third quarter of 2021 and 13 basis points in the fourth quarter of 2020.

Provision for loan losses totaled an expense of $3.6 million for the fourth quarter of 2021 compared to a recovery of $2.3 million in the third quarter of 2021 and an expense of $4.6 million for the fourth quarter of 2020. The expense in the fourth quarter of 2021 was primarily driven by an increase in loan balances, as well as a $1.9 million net charge-off on a multifamily loan, partially offset by improved credit quality and qualitative factors.

Non-interest income was $12.4 million for the fourth quarter of 2021, compared to $6.7 million in the third quarter of 2021 and $10.0 million for the fourth quarter in 2020. The sequential increase of $5.7 million in the fourth quarter of 2021, compared to the preceding quarter, was primarily due to $5.3 million in equity method investment income related to a new investment in a solar initiative. The increase of $2.4 million in the fourth quarter of 2021 compared to the same quarter last year was primarily due to the solar investment income, offset by decreases in gains on sale of loans compared to the corresponding quarter in 2020.

Non-interest expense for the fourth quarter of 2021 was $35.0 million, an increase of $2.0 million from the third quarter of 2021 and an increase of $2.3 million from the fourth quarter of 2020. The increase of $2.0 million from the preceding quarter includes $0.9 million of ABOC acquisition related costs, as well as a $0.7 million increase in data processing expenses related to the modernization of the Trust department. The increase of $2.3 million from the fourth quarter of 2020 is due to the ABOC related costs, as well as an increase of data processing expenses related to the modernization of the Trust department, increased transaction processing costs post COVID-19, and other technology upgrades.

Our provision for income tax expense was $4.9 million for the fourth quarter of 2021, compared to $4.9 million for the third quarter of 2021 and $4.6 million for the fourth quarter of 2020. Our effective tax rate for the fourth quarter of 2021 was 23.6%, compared to 25.4% for the third quarter of 2021 and 25.2% for the fourth quarter of 2020.

Results of Operations, Full Year Ended December 31, 2021

Net income for the year ended December 31, 2021 was $52.9 million, or $1.68 per average diluted share, compared to $46.2 million, or $1.48 per average diluted share, for same period in 2020. The $6.7 million increase was primarily due to a $0.3 million recovery of provision for loan loss compared to a $24.8 million provision for loan loss for the same period in 2020, as well as a $1.6 million decrease in non-interest expense. This recovery of provision was partially offset by a $12.2 million decrease in non-interest income and a $5.7 million decrease in net interest income.

Core net income (non-GAAP)2 for the year ended December 31, 2021 was $54.3 million, or $1.72 per diluted share, compared to $50.3 million or $1.61 per diluted share, for the same period last year. Core net income for the year ended December 31, 2021 excludes ABOC acquisition related costs, severance costs, gains on the sale of securities, and the tax effect of such adjustments. Core net income for the year ended 2020 excludes branch closure expenses, branch sale gains, severance costs, gains on the sale of securities, and the tax effect of such adjustments.

Net interest income was $174.3 million for the year ended December 31, 2021, compared to $180.0 million for the same period in 2020. This decrease of $5.7 million was primarily attributable to a decrease in average loans and lower yields earned on securities and loans. These impacts are partially offset by an increase in average securities and a decrease in average rates paid on deposits.

Provision for loan losses totaled a recovery of $0.3 million for the year ended December 31, 2021, compared to an expense of $24.8 million for the same period in 2020. The recovery for the year ended December 31, 2021 was primarily driven by lower loan balances and improvements in credit quality, offset by charge-offs primarily related to our focus on reducing nonperforming assets.

Non-interest income was $28.4 million for the year ended December 31, 2021, compared to $40.6 million for the same period in 2020, a decrease of $12.2 million. This decrease is primarily due to the tax credits on equity investment projects being in a loss position compared to a gain position in the prior year, as well as a $1.4 million gain on the sale of a branch reported in other non-interest income in the prior year, and a $1.9 million decrease in Trust department fees primarily attributed to the run-off of the ULTRA real estate fund, which ceased earning revenues in 2020.

Non-interest expense for the year ended December 31, 2021 was $132.3 million, a decrease of $1.6 million from $133.9 million for the year ended December 31, 2020. The decrease was primarily due to a $9.0 million decrease in occupancy and depreciation expense due to the branch closures in the prior year and lower rent expense in the current year, offset by a $1.8 million increase in professional fees mainly related to our holding company formation and chief executive officer search, a $4.7 million increase in data processing mainly related to the modernization of our Trust Department and increased transaction processing costs post COVID-19, and a $1.2 million increase in other expenses mainly related to insurance costs, reserves for unused loan commitments, and foreclosure recoveries that were recognized in the prior year.

We had income tax expense of $17.8 million for the year ended December 31, 2021, compared to $15.8 million for the same period in 2020. Our effective tax rate was 25.2% for the year ended December 31, 2021, compared to 25.4% for the same period in 2020.

Financial Condition

Total assets were $7.1 billion at December 31, 2021, compared to $6.0 billion at December 31, 2020. The increase of $1.1 billion was driven primarily by a $291.7 million increase in cash and cash equivalents and a $922.7 million increase in investment securities, of which $206.4 million was from PACE assessments, which was partially offset by a $169.9 million decrease in loans receivable, net.

Total loans, net at December 31, 2021 were $3.3 billion, a decrease of $169.9 million, or 4.9%, compared to December 31, 2020. The decrease in loans was primarily driven by increased refinancing activity by existing customers as well as payoffs throughout the year.

Deposits at December 31, 2021 were $6.4 billion, an increase of $1.1 billion, or 19.1%, 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 $989.6 million as of December 31, 2021, an increase of $386.8 million compared to $602.8 million as of December 31, 2020.

Nonperforming assets totaled $54.6 million, or 0.77% of period-end total assets at December 31, 2021, a decrease of $27.6 million, compared with $82.2 million, or 1.38% of period-end total assets at December 31, 2020. The decrease in nonperforming assets at December 31, 2021 compared to December 31, 2020 was primarily driven by the payoff of $11.2 million of non-accruing construction loans, $3.5 million of multifamily loans, and $2.6 million of C&I loans, as well as a sale of $4.5 million nonperforming residential loans, and a partial charge-off and transfer of a $3.2 million multifamily loan to held-for-sale.

The allowance for loan losses decreased $5.7 million to $35.9 million at December 31, 2021 from $41.6 million at December 31, 2020, primarily due to improvements in credit quality. At December 31, 2021, we had $53.2 million of impaired loans for which a specific allowance of $5.1 million was made, compared to $80.5 million of impaired loans at December 31, 2020 for which a specific allowance of $6.2 million was made. The ratio of allowance to total loans was 1.08% at December 31, 2021 and 1.19% at December 31, 2020.

Capital

As of December 31, 2021, our Common Equity Tier 1 Capital Ratio was 12.98%, Total Risk-Based Capital Ratio was 15.95%, and Tier-1 Leverage Capital Ratio was 7.62%, compared to 13.11%, 14.25% and 7.97%, respectively, as of December 31, 2020. The increase in our Total Risk-Based Capital Ratio was primarily due to the issuance of $85.0 million of subordinated debt, due to mature in 2031, the net proceeds from which will be used for general business purposes, including the funding of the ABOC acquisition. Stockholders’ equity at December 31, 2021 was $563.9 million, compared to $535.8 million at December 31, 2020. The increase in stockholders’ equity was driven by $52.9 million of net income, partially offset by a $11.8 million decrease in accumulated other comprehensive income due to the mark to market on our securities portfolio and $3.0 million decrease in additional paid-in capital.

Our tangible book value per share was $17.56 as of December 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 fourth quarter and full year 2021 results today, January 27, 2022 at 11:00am (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. Fourth Quarter 2021 Earnings Call. A replay of the conference call will be available within two hours of the conclusion of the call and can be accessed both online and by dialing 1-844-512-2921 (international callers please dial 1-412-317-6671). The pin to access the telephone replay is 13726056. The replay will be available until February 3, 2022.

A live audio webcast of the conference call will be available on the website at https://ir.amalgamatedbank.com/.

The presentation materials for the call can be accessed on the investor relations section of our website at https://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 five branches across New York City, Washington D.C., and San Francisco, and a commercial office in 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 December 31, 2021, our total assets were $7.1 billion, total net loans were $3.3 billion, and total deposits were $6.4 billion. Additionally, as of December 31, 2021, our trust business held $40.2 billion in assets under custody and $17.3 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,” “Average 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, 2021 versus certain periods in 2021 and 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 acquisitions, 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, acquisition 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” 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 release include statements about our planned acquisition of ABOC. 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) 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; (vi) 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; (vii) fluctuations or unanticipated changes in interest rates on loans or deposits or that affect the yield curve; (viii) the results of regulatory examinations; (ix) potential deterioration in real estate values; (x) changes in legislation, regulation, policies, or administrative practices, whether by judicial, governmental, or legislative action; (xi) the risk that the preliminary financial information reported herein and our current preliminary analysis will be different when our review is finalized; (xii) increased competition for experienced executives in the banking industry; and (xiii) risks related to our proposed acquisition of ABOC, including, among others, that the acquisition does not close when expected or at all because conditions to closing are not satisfied on a timely basis or at all, or that financial projections from the acquisition are not realized. 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

Year Ended

December 31,

September 30,

December 31,

December 31,

($ in thousands)

2021

2021

2020

2021

2020

INTEREST AND DIVIDEND INCOME

Loans

$

32,138

$

29,915

$

35,544

$

123,318

$

141,983

Securities

16,511

14,612

11,816

56,387

47,588

Federal Home Loan Bank of New York stock

38

43

36

170

227

Interest-bearing deposits in banks

200

230

66

651

697

Total interest and dividend income

48,887

44,800

47,462

180,526

190,495

INTEREST EXPENSE

Deposits

1,407

1,413

1,807

5,823

10,452

Borrowed funds

399

399

27

Total interest expense

1,806

1,413

1,807

6,222

10,479

NET INTEREST INCOME

47,081

43,387

45,655

174,304

180,016

Provision for (recovery of) loan losses

3,568

(2,276

)

4,589

(287

)

24,791

Net interest income after provision for loan losses

43,513

45,663

41,066

174,591

155,225

NON-INTEREST INCOME

Trust Department fees

2,881

3,353

3,533

13,352

15,222

Service charges on deposit accounts

2,414

2,466

2,811

9,355

9,201

Bank-owned life insurance

530

539

363

2,388

3,085

Gain (loss) on sale of securities

(106

)

413

649

1,605

Gain (loss) on sale of loans, net

181

280

1,320

1,887

2,520

Gain (loss) on other real estate owned, net

(407

)

(482

)

Equity method investments

5,870

(483

)

1,825

150

7,411

Other

591

134

188

1,015

2,042

Total non-interest income

12,361

6,702

10,040

28,389

40,604

NON-INTEREST EXPENSE

Compensation and employee benefits

17,359

17,482

17,082

69,844

69,421

Occupancy and depreciation

3,730

3,440

3,385

14,023

23,040

Professional fees

3,742

2,348

4,033

12,961

11,205

Data processing

5,194

4,521

3,174

16,042

11,330

Office maintenance and depreciation

695

887

776

3,057

3,314

Amortization of intangible assets

302

301

342

1,207

1,370

Advertising and promotion

982

1,023

1,003

3,230

3,514

Other

3,028

3,032

2,875

11,891

10,692

Total non-interest expense

35,032

33,034

32,670

132,255

133,886

Income before income taxes

20,842

19,331

18,436

70,725

61,943

Income tax expense (benefit)

4,918

4,915

4,646

17,788

15,755

Net income

15,924

14,416

13,790

52,937

46,188

Net income attributable to Amalgamated Financial Corp.

$

15,924

$

14,416

$

13,790

$

52,937

$

46,188

Earnings per common share - basic

$

0.51

$

0.46

$

0.44

$

1.70

$

1.48

Earnings per common share - diluted

$

0.50

$

0.46

$

0.44

$

1.68

$

1.48


Consolidated Statements of Financial Condition

($ in thousands)

December 31,
2021

December 31,
2020

Assets

(unaudited)

Cash and due from banks

$

8,622

$

7,736

Interest-bearing deposits in banks

321,863

31,033

Total cash and cash equivalents

330,485

38,769

Securities:

Available for sale, at fair value (amortized cost of $2,103,049 and $1,513,409, respectively)

2,113,410

1,539,862

Held-to-maturity (fair value of $849,704 and $502,425, respectively)

843,569

494,449

Loans held for sale

2,279

11,178

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

3,313,224

3,488,895

Allowance for loan losses

(35,866

)

(41,589

)

Loans receivable, net

3,277,358

3,447,306

Resell agreements

229,018

154,779

Accrued interest and dividends receivable

28,820

23,970

Premises and equipment, net

11,735

12,977

Bank-owned life insurance

107,266

105,888

Right-of-use lease asset

33,115

36,104

Deferred tax asset

26,719

36,079

Goodwill

12,936

12,936

Other intangible assets

4,151

5,359

Equity investments

6,856

11,735

Other assets

51,328

47,240

Total assets

$

7,079,045

$

5,978,631

Liabilities

Deposits

$

6,356,255

$

5,338,711

Subordinated Debt

85,000

Operating leases

48,160

53,173

Other liabilities

25,755

50,926

Total liabilities

$

6,515,170

$

5,442,810

Commitments and contingencies

Stockholders’ equity

Common stock, par value $.01 per share (70,000,000 shares authorized; 31,130,143 and 31,049,525 shares issued and outstanding, respectively)

311

310

Additional paid-in capital

297,975

300,989

Retained earnings

260,047

217,213

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

5,409

17,176

Total Amalgamated Financial Corp. stockholders’ equity

563,742

535,688

Noncontrolling interests

133

133

Total stockholders’ equity

563,875

535,821

Total liabilities and stockholders’ equity

$

7,079,045

$

5,978,631


Select Financial Data

As of and for the

As of and for the

Three Months Ended

Year Ended

December 31,

September 30,

December 31,

December 31,

(Shares in thousands)

2021

2021

2020

2021

2020

Selected Financial Ratios and Other Data:

Earnings

Basic

$

0.51

$

0.46

$

0.44

1.70

1.48

Diluted

0.50

0.46

0.44

1.68

1.48

Core net income (non-GAAP)

Basic

$

0.54

$

0.46

$

0.44

1.75

1.62

Diluted

0.53

0.46

0.44

1.72

1.61

Book value per common share (excluding minority interest)

18.11

17.89

17.25

18.11

17.25

Tangible book value per share (non-GAAP)

17.56

17.33

16.66

17.56

16.66

Common shares outstanding

31,130

31,097

31,050

31,130

31,050

Weighted average common shares outstanding, basic

31,108

31,094

31,050

31,104

31,133

Weighted average common shares outstanding, diluted

31,516

31,462

31,145

31,512

31,229


Select Financial Data

As of and for the

As of and for the

Three Months Ended

Year Ended

December 31,

September 30,

December 31,

December 31,

2021

2021

2020

2021

2020

Selected Performance Metrics:

Return on average assets

0.90

%

0.86

%

0.89

%

0.81

%

0.76

%

Core return on average assets (non-GAAP)

0.95

%

0.86

%

0.89

%

0.83

%

0.83

%

Return on average equity

11.23

%

10.29

%

10.34

%

9.59

%

9.07

%

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

12.20

%

10.62

%

10.72

%

10.16

%

10.27

%

Average equity to average assets

8.02

%

8.38

%

8.58

%

8.40

%

8.50

%

Tangible common equity to tangible assets

7.74

%

7.88

%

8.65

%

7.74

%

8.65

%

Loan yield

4.01

%

3.84

%

4.04

%

3.88

%

4.03

%

Securities yield

2.18

%

2.19

%

2.21

%

2.17

%

2.53

%

Deposit cost

0.09

%

0.09

%

0.13

%

0.10

%

0.19

%

Net interest margin

2.77

%

2.70

%

3.06

%

2.77

%

3.11

%

Efficiency ratio (1)

58.94

%

65.95

%

58.66

%

65.25

%

60.69

%

Core efficiency ratio (non-GAAP) (1)

57.18

%

65.71

%

58.66

%

64.24

%

57.60

%

Asset Quality Ratios:

Nonaccrual loans to total loans

0.85

%

1.46

%

1.75

%

0.85

%

1.75

%

Nonperforming assets to total assets

0.77

%

0.99

%

1.38

%

0.77

%

1.38

%

Allowance for loan losses to nonaccrual loans

127.10

%

78.83

%

68.26

%

127.10

%

68.26

%

Allowance for loan losses to total loans

1.08

%

1.15

%

1.19

%

1.08

%

1.19

%

Annualized net charge-offs (recoveries) to average loans

0.44

%

-0.02

%

1.24

%

0.17

%

0.48

%

Capital Ratios:

Tier 1 leverage capital ratio

7.62

%

7.85

%

7.97

%

7.62

%

7.97

%

Tier 1 risk-based capital ratio

12.98

%

13.98

%

13.11

%

12.98

%

13.11

%

Total risk-based capital ratio

15.95

%

14.99

%

14.25

%

15.95

%

14.25

%

Common equity tier 1 capital ratio

12.98

%

13.98

%

13.11

%

12.98

%

13.11

%

(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, 2021

At September 30, 2021

At December 31, 2020

Amount

% of total
loans

Amount

% of total
loans

Amount

% of total
loans

Commercial portfolio:

Commercial and industrial

$

729,385

22.0

%

$

628,388

20.2

%

$

677,192

19.5

%

Multifamily

821,801

24.8

%

826,143

26.5

%

947,177

27.2

%

Commercial real estate

370,429

11.2

%

346,996

11.1

%

372,736

10.7

%

Construction and land development

31,539

1.0

%

34,863

1.1

%

56,087

1.6

%

Total commercial portfolio

1,953,154

59.0

%

1,836,390

58.9

%

2,053,192

59.0

%

Retail portfolio:

Residential real estate lending

1,063,682

32.2

%

1,032,947

33.1

%

1,238,697

35.5

%

Consumer and other

291,818

8.8

%

249,050

8.0

%

190,676

5.5

%

Total retail

1,355,500

41.0

%

1,281,997

41.1

%

1,429,373

41.0

%

Total loans

3,308,654

100.0

%

3,118,387

100.0

%

3,482,565

100.0

%

Net deferred loan origination costs (fees)

4,570

4,942

6,330

Allowance for loan losses

(35,866

)

(35,863

)

(41,589

)

Total loans, net

$

3,277,358

$

3,087,466

$

3,447,306

Held-to-maturity securities portfolio:

PACE assessments

627,394

74.4

%

627,195

86.5

%

421,036

85.2

%

Other securities

216,175

25.6

%

97,881

13.5

%

73,413

14.8

%

Total held-to-maturity securities

$

843,569

100.0

%

$

725,076

100.0

%

$

494,449

100.0

%


Net Interest Income Analysis


Three Months Ended

December 31, 2021

September 30, 2021

December 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

$

561,027

$

200

0.14

%

$

632,526

$

230

0.14

%

$

299,881

$

66

0.09

%

Securities and FHLB stock

3,014,586

16,549

2.18

%

2,659,803

14,655

2.19

%

2,133,957

11,852

2.21

%

Total loans, net (1)(2)

3,177,729

32,138

4.01

%

3,087,744

29,915

3.84

%

3,503,929

35,544

4.04

%

Total interest earning assets

6,753,342

48,887

2.87

%

6,380,073

44,800

2.79

%

5,937,767

47,462

3.18

%

Non-interest earning assets:

Cash and due from banks

8,072

8,464

7,594

Other assets

249,476

243,969

237,628

Total assets

$

7,010,890

$

6,632,506

$

6,182,989

Interest bearing liabilities:

Savings, NOW and money market deposits

$

2,765,380

$

1,220

0.18

%

$

2,641,719

$

1,173

0.18

%

$

2,356,137

$

1,384

0.23

%

Time deposits

215,562

187

0.34

%

241,009

240

0.40

%

268,896

423

0.63

%

Total deposits

2,980,942

1,407

0.19

%

2,882,728

1,413

0.19

%

2,625,033

1,807

0.27

%

Other Borrowings

49,891

399

3.17

%

%

%

Total interest bearing liabilities

3,030,833

1,806

0.24

%

2,882,728

1,413

0.19

%

2,625,033

1,807

0.27

%

Non-interest bearing liabilities:

Demand and transaction deposits

3,290,932

3,077,231

2,947,075

Other liabilities

126,746

116,790

80,529

Total liabilities

6,448,511

6,076,749

5,652,637

Stockholders’ equity

562,379

555,757

530,352

Total liabilities and stockholders’ equity

$

7,010,890

$

6,632,506

$

6,182,989

Net interest income / interest rate spread

$

47,081

2.63

%

$

43,387

2.60

%

$

45,655

2.91

%

Net interest earning assets / net interest margin

$

3,722,509

2.77

%

$

3,497,345

2.70

%

$

3,312,734

3.06

%

Total Cost of Deposits

0.09

%

0.09

%

0.13

%



(1) Amounts are net of deferred origination costs (fees) and the allowance for loan losses
(2) Includes prepayment penalty interest income in 4Q2021, 3Q2021, and 4Q2020 of $353, $169, and $1,987, respectively (in thousands)


Net Interest Income Analysis

Year Ended

December 31, 2021

December 31, 2020

(In thousands)

Average
Balance

Income /
Expense

Yield /
Rate

Average
Balance

Income /
Expense

Yield /
Rate

Interest earning assets:

Interest-bearing deposits in banks

$

521,681

$

651

0.12

%

$

371,112

$

697

0.19

%

Securities and FHLB stock

2,600,494

56,557

2.17

%

1,890,824

47,815

2.53

%

Total loans, net (1)(2)

3,180,093

123,318

3.88

%

3,527,261

141,983

4.03

%

Total interest earning assets

6,302,268

180,526

2.86

%

5,789,197

190,495

3.29

%

Non-interest earning assets:

Cash and due from banks

7,853

25,220

Other assets

259,718

229,825

Total assets

$

6,569,839

$

6,044,242

Interest bearing liabilities:

Savings, NOW and money market deposits

$

2,622,584

$

4,788

0.18

%

$

2,297,841

$

7,303

0.32

%

Time deposits

248,507

1,035

0.42

%

335,433

3,149

0.94

%

Total deposits

2,871,091

5,823

0.20

%

2,633,274

10,452

0.40

%

Federal Home Loan Bank advances

123

0.00

%

1,585

27

1.70

%

Other Borrowings

12,575

399

3.17

%

%

Total interest bearing liabilities

2,883,789

6,222

0.22

%

2,634,859

10,479

0.40

%

Non-interest bearing liabilities:

Demand and transaction deposits

3,017,621

2,798,106

Other liabilities

116,256

102,282

Total liabilities

6,017,666

5,535,247

Stockholders’ equity

552,173

508,995

Total liabilities and stockholders’ equity

$

6,569,839

$

6,044,242

Net interest income / interest rate spread

$

174,304

2.64

%

$

180,016

2.89

%

Net interest earning assets / net interest margin

$

3,418,479

2.77

%

$

3,154,338

3.11

%

Total Cost of Deposits

0.10

%

0.19

%

(1) Amounts are net of deferred origination costs (fees) and the allowance for loan losses
(2) Includes prepayment penalty interest income in December YTD 2021 and December YTD 2020 of $1,669 and $4,097, respectively (in thousands)


Deposit Portfolio Composition

(In thousands)

December 31, 2021

September 30, 2021

December 31, 2020

Non-interest bearing demand deposit accounts

$

3,335,005

$

3,189,155

$

2,603,274

NOW accounts

210,844

206,610

205,653

Money market deposit accounts

2,227,953

2,241,914

1,914,391

Savings accounts

375,301

364,568

343,368

Time deposits

207,152

222,259

272,025

Total deposits

$

6,356,255

$

6,224,506

$

5,338,711


Three Months Ended

December 31, 2021

September 30, 2021

December 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

$

3,290,932

0.00

%

$

3,077,231

0.00

%

$

2,947,075

0.00

%

NOW accounts

204,556

0.09

%

205,417

0.09

%

194,555

0.08

%

Money market deposit accounts

2,190,423

0.20

%

2,066,830

0.20

%

1,823,391

0.27

%

Savings accounts

370,401

0.10

%

369,472

0.10

%

338,192

0.12

%

Time deposits

215,562

0.34

%

241,009

0.40

%

268,896

0.62

%

Total deposits

$

6,271,874

0.09

%

$

5,959,959

0.09

%

$

5,572,109

0.13

%


Asset Quality

(In thousands)

December 31, 2021

September 30, 2021

December 31, 2020

Loans 90 days past due and accruing

$

$

$

1,404

Nonaccrual loans excluding held for sale loans and restructured loans

14,722

24,960

40,039

Nonaccrual loans held for sale

1,000

Troubled debt restructured loans - nonaccrual

13,497

20,534

20,885

Troubled debt restructured loans - accruing

24,997

21,958

19,553

Other real estate owned

307

307

306

Impaired securities

63

64

47

Total nonperforming assets

$

54,586

$

67,823

$

82,234

Nonaccrual loans:

Commercial and industrial

$

8,313

$

13,709

$

12,444

Multifamily

2,907

6,079

9,575

Commercial real estate

4,054

4,023

3,433

Construction and land development

11,184

Total commercial portfolio

15,274

23,811

36,636

Residential real estate lending

12,525

20,797

23,656

Consumer and other

420

886

632

Total retail portfolio

12,945

21,683

24,288

Total nonaccrual loans

$

28,219

$

45,494

$

60,924

Nonaccrual loans to total loans

0.85

%

1.46

%

1.75

%

Nonperforming assets to total assets

0.77

%

0.99

%

1.38

%

Allowance for loan losses to nonaccrual loans

127.10

%

78.83

%

68.26

%

Allowance for loan losses to total loans

1.08

%

1.15

%

1.19

%

Annualized net charge-offs (recoveries) to average loans

0.44

%

-0.02

%

1.24

%


Credit Quality

December 31, 2021

($ in thousands)

Pass

Special Mention

Substandard

Doubtful

Total

Commercial and industrial

$

693,312

$

10,165

$

25,908

$

$

729,385

Multifamily

721,869

48,804

51,128

821,801

Commercial real estate

296,261

13,947

60,221

370,429

Construction and land development

24,063

7,476

31,539

Residential real estate lending

1,050,865

292

12,525

1,063,682

Consumer and other

291,398

420

291,818

Total loans

$

3,077,768

$

73,208

$

157,678

$

$

3,308,654


September 30, 2021

($ in thousands)

Pass

Special Mention

Substandard

Doubtful

Total

Commercial and industrial

$

579,429

$

22,655

$

25,850

$

454

$

628,388

Multifamily

696,898

83,851

42,221

3,173

826,143

Commercial real estate

243,903

26,815

76,278

346,996

Construction and land development

27,387

7,476

34,863

Residential real estate lending

1,011,856

294

20,797

1,032,947

Consumer and other

248,164

886

249,050

Total loans

$

2,807,637

$

133,615

$

173,508

$

3,627

$

3,118,387


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


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

Year Ended

(in thousands)

December 31,
2021

September 30,
2021

December 31,
2020

December 31,
2021

December 31,
2020

Core operating revenue

Net Interest income (GAAP)

$

47,081

$

43,387

$

45,655

$

174,304

$

180,016

Non-interest income

12,361

6,702

10,040

28,389

40,604

Less: Branch sale (gain) loss (1)

(1,394

)

Less: Securities (gain) loss

106

(413

)

(649

)

(1,605

)

Core operating revenue (non-GAAP)

$

59,548

$

49,676

$

55,695

$

202,044

$

217,621

Core non-interest expense

Non-interest expense (GAAP)

$

35,032

$

33,034

$

32,670

$

132,255

$

133,886

Less: Branch closure expense (2)

(8,330

)

Less: Severance (3)

(54

)

(1,144

)

(201

)

Less: ABOC

(930

)

(392

)

(1,322

)

Core non-interest expense (non-GAAP)

$

34,048

$

32,642

$

32,670

$

129,789

$

125,355

Core net income

Net Income (GAAP)

$

15,924

$

14,416

$

13,790

$

52,937

$

46,188

Less: Branch sale (gain) loss (1)

(1,394

)

Less: Securities (gain) loss

106

(413

)

(649

)

(1,605

)

Add: Branch closure expense (2)

8,330

Add: Severance (3)

54

1,144

201

Add: ABOC

930

392

1,322

Less: Tax on notable items

(257

)

5

(457

)

(1,407

)

Core net income (non-GAAP)

16,757

14,400

13,790

54,297

50,313

Tangible common equity

Stockholders’ Equity (GAAP)

$

563,875

$

556,390

$

535,821

$

563,875

$

535,821

Less: Minority Interest

(133

)

(133

)

(133

)

(133

)

(133

)

Less: Goodwill

(12,936

)

(12,936

)

(12,936

)

(12,936

)

(12,936

)

Less: Core deposit intangible

(4,151

)

(4,453

)

(5,358

)

(4,151

)

(5,358

)

Tangible common equity (non-GAAP)

$

546,655

$

538,868

$

517,394

$

546,655

$

517,394

Average tangible common equity

Average Stockholders’ Equity (GAAP)

$

562,379

$

555,757

$

530,352

$

552,173

$

508,995

Less: Minority Interest

(133

)

(133

)

(133

)

(133

)

(134

)

Less: Goodwill

(12,936

)

(12,936

)

(12,936

)

(12,936

)

(12,936

)

Less: Core deposit intangible

(4,299

)

(4,602

)

(5,525

)

(4,748

)

(6,037

)

Average tangible common equity (non-GAAP)

$

545,011

$

538,086

$

511,758

$

534,356

$

489,888

Core return on average assets

Core net income (non-GAAP)

$

16,757

$

14,400

$

13,790

$

54,297

$

50,313

Divided: Total average assets

7,010,890

6,632,506

6,182,989

6,569,840

6,044,242

Core return on average assets (non-GAAP)

0.95

%

0.86

%

0.89

%

0.83

%

0.83

%

Core return on average tangible common equity

Core net income (non-GAAP)

$

16,757

$

14,400

$

13,790

$

54,297

$

50,313

Divided: Average tangible common equity

545,011

538,086

511,758

534,356

489,888

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

12.20

%

10.62

%

10.72

%

10.16

%

10.27

%

Core efficiency ratio

Core non-interest expense (non-GAAP)

$

34,048

$

32,642

$

32,670

$

129,789

$

125,355

Core operating revenue (non-GAAP)

59,548

49,676

55,695

202,044

217,621

Core efficiency ratio (non-GAAP)

57.18

%

65.71

%

58.66

%

64.24

%

57.60

%

(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

[1] Effective March 1, 2021, the Company acquired all of the outstanding stock of the Bank in a 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.
[2] 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.