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Amalgamated Financial Corp. Reports Third Quarter 2021 Financial Results

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NEW YORK, Oct. 28, 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 third quarter ended September 30, 20211.

Third Quarter 2021 Highlights

  • Net income of $14.4 million, or $0.46 per diluted share, compared to $10.4 million, or $0.33 per diluted share, for the second quarter of 2021 and $12.5 million, or $0.40 per diluted share for the third quarter of 2020.

  • Deposits increased $314.5 million to $6.2 billion on a linked quarter basis.

  • Political deposits remained strong and stable at $1.0 billion as of September 30, 2021, with $223.5 million growth on a linked quarter basis.

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

  • PACE assessments grew $81.4 million to $627.2 million on a linked quarter basis, and grew $259.8 million on a year over year basis. Current quarter growth included $69.0 million of Commercial PACE assessments.

  • Net loans including PACE assessments grew by $31.4 million, or 0.85%, on a linked quarter basis. Excluding the impact of our residential 1-4 first mortgage portfolio runoff, the growth was $83.7 million, or 3.20%.

  • Net interest margin was 2.70%, compared to 2.75% for the second quarter of 2021 and 2.88% for the third quarter of 2020.

  • Regulatory capital remains above bank “well capitalized” standards.

  • Nonperforming assets improved to $67.8 million or 0.99% of total assets as of September 30, 2021, compared to $71.0 million or 1.08% of total assets on a linked quarter basis.

  • Announced plan to acquire Amalgamated Bank of Chicago (ABOC) in an all-cash transaction that will bring Amalgamated’s asset size to greater than $7.6 billion, building on the largest socially responsible, mission-oriented bank in the United States.

Priscilla Sims Brown, President and Chief Executive Officer, commented, “I am pleased with our third quarter results which position us to achieve our revised full year guidance as we delivered strong results across the dimensions of revenue, profitability, credit quality, and foundational growth drivers such as PACE assessments and deposits. I am also encouraged that we can generate sustained and profitable growth as we begin the implementation of our strategic initiatives. During the third quarter, we grew PACE assessments 15% to $627 million as compared to the second quarter of 2021, resulting in net growth in our combined lending and PACE portfolio. Importantly, the headwinds that we have experienced in our loan portfolio continued to diminish through the third quarter positioning the Bank for a return to organic loan growth in the year ahead. Our deposit franchise also continued its growth trajectory, gaining 5.3% from the previous quarter while our cost of deposits declined to 9 basis points, one of the lowest in the industry. Contributing to our low cost of funds was the strong growth in political deposits which increased by almost $250 million to $1 billion on a linked quarter basis.”

Brown added, “We have very recently launched a series of growth initiatives designed to fuel our loan and trust growth while staying true to our mission and solidifying our position as America’s Socially Responsible Bank. Our initiatives are focused on four pillars including the building of our business through our mission, improving our focus on and deepening insights of our core customers, developing and expanding our product expertise to grow our lending platform and trust businesses, and improving our data and technology. Also central to our growth initiatives is a disciplined M&A strategy where our recently announced acquisition of ABOC will allow us to expand into the third largest MSA in the U.S. as we offer larger-scale loans to a client base that has historically proven a need for them, cross-market our services to ABOC’s customer base, and be able to reach new, untapped business in the greater Chicago and Midwestern markets.”

___________________
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.

Results of Operations, Quarter Ended September 30, 2021

Net income for the third quarter of 2021 was $14.4 million, or $0.46 per diluted share, compared to $10.4 million, or $0.33 per diluted share, for the second quarter of 2021 and $12.5 million, or $0.40 per diluted share, for the third quarter of 2020. The $4.0 million increase for the third quarter of 2021 was primarily due to a $2.3 million release of provision for loan losses compared to a $1.7 million provision expense in the preceding quarter, as well as $1.4 million increase in net interest income and a $1.4 million increase in non-interest income. These increases were partially offset by a $1.6 million increase in non-interest expense and a $1.1 million increase in income tax expense.

Core net income (non-GAAP)2 for the third quarter of 2021 was $14.4 million, or $0.46 per diluted share, compared to $10.2 million, or $0.32 per diluted share, for the second quarter of 2021 and $16.8 million, or $0.54 per diluted share, for the third quarter of 2020. Excluded from core net income 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 ABOC, and for the second quarter of 2021 was $0.3 million of non-interest income gains on the sale of securities. Excluded from core net income for the third quarter of 2020 was $0.6 million of non-interest income gains on the sale of securities, $6.3 million in branch closure expenses, and other adjustments, including the tax effect of such adjustments.

Net interest income was $43.4 million for the third quarter of 2021, compared to $42.0 million for the second quarter of 2021 and $45.2 million for the third quarter of 2020. The $1.4 million increase from the preceding quarter reflected higher income on securities and lower interest expense on deposits, offset by a decrease in interest income as average loans decreased $75.2 million from the prepayment and paydowns of residential and commercial real estate loans. The $1.8 million decrease from the third quarter of 2020 was primarily attributable to a decrease in average loans of $481.6 million from the prepayment of residential and commercial loans and a 13 basis point decrease in yield due to lower yields on originations, partially offset by higher income on securities and lower interest expense on deposits.

Net interest margin was 2.70% for the third quarter of 2021, a decrease of five basis points from 2.75% in the second quarter of 2021, and a decrease of 18 basis points from 2.88% in the third quarter of 2020. The accretion of the loan mark from the loans acquired in the New Resource Bank acquisition contributed one basis point to our net interest margin in the third quarter of 2021, compared to two basis points in the second quarter of 2021 and third quarter of 2020. Prepayment penalties earned in loan income contributed one basis point to our net interest margin in the third quarter of 2021, compared to three basis points in the second quarter of 2021 and seven basis points in the third quarter of 2020.

Provision for loan losses totaled a recovery of $2.3 million for the third quarter of 2021 compared to an expense of $1.7 million in the second quarter of 2021 and an expense of $3.4 million for the third quarter of 2020, respectively. The recovery in the third quarter of 2021 was primarily driven by a decrease in allowance primarily driven by improvement in loss and qualitative factors, improved credit quality, and lower loan balances.

Non-interest income was $6.7 million for the third quarter of 2021, compared to $5.3 million in the second quarter of 2021 and $12.8 million for the third quarter in 2020. This increase of $1.4 million in the third quarter of 2021, compared to the preceding quarter, was primarily due to the expected decrease in equity method investment losses related to investments in solar initiatives. The decrease of $6.1 million in the third quarter of 2021 compared to the corresponding quarter in 2020 was primarily due to a loss of $0.5 million related to equity investments in solar initiatives in the third quarter of 2021 compared to a $4.3 million gain in the third quarter in 2020. The Company primarily recognized the benefit of the tax credits in 2020, the initial year of the equity investment. We expect minimal losses in equity method investments during the remainder of 2021. These impacts do not include any benefits of new solar equity investments that we may make in the future.

Non-interest expense for the third quarter of 2021 was $33.0 million, an increase of $1.6 million from the second quarter of 2021 and a decrease of $4.9 million from the third quarter of 2020. The increase of $1.6 million from the preceding quarter includes $0.4 million of ABOC related costs. The remaining difference was primarily due to a $1.2 million increase to data processing related to the full impact of our Trust Department outsourced operation, a $0.5 million increase to compensation and employee benefits, and a $0.4 million increase in reserves for unused loan commitments, partially offset by a $1.2 million decrease in professional services expense, net of ABOC related deal costs. The decrease of $4.9 million from the third quarter of 2020 is due to a decrease in occupancy and depreciation expenses related to branch closures in 2020.

Our provision for income tax expense was $4.9 million for the third quarter of 2021, compared to $3.8 million for the second quarter of 2021 and $4.3 million for the third quarter of 2020. Our effective tax rate for the third quarter of 2021 was 25.4%, compared to 26.9% for the second quarter of 2021 and 25.4% for the third quarter of 2020.

___________________
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.

Results of Operations, Nine Months Ended September 30, 2021

Net income for the nine months ended September 30, 2021 was $37.0 million, or $1.17 per average diluted share, compared to $32.4 million, or $1.04 per average diluted share, for same period in 2020. The $4.6 million increase was primarily due to a $3.9 million recovery of provision for loan loss compared to a $20.2 million provision for loan loss for the same period in 2020, as well as a $4.0 million decrease in non-interest expense. This recovery of provision was partially offset by a $14.6 million decrease in non-interest income and a $7.2 million decrease in net interest income.

Core net income (non-GAAP) for the nine months ended September 30, 2021 was $37.6 million, or $1.19 per diluted share, compared to $36.5 million or $1.17 per diluted share, for the same period last year. Core net income for the first nine months of 2021 excludes severance costs, non-interest income gains on the sale of securities, and the tax effect of such adjustments.

Net interest income was $127.2 million for the nine months ended September 30, 2021, compared to $134.4 million for the same period in 2020. This decrease of $7.2 million was primarily attributable to a decrease in average loans of $354.2 million and lower yields earned on interest bearing assets. These impacts are partially offset by an increase in average securities of $651.8 million, and a decrease in average rates paid on deposits.

Provision for loan losses totaled a recovery of $3.9 million for the nine months ended September 30, 2021, compared to an expense of $20.2 million for the same period in 2020. The recovery for the nine months ended September 30, 2021 was primarily driven by a release of allowance for loan loss due to improvement in loss rate and other qualitative factors, improved credit quality, and lower loan balances.

Non-interest income was $16.0 million for the nine months ended September 30, 2021, compared to $30.6 million for the same period in 2020, a decrease of $14.6 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 $1.2 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 nine months ended September 30, 2021 was $97.2 million, a decrease of $4.0 million from $101.2 million for the nine months ended September 30, 2020. The decrease was primarily due to a $9.4 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 $2.0 million increase in professional fees mainly related to our holding company formation and chief executive officer search, a $2.7 million increase in data processing mainly related to the modernization of our Trust Department and increased transaction processing costs post COVID-19, and a $0.9 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 $12.9 million for the nine months ended September 30, 2021, compared to $11.1 million for the same period in 2020. Our effective tax rate was 25.8% for the nine months ended September 30, 2021, compared to 25.5% for the same period in 2020.

Financial Condition

Total assets were $6.9 billion at September 30, 2021, compared to $6.0 billion at December 31, 2020. The increase of $0.9 billion was driven primarily by a $651.5 million increase in cash and cash equivalents and a $646.3 million increase in investment securities, of which $81.4 million was from PACE assessments, which was partially offset by a $359.8 million decrease in loans receivable, net.

Total loans, net at September 30, 2021 were $3.1 billion, a decrease of $359.8 million, or 14.0% annualized, compared to December 31, 2020. The decline in loans was primarily driven by a $205.8 million decrease in residential loans due to increased refinancing activity by existing customers, a $146.8 million decrease in commercial real estate and multifamily loans due to refinancing activity by existing customers and payoffs, and a $48.8 million decrease in C&I loans due to payoffs. As of September 30, 2021, the Company had $16.7 million in loans remaining on a payment deferral program and still accruing interest, the majority of which represent two performing commercial loans requesting additional deferrals.

Deposits at September 30, 2021 were $6.2 billion, an increase of $885.8 million, or 22.2% 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 $1.0 billion as of September 30, 2021, an increase of $411.9 million compared to $602.8 million as of December 31, 2020. Noninterest-bearing deposits represent 52% of average deposits and 51% of ending deposits for the quarter ended September 30, 2021, contributing to an average cost of deposits of 0.09% in the third quarter of 2021, a one basis point decrease from the preceding quarter.

Nonperforming assets totaled $67.8 million, or 0.99% of period-end total assets at September 30, 2021, a decrease of $14.4 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 September 30, 2021 compared to December 31, 2020 was primarily driven by the payoff of $11.2 million of non-accruing construction loans and $3.5 million of multifamily loans, and the decrease of $1.4 million of loans 90 days past due and accruing, partially offset by an increase of $2.1 million of Troubled Debt Restructurings.

The allowance for loan losses decreased $5.7 million to $35.9 million at September 30, 2021 from $41.6 million at December 31, 2020, primarily due to decreases in loan balances. At September 30, 2021, we had $67.5 million of impaired loans for which a specific allowance of $6.5 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 1.15% at September 30, 2021 and 1.19% at December 31, 2020.

Capital

As of September 30, 2021, our Common Equity Tier 1 Capital Ratio was 13.98%, Total Risk-Based Capital Ratio was 14.99%, and Tier-1 Leverage Capital Ratio was 7.85%, compared to 13.11%, 14.25% and 7.97%, respectively, as of December 31, 2020. Stockholders’ equity at September 30, 2021 was $556.4 million, compared to $535.8 million at December 31, 2020. The increase in stockholders’ equity was driven by $37.0 million of net income, partially offset by a $5.8 million decrease in accumulated other comprehensive income due to the mark to market on our securities portfolio and $3.1 million decrease in additional paid-in capital.

Our tangible book value per share was $17.33 as of September 30, 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 third quarter 2021 results today, October 28th, 2021 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. Third 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 13723559. The telephonic replay will be available until November 4, 2021.

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

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

About Amalgamated 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 September 30, 2021, our total assets were $6.9 billion, total net loans were $3.1 billion, and total deposits were $6.2 billion. Additionally, as of September 30, 2021, our trust business held $39.5 billion in assets under custody and $16.1 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 September 30, 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 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 the losses in our equity method investments and our 2021 earnings guidance. 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 Amalgamated Bank of Chicago, 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

Nine Months Ended

September 30,

June 30,

September 30,

September 30,

($ in thousands)

2021

2021

2020

2021

2020

INTEREST AND DIVIDEND INCOME

Loans

$

29,915

$

30,156

$

35,602

$

91,180

$

106,440

Securities

14,612

13,094

11,473

39,876

35,772

Federal Home Loan Bank of New York stock

43

41

56

132

190

Interest-bearing deposits in banks

230

131

152

451

631

Total interest and dividend income

44,800

43,422

47,283

131,639

143,033

INTEREST EXPENSE

Deposits

1,413

1,431

2,049

4,416

8,645

Borrowed funds

27

Total interest expense

1,413

1,431

2,049

4,416

8,672

NET INTEREST INCOME

43,387

41,991

45,234

127,223

134,361

Provision for (recovery of) loan losses

(2,276

)

1,682

3,394

(3,855

)

20,202

Net interest income after provision for loan losses

45,663

40,309

41,840

131,078

114,159

NON-INTEREST INCOME

Trust Department fees

3,353

3,292

3,622

10,471

11,688

Service charges on deposit accounts

2,466

2,296

2,130

6,941

6,391

Bank-owned life insurance

539

531

1,227

1,858

2,722

Gain (loss) on sale of securities

413

321

619

755

1,605

Gain (loss) on sale of loans, net

280

720

903

1,706

1,200

Gain (loss) on other real estate owned, net

(407

)

(176

)

(407

)

(482

)

Equity method investments

(483

)

(1,555

)

4,297

(5,720

)

5,586

Other

134

129

154

424

1,855

Total non-interest income

6,702

5,327

12,776

16,028

30,565

NON-INTEREST EXPENSE

Compensation and employee benefits

17,482

16,964

17,547

52,485

52,338

Occupancy and depreciation

3,440

3,352

9,908

10,293

19,655

Professional fees

2,348

3,211

2,202

9,219

7,173

Data processing

4,521

3,322

2,916

10,848

8,157

Office maintenance and depreciation

887

820

863

2,362

2,538

Amortization of intangible assets

301

302

342

905

1,027

Advertising and promotion

1,023

628

1,172

2,248

2,511

Other

3,032

2,796

2,927

8,863

7,817

Total non-interest expense

33,034

31,395

37,877

97,223

101,216

Income before income taxes

19,331

14,241

16,739

49,883

43,508

Income tax expense (benefit)

4,915

3,833

4,259

12,870

11,109

Net income

14,416

10,408

12,480

37,013

32,399

Net income attributable to Amalgamated Financial Corp.

$

14,416

$

10,408

$

12,480

$

37,013

$

32,399

Earnings per common share - basic

$

0.46

$

0.33

$

0.40

$

1.19

$

1.04

Earnings per common share - diluted

$

0.46

$

0.33

$

0.40

$

1.17

$

1.04


Consolidated Statements of Financial Condition

($ in thousands)

September 30,
2021

December 31,
2020

Assets

(unaudited)

Cash and due from banks

$

8,488

$

7,736

Interest-bearing deposits in banks

681,758

31,033

Total cash and cash equivalents

690,246

38,769

Securities:

Available for sale, at fair value (amortized cost of $1,936,830 and $1,513,409, respectively)

1,955,502

1,539,862

Held-to-maturity (fair value of $727,161 and $502,425, respectively)

725,076

494,449

Loans held for sale

6,156

11,178

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

3,123,329

3,488,895

Allowance for loan losses

(35,863

)

(41,589

)

Loans receivable, net

3,087,466

3,447,306

Resell agreements

130,434

154,779

Accrued interest and dividends receivable

23,337

23,970

Premises and equipment, net

12,447

12,977

Bank-owned life insurance

106,736

105,888

Right-of-use lease asset

34,819

36,104

Deferred tax asset

24,672

36,079

Goodwill

12,936

12,936

Other intangible assets

4,453

5,359

Equity investments

5,614

11,735

Other assets

39,871

47,240

Total assets

$

6,859,765

$

5,978,631

Liabilities

Deposits

$

6,224,506

$

5,338,711

Operating leases

50,416

53,173

Other liabilities

28,453

50,926

Total liabilities

6,303,375

5,442,810

Commitments and contingencies

Stockholders’ equity

Common stock, par value $.01 per share (70,000,000 shares authorized; 31,096,896 and 31,049,525 shares issued and outstanding, respectively)

311

310

Additional paid-in capital

297,904

300,989

Retained earnings

246,665

217,213

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

11,377

17,176

Total Amalgamated Financial Corp. stockholders' equity

556,257

535,688

Noncontrolling interests

133

133

Total stockholders' equity

556,390

535,821

Total liabilities and stockholders’ equity

$

6,859,765

$

5,978,631


Select Financial Data

As of and for the

As of and for the

Three Months Ended

Nine Months Ended

September 30,

June 30,

September 30,

September 30,

(Shares in thousands)

2021

2021

2020

2021

2020

Selected Financial Ratios and Other Data:

Earnings

Basic

$

0.46

$

0.33

$

0.40

1.19

1.04

Diluted

0.46

0.33

0.40

1.17

1.04

Core net income (non-GAAP)

Basic

$

0.46

$

0.33

$

0.54

1.20

1.17

Diluted

0.46

0.32

0.54

1.19

1.17

Book value per common share (excluding minority interest)

17.89

17.64

16.82

17.89

16.82

Tangible book value per share (non-GAAP)

17.33

17.07

16.22

17.33

16.22

Common shares outstanding

31,097

31,074

31,050

31,097

31,050

Weighted average common shares outstanding, basic

31,094

31,136

31,050

31,216

31,161

Weighted average common shares outstanding, diluted

31,462

31,572

31,075

31,584

31,240


Select Financial Data

As of and for the

As of and for the

Three Months Ended

Nine Months Ended

September 30,

June 30,

September 30,

September 30,

2021

2021

2020

2021

2020

Selected Performance Metrics:

Return on average assets

0.86

%

0.65

%

0.76

%

0.77

%

0.72

%

Core return on average assets (non-GAAP)

0.86

%

0.64

%

1.03

%

0.78

%

0.81

%

Return on average equity

10.29

%

7.62

%

9.62

%

9.02

%

8.62

%

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

10.62

%

7.70

%

13.44

%

9.46

%

10.11

%

Average equity to average assets

8.38

%

8.57

%

7.95

%

8.55

%

8.37

%

Tangible common equity to tangible assets

7.88

%

8.09

%

7.61

%

7.88

%

7.61

%

Loan yield

3.84

%

3.82

%

3.97

%

3.83

%

4.02

%

Securities yield

2.19

%

2.15

%

2.24

%

2.17

%

2.66

%

Deposit cost

0.09

%

0.10

%

0.14

%

0.10

%

0.21

%

Net interest margin

2.70

%

2.75

%

2.88

%

2.77

%

3.13

%

Efficiency ratio (1)

65.95

%

66.35

%

65.29

%

67.87

%

61.37

%

Core efficiency ratio (non-GAAP) (1)

65.71

%

66.80

%

54.84

%

67.19

%

57.24

%

Asset Quality Ratios:

Nonaccrual loans to total loans

1.46

%

1.64

%

1.41

%

1.46

%

1.41

%

Nonperforming assets to total assets

0.99

%

1.08

%

1.22

%

0.99

%

1.22

%

Allowance for loan losses to nonaccrual loans

78.83

%

73.20

%

94.59

%

78.83

%

94.59

%

Allowance for loan losses to total loans

1.15

%

1.20

%

1.34

%

1.15

%

1.34

%

Annualized net charge-offs (recoveries) to average loans

-0.02

%

0.04

%

0.59

%

0.08

%

0.22

%

Capital Ratios:

Tier 1 leverage capital ratio

7.85

%

7.93

%

7.39

%

7.85

%

7.39

%

Tier 1 risk-based capital ratio

13.98

%

13.63

%

12.76

%

13.98

%

12.76

%

Total risk-based capital ratio

14.99

%

14.68

%

14.01

%

14.99

%

14.01

%

Common equity tier 1 capital ratio

13.98

%

13.63

%

12.76

%

13.98

%

12.76

%

(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, 2021

At June 30, 2021

At September 30, 2020

Amount

% of total
loans

Amount

% of total
loans

Amount

% of total
loans

Commercial portfolio:

Commercial and industrial

$

628,388

20.2

%

$

619,037

19.5

%

$

660,914

18.4

%

Multifamily

826,143

26.5

%

848,651

26.8

%

974,962

27.1

%

Commercial real estate

346,996

11.1

%

351,707

11.1

%

388,757

10.8

%

Construction and land development

34,863

1.1

%

42,303

1.3

%

61,687

1.7

%

Total commercial portfolio

1,836,390

58.9

%

1,861,698

58.7

%

2,086,320

58.0

%

Retail portfolio:

Residential real estate lending

1,032,947

33.1

%

1,085,791

34.3

%

1,329,021

37.0

%

Consumer and other

249,050

8.0

%

222,265

7.0

%

179,507

5.0

%

Total retail

1,281,997

41.1

%

1,308,056

41.3

%

1,508,528

42.0

%

Total loans

3,118,387

100.0

%

3,169,754

100.0

%

3,594,848

100.0

%

Net deferred loan origination costs (fees)

4,942

5,707

7,604

Allowance for loan losses

(35,863

)

(38,012

)

(48,072

)

Total loans, net

$

3,087,466

$

3,137,449

$

3,554,380

Held-to-maturity securities portfolio:

PACE assessments

627,195

86.5

%

545,795

87.4

%

367,393

83.3

%

Other securities

97,881

13.5

%

79,031

12.6

%

73,556

16.7

%

Total held-to-maturity securities

$

725,076

100.0

%

$

624,826

100.0

%

$

440,949

100.0

%


Net Interest Income Analysis

Three Months Ended

September 30, 2021

June 30, 2021

September 30, 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

$

632,526

$

230

0.14

%

$

510,473

$

131

0.10

%

$

632,268

$

152

0.10

%

Securities and FHLB stock

2,659,803

14,655

2.19

%

2,447,241

13,135

2.15

%

2,045,231

11,529

2.24

%

Total loans, net (1)(2)

3,087,744

29,915

3.84

%

3,162,896

30,156

3.82

%

3,569,313

35,602

3.97

%

Total interest earning assets

6,380,073

44,800

2.79

%

6,120,610

43,422

2.85

%

6,246,812

47,283

3.01

%

Non-interest earning assets:

Cash and due from banks

8,464

7,545

9,239

Other assets

243,969

266,613

234,248

Total assets

$

6,632,506

$

6,394,768

$

6,490,299

Interest bearing liabilities:

Savings, NOW and money market deposits

$

2,641,719

$

1,173

0.18

%

$

2,567,396

$

1,174

0.18

%

$

2,376,701

$

1,427

0.24

%

Time deposits

241,009

240

0.40

%

258,257

257

0.40

%

321,696

622

0.77

%

Total interest bearing liabilities

2,882,728

1,413

0.19

%

2,825,653

1,431

0.20

%

2,698,397

2,049

0.30

%

Non-interest bearing liabilities:

Demand and transaction deposits

3,077,231

2,909,554

3,191,858

Other liabilities

116,790

111,795

84,138

Total liabilities

6,076,749

5,847,002

5,974,393

Stockholders' equity

555,757

547,766

515,906

Total liabilities and stockholders' equity

$

6,632,506

$

6,394,768

$

6,490,299

Net interest income / interest rate spread

$

43,387

2.60

%

$

41,991

2.65

%

$

45,234

2.71

%

Net interest earning assets / net interest margin

$

3,497,345

2.70

%

$

3,294,957

2.75

%

$

3,548,415

2.88

%

Total Cost of Deposits

0.09

%

0.10

%

0.14

%

(1) Amounts are net of deferred origination costs (fees) and the allowance for loan losses
(2) Includes prepayment penalty interest income in 3Q2021, 2Q2021, and 3Q2020 of $169, $504, and $1,110 respectively (in thousands)


Net Interest Income Analysis

Nine Months Ended

September 30, 2021

September 30, 2020

(In thousands)

Average
Balance

Income /
Expense

Yield /
Rate

Average
Balance

Income /
Expense

Yield /
Rate

Interest earning assets:

Interest-bearing deposits in banks

$

508,421

$

451

0.12

%

$

395,029

$

631

0.21

%

Securities and FHLB stock

2,460,946

40,008

2.17

%

1,809,188

35,962

2.66

%

Total loans, net (1)(2)

3,180,890

91,180

3.83

%

3,535,096

106,440

4.02

%

Total interest earning assets

6,150,257

131,639

2.86

%

5,739,313

143,033

3.33

%

Non-interest earning assets:

Cash and due from banks

7,780

31,138

Other assets

263,170

227,205

Total assets

$

6,421,207

$

5,997,656

Interest bearing liabilities:

Savings, NOW and money market deposits

$

2,574,463

$

3,568

0.19

%

$

2,278,267

$

5,919

0.35

%

Time deposits

259,609

848

0.44

%

357,774

2,726

1.02

%

Total deposits

2,834,072

4,416

0.21

%

2,636,041

8,645

0.44

%

Federal Home Loan Bank advances

165

0.00

%

2,117

27

1.70

%

Total interest bearing liabilities

2,834,237

4,416

0.21

%

2,638,158

8,672

0.44

%

Non-interest bearing liabilities:

Demand and transaction deposits

2,925,516

2,748,088

Other liabilities

112,721

109,586

Total liabilities

5,872,474

5,495,832

Stockholders' equity

548,733

501,824

Total liabilities and stockholders' equity

$

6,421,207

$

5,997,656

Net interest income / interest rate spread

$

127,223

2.65

%

$

134,361

2.89

%

Net interest earning assets / net interest margin

$

3,316,020

2.77

%

$

3,101,155

3.13

%

Total Cost of Deposits

0.10

%

0.21

%

(1) Amounts are net of deferred origination costs (fees) and the allowance for loan losses
(2) Includes prepayment penalty interest income in September YTD 2021 and September YTD 2020 of $1,316 and $2,111 respectively (in thousands)

Deposit Portfolio Composition

(In thousands)

September 30, 2021

June 30, 2021

September 30, 2020

Non-interest bearing demand deposit accounts

$

3,189,155

$

2,948,718

$

3,357,715

NOW accounts

206,610

200,758

192,066

Money market deposit accounts

2,241,914

2,136,719

1,853,373

Savings accounts

364,568

371,047

339,516

Time deposits

222,259

252,750

278,330

Total deposits

$

6,224,506

$

5,909,992

$

6,021,000


Three Months Ended

September 30, 2021

June 30, 2021

September 30, 2020

(In thousands)

Average
Balance

Average
Rate Paid

Average
Balance

Average
Rate Paid

Average
Balance

Average
Rate Paid

Non-interest bearing demand deposit accounts

$

3,077,231

0.00

%

$

2,909,554

0.00

%

$

3,191,858

0.00

%

NOW accounts

205,417

0.09

%

204,341

0.08

%

196,422

0.09

%

Money market deposit accounts

2,066,830

0.20

%

1,993,643

0.21

%

1,839,230

0.28

%

Savings accounts

369,472

0.10

%

369,412

0.10

%

341,049

0.12

%

Time deposits

241,009

0.40

%

258,257

0.40

%

321,696

0.77

%

Total deposits

$

5,959,959

0.09

%

$

5,735,207

0.10

%

$

5,890,255

0.14

%

Asset Quality

(In thousands)

September 30, 2021

June 30, 2021

September 30, 2020

Loans 90 days past due and accruing

$

$

$

9,522

Nonaccrual loans excluding held for sale loans and restructured loans

24,960

31,437

17,515

Troubled debt restructured loans - nonaccrual

20,534

20,494

33,306

Troubled debt restructured loans - accruing

21,958

18,683

19,919

Other real estate owned

307

307

306

Impaired securities

64

59

44

Total nonperforming assets

$

67,823

$

70,980

$

80,612

Nonaccrual loans:

Commercial and industrial

$

13,709

$

14,561

$

25,785

Multifamily

6,079

10,266

Commercial real estate

4,023

4,066

3,500

Construction and land development

10,688

Total commercial portfolio

23,811

28,893

39,973

Residential real estate lending

20,797

22,320

9,750

Consumer and other

886

718

1,098

Total retail portfolio

21,683

23,038

10,848

Total nonaccrual loans

$

45,494

$

51,931

$

50,821

Nonaccrual loans to total loans

1.46

%

1.64

%

1.41

%

Nonperforming assets to total assets

0.99

%

1.08

%

1.22

%

Allowance for loan losses to nonaccrual loans

78.83

%

73.20

%

94.59

%

Allowance for loan losses to total loans

1.15

%

1.20

%

1.34

%

Annualized net charge-offs (recoveries) to average loans

-0.02

%

0.04

%

0.59

%


Credit Quality

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


June 30, 2021

($ in thousands)

Pass

Special Mention

Substandard

Doubtful

Total

Commercial and industrial

$

568,878

$

17,569

$

32,133

$

457

$

619,037

Multifamily

711,551

101,579

32,348

3,173

848,651

Commercial real estate

234,018

45,236

72,453

351,707

Construction and land development

34,414

535

7,354

42,303

Residential real estate lending

1,063,176

295

22,320

1,085,791

Consumer and other

221,835

430

222,265

Total loans

$

2,833,872

$

165,214

$

167,038

$

3,630

$

3,169,754


September 30, 2020

($ in thousands)

Pass

Special Mention

Substandard

Doubtful

Total

Commercial and industrial

$

608,099

$

17,107

$

35,244

$

464

$

660,914

Multifamily

963,834

6,022

5,106

974,962

Commercial real estate

383,087

1,439

4,231

388,757

Construction and land development

40,531

10,468

10,688

61,687

Residential real estate lending

1,319,649

9,372

1,329,021

Consumer and other

178,409

1,098

179,507

Total loans

$

3,493,609

$

35,036

$

65,739

$

464

$

3,594,848

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

Nine Months Ended

(in thousands)

September 30,
2021

June 30, 2021

September 30,
2020

September 30,
2021

September 30,
2020

Core operating revenue

Net Interest income

$

43,387

$

41,991

$

45,234

$

127,223

$

134,361

Non-interest income

6,702

5,327

12,776

16,028

30,565

Less: Branch sale (gain) loss (1)

(1,394

)

Less: Securities (gain) loss

(413

)

(321

)

(619

)

(755

)

(1,605

)

Core operating revenue (non-GAAP)

$

49,676

$

46,997

$

57,391

$

142,496

$

161,927

Core non-interest expense

Non-interest expense

$

33,034

$

31,395

$

37,877

$

97,224

$

101,216

Less: Branch closure expense (2)

(6,279

)

(8,330

)

Less: Severance (3)

(125

)

(1,090

)

(201

)

Less: ABOC

(392

)

(392

)

Core non-interest expense (non-GAAP)

$

32,642

$

31,395

$

31,473

$

95,742

$

92,685

Core net income

Net Income (GAAP)

$

14,416

$

10,408

$

12,480

$

37,013

$

32,399

Less: Branch sale (gain) loss (1)

(1,394

)

Less: Securities (gain) loss

(413

)

(321

)

(619

)

(755

)

(1,605

)

Add: Branch closure expense (2)

6,279

8,330

Add: Severance (3)

125

1,090

201

Add: ABOC

392

392

Less: Tax on notable items

5

86

(1,472

)

(188

)

(1,412

)

Core net income (non-GAAP)

14,400

10,173

16,793

37,552

36,519

Tangible common equity

Stockholders' Equity (GAAP)

$

556,390

$

548,211

$

522,497

$

556,390

$

522,497

Less: Minority Interest (GAAP)

(133

)

(133

)

(133

)

(133

)

(133

)

Less: Goodwill (GAAP)

(12,936

)

(12,936

)

(12,936

)

(12,936

)

(12,936

)

Less: Core deposit intangible (GAAP)

(4,453

)

(4,755

)

(5,701

)

(4,453

)

(5,701

)

Tangible common equity (non-GAAP)

$

538,868

$

530,387

$

503,727

$

538,868

$

503,727

Average tangible common equity

Average Stockholders' Equity (GAAP)

$

555,757

$

547,766

$

515,906

$

548,733

$

501,824

Less: Minority Interest (GAAP)

(133

)

(133

)

(134

)

(133

)

(134

)

Less: Goodwill (GAAP)

(12,936

)

(12,936

)

(12,936

)

(12,936

)

(12,936

)

Less: Core deposit intangible (GAAP)

(4,602

)

(4,903

)

(5,868

)

(4,900

)

(6,209

)

Average tangible common equity (non-GAAP)

$

538,086

$

529,794

$

496,968

$

530,764

$

482,545

Core return on average assets

Core net income (numerator) (non-GAAP)

$

14,400

$

10,173

$

16,793

$

37,552

$

36,519

Divided: Total average assets (denominator) (GAAP)

6,632,506

6,394,768

6,490,299

6,421,208

5,997,656

Core return on average assets (non-GAAP)

0.86

%

0.64

%

1.03

%

0.78

%

0.81

%

Core return on average tangible common equity

Core net income (numerator) (non-GAAP)

$

14,400

$

10,173

$

16,793

$

37,552

$

36,519

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

538,086

529,794

496,968

530,764

482,545

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

10.62

%

7.70

%

13.44

%

9.46

%

10.11

%

Core efficiency ratio

Core non-interest expense (numerator) (non-GAAP)

$

32,642

$

31,395

$

31,473

$

95,742

$

92,685

Core operating revenue (denominator) (non-GAAP)

49,676

46,997

57,391

142,496

161,927

Core efficiency ratio (non-GAAP)

65.71

%

66.80

%

54.84

%

67.19

%

57.24

%

(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