Amalgamated Financial Corp. Reports Second Quarter 2021 Financial Results

NEW YORK, July 29, 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 second quarter ended June 30, 20211.

Second Quarter 2021 Highlights

  • Net income of $10.4 million, or $0.33 per diluted share, compared to $12.2 million, or $0.39 per diluted share, for the first quarter of 2021 and $10.4 million, or $0.33 per diluted share for the second quarter of 2020.
  • Deposits increased $189.9 million to $5.9 billion on a linked quarter basis.
  • Political deposits remained strong and stable at $791.3 million as of June 30, 2021, with $99.3 million growth on a linked quarter basis.
  • Cost of deposits was 0.10%, down 10 bps from the second quarter of 2020.
  • PACE assessments grew $94.2 million to $545.8 million on a linked quarter basis, and grew $222.4 million on a year over year basis. Current quarter growth included $82.8 million of Commercial PACE assessments.
  • Loans decreased $85.4 million to $3.1 billion, on a linked quarter basis, due to continued prepayment activity and paydowns on commercial revolvers.
  • Net interest margin was 2.75%, compared to 2.85% for the first quarter of 2021 and 3.10% for the second quarter of 2020.
  • Repurchased approximately 154,000 shares, or $2.5 million of common stock.
  • Regulatory capital remains above bank “well capitalized” standards.
  • Nonperforming assets improved to $71.0 million or 1.08% of total assets as of June 30, 2021, compared to $81.0 million or 1.27% of total assets on a linked quarter basis.

Priscilla Sims Brown, President and Chief Executive Officer, commented, “I am encouraged to report that our second quarter results provide confirmation of the continuing soundness of Amalgamated’s financial foundation, which underpins our ability to grow and accelerate profitability. Our deposit franchise remains a source of strength with one of the lowest cost of deposits in the industry at 10 basis points and powered by political deposits which have steadily grown following the recent election cycle. Our underwriting and credit management has positioned the Bank to explore a range of mission-aligned options as we focus on organic loan growth. While the current backdrop remains challenging as loan demand is tepid and prepayments remained elevated, our PACE assessments pipeline in both residential and commercial is encouraging and we are optimistic for loan demand to rebound as we look to the second half of the year.”

Brown added, “I am delighted that the Board asked me to lead Amalgamated into the future. After spending more than 30 years in the banking and financial services sectors, what attracted me to Amalgamated was their ability to redefine the concept of banking, never wavering from their century-long mission of empowering organizations and individuals to advance positive social change. I have spent a good portion of my career building brands both nationally and internationally in banking and financial services firms in the public and private sectors. Amalgamated’s mission is one that needs to be told to a world that is increasingly receptive to hearing it. We see significant opportunities in the markets in which Amalgamated participates and we are strategically evaluating how to maximize our brand and the ways we do business, including deepening our high-value client relationships, expanding our customer base, accelerating organic loan growth, and exploring M&A opportunities. I look forward to providing a more detailed plan on our third quarter call.”

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[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 June 30, 2021

Net income for the second quarter of 2021 was $10.4 million, or $0.33 per diluted share, compared to $12.2 million, or $0.39 per diluted share, for the first quarter of 2021 and $10.4 million, or $0.33 per diluted share, for the second quarter of 2020. The $1.8 million decrease for the second quarter of 2021 was primarily due to a $1.7 million provision expense for loan losses compared to a $3.3 million release of provision for loan losses in the preceding quarter. The provision expense increase was partially offset by a $1.4 million decrease in non-interest expense, and a $1.3 million increase in non-interest income.

Core net income (non-GAAP)2 for the second quarter of 2021 was $10.2 million, or $0.32 per diluted share, compared to $13.0 million, or $0.41 per diluted share, for the first quarter of 2021 and $10.6 million, or $0.34 per diluted share, for the second quarter of 2020. Excluded from core net income for the second quarter of 2021 was $0.3 million of non-interest income gains on the sale of securities, and for the first quarter of 2021 was $1.1 million of severance expense related to the modernization of our Trust Department and its related tax impact. Excluded from core net income for the second quarter of 2020 was $0.5 million of non-interest income gains on the sale of securities, $0.7 million in expense related to the closure of six branches, and other adjustments, including the tax effect of such adjustments.

Net interest income was $42.0 million for the second quarter of 2021, compared to $41.8 million for the first quarter of 2021 and $44.4 million for the second quarter of 2020. The $0.2 million increase from the preceding quarter reflected higher income on securities and lower interest expense on deposits, almost wholly offset by a decrease in interest income as average loans decreased $130.9 million from the prepayment and paydowns of residential and commercial loans. The $2.4 million decrease from the second quarter of 2020 was primarily attributable to a decrease in average loans of $408.3 million from the prepayment of residential and commercial loans and a 15 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 2.75% for the second quarter of 2021, a decrease of 10 basis points from 2.85% in the first quarter of 2021, and a decrease of 35 basis points from 3.10% in the second quarter of 2020. The accretion of the loan mark from the loans acquired in the New Resource Bank acquisition contributed two basis points to our net interest margin in the second quarter of 2021, compared to two and three basis points in the first quarter of 2021 and second quarter of 2020, respectively. Prepayment penalties earned in loan income contributed three basis points to our net interest margin in the second quarter of 2021, compared to four basis points in the first quarter of 2021 and two basis points in the second quarter of 2020.

Provision for loan losses totaled an expense of $1.7 million for the second quarter of 2021 compared to a recovery of $3.3 million in the first quarter of 2021 and an expense of $8.2 million for the second quarter of 2020, respectively. The expense in the second quarter of 2021 was primarily driven by an increase in allowance due to an increase of specific reserves for C&I loans, countered by net balance reductions.

Non-interest income was $5.3 million for the second quarter of 2021, compared to $4.0 million in the first quarter of 2021 and $8.7 million for the second quarter in 2020. This increase of $1.3 million in the second 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 partially offset by a decrease of $0.5 million in Trust Department fees primarily attributed to the low interest rate environment and pressure on fixed income bonds. The decrease of $3.4 million in the second quarter of 2021 compared to the corresponding quarter in 2020 was primarily due to a loss of $1.6 million related to equity investments in solar initiatives in the second quarter of 2021 compared to a $1.3 million gain in the second quarter of 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 second quarter of 2021 was $31.4 million, a decrease of $1.4 million from the first quarter of 2021 and an increase of $0.3 million from the second quarter of 2020. The decrease of $1.4 million from the preceding quarter was primarily due to a $1.1 million charge for severance related to the modernization of our Trust Department in the first quarter of 2021 and a decrease in professional service expense.

Our provision for income tax expense was $3.8 million for the second quarter of 2021, compared to $4.1 million for the first quarter of 2021 and $3.4 million for the second quarter of 2020. Our effective tax rate for the second quarter of 2021 was 26.9%, compared to 25.4% for the first quarter of 2021 and 24.9% for the second quarter of 2020.

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[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, Six Months Ended June 30, 2021

Net income for the six months ended June 30, 2021 was $22.6 million, or $0.72 per average diluted share, compared to $19.9 million, or $0.64 per average diluted share, for same period in 2020. The $2.7 million increase was primarily due to a $1.6 million recovery of provision for loan loss compared to a $16.8 million increase to provision for loan loss for the same period in 2020. This recovery of provision was partially offset by a $8.5 million decrease in non-interest income, a $5.3 million decrease in net interest income and a $0.9 million increase in non-interest expense.

Core net income (non-GAAP) for the six months ended June 30, 2021 of $23.2 million, or $0.73 per diluted share, compared to $19.7 million or $0.63 per diluted share, for the same period last year. Core net income for the first six 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 $83.8 million for the six months ended June 30, 2021, compared to $89.1 million for the same period in 2020. This decrease of $5.3 million was primarily attributable to a decrease in average loans of $289.6 million and lower yields earned on interest bearing assets. These impacts are partially offset by an increase in average securities of $670.0 million, and a decrease in average rates paid on deposits.

Provision for loan losses totaled a recovery of $1.6 million for the six months ended June 30, 2021, compared to an expense of $16.8 million for the same period in 2020. The recovery for the six months ended June 30, 2021 was primarily driven by a release of allowance for loan loss due to lower loan balances, and the upgrade of one construction loan to a pass rating, countered by an increase in allowance due to an increase of specific reserves for C&I loans.

Non-interest income was $9.3 million for the six months ended June 30, 2021, compared to $17.8 million for the same period in 2020, a decrease of $8.5 million. This decrease is primarily due to a decrease of $6.8 million in a tax credits on equity investment projects, a $1.4 million gain on the sale of a branch reported in other non-interest income in the prior year, a $0.9 million decrease in Trust Department fees primarily attributed to the low interest rate environment and pressure on fixed income bonds, as mentioned above, the expected wind-down of the real estate fund, and a decrease in gain on the sale of securities. These decreases were partially offset by an increase of $1.1 million in gains on the sale of residential loans.

Non-interest expense for the six months ended June 30, 2021 was $64.2 million, an increase of $0.9 million from $63.3 million for the six months ended June 30, 2020. The increase was primarily due to a $1.9 million increase in professional fees mainly related to our holding company formation and chief executive officer search, a $1.1 million increase in data processing mainly related to the modernization of our Trust Department and increased transaction processing post COVID-19, and a $0.9 million increase in other expenses, offset by a $2.9 million decrease in branch occupancy expense attributed to branch closure expenses in the prior year and lower rent expense in the current year.

We had income tax expense of $8.0 million for the six months ended June 30, 2021, compared to $6.9 million for the same period in 2020. Our effective tax rate was 26.0% for the six months ended June 30, 2021, compared to 25.6% for the same period in 2020.

Financial Condition

Total assets were $6.6 billion at June 30, 2021, compared to $6.0 billion at December 31, 2020. The increase of $0.6 billion was driven primarily by a $508.7 million increase in cash and cash equivalents and a $415.2 million increase in investment securities, of which $94.2 million was from PACE assessments, which was partially offset by a $309.9 million decrease in loans receivable, net.

Total loans, net at June 30, 2021 were $3.1 billion, a decrease of $309.9 million, or 18.1% annualized, compared to December 31, 2020. The decline in loans was primarily driven by a $152.9 million decrease in residential loans due to increased refinancing activity by existing customers, a $119.6 million decrease in commercial real estate and multifamily loans due to refinancing activity by existing customers, and a $58.2 million decrease in C&I loans due to the payoff of one large loan. As of June 30, 2021, the Company had $4.0 million in loans remaining on a payment deferral program and still accruing interest, the majority of which were residential 1-4 family loans, and none were commercial loans.

Deposits at June 30, 2021 were $5.9 billion, an increase of $571.3 million, or 21.6% 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 $791.3 million as of June 30, 2021, an increase of $188.5 million compared to $602.8 million as of December 31, 2020. Noninterest-bearing deposits represent 51% of average deposits and 50% of ending deposits for the quarter ended June 30, 2021, contributing to an average cost of deposits of 0.10% in the second quarter of 2021, a one basis point decrease from the preceding quarter.

Nonperforming assets totaled $71.0 million, or 1.08% of period-end total assets at June 30, 2021, a decrease of $11.2 million, compared with $82.2 million, or 1.38% of period-end total assets at December 31, 2020. The decrease in non-performing assets at June 30, 2021 compared to December 31, 2020 was primarily driven by the payoff of $11.2 million of non-accruing construction loans, and the decrease of $1.4 million of loans ninety days past due and accruing, partially offset by an increase of $2.1 million of C&I loans.

The allowance for loan losses decreased $3.6 million to $38.0 million at June 30, 2021 from $41.6 million at December 31, 2020, primarily due to decreases in loan balances. At June 30, 2021, we had $70.6 million of impaired loans for which a specific allowance of $6.3 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 1.20% at June 30, 2021 and 1.19% at December 31, 2020.

Capital

As of June 30, 2021, our Common Equity Tier 1 Capital Ratio was 13.63%, Total Risk-Based Capital Ratio was 14.68%, and Tier-1 Leverage Capital Ratio was 7.93%, compared to 13.11%, 14.25% and 7.97%, respectively, as of December 31, 2020. Stockholders’ equity at June 30, 2021 was $548.2 million, compared to $535.8 million at December 31, 2020. The increase in stockholders’ equity was driven by $22.6 million of net income, partially offset by a $1.5 million decrease in accumulated other comprehensive income due to the mark to market on our securities portfolio and $3.7 million decrease in additional paid-in capital.

Our tangible book value per share was $17.07 as of June 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 second quarter 2021 results today, July 29th, 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. Second 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 13720783. The telephonic replay will be available until August 5, 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 June 30, 2021, our total assets were $6.6 billion, total net loans were $3.1 billion, and total deposits were $5.9 billion. Additionally, as of June 30, 2021, our trust business held $39.2 billion in assets under custody and $16.6 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 June 30, 2021 versus certain periods in 2020 and to prepare internal projections. We believe these non-GAAP financial measures facilitate making period-to-period comparisons and are meaningful indications of our operating performance. In addition, because intangible assets such as goodwill and other discrete items unrelated to our core business, which are excluded, vary extensively from company to company, we believe that the presentation of this information allows investors to more easily compare our results to those of other companies.

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

Terminology

Certain terms used in this release are defined as follows:

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

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

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

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

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

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

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

Forward-Looking Statements

Statements included in this release that are not historical in nature are intended to be, and are hereby identified as, forward-looking statements within the meaning of the Private Securities Litigation Reform Act, Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements generally can be identified through the use of forward-looking terminology such as “may,” “will,” “anticipate,” “should,” “would,” “believe,” “contemplate,” “expect,” “estimate,” “continue,” “in the future,” “may” and “intend,” as well as other similar words and expressions of the future, and in this press release include statements about expected rebound in loan demand, the wind-down in our real estate fund and the losses in our equity method investments. Forward-looking statements are subject to known and unknown risks, uncertainties and other factors, any or all of which could cause actual results to differ materially from the results expressed or implied by such forward-looking statements. These risks and uncertainties include, but are not limited to: (i) deterioration in the financial condition of borrowers resulting in significant increases in loan losses and provisions for those losses; (ii) continuation of the historically low short-term interest rate environment; (iii) our inability to maintain the historical growth rate of the loan portfolio; (iv) changes in loan underwriting, credit review or loss reserve policies associated with economic conditions, examination conclusions, or regulatory developments; (v) 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) unexpected challenges and potential operational disruptions related to our executive officer transitions. 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 Six Months Ended
 June 30, March 31, June 30, June 30,
($ in thousands)2021
 2021 2020
 2021
 2020
INTEREST AND DIVIDEND INCOME         
Loans$30,156  $31,109  $35,225  $61,265  $70,837 
Securities13,094  12,170  11,746  25,264  24,299 
Federal Home Loan Bank of New York stock41  48  66  89  135 
Interest-bearing deposits in banks131  90  83  221  479 
Total interest and dividend income43,422  43,417  47,120  86,839  95,750 
INTEREST EXPENSE         
Deposits1,431  1,573  2,681  3,003  6,596 
Borrowed funds        27 
Total interest expense1,431  1,573  2,681  3,003  6,623 
NET INTEREST INCOME41,991  41,844  44,439  83,836  89,127 
Provision for (recovery of) loan losses1,682  (3,261) 8,221  (1,579) 16,808 
Net interest income after provision for loan losses40,309  45,105  36,218  85,415  72,319 
NON-INTEREST INCOME         
Trust Department fees3,292  3,827  3,980  7,118  8,066 
Service charges on deposit accounts2,296  2,178  1,850  4,475  4,261 
Bank-owned life insurance531  788  1,111  1,319  1,495 
Gain (loss) on sale of investment securities available for sale, net321  21  486  342  985 
Gain (loss) on sale of loans, net720  707  162  1,426  297 
Gain (loss) on other real estate owned, net(407)   (283) (407) (306)
Equity method investments(1,555) (3,682) 1,289  (5,237) 1,289 
Other129  161  76  290  1,702 
Total non-interest income5,327  4,000  8,671  9,326  17,789 
NON-INTEREST EXPENSE         
Compensation and employee benefits16,964  18,039  17,334  35,003  34,792 
Occupancy and depreciation3,352  3,501  4,241  6,853  9,747 
Professional fees3,211  3,661  1,988  6,871  4,971 
Data processing3,322  3,005  2,977  6,327  5,241 
Office maintenance and depreciation820  655  818  1,475  1,675 
Amortization of intangible assets302  302  342  604  685 
Advertising and promotion628  597  672  1,225  1,339 
Other2,796  3,033  2,696  5,831  4,889 
Total non-interest expense31,395  32,793  31,068  64,189  63,339 
Income before income taxes14,241  16,312  13,821  30,552  26,769 
Income tax expense (benefit)3,833  4,123  3,447  7,955  6,850 
Net income10,408  12,189  10,374  22,597  19,919 
Net income attributable to Amalgamated Financial Corp.$10,408  $12,189  $10,374  $22,597  $19,919 
Earnings per common share - basic0.33  0.39  0.33  0.73  0.64 
Earnings per common share - diluted0.33  0.39  0.33  0.72  0.64 
               


 
Consolidated Statements of Financial Condition
    
($ in thousands)June 30,
2021
 December 31,
2020
Assets(unaudited)  
Cash and due from banks$7,960  $7,736 
Interest-bearing deposits in banks539,485  31,033 
Total cash and cash equivalents547,445  38,769 
Securities:   
Available for sale, at fair value (amortized cost of $1,799,993 and $1,513,409, respectively)1,824,726  1,539,862 
Held-to-maturity (fair value of $621,954 and $502,425, respectively)624,826  494,449 
Loans held for sale8,230  11,178 
Loans receivable, net of deferred loan origination costs (fees)3,175,461  3,488,895 
Allowance for loan losses(38,012) (41,589)
Loans receivable, net3,137,449  3,447,306 
    
Resell agreements141,651  154,779 
Accrued interest and dividends receivable22,648  23,970 
Premises and equipment, net12,876  12,977 
Bank-owned life insurance106,197  105,888 
Right-of-use lease asset35,072  36,104 
Deferred tax asset, net24,328  36,079 
Goodwill12,936  12,936 
Other intangible assets4,755  5,359 
Equity investments6,296  11,735 
Other assets46,837  47,240 
Total assets$6,556,272  $5,978,631 
Liabilities   
Deposits$5,909,992  $5,338,711 
Operating leases51,165  53,173 
Other liabilities46,904  50,926 
Total liabilities6,008,061  5,442,810 
    
Commitments and contingencies   
    
Stockholders’ equity   
Common stock, par value $.01 per share (70,000,000 shares authorized; 31,073,669 and 31,049,525 shares issued and outstanding, respectively)311  310 
Additional paid-in capital297,283  300,989 
Retained earnings234,769  217,213 
Accumulated other comprehensive income (loss), net of income taxes15,715  17,176 
Total Amalgamated Financial Corp. stockholders' equity548,078  535,688 
Noncontrolling interests133  133 
Total stockholders' equity548,211  535,821 
Total liabilities and stockholders’ equity$6,556,272  $5,978,631 
        


 
Select Financial Data
    
 As of and for the As of and for the
 Three Months Ended Six Months Ended
 June 30, March 31, June 30, June 30,
(Shares in thousands)2021 2021 2020 2021 2020
Selected Financial Ratios and Other Data:         
Earnings         
Basic$0.33  $0.39  $0.33  0.73  0.64 
Diluted0.33  0.39  0.33  0.72  0.64 
Core net income (non-GAAP)         
Basic$0.33  $0.42  $0.34  0.74  0.63 
Diluted0.32  0.41  0.34  0.73  0.63 
Book value per common share (excluding minority interest)17.64  17.33  16.22  17.64  16.22 
Tangible book value per share (non-GAAP)17.07  16.75  15.61  17.07  15.61 
Common shares outstanding31,074  31,169  31,050  31,074  31,050 
Weighted average common shares outstanding, basic31,136  31,082  31,023  31,109  31,217 
Weighted average common shares outstanding, diluted31,572  31,524  31,035  31,545  31,345 
               


 
Select Financial Data
    
 As of and for the As of and for the
 Three Months Ended Six Months Ended
 June 30, March 31, June 30, June 30,
 2021 2021 2020 2021 2020
Selected Performance Metrics:         
Return on average assets0.65% 0.79% 0.69% 0.72% 0.70%
Core return on average assets (non-GAAP)0.64% 0.85% 0.70% 0.74% 0.69%
Return on average equity7.62% 9.11% 8.56% 8.36% 8.10%
Core return on average tangible common equity (non-GAAP)7.70% 10.05% 9.07% 8.86% 8.35%
Average equity to average assets8.57% 8.71% 8.03% 8.63% 8.61%
Tangible common equity to assets8.09% 8.18% 7.49% 8.09% 7.49%
Loan yield3.82% 3.83% 3.97% 3.83% 4.05%
Securities yield2.15% 2.18% 2.59% 2.17% 2.91%
Deposit cost0.10% 0.11% 0.20% 0.11% 0.26%
Net interest margin2.75% 2.85% 3.10% 2.80% 3.27%
Efficiency ratio (1)66.35% 71.53% 58.50% 68.90% 59.24%
Core efficiency ratio (non-GAAP) (1)66.80% 69.18% 57.68% 67.98% 58.56%
          
Asset Quality Ratios:         
Nonaccrual loans to total loans1.64% 1.78% 1.24% 1.64% 1.24%
Nonperforming assets to total assets1.08% 1.27% 1.15% 1.08% 1.15%
Allowance for loan losses to nonaccrual loans73.20% 63.32% 109.49% 73.20% 109.49%
Allowance for loan losses to total loans1.20% 1.13% 1.36% 1.20% 1.36%
Annualized net charge-offs (recoveries) to average loans0.04% 0.20% 0.06% 0.12% 0.04%
          
Capital Ratios:         
Tier 1 leverage capital ratio7.93% 8.06% 7.69% 7.93% 7.69%
Tier 1 risk-based capital ratio13.63% 13.70% 12.32% 13.63% 12.32%
Total risk-based capital ratio14.68% 14.74% 13.57% 14.68% 13.57%
Common equity tier 1 capital ratio13.63% 13.70% 12.32% 13.63% 12.32%
          
(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 June 30, 2021 At March 31, 2021 At June 30, 2020
 Amount % of total
loans
 Amount % of total
loans
 Amount % of total
loans
Commercial portfolio:           
Commercial and industrial$619,037  19.5% $612,581  18.8% $617,579  16.8%
Multifamily848,651  26.8% 882,231  27.2% 972,129  26.4%
Commercial real estate351,707  11.1% 364,308  11.2% 404,064  11.0%
Construction and land development42,303  1.3% 50,267  1.5% 65,259  1.8%
Total commercial portfolio1,861,698  58.7% 1,909,387  58.7% 2,059,031  56.0%
            
Retail portfolio:           
Residential real estate lending1,085,791  34.3% 1,137,851  35.0% 1,432,645  38.9%
Consumer and other222,265  7.0% 206,451  6.3% 187,980  5.1%
Total retail1,308,056  41.3% 1,344,302  41.3% 1,620,625  44.0%
Total loans3,169,754  100.0% 3,253,689  100.0% 3,679,656  100.0%
            
Net deferred loan origination costs (fees)5,707    5,815    8,336   
Allowance for loan losses(38,012)   (36,662)   (50,010)  
Total loans, net$3,137,449    $3,222,842    $3,637,982   
            
Held-to-maturity securities portfolio:           
PACE assessments545,795  87.4% 451,643  85.0% 323,392  87.3%
Other securities79,031  12.6% 79,631  15.0% 47,106  12.7%
Total held-to-maturity securities$624,826  100.0% $531,274  100.0% $370,498  100.0%
                     


 
Net Interest Income Analysis
  
 Three Months Ended
 June 30, 2021 March 31, 2021 June 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$510,473  $131  0.10% $380,390  $90  0.10% $364,932  $83  0.09%
Securities and FHLB stock2,447,241  13,135  2.15% 2,271,218  12,218  2.18% 1,834,892  11,812  2.59%
Total loans, net (1)(2)3,162,896  30,156  3.82% 3,293,775  31,109  3.83% 3,571,160  35,225  3.97%
Total interest earning assets6,120,610  43,422  2.85% 5,945,383  43,417  2.96% 5,770,984  47,120  3.28%
Non-interest earning assets:                 
Cash and due from banks7,545      7,307      74,877     
Other assets266,613      279,308      224,531     
Total assets$6,394,768      $6,231,998      $6,070,392     
                  
Interest bearing liabilities:                 
Savings, NOW and money market deposits$2,567,396  $1,174  0.18% $2,512,892  $1,222  0.20% $2,313,772  $1,755  0.31%
Time deposits258,257  257  0.40% 280,057  351  0.51% 370,969  926  1.00%
Total deposits2,825,653  1,431  0.20% 2,792,949  1,573  0.23% 2,684,741  2,681  0.40%
Federal Home Loan Bank advances    0.00% 495    0.00%     0.00%
Total interest bearing liabilities2,825,653  1,431  0.20% 2,793,444  1,573  0.23% 2,684,741  2,681  0.40%
Non-interest bearing liabilities:                 
Demand and transaction deposits2,909,554      2,786,581      2,746,529     
Other liabilities111,795      109,420      151,591     
Total liabilities5,847,002      5,689,445      5,582,861     
Stockholders' equity547,766      542,553      487,531     
Total liabilities and stockholders' equity$6,394,768      $6,231,998      $6,070,392     
                  
Net interest income / interest rate spread  $41,991  2.65%   $41,844  2.73%   $44,439  2.88%
Net interest earning assets / net interest margin$3,294,957    2.75% $3,151,939    2.85% $3,086,243    3.10%
                  
Total Cost of Deposits    0.10%     0.11%     0.20%

(1) Amounts are net of deferred origination costs (fees) and the allowance for loan losses
(2) Includes prepayment penalty interest income in 2Q2021, 1Q2021, and 2Q2020 of $504, $642, and $239 respectively (in thousands)

 
Net Interest Income Analysis
  
 Six Months Ended
 June 30, 2021 June 30, 2020
(In thousands)Average
Balance
Income /
Expense
Yield /
Rate
 Average
Balance
Income /
Expense
Yield /
Rate
            
Interest earning assets:           
Interest-bearing deposits in banks$445,340  $221  0.10% $275,107  $479  0.35%
Securities and FHLB stock2,359,870  25,353  2.17% 1,689,870  24,434  2.91%
Total loans, net (1)(2)3,228,235  61,265  3.83% 3,517,799  70,837  4.05%
Total interest earning assets6,033,445  86,839  2.90% 5,482,776  95,750  3.51%
Non-interest earning assets:           
Cash and due from banks7,432      42,208     
Other assets272,930      223,643     
Total assets$6,313,807      $5,748,627     
            
Interest bearing liabilities:           
Savings, NOW and money market deposits$2,540,277  $2,395  0.19% $2,228,509  $4,492  0.41%
Time deposits269,063  608  0.46% 376,011  2,104  1.13%
Total deposits2,809,340  3,003  0.22% 2,604,520  6,596  0.51%
Federal Home Loan Bank advances249    0.00% 3,187  27  1.70%
Total interest bearing liabilities2,809,589  3,003  0.22% 2,607,707  6,623  0.51%
Non-interest bearing liabilities:           
Demand and transaction deposits2,848,401      2,523,764     
Other liabilities110,654      122,450     
Total liabilities5,768,644      5,253,921     
Stockholders' equity545,163      494,706     
Total liabilities and stockholders' equity$6,313,807      $5,748,627     
            
Net interest income / interest rate spread  $83,836  2.68%   $89,127  3.00%
Net interest earning assets / net interest margin$3,223,856    2.80% $2,875,069    3.27%
            
Total Cost of Deposits    0.11%     0.26%

(1) Amounts are net of deferred origination costs (fees) and the allowance for loan losses
(2) Includes prepayment penalty interest income in June YTD 2021 and June YTD 2020 of $1,146 and $1,001 respectively (in thousands)

 
Deposit Portfolio Composition
      
(In thousands)June 30, 2021 March 31, 2021 June 30, 2020
      
Non-interest bearing demand deposit accounts$2,948,718  $2,819,627  $3,089,004 
NOW accounts200,758  206,145  198,653 
Money market deposit accounts2,136,719  2,067,886  1,876,540 
Savings accounts371,047  361,731  342,477 
Time deposits252,750  264,678  363,645 
Total deposits$5,909,992  $5,720,067  $5,870,319 


 Three Months Ended
 June 30, 2021 March 31, 2021 June 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$2,909,554  0.00% $2,786,581  0.00% $2,746,529  0.00%
NOW accounts 204,341  0.08%  198,117  0.08%  237,279  0.17%
Money market deposit accounts 1,993,643  0.21%  1,963,707  0.23%  1,741,466  0.36%
Savings accounts 369,412  0.10%  351,068  0.11%  335,027  0.12%
Time deposits 258,257  0.40%  280,057  0.51%  370,969  0.99%
Total deposits$5,735,207  0.10% $5,579,530  0.11% $5,431,270  0.20%
                     


 
Asset Quality
      
(In thousands)June 30, 2021 March 31, 2021 June 30, 2020
Loans 90 days past due and accruing$  $2,424  $ 
Nonaccrual loans excluding held for sale loans and restructured loans31,437  37,324  18,901 
Nonaccrual loans held for sale     
Troubled debt restructured loans - nonaccrual20,494  20,578  26,776 
Troubled debt restructured loans - accruing18,683  17,656  28,031 
Other real estate owned307  2,988  503 
Impaired securities59  61  46 
Total nonperforming assets$70,980  $81,031  $74,257 
      
Nonaccrual loans:     
Commercial and industrial$14,561  $12,347  $15,742 
Multifamily10,266  7,660   
Commercial real estate4,066  4,133  13,768 
Construction and land development  8,605  3,652 
Total commercial portfolio28,893  32,745  33,162 
      
Residential real estate lending22,320  24,300  11,835 
Consumer and other718  857  680 
Total retail portfolio23,038  25,157  12,515 
Total nonaccrual loans$51,931  $57,902  $45,677 
      
Nonaccrual loans to total loans1.64% 1.78% 1.24%
Nonperforming assets to total assets1.08% 1.27% 1.15%
Allowance for loan losses to nonaccrual loans73.20% 63.32% 109.49%
Allowance for loan losses to total loans1.20% 1.13% 1.36%
Annualized net charge-offs (recoveries) to average loans0.04% 0.20% 0.06%
         


 
Credit Quality
  
 June 30, 2021
($ in thousands)Pass Special Mention Substandard Doubtful Total
Commercial and industrial$568,878  $17,569  $32,133  $457  $619,037 
Multifamily711,551  101,579  32,348  3,173  848,651 
Commercial real estate234,018  45,236  72,453    351,707 
Construction and land development34,414  535  7,354    42,303 
Residential real estate lending1,063,176  295  22,320    1,085,791 
Consumer and other221,835    430    222,265 
Total loans$2,833,872  $165,214  $167,038  $3,630  $3,169,754 


 March 31, 2021
($ in thousands)Pass Special Mention Substandard Doubtful Total
Commercial and industrial$566,421  $17,622  $28,079  $459  $612,581 
Multifamily742,746  108,016  28,296  3,173  882,231 
Commercial real estate257,178  32,878  74,252    364,308 
Construction and land development33,971  7,691  8,605    50,267 
Residential real estate lending1,113,551    24,300    1,137,851 
Consumer and other205,594    857    206,451 
Total loans$2,919,461  $166,207  $164,389  $3,632  $3,253,689 


 June 30, 2020
($ in thousands)Pass Special Mention Substandard Doubtful Total
Commercial and industrial$567,174  $15,493  $34,445  $467  $617,579 
Multifamily966,067  6,062      972,129 
Commercial real estate388,170  1,439  14,455    404,064 
Construction and land development35,578  26,029  3,652    65,259 
Residential real estate lending1,421,785    10,860    1,432,645 
Consumer and other187,300    680    187,980 
Total loans$3,566,074  $49,023  $64,092  $467  $3,679,656 
                    

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 Six Months Ended
(in thousands)June 30, 2021 March 31, 2021 June 30, 2020 June 30, 2021 June 30, 2020
Core operating revenue         
Net Interest income$41,991  $41,844  $44,439  $83,836  $89,127 
Non-interest income5,327  4,000  8,671  9,327  17,789 
Less: Branch sale loss (gain) (1)    34    (1,394)
Less: Securities gain, net(321) (18) (486) (339) (985)
Core operating revenue$46,997  $45,826  $52,658  $92,824  $104,537 
          
Core non-interest expense         
Non-interest expense$31,395  $32,793  $31,068  $64,189  $63,339 
Less: Branch closure expense (2)    (695)   (2,051)
Less: Severance (3)  (1,090)   (1,090) (76)
Core non-interest expense$31,395  $31,703  $30,373  $63,099  $61,212 
          
Core net income         
Net Income (GAAP)$10,408  $12,189  $10,374  $22,598  $19,919 
Less: Branch sale (gain) (1)    34    (1,394)
Less: Securities loss (gain)(321) (18) (486) (339) (985)
Add: Branch closure expense (2)    695    2,051 
Add: Severance (3)  1,090    1,090  76 
Less: Tax on notable items86  (271) (61) (196) 64 
Core net income (non-GAAP)$10,173  $12,990  $10,556  $23,153  $19,731 
          
Tangible common equity         
Stockholders' Equity (GAAP)$548,211  $540,222  $503,702  $548,211  $503,702 
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)(4,755) (5,057) (6,043) (4,755) (6,043)
Tangible common equity (non-GAAP)$530,387  $522,096  $484,589  $530,387  $484,589 
          
Average tangible common equity         
Average Stockholders' Equity (GAAP)$547,766  $542,553  $487,531  $545,163  $494,706 
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)(4,903) (5,205) (6,211) (5,052) (6,382)
Average tangible common equity (non-GAAP)$529,794  $524,279  $468,250  $527,042  $475,254 
          
Core return on average assets         
Core net income (numerator) (non-GAAP)10,173  12,990  10,556  23,153  19,731 
Divided: Total average assets (denominator) (GAAP)6,394,768  6,231,998  6,070,392  6,313,807  5,748,627 
Core return on average assets (non-GAAP)0.64% 0.85% 0.70% 0.74% 0.69%
          
Core return on average tangible common equity         
Core net income (numerator) (non-GAAP)10,173  12,990  10,556  23,153  19,731 
Divided: Average tangible common equity (denominator) (GAAP)529,794  524,279  468,250  527,042  475,254 
Core return on average tangible common equity (non-GAAP)7.70% 10.05% 9.07% 8.86% 8.35%
          
Core efficiency ratio         
Core non-interest expense (numerator)31,395  31,703  30,373  63,099  61,212 
Core operating revenue (denominator)46,997  45,826  52,658  92,824  104,537 
Core efficiency ratio66.80% 69.18% 57.68% 67.98% 58.56%

(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


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