• Amalgamated Financial Corp. Reports Third Quarter 2021 Financial Results

    Source: Nasdaq GlobeNewswire / 28 Oct 2021 06:25:01   America/New_York

    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.”

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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 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.

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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, 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 
    Securities14,612  13,094  11,473  39,876  35,772 
    Federal Home Loan Bank of New York stock43  41  56  132  190 
    Interest-bearing deposits in banks230  131  152  451  631 
    Total interest and dividend income44,800  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 expense1,413  1,431  2,049  4,416  8,672 
    NET INTEREST INCOME43,387  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 losses45,663  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 
    Other134  129  154  424  1,855 
    Total non-interest income6,702  5,327  12,776  16,028  30,565 
    NON-INTEREST EXPENSE         
    Compensation and employee benefits17,482  16,964  17,547  52,485  52,338 
    Occupancy and depreciation3,440  3,352  9,908  10,293  19,655 
    Professional fees2,348  3,211  2,202  9,219  7,173 
    Data processing4,521  3,322  2,916  10,848  8,157 
    Office maintenance and depreciation887  820  863  2,362  2,538 
    Amortization of intangible assets301  302  342  905  1,027 
    Advertising and promotion1,023  628  1,172  2,248  2,511 
    Other3,032  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 banks681,758  31,033 
    Total cash and cash equivalents690,246  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 sale6,156  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, net3,087,466  3,447,306 
        
    Resell agreements130,434  154,779 
    Accrued interest and dividends receivable23,337  23,970 
    Premises and equipment, net12,447  12,977 
    Bank-owned life insurance106,736  105,888 
    Right-of-use lease asset34,819  36,104 
    Deferred tax asset24,672  36,079 
    Goodwill12,936  12,936 
    Other intangible assets4,453  5,359 
    Equity investments5,614  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 leases50,416  53,173 
    Other liabilities28,453  50,926 
    Total liabilities6,303,375  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 capital297,904  300,989 
    Retained earnings246,665  217,213 
    Accumulated other comprehensive income (loss), net of income taxes11,377  17,176 
    Total Amalgamated Financial Corp. stockholders' equity556,257  535,688 
    Noncontrolling interests133  133 
    Total stockholders' equity556,390  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 
    Diluted0.46  0.33  0.40  1.17  1.04 
    Core net income (non-GAAP)         
    Basic$0.46  $0.33  $0.54  1.20  1.17 
    Diluted0.46  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 outstanding31,097  31,074  31,050  31,097  31,050 
    Weighted average common shares outstanding, basic31,094  31,136  31,050  31,216  31,161 
    Weighted average common shares outstanding, diluted31,462  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 assets0.86% 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 equity10.29% 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 assets8.38% 8.57% 7.95% 8.55% 8.37%
    Tangible common equity to tangible assets7.88% 8.09% 7.61% 7.88% 7.61%
    Loan yield3.84% 3.82% 3.97% 3.83% 4.02%
    Securities yield2.19% 2.15% 2.24% 2.17% 2.66%
    Deposit cost0.09% 0.10% 0.14% 0.10% 0.21%
    Net interest margin2.70% 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 loans1.46% 1.64% 1.41% 1.46% 1.41%
    Nonperforming assets to total assets0.99% 1.08% 1.22% 0.99% 1.22%
    Allowance for loan losses to nonaccrual loans78.83% 73.20% 94.59% 78.83% 94.59%
    Allowance for loan losses to total loans1.15% 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 ratio7.85% 7.93% 7.39% 7.85% 7.39%
    Tier 1 risk-based capital ratio13.98% 13.63% 12.76% 13.98% 12.76%
    Total risk-based capital ratio14.99% 14.68% 14.01% 14.99% 14.01%
    Common equity tier 1 capital ratio13.98% 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%
    Multifamily826,143  26.5% 848,651  26.8% 974,962  27.1%
    Commercial real estate346,996  11.1% 351,707  11.1% 388,757  10.8%
    Construction and land development34,863  1.1% 42,303  1.3% 61,687  1.7%
    Total commercial portfolio1,836,390  58.9% 1,861,698  58.7% 2,086,320  58.0%
                
    Retail portfolio:           
    Residential real estate lending1,032,947  33.1% 1,085,791  34.3% 1,329,021  37.0%
    Consumer and other249,050  8.0% 222,265  7.0% 179,507  5.0%
    Total retail1,281,997  41.1% 1,308,056  41.3% 1,508,528  42.0%
    Total loans3,118,387  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 assessments627,195  86.5% 545,795  87.4% 367,393  83.3%
    Other securities97,881  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 stock2,659,803  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 assets6,380,073  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 banks8,464      7,545      9,239     
    Other assets243,969      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 deposits241,009  240  0.40% 258,257  257  0.40% 321,696  622  0.77%
    Total interest bearing liabilities2,882,728  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 deposits3,077,231      2,909,554      3,191,858     
    Other liabilities116,790      111,795      84,138     
    Total liabilities6,076,749      5,847,002      5,974,393     
    Stockholders' equity555,757      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 stock2,460,946  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 assets6,150,257  131,639  2.86% 5,739,313  143,033  3.33%
    Non-interest earning assets:           
    Cash and due from banks7,780      31,138     
    Other assets263,170      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 deposits259,609  848  0.44% 357,774  2,726  1.02%
    Total deposits2,834,072  4,416  0.21% 2,636,041  8,645  0.44%
    Federal Home Loan Bank advances165    0.00% 2,117  27  1.70%
    Total interest bearing liabilities2,834,237  4,416  0.21% 2,638,158  8,672  0.44%
    Non-interest bearing liabilities:           
    Demand and transaction deposits2,925,516      2,748,088     
    Other liabilities112,721      109,586     
    Total liabilities5,872,474      5,495,832     
    Stockholders' equity548,733      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 accounts206,610   200,758  192,066 
    Money market deposit accounts2,241,914   2,136,719  1,853,373 
    Savings accounts364,568   371,047  339,516 
    Time deposits222,259   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 loans24,960  31,437  17,515 
    Troubled debt restructured loans - nonaccrual20,534  20,494  33,306 
    Troubled debt restructured loans - accruing21,958  18,683  19,919 
    Other real estate owned307  307  306 
    Impaired securities64  59  44 
    Total nonperforming assets$67,823  $70,980  $80,612 
          
    Nonaccrual loans:     
    Commercial and industrial$13,709  $14,561  $25,785 
    Multifamily6,079  10,266   
    Commercial real estate4,023  4,066  3,500 
    Construction and land development    10,688 
    Total commercial portfolio23,811  28,893  39,973 
          
    Residential real estate lending20,797  22,320  9,750 
    Consumer and other886  718  1,098 
    Total retail portfolio21,683  23,038  10,848 
    Total nonaccrual loans$45,494  $51,931  $50,821 
          
    Nonaccrual loans to total loans1.46% 1.64% 1.41%
    Nonperforming assets to total assets0.99% 1.08% 1.22%
    Allowance for loan losses to nonaccrual loans78.83% 73.20% 94.59%
    Allowance for loan losses to total loans1.15% 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 
    Multifamily696,898  83,851  42,221  3,173  826,143 
    Commercial real estate243,903  26,815  76,278    346,996 
    Construction and land development27,387    7,476    34,863 
    Residential real estate lending1,011,856  294  20,797    1,032,947 
    Consumer and other248,164    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 
    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 


     September 30, 2020
    ($ in thousands)Pass Special Mention Substandard Doubtful Total
    Commercial and industrial$608,099  $17,107  $35,244  $464  $660,914 
    Multifamily963,834  6,022  5,106    974,962 
    Commercial real estate383,087  1,439  4,231    388,757 
    Construction and land development40,531  10,468  10,688    61,687 
    Residential real estate lending1,319,649    9,372    1,329,021 
    Consumer and other178,409    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 income6,702  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: ABOC392      392   
    Less: Tax on notable items5  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

     


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