Amalgamated Financial Corp. Reports Fourth Quarter 2021 Financial Results

Donnerstag, 27. Januar 2022 12:25

NEW YORK, Jan. 27, 2022 (GLOBE NEWSWIRE) -- Amalgamated Financial Corp. (the “Company” or “Amalgamated”) (Nasdaq: AMAL), the holding company for Amalgamated Bank (the “Bank”), today announced financial results for the fourth quarter ended December 31, 20211.

Fourth Quarter 2021 Highlights

  • Net income of $15.9 million, or $0.50 per diluted share, compared to $14.4 million, or $0.46 per diluted share, for the third quarter of 2021 and $13.8 million, or $0.44 per diluted share for the fourth quarter of 2020.
  • Total assets exceeded $7.0 billion for the first time.
  • Deposits increased $131.8 million to $6.4 billion on a linked quarter basis.
  • Political deposits remained strong and stable at $989.6 million as of December 31, 2021.
  • Cost of deposits was 0.09%, down four basis points from the fourth quarter of 2020.
  • Net loans, not including PACE assessments, increased $189.9 million, or 6.2%, to $3.3 billion, on a linked quarter basis.
  • Total PACE assessments grew $206.4 million, or 49%, on a year over year basis to $627.4 million. Of which, Commercial PACE assessments grew $158.4 million to $175.7 million from $17.3 million on a year over year basis and $6.6 million during the quarter.
  • Net interest margin improved to 2.77% compared to 2.70% for the third quarter of 2021 while declining from 3.06% for the fourth quarter of 2020.
  • Nonaccrual loans improved to $28.2 million or 0.85% of total loans as of December 31, 2021, compared to $45.5 million or 1.46% of total loans on a linked quarter basis.
  • Credit quality improved with classified or criticized assets declining by $79.9 million or 26% to $230.9 million on a linked quarter basis and by $137.4 million or 37% on a year over year basis.
  • Regulatory capital remains above bank “well capitalized” standards, including on a pro-forma basis as of December 31, 2021 after giving effect to the pending Amalgamated Bank of Chicago (“ABOC”) acquisition.
  • Subordinated debt of $85.0 million raised to help fund the ABOC acquisition, now targeted to close early in the second quarter of 2022.

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

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

Results of Operations, Quarter Ended December 31, 2021

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

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

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

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

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

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

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

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

Results of Operations, Full Year Ended December 31, 2021

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

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

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

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

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

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

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

Financial Condition

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

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

Deposits at December 31, 2021 were $6.4 billion, an increase of $1.1 billion, or 19.1%, as compared to $5.3 billion as of December 31, 2020. Deposits held by politically active customers, such as campaigns, PACs, advocacy-based organizations, and state and national party committees were $989.6 million as of December 31, 2021, an increase of $386.8 million compared to $602.8 million as of December 31, 2020.

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

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

Capital

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

Our tangible book value per share was $17.56 as of December 31, 2021 compared to $16.66 as of December 31, 2020.

Conference Call

As previously announced, Amalgamated Financial Corp. will host a conference call to discuss its fourth quarter and full year 2021 results today, January 27, 2022 at 11:00am (Eastern Time). The conference call can be accessed by dialing 1-877-407-9716 (domestic) or 1-201-493-6779 (international) and asking for the Amalgamated Financial Corp. Fourth Quarter 2021 Earnings Call. A replay of the conference call will be available within two hours of the conclusion of the call and can be accessed both online and by dialing 1-844-512-2921 (international callers please dial 1-412-317-6671). The pin to access the telephone replay is 13726056. The replay will be available until February 3, 2022.

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

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

About Amalgamated Financial Corp.

Amalgamated Financial Corp. is a Delaware public benefit corporation and a bank holding company engaged in commercial banking and financial services through its wholly-owned subsidiary, Amalgamated Bank. Amalgamated Bank is a New York-based full-service commercial bank and a chartered trust company with a combined network of five branches across New York City, Washington D.C., and San Francisco, and a commercial office in Boston. Amalgamated Bank was formed in 1923 as Amalgamated Bank of New York by the Amalgamated Clothing Workers of America, one of the country’s oldest labor unions. Amalgamated Bank provides commercial banking and trust services nationally and offers a full range of products and services to both commercial and retail customers. Amalgamated Bank is a proud member of the Global Alliance for Banking on Values and is a certified B Corporation®. As of December 31, 2021, our total assets were $7.1 billion, total net loans were $3.3 billion, and total deposits were $6.4 billion. Additionally, as of December 31, 2021, our trust business held $40.2 billion in assets under custody and $17.3 billion in assets under management.

Non-GAAP Financial Measures

This release (and the accompanying financial information and tables) refers to certain non-GAAP financial measures including, without limitation, “Core operating revenue,” “Core non-interest expense,” “Core net income,” “Tangible common equity,” “Average tangible common equity,” “Core return on average assets,” “Core return on average tangible common equity,” and “Core efficiency ratio.”

Our management utilizes this information to compare our operating performance for December 31, 2021 versus certain periods in 2021 and 2020 and to prepare internal projections. We believe these non-GAAP financial measures facilitate making period-to-period comparisons and are meaningful indications of our operating performance. In addition, because intangible assets such as goodwill and other discrete items unrelated to our core business, which are excluded, vary extensively from company to company, we believe that the presentation of this information allows investors to more easily compare our results to those of other companies.

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

Terminology

Certain terms used in this release are defined as follows:

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

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

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

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

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

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

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

Forward-Looking Statements

Statements included in this release that are not historical in nature are intended to be, and are hereby identified as, forward-looking statements within the meaning of the Private Securities Litigation Reform Act, Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements generally can be identified through the use of forward-looking terminology such as “may,” “will,” “anticipate,” “should,” “would,” “believe,” “contemplate,” “expect,” “estimate,” “continue,” “in the future,” “may” and “intend,” as well as other similar words and expressions of the future, and in this release include statements about our planned acquisition of ABOC. Forward-looking statements are subject to known and unknown risks, uncertainties and other factors, any or all of which could cause actual results to differ materially from the results expressed or implied by such forward-looking statements. These risks and uncertainties include, but are not limited to: (i) deterioration in the financial condition of borrowers resulting in significant increases in loan losses and provisions for those losses; (ii) continuation of the historically low short-term interest rate environment; (iii) our inability to maintain the historical growth rate of the loan portfolio; (iv) changes in loan underwriting, credit review or loss reserve policies associated with economic conditions, examination conclusions, or regulatory developments; (v) the impact of competition with other financial institutions, including pricing pressures and the resulting impact on our results, including as a result of compression to net interest margin; (vi) greater than anticipated adverse conditions in the national or local economies including in our core markets, including, but not limited to, the negative impacts and disruptions resulting from the outbreak of the novel coronavirus, or COVID-19, which may continue to have an adverse impact on our business, operations and performance, and could continue to have a negative impact on our credit portfolio, share price, borrowers, and on the economy as a whole, both domestically and globally; (vii) fluctuations or unanticipated changes in interest rates on loans or deposits or that affect the yield curve; (viii) the results of regulatory examinations; (ix) potential deterioration in real estate values; (x) changes in legislation, regulation, policies, or administrative practices, whether by judicial, governmental, or legislative action; (xi) the risk that the preliminary financial information reported herein and our current preliminary analysis will be different when our review is finalized; (xii) increased competition for experienced executives in the banking industry; and (xiii) risks related to our proposed acquisition of ABOC, including, among others, that the acquisition does not close when expected or at all because conditions to closing are not satisfied on a timely basis or at all, or that financial projections from the acquisition are not realized. Additional factors which could affect the forward-looking statements can be found in our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K filed with the SEC and available on the SEC’s website at https://www.sec.gov/. We disclaim any obligation to update or revise any forward-looking statements contained in this release, which speak only as of the date hereof, whether as a result of new information, future events or otherwise, except as required by law.

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


Consolidated Statements of Income (unaudited)

 Three Months Ended Year Ended
 December 31, September 30, December 31, December 31,
($ in thousands)2021 2021 2020 2021 2020
INTEREST AND DIVIDEND INCOME         
Loans$32,138  $29,915  $35,544 $123,318  $141,983 
Securities 16,511   14,612   11,816  56,387   47,588 
Federal Home Loan Bank of New York stock 38   43   36  170   227 
Interest-bearing deposits in banks 200   230   66  651   697 
Total interest and dividend income 48,887   44,800   47,462  180,526   190,495 
INTEREST EXPENSE         
Deposits 1,407   1,413   1,807  5,823   10,452 
Borrowed funds 399        399   27 
Total interest expense 1,806   1,413   1,807  6,222   10,479 
NET INTEREST INCOME 47,081   43,387   45,655  174,304   180,016 
Provision for (recovery of) loan losses 3,568   (2,276)  4,589  (287)  24,791 
Net interest income after provision for loan losses 43,513   45,663   41,066  174,591   155,225 
NON-INTEREST INCOME         
Trust Department fees 2,881   3,353   3,533  13,352   15,222 
Service charges on deposit accounts 2,414   2,466   2,811  9,355   9,201 
Bank-owned life insurance 530   539   363  2,388   3,085 
Gain (loss) on sale of securities (106)  413     649   1,605 
Gain (loss) on sale of loans, net 181   280   1,320  1,887   2,520 
Gain (loss) on other real estate owned, net         (407)  (482)
Equity method investments 5,870   (483)  1,825  150   7,411 
Other 591   134   188  1,015   2,042 
Total non-interest income 12,361   6,702   10,040  28,389   40,604 
NON-INTEREST EXPENSE         
Compensation and employee benefits 17,359   17,482   17,082  69,844   69,421 
Occupancy and depreciation 3,730   3,440   3,385  14,023   23,040 
Professional fees 3,742   2,348   4,033  12,961   11,205 
Data processing 5,194   4,521   3,174  16,042   11,330 
Office maintenance and depreciation 695   887   776  3,057   3,314 
Amortization of intangible assets 302   301   342  1,207   1,370 
Advertising and promotion 982   1,023   1,003  3,230   3,514 
Other 3,028   3,032   2,875  11,891   10,692 
Total non-interest expense 35,032   33,034   32,670  132,255   133,886 
Income before income taxes 20,842   19,331   18,436  70,725   61,943 
Income tax expense (benefit) 4,918   4,915   4,646  17,788   15,755 
Net income 15,924   14,416   13,790  52,937   46,188 
Net income attributable to Amalgamated Financial Corp.$15,924  $14,416  $13,790 $52,937  $46,188 
Earnings per common share - basic$0.51  $0.46  $0.44 $1.70  $1.48 
Earnings per common share - diluted$0.50  $0.46  $0.44 $1.68  $1.48 


Consolidated Statements of Financial Condition

($ in thousands)December 31,
2021
 December 31,
2020
Assets(unaudited)  
Cash and due from banks$8,622  $7,736 
Interest-bearing deposits in banks 321,863   31,033 
Total cash and cash equivalents 330,485   38,769 
Securities:   
Available for sale, at fair value (amortized cost of $2,103,049 and $1,513,409, respectively) 2,113,410   1,539,862 
Held-to-maturity (fair value of $849,704 and $502,425, respectively) 843,569   494,449 
Loans held for sale 2,279   11,178 
Loans receivable, net of deferred loan origination costs (fees) 3,313,224   3,488,895 
Allowance for loan losses (35,866)  (41,589)
Loans receivable, net 3,277,358   3,447,306 
    
Resell agreements 229,018   154,779 
Accrued interest and dividends receivable 28,820   23,970 
Premises and equipment, net 11,735   12,977 
Bank-owned life insurance 107,266   105,888 
Right-of-use lease asset 33,115   36,104 
Deferred tax asset 26,719   36,079 
Goodwill 12,936   12,936 
Other intangible assets 4,151   5,359 
Equity investments 6,856   11,735 
Other assets 51,328   47,240 
Total assets$7,079,045  $5,978,631 
Liabilities   
Deposits$6,356,255  $5,338,711 
Subordinated Debt 85,000    
Operating leases 48,160   53,173 
Other liabilities 25,755   50,926 
Total liabilities$6,515,170  $5,442,810 
    
Commitments and contingencies     
    
Stockholders’ equity   
Common stock, par value $.01 per share (70,000,000 shares authorized; 31,130,143 and 31,049,525 shares issued and outstanding, respectively) 311   310 
Additional paid-in capital 297,975   300,989 
Retained earnings 260,047   217,213 
Accumulated other comprehensive income (loss), net of income taxes 5,409   17,176 
Total Amalgamated Financial Corp. stockholders’ equity 563,742   535,688 
Noncontrolling interests 133   133 
Total stockholders’ equity 563,875   535,821 
Total liabilities and stockholders’ equity$7,079,045  $5,978,631 


Select Financial Data

 As of and for the As of and for the
 Three Months Ended Year Ended
 December 31, September 30, December 31, December 31,
(Shares in thousands)2021 2021 2020 2021 2020
Selected Financial Ratios and Other Data:         
Earnings         
Basic$0.51 $0.46 $0.44 1.70 1.48
Diluted 0.50  0.46  0.44 1.68 1.48
Core net income (non-GAAP)         
Basic$0.54 $0.46 $0.44 1.75 1.62
Diluted 0.53  0.46  0.44 1.72 1.61
Book value per common share (excluding minority interest) 18.11  17.89  17.25 18.11 17.25
Tangible book value per share (non-GAAP) 17.56  17.33  16.66 17.56 16.66
Common shares outstanding 31,130  31,097  31,050 31,130 31,050
Weighted average common shares outstanding, basic 31,108  31,094  31,050 31,104 31,133
Weighted average common shares outstanding, diluted 31,516  31,462  31,145 31,512 31,229


Select Financial Data

 As of and for the As of and for the
 Three Months Ended Year Ended
 December 31, September 30, December 31, December 31,
 2021 2021 2020 2021 2020
Selected Performance Metrics:         
Return on average assets0.90% 0.86% 0.89% 0.81% 0.76%
Core return on average assets (non-GAAP)0.95% 0.86% 0.89% 0.83% 0.83%
Return on average equity11.23% 10.29% 10.34% 9.59% 9.07%
Core return on average tangible common equity (non-GAAP)12.20% 10.62% 10.72% 10.16% 10.27%
Average equity to average assets8.02% 8.38% 8.58% 8.40% 8.50%
Tangible common equity to tangible assets7.74% 7.88% 8.65% 7.74% 8.65%
Loan yield4.01% 3.84% 4.04% 3.88% 4.03%
Securities yield2.18% 2.19% 2.21% 2.17% 2.53%
Deposit cost0.09% 0.09% 0.13% 0.10% 0.19%
Net interest margin2.77% 2.70% 3.06% 2.77% 3.11%
Efficiency ratio (1)58.94% 65.95% 58.66% 65.25% 60.69%
Core efficiency ratio (non-GAAP) (1)57.18% 65.71% 58.66% 64.24% 57.60%
          
Asset Quality Ratios:         
Nonaccrual loans to total loans0.85% 1.46% 1.75% 0.85% 1.75%
Nonperforming assets to total assets0.77% 0.99% 1.38% 0.77% 1.38%
Allowance for loan losses to nonaccrual loans127.10% 78.83% 68.26% 127.10% 68.26%
Allowance for loan losses to total loans1.08% 1.15% 1.19% 1.08% 1.19%
Annualized net charge-offs (recoveries) to average loans0.44% -0.02% 1.24% 0.17% 0.48%
          
Capital Ratios:         
Tier 1 leverage capital ratio7.62% 7.85% 7.97% 7.62% 7.97%
Tier 1 risk-based capital ratio12.98% 13.98% 13.11% 12.98% 13.11%
Total risk-based capital ratio15.95% 14.99% 14.25% 15.95% 14.25%
Common equity tier 1 capital ratio12.98% 13.98% 13.11% 12.98% 13.11%
          
(1) Efficiency ratio is calculated by dividing total non-interest expense by the sum of net interest income and total non-interest income


Loan and Held-to-Maturity Securities Portfolio Composition

(In thousands)At December 31, 2021 At September 30, 2021 At December 31, 2020
 Amount % of total
loans
 Amount % of total
loans
 Amount % of total
loans
Commercial portfolio:           
Commercial and industrial$729,385  22.0% $628,388  20.2% $677,192  19.5%
Multifamily 821,801  24.8%  826,143  26.5%  947,177  27.2%
Commercial real estate 370,429  11.2%  346,996  11.1%  372,736  10.7%
Construction and land development 31,539  1.0%  34,863  1.1%  56,087  1.6%
Total commercial portfolio 1,953,154  59.0%  1,836,390  58.9%  2,053,192  59.0%
            
Retail portfolio:           
Residential real estate lending 1,063,682  32.2%  1,032,947  33.1%  1,238,697  35.5%
Consumer and other 291,818  8.8%  249,050  8.0%  190,676  5.5%
Total retail 1,355,500  41.0%  1,281,997  41.1%  1,429,373  41.0%
Total loans 3,308,654  100.0%  3,118,387  100.0%  3,482,565  100.0%
            
Net deferred loan origination costs (fees) 4,570     4,942     6,330   
Allowance for loan losses (35,866)    (35,863)    (41,589)  
Total loans, net$3,277,358    $3,087,466    $3,447,306   
            
Held-to-maturity securities portfolio:           
PACE assessments 627,394  74.4%  627,195  86.5%  421,036  85.2%
Other securities 216,175  25.6%  97,881  13.5%  73,413  14.8%
Total held-to-maturity securities$843,569  100.0% $725,076  100.0% $494,449  100.0%


Net Interest Income Analysis

 

 Three Months Ended
 December 31, 2021 September 30, 2021 December 31, 2020
(In thousands)Average
Balance
 Income/
Expense
 Yield/
Rate
 Average
Balance
 Income/
Expense
 Yield/
Rate
 Average
Balance
 Income/
Expense
 Yield/
Rate
                  
Interest earning assets:                 
Interest-bearing deposits in banks$561,027 $200 0.14% $632,526 $230 0.14% $299,881 $66 0.09%
Securities and FHLB stock 3,014,586  16,549 2.18%  2,659,803  14,655 2.19%  2,133,957  11,852 2.21%
Total loans, net (1)(2) 3,177,729  32,138 4.01%  3,087,744  29,915 3.84%  3,503,929  35,544 4.04%
Total interest earning assets 6,753,342  48,887 2.87%  6,380,073  44,800 2.79%  5,937,767  47,462 3.18%
Non-interest earning assets:                 
Cash and due from banks 8,072      8,464      7,594    
Other assets 249,476      243,969      237,628    
Total assets$7,010,890     $6,632,506     $6,182,989    
                  
Interest bearing liabilities:                 
Savings, NOW and money market deposits$2,765,380 $1,220 0.18% $2,641,719 $1,173 0.18% $2,356,137 $1,384 0.23%
Time deposits 215,562  187 0.34%  241,009  240 0.40%  268,896  423 0.63%
Total deposits 2,980,942  1,407 0.19%  2,882,728  1,413 0.19%  2,625,033  1,807 0.27%
Other Borrowings 49,891  399 3.17%     %     %
Total interest bearing liabilities 3,030,833  1,806 0.24%  2,882,728  1,413 0.19%  2,625,033  1,807 0.27%
Non-interest bearing liabilities:                 
Demand and transaction deposits 3,290,932      3,077,231      2,947,075    
Other liabilities 126,746      116,790      80,529    
Total liabilities 6,448,511      6,076,749      5,652,637    
Stockholders’ equity 562,379      555,757      530,352    
Total liabilities and stockholders’ equity$7,010,890     $6,632,506     $6,182,989    
                  
Net interest income / interest rate spread  $47,081 2.63%   $43,387 2.60%   $45,655 2.91%
Net interest earning assets / net interest margin$3,722,509   2.77% $3,497,345   2.70% $3,312,734   3.06%
                  
Total Cost of Deposits    0.09%     0.09%     0.13%

 

 

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


Net Interest Income Analysis

 Year Ended
 December 31, 2021 December 31, 2020
(In thousands)Average
Balance
Income /
Expense
Yield /
Rate
 Average
Balance
Income /
Expense
Yield /
Rate
            
Interest earning assets:           
Interest-bearing deposits in banks$521,681 $651 0.12% $371,112 $697 0.19%
Securities and FHLB stock 2,600,494  56,557 2.17%  1,890,824  47,815 2.53%
Total loans, net (1)(2) 3,180,093  123,318 3.88%  3,527,261  141,983 4.03%
Total interest earning assets 6,302,268  180,526 2.86%  5,789,197  190,495 3.29%
Non-interest earning assets:           
Cash and due from banks 7,853      25,220    
Other assets 259,718      229,825    
Total assets$6,569,839     $6,044,242    
            
Interest bearing liabilities:           
Savings, NOW and money market deposits$2,622,584 $4,788 0.18% $2,297,841 $7,303 0.32%
Time deposits 248,507  1,035 0.42%  335,433  3,149 0.94%
Total deposits 2,871,091  5,823 0.20%  2,633,274  10,452 0.40%
Federal Home Loan Bank advances 123   0.00%  1,585  27 1.70%
Other Borrowings 12,575  399 3.17%     %
Total interest bearing liabilities 2,883,789  6,222 0.22%  2,634,859  10,479 0.40%
Non-interest bearing liabilities:           
Demand and transaction deposits 3,017,621      2,798,106    
Other liabilities 116,256      102,282    
Total liabilities 6,017,666      5,535,247    
Stockholders’ equity 552,173      508,995    
Total liabilities and stockholders’ equity$6,569,839     $6,044,242    
            
Net interest income / interest rate spread  $174,304 2.64%   $180,016 2.89%
Net interest earning assets / net interest margin$3,418,479   2.77% $3,154,338   3.11%
            
Total Cost of Deposits    0.10%     0.19%

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


Deposit Portfolio Composition

(In thousands)December 31, 2021 September 30, 2021 December 31, 2020
      
Non-interest bearing demand deposit accounts$3,335,005 $3,189,155 $2,603,274
NOW accounts 210,844  206,610  205,653
Money market deposit accounts 2,227,953  2,241,914  1,914,391
Savings accounts 375,301  364,568  343,368
Time deposits 207,152  222,259  272,025
Total deposits$6,356,255 $6,224,506 $5,338,711


 Three Months Ended
 December 31, 2021 September 30, 2021 December 31, 2020
(In thousands)Average
Balance
 Average
Rate Paid
 Average
Balance
 Average
Rate Paid
 Average
Balance
 Average
Rate Paid
            
Non-interest bearing demand deposit accounts$3,290,932 0.00% $3,077,231 0.00% $2,947,075 0.00%
NOW accounts 204,556 0.09%  205,417 0.09%  194,555 0.08%
Money market deposit accounts 2,190,423 0.20%  2,066,830 0.20%  1,823,391 0.27%
Savings accounts 370,401 0.10%  369,472 0.10%  338,192 0.12%
Time deposits 215,562 0.34%  241,009 0.40%  268,896 0.62%
Total deposits$6,271,874 0.09% $5,959,959 0.09% $5,572,109 0.13%


Asset Quality

(In thousands)December 31, 2021 September 30, 2021 December 31, 2020
Loans 90 days past due and accruing$  $  $1,404 
Nonaccrual loans excluding held for sale loans and restructured loans 14,722   24,960   40,039 
Nonaccrual loans held for sale 1,000       
Troubled debt restructured loans - nonaccrual 13,497   20,534   20,885 
Troubled debt restructured loans - accruing 24,997   21,958   19,553 
Other real estate owned 307   307   306 
Impaired securities 63   64   47 
Total nonperforming assets$54,586  $67,823  $82,234 
      
Nonaccrual loans:     
Commercial and industrial$8,313  $13,709  $12,444 
Multifamily 2,907   6,079   9,575 
Commercial real estate 4,054   4,023   3,433 
Construction and land development       11,184 
Total commercial portfolio 15,274   23,811   36,636 
      
Residential real estate lending 12,525   20,797   23,656 
Consumer and other 420   886   632 
Total retail portfolio 12,945   21,683   24,288 
Total nonaccrual loans$28,219  $45,494  $60,924 
      
Nonaccrual loans to total loans 0.85%  1.46%  1.75%
Nonperforming assets to total assets 0.77%  0.99%  1.38%
Allowance for loan losses to nonaccrual loans 127.10%  78.83%  68.26%
Allowance for loan losses to total loans 1.08%  1.15%  1.19%
Annualized net charge-offs (recoveries) to average loans 0.44%  -0.02%  1.24%


Credit Quality

 December 31, 2021
($ in thousands)Pass Special Mention Substandard Doubtful Total
Commercial and industrial$693,312 $10,165 $25,908 $ $729,385
Multifamily 721,869  48,804  51,128    821,801
Commercial real estate 296,261  13,947  60,221    370,429
Construction and land development 24,063    7,476    31,539
Residential real estate lending 1,050,865  292  12,525    1,063,682
Consumer and other 291,398    420    291,818
Total loans$3,077,768 $73,208 $157,678 $ $3,308,654


 September 30, 2021
($ in thousands)Pass Special Mention Substandard Doubtful Total
Commercial and industrial$579,429 $22,655 $25,850 $454 $628,388
Multifamily 696,898  83,851  42,221  3,173  826,143
Commercial real estate 243,903  26,815  76,278    346,996
Construction and land development 27,387    7,476    34,863
Residential real estate lending 1,011,856  294  20,797    1,032,947
Consumer and other 248,164    886    249,050
Total loans$2,807,637 $133,615 $173,508 $3,627 $3,118,387


 December 31, 2020
($ in thousands)Pass Special Mention Substandard Doubtful Total
Commercial and industrial$627,553 $16,407 $32,770 $462 $677,192
Multifamily 775,605  138,090  33,482    947,177
Commercial real estate 276,712  41,420  54,604    372,736
Construction and land development 28,967  15,936  11,184    56,087
Residential real estate lending 1,215,417    23,280    1,238,697
Consumer and other 190,044    632    190,676
Total loans$3,114,298 $211,853 $155,952 $462 $3,482,565


Reconciliation of GAAP to Non-GAAP Financial Measures
The information provided below presents a reconciliation of each of our non-GAAP financial measures to the most directly comparable GAAP financial measure.

 As of and for the  As of and for the
 Three Months Ended Year Ended
(in thousands)December 31,
2021
 September 30,
2021
 December 31,
2020
 December 31,
2021
 December 31,
2020
Core operating revenue         
Net Interest income (GAAP)$47,081  $43,387  $45,655  $174,304  $180,016 
Non-interest income 12,361   6,702   10,040   28,389   40,604 
Less: Branch sale (gain) loss (1)             (1,394)
Less: Securities (gain) loss 106   (413)     (649)  (1,605)
Core operating revenue (non-GAAP)$59,548  $49,676  $55,695  $202,044  $217,621 
          
Core non-interest expense         
Non-interest expense (GAAP)$35,032  $33,034  $32,670  $132,255  $133,886 
Less: Branch closure expense (2)             (8,330)
Less: Severance (3) (54)        (1,144)  (201)
Less: ABOC (930)  (392)     (1,322)   
Core non-interest expense (non-GAAP)$34,048  $32,642  $32,670  $129,789  $125,355 
          
Core net income         
Net Income (GAAP)$15,924  $14,416  $13,790  $52,937  $46,188 
Less: Branch sale (gain) loss (1)             (1,394)
Less: Securities (gain) loss 106   (413)     (649)  (1,605)
Add: Branch closure expense (2)             8,330 
Add: Severance (3) 54         1,144   201 
Add: ABOC 930   392      1,322    
Less: Tax on notable items (257)  5      (457)  (1,407)
Core net income (non-GAAP) 16,757   14,400   13,790   54,297   50,313 
          
Tangible common equity         
Stockholders’ Equity (GAAP)$563,875  $556,390  $535,821  $563,875  $535,821 
Less: Minority Interest (133)  (133)  (133)  (133)  (133)
Less: Goodwill (12,936)  (12,936)  (12,936)  (12,936)  (12,936)
Less: Core deposit intangible (4,151)  (4,453)  (5,358)  (4,151)  (5,358)
Tangible common equity (non-GAAP)$546,655  $538,868  $517,394  $546,655  $517,394 
          
Average tangible common equity         
Average Stockholders’ Equity (GAAP)$562,379  $555,757  $530,352  $552,173  $508,995 
Less: Minority Interest (133)  (133)  (133)  (133)  (134)
Less: Goodwill (12,936)  (12,936)  (12,936)  (12,936)  (12,936)
Less: Core deposit intangible (4,299)  (4,602)  (5,525)  (4,748)  (6,037)
Average tangible common equity (non-GAAP)$545,011  $538,086  $511,758  $534,356  $489,888 
          
Core return on average assets         
Core net income (non-GAAP)$16,757  $14,400  $13,790  $54,297  $50,313 
Divided: Total average assets 7,010,890   6,632,506   6,182,989   6,569,840   6,044,242 
Core return on average assets (non-GAAP) 0.95%  0.86%  0.89%  0.83%  0.83%
          
Core return on average tangible common equity         
Core net income (non-GAAP)$16,757  $14,400  $13,790  $54,297  $50,313 
Divided: Average tangible common equity 545,011   538,086   511,758   534,356   489,888 
Core return on average tangible common equity (non-GAAP) 12.20%  10.62%  10.72%  10.16%  10.27%
          
Core efficiency ratio         
Core non-interest expense (non-GAAP)$34,048  $32,642  $32,670  $129,789  $125,355 
Core operating revenue (non-GAAP) 59,548   49,676   55,695   202,044   217,621 
Core efficiency ratio (non-GAAP) 57.18%  65.71%  58.66%  64.24%  57.60%

(1) Fixed Asset branch sale in March 2020
(2) Occupancy and other expense related to closure of branches during our branch rationalization
(3) Salary and COBRA reimbursement expense for positions eliminated


[1] Effective March 1, 2021, the Company acquired all of the outstanding stock of the Bank in a reorganization effected under New York law and in accordance with the terms of a Plan of Acquisition dated September 4, 2020. In this release, unless the context indicates otherwise, references to “we,” “us,” and “our” refer to the Company and the Bank. However, if the discussion relates to a period before the effective date, the terms refer only to the Bank.
[2] Reconciliations of non-GAAP financial measures to the most comparable GAAP measure are set forth on the last page of the financial information accompanying this press release and may also be found on our website, www.amalgamatedbank.com. 


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