Financial News

Amalgamated Bank Reports Fourth Quarter and Full Year 2020 Financial Results

NEW YORK, Jan. 28, 2021 (GLOBE NEWSWIRE) -- Amalgamated Bank (Nasdaq: AMAL) (“Amalgamated” or the “Bank”) today announced financial results for the fourth quarter and full year ended December 31, 2020.

Fourth Quarter 2020 Highlights

  • Net income of $13.8 million, or $0.44 per diluted share, compared to $12.5 million, or $0.40 per diluted share, for the third quarter of 2020 and $12.0 million, or $0.37 per diluted share for the fourth quarter of 2019
  • Core net income (non-GAAP)[1] of $13.8 million, or $0.44 per diluted share, compared to $16.8 million, or $0.54 per diluted share for the third quarter of 2020 and $12.6 million, or $0.39 per diluted share, for the fourth quarter of 2019
  • Deposit decline of $682.3 million, primarily due to the election cycle, to $5.3 billion compared to a balance of $6.0 billion on September 30, 2020
  • Total loans of $3.4 billion, compared to a balance of $3.6 billion on September 30, 2020
  • Growth in PACE assessments of $53.6 million, or 58.1% annualized, from a balance of $367.4 million on September 30, 2020
  • Cost of deposits was 0.13%, compared to 0.14% for the third quarter of 2020 and 0.36% for the fourth quarter of 2019
  • Net interest margin was 3.06%, compared to 2.88% for the third quarter of 2020 and 3.43% for the fourth quarter of 2019
  • Common Equity Tier 1, Total Risk-Based, and Tier 1 Leverage capital ratios were 13.11%, 14.25%, and 7.97%, respectively, at December 31, 2020
  • Total nonperforming assets were $82.2 million or 1.38% of total assets as of December 31, 2020, compared to $80.6 million or 1.22% of total assets at September 30, 2020 and $66.7 million, or 1.25% of total assets at December 31, 2019

Full Year 2020 Highlights

  • Net income of $46.2 million, or $1.48 per diluted share, as compared to $47.2 million, or $1.47 per diluted share, for the full year of 2019
  • Core net income (non-GAAP)[1] of $50.3 million, or $1.61 per diluted share, as compared to $48.2 million, or $1.49 per diluted share, for the full year of 2019
  • Deposit growth of $697.7 million, or 15.0%, compared to December 31, 2019
  • Loan growth of $8.5 million, or 0.2%, compared to December 31, 2019
  • Growth in PACE assessments of $157.2 million, or 59.6%, from a balance of $263.8 million on December 31, 2019
  • Cost of deposits was 0.19%, compared to 0.35% for the full year of 2019
  • Net interest margin was 3.11%, compared to 3.55% for the full year of 2019

Keith Mestrich, President and Chief Executive Officer of Amalgamated Bank, commented, “As I look back on our fourth quarter and full year 2020 results, I am not only pleased, but proud of all that we have accomplished in such challenging, unprecedented times, highlighted by our net income growth of 10.5% to $13.8 million in the fourth quarter as compared to $12.5 million in the third quarter of 2020. Additionally, we expanded our position this election cycle as demonstrated in our political deposit balance as of year-end of $602.8 million which compares to the 2018 cycle trough of $181.9 million. While we expect political deposits to modestly run off further through the first quarter, our results greatly exceeded our expectations. Our ability to succeed, proven during the ongoing pandemic, is largely attributed to the strong foundation we have built over our near 100-year history, and, in recent years, the work we have completed to strengthen the Bank’s operations, management team, and credit profile of our loan portfolio. Our team has worked diligently through the current crisis to proactively address issues in our portfolio and position the Bank for success as we expect the credit metrics of our loan portfolio to improve throughout 2021. Looking to the year ahead, there is much to be excited about as we continue to build upon our reputation as America’s Socially Responsible Bank and execute our growth strategy designed to increase the franchise value of Amalgamated. I look forward to working with the team that I am so very proud of as I transition into my new role as Special Advisor to the Board at the beginning of February.”

_________________________

[1] Reconciliations of non-GAAP financial measures to the most comparable GAAP measure are set forth on the last two pages of the financial information accompanying this press release and may also be found on our website, www.amalgamatedbank.com.

COVID-19 Update

Amalgamated’s primary concern during the COVID-19 pandemic is for the health and well-being of the Bank’s employees, customers, and communities. Our employees continue to operate in a work from home environment, and we continue to perform well, effectively transitioning many customers to our digital platform, allowing for further consolidation of our branch network.

We have offered payment deferrals as an option for our consumer and commercial borrowers who are experiencing financial stress as a result of COVID-19 impacts. As of December 31, 2020, the following loan balances are still on deferral, accruing interest, and no loan has been on deferral longer than six months.

 Total LoansDeferrals as of:% of Portfolio
(1)
$ millions12/31/2012/31/209/30/2020
Multifamily$947 $15 $124 1.5%
CRE & Construction429 2 97 0.5%
C&I677 4 5 0.6%
Residential1,239 18 63 1.5%
Consumer & Student191 2 4 1.0%
Total$3,843 $41 $293 1.2%
(1) Loan portfolio % is for deferral balances as of 12/31/2020 

The table below shows the credit risk rating of loans that have exited deferral status as of December 31, 2020, including those loans that did not resume payments and have been moved to non-accrual. These loans do not include other special mention or substandard loans that were never granted a payment deferral:

$ millionsPass
Rated
Special
Mention
Substandard(2)Total
Multifamily$52 $109 $18 $179  
CRE & Construction30 39 49 118  
C&I10 15 3 28  
Residential87  16 103  
Consumer & Student   —  
Total$179 $163 $86 $428 
(2) Substandard loans include $16 million of residential and $4 million of multifamily loans that have been placed on non-accrual 

Results of Operations, Quarter Ended December 31, 2020

Net income for the fourth quarter of 2020 was $13.8 million, or $0.44 per diluted share, compared to $12.5 million, or $0.40 per diluted share, for the third quarter of 2020 and $12.0 million, or $0.37 per diluted share, for the fourth quarter of 2019. The $1.3 million increase for the 2020 fourth quarter, compared to the 2020 third quarter, was primarily due to a $5.2 million decrease in non-interest expense, partially offset by a $2.7 million decrease in non-interest income and a $1.2 million increase in the provision for loan losses.

Core net income (non-GAAP) for the fourth quarter of 2020 was $13.8 million, or $0.44 per diluted share, compared to $16.8 million, or $0.54 per diluted share, for the third quarter of 2020 and $12.6 million, or $0.39 per diluted share, for the fourth quarter of 2019. Core net income for the fourth quarter of 2020 included no adjustments to GAAP net income, and the third quarter of 2020 excluded $0.6 million of non-interest income gains on the sale of securities, $6.4 million in expense related to the closure of six branches and severance costs, and the tax effect of such adjustments. Core net income for the fourth quarter of 2019 excluded $0.2 million of non-interest income gains on the sale of securities, $1.1 million in expense related to the closure of one branch and severance costs, and the tax effect of such adjustments.

Net interest income was $45.7 million for the fourth quarter of 2020, compared to $45.2 million for the third quarter of 2020 and $42.3 million for the fourth quarter of 2019. The year-over-year increase of $3.4 million was primarily attributable to a decrease in interest expense due to a decrease in deposit rates paid and FHLB advances, and an increase in average securities of $734.3 million and average loans of $97.1 million, with such growth more than offsetting the lower yields earned on such assets. These impacts were partially offset by an increase in average interest-bearing deposits of $224.5 million.

Net interest margin was 3.06% for the fourth quarter of 2020, an increase of 18 basis points from 2.88% in the third quarter of 2020, and a decrease of 37 basis points from 3.43% in the fourth quarter of 2019. The accretion of the loan mark from the loans we acquired in our New Resource Bank acquisition contributed two basis points to our net interest margin in the third and fourth quarters of 2020, compared to five basis points in the fourth quarter of 2019. Prepayment penalties earned through loan income contributed 13 basis points to our net interest margin in the fourth quarter of 2020, compared to seven and two basis points in the third quarter of 2020 and the fourth quarter of 2019, respectively.

Provisions for loan losses totaled an expense of $4.6 million for the fourth quarter of 2020 compared to an expense of $0.1 million for the same period in 2019. The provision expense in the fourth quarter of 2020 was primarily driven by an $11.0 million charge-off primarily related to an indirect C&I loan, of which $8.3 million was reserved for in previous quarters, and by specific reserves on multifamily loans of $2.0 million.

Non-interest income was $10.0 million for the fourth quarter of 2020, compared to $12.8 million in the third quarter of 2020 and $7.8 million for the same period in 2019. This decrease of $2.7 million in the fourth quarter of 2020 compared to the previous quarter was primarily due to a decrease of $2.5 million in tax credits on equity investments in solar projects. The increase of $2.2 million in the fourth quarter of 2020 compared to the fourth quarter of 2019 was primarily due to $1.8 million in tax credits on equity investments in solar projects in the fourth quarter of 2020 and an increase of $1.3 million in gains on the sale of loans. These increases were partially offset by a $0.9 million decrease in Trust Department fees primarily related to the decrease in revenue from a real estate fund that is liquidating assets, the movement of funds to lower yielding products and market volatility. Our real-estate fund is expected to stop earnings fees in 2021; this fund generated $0.4 million in fees, included within Trust Department fees, during the three months ended December 31, 2020. Additionally, we expect a loss in equity method investments of approximately $5.6 million during 2021; this loss is due to the timing of the $7.4 million in tax benefits earned during 2020. These impacts do not include any benefits of new solar equity investments that we may make in the future.

Non-interest expense for the fourth quarter of 2020 was $32.7 million, a decrease of $5.2 million from the third quarter of 2020 and a decrease of $0.8 million from the fourth quarter of 2019. The decrease of $5.2 million from the previous quarter was primarily due to a $6.5 million decrease in occupancy and depreciation expenses related to closing six branches in New York City, partially offset by an increase of $1.8 million in professional fees related to the formation of a bank holding company, the transition of our CEO and other strategic initiatives.

Our provision for income tax expense was $4.6 million for the fourth quarter of 2020, compared to $4.3 million for the third quarter of 2020 and $4.4 million for the fourth quarter of 2019. Our effective tax rate for the fourth quarter of 2020 was 25.2%, compared to 25.4% for the third quarter of 2020 and 27.0% for the fourth quarter of 2019.

Results of Operations, Full Year Ended December 31, 2020

Net income for the year ended December 31, 2020 was $46.2 million, or $1.48 per average diluted share, compared to $47.2 million, or $1.47 per average diluted share, for year ended December 31, 2019. The $1.1 million decrease was primarily due to a $21.0 million increase in the provision for loan losses and a $6.1 million increase in non-interest expense, partially offset by a $13.4 million increase in net interest income and an $11.4 million increase in non-interest income.

Core net income (non-GAAP) for the year ended December 31, 2020 of $50.3 million, or $1.61 per diluted share, compared to $48.2 million or $1.49 per diluted share, for the year ended December 31, 2019. Core net income for the twelve months ended December 31, 2020 excludes branch closure expenses and the gain on sale of a closed branch, gains on the sale of securities, severance costs, and the tax effect of such adjustments.

Net interest income was $180.0 million for the year ended December 31, 2020, compared to $166.6 million for the year ended December 31, 2019. This increase of $13.4 million was primarily attributable to a decrease in interest expense due to a decrease in borrowings and deposit rate paid, and an increase in average securities of $552.5 million and average loans of $250.7 million, with such growth more than offsetting the lower yields earned on such assets. These impacts are partially offset by an increase in average interest-bearing deposits of $295.7 million.

Provisions for loan losses totaled an expense of $24.8 million for the year ended December 31, 2020, compared to an expense of $3.8 million for the year ended December 31, 2019. The provision expense for the year ended December 31, 2020 was primarily driven by a $4.4 million increase in allowance related to negative economic factors and payment deferrals in our loan portfolio, $17.0 million in charge offs primarily related to hotel, construction loans, and indirect C&I loans (of which $4.4 million was previously reserved for in 2019), a $4.6 million increase related to loan downgrades and other factors.

Non-interest income was $40.6 million for the year ended December 31, 2020, compared to $29.2 million for the year ended December 31, 2019, an increase of $11.4 million. This increase was primarily due to $7.4 million in tax credits on equity investments in solar projects, an increase of $2.5 million on gains on the sale of originated loans, a $1.5 million change in gain on the sale of securities, a $1.4 million gain on the sale of a branch reported in other non-interest income, and a $1.4 million increase in Bank-owned life insurance income due to the receipt of multiple death benefit payouts. These increases were partially offset by a $3.4 million decrease in Trust Department fees primarily related to the impact of low asset values in the first half of 2020 due to market fluctuations and the real estate fund that is liquidating its assets noted above.

Non-interest expense for the year ended December 31, 2020 was $133.9 million, an increase of $6.1 million from $127.8 million for the year ended December 31, 2019. The increase was primarily due to a $5.3 million increase in occupancy and depreciation expense related to branch closures and a $1.5 million increase in other expenses due to FDIC insurance rebates in 2019 that ceased in 2020.

We had income tax expense of $15.8 million for the year ended December 31, 2020, compared to $17.0 million for the year ended December 31, 2019. Our effective tax rate was 25.4% for the year ended December 31, 2020, compared to 26.4% for the year ended December 31, 2019.

Financial Condition

Total assets were $6.0 billion at December 31, 2020, compared to $5.3 billion at December 31, 2019. The increase of $0.7 billion was driven primarily by a $516.8 million increase in investment securities, of which $157.2 million was from PACE assessments, and a $154.8 million increase in resell agreements backed by Government Guaranteed loans. In the twelve months ended December 31, 2020, the Bank also made $26.1 million of investments in solar projects with federal tax benefits.

Total loans, net at December 31, 2020 were $3.4 billion, an increase of $8.5 million, or 0.2% annualized, compared to December 31, 2019. Loan growth in 2020 was primarily driven by a $202.9 million increase in C&I loans including $97.7 million of government guaranteed and Paycheck Protection Program loans, and a $27.6 million increase in consumer loans. These increases were partially offset by a $127.8 million decrease in residential loans and a $78.4 million decrease in commercial real estate and multifamily loans.

Deposits at December 31, 2020 were $5.3 billion, an increase of $0.7 billion, or 15.0% annualized, as compared to $4.6 billion as of December 31, 2019. Deposits held by politically active customers, such as campaigns, PACs, advocacy-based organizations, and state and national party committees were $603 million as of December 31, 2020, an increase of $24 million compared to $579 million as of December 31, 2019. Noninterest-bearing deposits represent 53% of average deposits and 49% of ending deposits for the year ended December 31, 2020, contributing to an average cost of deposits of 0.13% in the fourth quarter of 2020, a one basis point decrease from the previous quarter.

Nonperforming assets totaled $82.2 million, or 1.38% of period-end total assets at December 31, 2020, an increase of $15.1 million, compared with $66.7 million, or 1.25% of period-end total assets at December 31, 2019. The increase in non-performing assets at December 31, 2020 compared to the December 31, 2019 was primarily driven by the addition of $13.5 million of non-accruing residential first-lien mortgages related to the COVID-19 pandemic. These loans were moved to non-accrual after not resuming payments after six months of payment deferrals. Loans that were rated special mention or substandard increased by $305.7 million as of December 31, 2020 compared to December 31, 2019. This change was primarily due to an increase in CRE/multifamily loans categorized as special mention or substandard of $179.5 million and $84.4 million, respectively; these increases were primarily due to impacts of COVID-19 on rental income of these properties.

The allowance for loan losses increased $7.8 million to $41.6 million at December 31, 2020 from $33.8 million at December 31, 2019, primarily due to increases in allowance related to the coronavirus pandemic. At December 31, 2020, we had $73.7 million of impaired loans for which a specific allowance of $6.2 million was made, compared to $65.4 million of impaired loans at December 31, 2019 for which a specific allowance of $7.5 million was made. The ratio of allowance to total loans was 1.19% at December 31, 2020 and 0.98% at December 31, 2019.

Capital

As of December 31, 2020, our Common Equity Tier 1 Capital Ratio was 13.11%, Total Risk-Based Capital Ratio was 14.25%, and Tier-1 Leverage Capital Ratio was 7.97%, compared to 13.01%, 14.01% and 8.90%, respectively, as of December 31, 2019. Stockholders’ equity at December 31, 2020 was $535.8 million, compared to $490.5 million at December 31, 2019. The increase in stockholders’ equity was driven by $46.2 million of net income and a $14.0 million increase in accumulated other comprehensive income due to the mark to market on our securities portfolio, offset by a $7.0 million decrease due to share repurchases in the first quarter and a $10.1 million decrease due to dividends to shareholders.

Our tangible book value per share was $16.66 as of December 31, 2020 compared to $14.93 as of December 31, 2019.

Conference Call

As previously announced, Amalgamated Bank will host a conference call to discuss its fourth quarter and full year 2020 results today, January 28, 2021 at 10:00am (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 Bank Fourth Quarter 2020 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 13714757. The telephonic replay will be available until 11:59 pm (Eastern Time) on February 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 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 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 provides commercial banking and trust services nationally and offers a full range of products and services to both commercial and retail customers. Amalgamated is a proud member of the Global Alliance for Banking on Values and is a certified B Corporation®. As of December 31, 2020, our total assets were $6.0 billion, total net loans were $3.4 billion, and total deposits were $5.3 billion. Additionally, as of December 31, 2020, the trust business held $36.8 billion in assets under custody and $15.4 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,” “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, 2020 versus certain periods in 2019 and to prepare internal projections. We believe these non-GAAP financial measures facilitate making period-to-period comparisons and are meaningful indications of our operating performance. In addition, because intangible assets such as goodwill and other discrete items unrelated to our core business, which are excluded, vary extensively from company to company, we believe that the presentation of this information allows investors to more easily compare our results to those of other companies.

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

Terminology

Certain terms used in this release are defined as follows:

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

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

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

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

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

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

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

Forward-Looking Statements

Statements included in this release that are not historical in nature are intended to be, and are hereby identified as, forward-looking statements within the meaning of the Private Securities Litigation Reform Act, Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements generally can be identified through the use of forward-looking terminology such as “may,” “will,” “anticipate,” “should,” “would,” “believe,” “contemplate,” “expect,” “estimate,” “continue,” “in the future,” “may” and “intend,” as well as other similar words and expressions of the future, and in this press release include statements about expected performance of our loan portfolio and payment deferrals, the wind-down of our real estate fund and the expected charges and anticipated consolidation of our branch network and our solar tax equity investments. Forward-looking statements are subject to known and unknown risks, uncertainties and other factors, any or all of which could cause actual results to differ materially from the results expressed or implied by such forward-looking statements. These risks and uncertainties include, but are not limited to: (i) deterioration in the financial condition of borrowers resulting in significant increases in loan losses and provisions for those losses; (ii) continuation of the historically low short-term interest rate environment; (iii) the inability of Amalgamated Bank to maintain the historical growth rate of its loan portfolio; (iv) changes in loan underwriting, credit review or loss reserve policies associated with economic conditions, examination conclusions, or regulatory developments; (v) effectiveness of Amalgamated Bank’s asset management activities in improving, resolving or liquidating lower-quality assets; (vi) the impact of competition with other financial institutions, including pricing pressures and the resulting impact on Amalgamated Bank’s results, including as a result of compression to net interest margin; (vii) greater than anticipated adverse conditions in the national or local economies including in Amalgamated Bank’s 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 (viii) fluctuations or unanticipated changes in interest rates on loans or deposits or that affect the yield curve; (ix) the results of regulatory examinations; (x) potential deterioration in real estate values; (xi) changes in legislation, regulation, policies, or administrative practices, whether by judicial, governmental, or legislative action, including, but not limited to, the Coronavirus Aid, Relief, and Economic Security Act, or the “CARES Act”; (xi) the risk that the preliminary financial information reported herein and our current preliminary analysis will be different when our review is finalized; (xii) our inability to timely identify a new Chief Executive Officer in light of, among other things, competition for experienced executives in the banking industry; and (xiii) unexpected challenges and potential operational disruptions related to our Chief Executive Officer’s transition. Additional factors which could affect the forward-looking statements can be found in Amalgamated’s Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K filed with the FDIC and available on the FDIC's website at https://efr.fdic.gov/fcxweb/efr/index.html. Amalgamated Bank disclaims 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.

Media Contact:
Kaye Verville
The Levinson Group
kaye@mollylevinson.com
202-244-1785

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


Consolidated Statements of Income

 Three Months Ended
 Twelve Months Ended
 December 31, September 30,
 December 31, December 31,
($ in thousands)2020 2020 2019 2020 2019
INTEREST AND DIVIDEND INCOME(unaudited) (unaudited)   (unaudited)  
Loans$35,544  $35,602  $35,202  $141,983  $139,995 
Securities11,816  11,473  11,426  47,588  44,197 
Federal Home Loan Bank of New York stock36  56  134  227  813 
Interest-bearing deposits in banks66  152  193  697  949 
Total interest and dividend income47,462  47,283  46,955  190,495  185,954 
INTEREST EXPENSE             
Deposits1,807  2,049  4,065  10,452  14,461 
Borrowed funds    640  27  4,856 
Total interest expense1,807  2,049  4,705  10,479  19,317 
NET INTEREST INCOME45,655  45,234  42,250  180,016  166,637 
Provision for (recovery of) loan losses4,589  3,394  83  24,791  3,837 
Net interest income after provision for loan losses41,066  41,840  42,167  155,225  162,800 
NON-INTEREST INCOME           
Trust Department fees3,533  3,622  4,481  15,222  18,598 
Service charges on deposit accounts2,811  2,130  2,383  9,201  8,544 
Bank-owned life insurance363  1,227  405  3,085  1,649 
Gain (loss) on sale of investment securities available for sale, net  619  218  1,605  83 
Gain (loss) on sale of loans, net1,320  903  53  2,520  13 
Gain (loss) on other real estate owned, net  (176)   (482) (564)
Equity method investments1,825  4,297    7,411   
Other188  154  236  2,042  878 
Total non-interest income10,040  12,776  7,776  40,604  29,201 
NON-INTEREST EXPENSE             
Compensation and employee benefits17,082  17,547  18,089  69,421  70,276 
Occupancy and depreciation3,385  9,908  5,007  23,040  17,721 
Professional fees4,033  2,202  3,248  11,205  11,934 
Data processing3,174  2,916  2,545  11,330  10,880 
Office maintenance and depreciation776  863  889  3,314  3,540 
Amortization of intangible assets342  342  344  1,370  1,374 
Advertising and promotion1,003  1,172  911  3,514  2,908 
Other2,875  2,927  2,457  10,692  9,194 
Total non-interest expense32,670  37,877  33,490  133,886  127,827 
Income before income taxes18,436  16,739  16,453  61,943  64,174 
Income tax expense (benefit)4,646  4,259  4,445  15,755  16,972 
Net income 13,790  12,480  12,008  46,188  47,202 
Net income attributable to noncontrolling interests         
Net income attributable to Amalgamated Bank and subsidiaries$13,790  $12,480  $12,008  $46,188  $47,202 
Earnings per common share - basic0.44  0.40  0.38  1.48  1.49 
Earnings per common share - diluted0.44  0.40  0.37  1.48  1.47 


Consolidated Statements of Financial Condition

 December 31, December 31,
($ in thousands)2020 2019
Assets(unaudited)  
Cash and due from banks$7,736  $7,596 
Interest-bearing deposits in banks31,033  114,942 
Total cash and cash equivalents38,769  122,538 
Securities:   
Available for sale, at fair value (amortized cost of $1,513,409 and $1,217,087, respectively)1,539,862  1,224,770 
Held-to-maturity (fair value of $502,425 and $292,837, respectively)494,449  292,704 
    
Loans held for sale11,178  2,328 
Loans receivable, net of deferred loan origination costs (fees)3,488,895  3,472,614 
Allowance for loan losses(41,589) (33,847)
Loans receivable, net3,447,306  3,438,767 
    
Resell agreements154,779   
Accrued interest and dividends receivable23,970  19,088 
Premises and equipment, net12,977  17,778 
Bank-owned life insurance105,888  80,714 
Right-of-use lease asset36,104  47,299 
Deferred tax asset35,370  31,441 
Goodwill and other intangible assets18,295  19,665 
Other assets59,684  28,246 
Total assets$5,978,631  $5,325,338 
Liabilities   
Deposits$5,338,711  $4,640,982 
Borrowed funds  75,000 
Operating leases53,173  62,404 
Other liabilities50,926  56,408 
Total liabilities5,442,810  4,834,794 
    
Commitments and contingencies   
    
Stockholders’ equity   
Common stock, par value $.01 per share (70,000,000 shares authorized; 31,049,525 and 31,523,442 shares issued and outstanding, respectively)310  315 
Additional paid-in capital300,989  305,738 
Retained earnings217,213  181,132 
Accumulated other comprehensive income (loss), net of income taxes17,176  3,225 
Total Amalgamated Bank stockholders' equity535,688  490,410 
Noncontrolling interests133  134 
Total stockholders' equity535,821  490,544 
Total liabilities and stockholders’ equity$5,978,631  $5,325,338 


Select Financial Data

  As of and for the As of and for the
  Three Months Ended Twelve Months Ended
  December 31, September 30, December 31, December 31,
  2020 2020 2019 2020 2019
Selected Financial Ratios and Other Data:          
Earnings          
Basic $0.44  $0.40  $0.38  1.48  1.49 
Diluted 0.44  0.40  0.37  1.48  1.47 
Core Earnings (non-GAAP)          
Basic $0.44  $0.54  $0.40  1.62  1.52 
Diluted 0.44  0.54  0.39  1.61  1.49 
Book value per common share (excluding minority interest) 17.25  16.82  15.56  17.25  15.56 
Tangible book value per share (non-GAAP) 16.66  16.22  14.93  16.66  14.93 
Common shares outstanding 31,049,525  31,049,525  31,523,442  31,049,525  31,523,442 
Weighted average common shares outstanding, basic 31,049,525  31,049,525  31,529,014  31,132,652  31,733,195 
Weighted average common shares outstanding, diluted 31,145,436  31,075,400  32,125,683  31,228,563  32,205,248 


Select Financial Data

  As of and for the As of and for the
  Three Months Ended Twelve Months Ended
  December 31, September 30, December 31, December 31,
  2020 2020 2019 2020 2019
Selected Performance Metrics:          
Return on average assets 0.89% 0.76% 0.93% 0.76% 0.96%
Core return on average assets (non-GAAP) 0.89% 1.03% 0.97% 0.83% 0.98%
Return on average equity 10.34% 9.62% 9.75% 9.07% 10.03%
Core return on average tangible common equity (non-GAAP) 10.72% 13.44% 10.68% 10.27% 10.70%
Loan yield 4.04% 3.97% 4.10% 4.03% 4.27%
Securities yield 2.21% 2.24% 3.28% 2.53% 3.36%
Deposit cost 0.13% 0.14% 0.36% 0.19% 0.35%
Net interest margin 3.06% 2.88% 3.43% 3.11% 3.55%
Efficiency ratio (1) 58.66% 65.29% 66.95% 60.69% 65.27%
Core efficiency ratio (non-GAAP) 58.66% 54.84% 65.11% 57.60% 64.57%
           
Asset Quality Ratios:          
Nonaccrual loans to total loans 1.75% 1.41% 0.90% 1.75% 0.90%
Nonperforming assets to total assets 1.38% 1.22% 1.25% 1.38% 1.25%
Allowance for loan losses to nonaccrual loans 68% 95% 109% 68% 109%
Allowance for loan losses to total loans 1.19% 1.34% 0.98% 1.19% 0.98%
Annualized net charge-offs (recoveries) to average loans 1.24% 0.59% -0.01% 0.48% 0.22%
           
Capital Ratios:          
Tier 1 leverage capital ratio 7.97% 7.39% 8.90% 7.97% 8.90%
Tier 1 risk-based capital ratio 13.11% 12.76% 13.01% 13.11% 13.01%
Total risk-based capital ratio 14.25% 14.01% 14.01% 14.25% 14.01%
Common equity tier 1 capital ratio 13.11% 12.76% 13.01% 13.11% 13.01%
           
(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, 2020 At September 30, 2020 At December 31, 2019
  Amount % of total loans Amount % of total loans Amount % of total loans
Commercial portfolio:            
Commercial and industrial $677,192   19.4% $660,914   18.4% $474,342   13.7%
Multifamily 947,177   27.2% 974,962   27.1% 976,380   28.2%
Commercial real estate 372,736   10.7% 388,757   10.8% 421,947   12.2%
Construction and land development 56,087   1.6% 61,687   1.7% 62,271   1.8%
Total commercial portfolio 2,053,192   58.9% 2,086,320   58.0% 1,934,940   55.9%
             
Retail portfolio:            
Residential real estate lending 1,238,697   35.6% 1,329,021   37.0% 1,366,473   39.4%
Consumer and other 190,676   5.5% 179,507   5.0% 163,077   4.7%
Total retail 1,429,373   41.1% 1,508,528   42.0% 1,529,550   44.1%
Total loans 3,482,565   100.0% 3,594,848   100.0% 3,464,490   100.0%
             
Net deferred loan origination fees (costs) 6,330     7,604     8,124    
Allowance for loan losses (41,589)   (48,072)   (33,847)  
Total loans, net $3,447,306     $3,554,380     $3,438,767    
             
Held-to-maturity securities portfolio:            
PACE assessments 421,036   85.2% 367,393   83.3% 263,805   90.1%
Other securities 73,413   14.8% 73,556   16.7% 28,899   9.9%
Total held-to-maturity securities 494,449   100.0% 440,949   100.0% 292,704   100.0%


Net Interest Income Analysis

  Three Months Ended Three Months Ended Three Months Ended
  December 31, 2020 September 30, 2020 December 31, 2019
($ 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 $299,881  $66  0.09% $632,268  $152  0.10% $85,965  $193  0.89%
Securities and FHLB stock 2,133,957  11,852  2.21% 2,045,231  11,529  2.24% 1,399,657  11,560  3.28%
Total loans, net (1)(2) 3,503,929  35,544  4.04% 3,569,313  35,602  3.97% 3,406,806  35,202  4.10%
Total interest earning assets 5,937,767  47,462  3.18% 6,246,812  47,283  3.01% 4,892,428  46,955  3.81%
Non-interest earning assets:                  
Cash and due from banks 7,594      9,239      8,852     
Other assets 237,628      234,248      238,421     
Total assets $6,182,989      $6,490,299      $5,139,701     
                   
Interest bearing liabilities:                  
Savings, NOW and money market deposits $2,356,137  $1,384  0.23% $2,376,701  $1,427  0.24% $2,003,888  $2,762  0.55%
Time deposits 268,896  423  0.63% 321,696 622  0.77% 396,631  1,303  1.30%
Total deposits 2,625,033  1,807  0.27% 2,698,397  2,049  0.30% 2,400,519  4,065  0.67%
Federal Home Loan Bank advances     0.00%     0.00% 128,604  636  1.96%
Other Borrowings     0.00%     0.00% 978  4  1.62%
Total interest bearing liabilities 2,625,033  1,807  0.27% 2,698,397  2,049  0.30% 2,530,101  4,705  0.74%
Non-interest bearing liabilities:                  
Demand and transaction deposits 2,947,075      3,191,858      2,024,521     
Other liabilities 80,529      84,138      96,335     
Total liabilities 5,652,637      5,974,393      4,650,957     
Stockholders' equity 530,352      515,906      488,744     
Total liabilities and stockholders' equity $6,182,989      $6,490,299      $5,139,701     
                   
Net interest income / interest rate spread   $45,655  2.91%   $45,234  2.71%   $42,250  3.07%
Net interest earning assets / net interest margin $3,312,734    3.06% $3,548,415    2.88% $2,362,327    3.43%
                   
Total Cost of Deposits     0.13%     0.14%     0.36%
                   
(1) Amounts are net of deferred origination costs / (fees) and the allowance for loan losses
(2) Includes prepayment penalty interest income in 4Q20, 3Q20 and 4Q19 of $1,986,500, $1,110,011 and $262,196 respectively


Net Interest Income Analysis

  Twelve Months Ended Twelve Months Ended
  December 31, 2020 December 31, 2019
($ in thousands) Average
Balance
 Income /
Expense
 Yield /
Rate
 Average
Balance
 Income /
Expense
 Yield /
Rate
             
Interest earning assets:            
Interest-bearing deposits in banks $371,112  $697  0.19% $75,487  $949  1.26%
Securities and FHLB stock 1,890,824  47,815  2.53% 1,338,339  45,010  3.36%
Total loans, net (1)(2) 3,527,261  141,983  4.03% 3,276,603  139,995  4.27%
Total interest earning assets 5,789,197  190,495  3.29% 4,690,429  185,954  3.96%
Non-interest earning assets:            
Cash and due from banks 25,220      8,159     
Other assets 229,825      239,336     
Total assets $6,044,242      $4,937,924     
             
Interest bearing liabilities:            
Savings, NOW and money market deposits $2,297,841  $7,303  0.32% $1,902,414  $9,068  0.48%
Time deposits 335,433  3,149  0.94% 435,157  5,393  1.24%
Total deposits 2,633,274  10,452  0.40% 2,337,571  14,461  0.62%
Federal Home Loan Bank advances 1,585  27  1.70% 202,837  4,835  2.38%
Other Borrowings     0.00% 890  21  2.36%
Total interest bearing liabilities 2,634,859  10,479  0.40% 2,541,298  19,317  0.76%
Non-interest bearing liabilities:            
Demand and transaction deposits 2,798,106      1,832,083     
Other liabilities 102,282      93,816     
Total liabilities 5,535,247      4,467,197     
Stockholders' equity 508,995      470,727     
Total liabilities and stockholders' equity $6,044,242      $4,937,924     
             
Net interest income / interest rate spread   $180,016  2.89%   $166,637  3.20%
Net interest earning assets / net interest margin $3,154,338    3.11% $2,149,131    3.55%
             
Total Cost of Deposits     0.19%     0.35%
             
(1) Amounts are net of deferred origination costs / (fees) and the allowance for loan losses
(2) Includes prepayment penalty interest income in Dec YTD 2020 and Dec YTD 2019 of $4,148,555 and $888,234 respectively


Deposit Portfolio Composition

($ in thousands) December 31, 2020 September 30, 2020 December 31, 2019
       
Non-interest bearing demand deposit accounts $2,603,274  $3,357,715  $2,179,247 
NOW accounts 205,653  192,066  230,919 
Money market deposit accounts 1,914,391  1,853,373  1,508,674 
Savings accounts 343,368  339,516  328,587 
Time deposits 272,025  278,330  393,555 
Brokered CD      
Total deposits $5,338,711  $6,021,000  $4,640,982 
       


  Three Months Ended Three Months Ended Three Months Ended
  December 31, 2020 September 30, 2020 December 31, 2019
($ in thousands) Average
Balance
 Average
Rate Paid
 Average
Balance
 Average
Rate Paid
 Average
Balance
 Average
Rate Paid
             
Non-interest bearing demand deposit accounts $2,947,075  0.00% $3,191,858  0.00% $2,024,521  0.00%
NOW accounts  194,555  0.08%  196,422  0.09%  227,285  0.47%
Money market deposit accounts  1,823,391  0.27%  1,839,230  0.28%  1,442,567  0.64%
Savings accounts  338,192  0.12%  341,049  0.12%  334,036  0.18%
Time deposits  268,896  0.61%  321,696  0.77%  393,261  1.29%
Brokered CD    0.00%    0.00%  3,370  3.13%
Total deposits $5,572,109  0.13% $5,890,255  0.14% $4,425,040  0.36%

 

Asset Quality

($ in thousands)December 31, 2020 September 30, 2020 December 31, 2019
      
Loans 90 days past due and accruing$1,404  $9,522  $446 
Nonaccrual loans excluding held for sale loans and restructured loans40,039  17,515  5,992 
Nonaccrual loans held for sale     
Troubled debt restructured loans - nonaccrual20,885  33,306  25,019 
Troubled debt restructured loans - accruing19,553  19,919  34,367 
Other real estate owned306  306  809 
Impaired securities47  44  65 
Total nonperforming assets$82,234  $80,612  $66,698 
      
Nonaccrual loans:     
Commercial and industrial$12,444  $25,785  $15,564 
Multifamily9,575     
Commercial real estate3,433  3,500  3,693 
Construction and land development11,184  10,688  3,652 
Total commercial portfolio36,636  39,973  22,909 
      
Residential real estate lending     
Residential 1-4 family 1st mortgages23,349  9,408  6,922 
Residential 1-4 family 2nd mortgages307  342  852 
Consumer and other632  1,098  328 
Total retail portfolio24,288  10,848  8,102 
Total nonaccrual loans$60,924  $50,821  $31,011 
      
      
Nonperforming assets to total assets1.38% 1.22% 1.25%
Nonaccrual assets to total assets1.02% 0.77% 0.60%
Nonaccrual loans to total loans1.75% 1.41% 0.90%
Allowance for loan losses to nonaccrual loans68% 95% 109%


Credit Quality

($ in thousands)At December 31, 2020
 Pass Special Mention Substandard Doubtful Total
Commercial and industrial$627,553  $16,407  $32,770  $462  $677,192 
Multifamily775,605  138,090  33,482    947,177 
Commercial real estate276,712  41,420  54,604    372,736 
Construction and land development28,967  15,936  11,184    56,087 
Residential real estate lending1,215,881    22,816    1,238,697 
Consumer and other190,044    632    190,676 
Total loans$3,114,762  $211,853  $155,488  $462  $3,482,565 


($ in thousands)At September 30, 2020
 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 


($ in thousands)At December 31, 2019
 Pass Special Mention Substandard Doubtful Total
Commercial and industrial$427,279  $14,445  $32,151  $467  $474,342 
Multifamily976,380        976,380 
Commercial real estate418,254    3,693    421,947 
Construction and land development58,619    3,652    62,271 
Residential real estate lending1,359,089    7,384    1,366,473 
Consumer and other162,749    328    163,077 
Total loans$3,402,370  $14,445  $47,208  $467  $3,464,490 


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
 Twelve Months Ended
  December 31, September 30, December 31,
 December 31,
($ in thousands) 2020
 2020 2019
 2020 2019
Core operating revenue                
Net Interest income $45,655  $45,234  $42,250  $180,016  $166,637 
Non-interest income 10,040  12,776  7,776  40,604  29,201 
Less: Branch sale loss (gain) (1)       (1,394)  
Less: Securities gain, net   (619) (218) (1,605) (83)
Core operating revenue $55,695  $57,391  $49,808  $217,621  $195,755 
                   
Core non-interest expenses                  
Non-interest expense $32,670  $37,877  $33,490  $133,886  $127,827 
Less: Branch closure expense (2)   (6,279) (957) (8,330) (1,008)
Less: Severance (3)   (125) (101) (201) (419)
Core non-interest expense $32,670  $31,473  $32,432  $125,355  $126,400 
                   
Core net income                  
Net Income (GAAP) $13,790  $12,480  $12,008  $46,188  $47,202 
Less: Branch sale loss (gain) (1)       (1,394)  
Less: Securities loss (gain)   (619) (218) (1,605) (83)
Add: Branch closure expense (2)   6,279  957  8,330  1,008 
Add: Severance (3)   125  101  201  419 
Less: Tax on notable items   (1,472) (227) (1,407) (359)
Core net income (non-GAAP) $13,790  $16,793  $12,621  $50,313  $48,187 
                   
Tangible common equity                  
Stockholders' Equity (GAAP) $535,821  $522,497  $490,544  $535,821  $490,544 
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) (5,358) (5,701) (6,728) (5,358) (6,728)
Tangible common equity (non-GAAP) $517,394  $503,727  $470,746  $517,394  $470,746 
                   
Average tangible common equity                  
Average Stockholders' Equity (GAAP) $530,352  $515,906  $488,744  $508,995  $470,727 
Less: Minority Interest (GAAP) (133) (134) (134) (134) (134)
Less: Goodwill (GAAP) (12,936) (12,936) (12,936) (12,936) (12,936)
Less: Core deposit intangible (GAAP) (5,525) (5,868) (6,895) (6,037) (7,400)
Average tangible common equity (non-GAAP) $511,758  $496,968  $468,779  $489,888  $450,257 
                   
Core return on average assets                  
Core net income (numerator) (non-GAAP) 13,790  16,793  12,621  50,313  48,187 
Divided: Total average assets (denominator) (GAAP) 6,182,989  6,490,299  5,139,701  6,044,242  4,937,924 
Core return on average assets (non-GAAP) 0.89%  1.03%  0.97%   0.83%   0.98%   
                   
Core return on average tangible common equity                  
Core net income (numerator) (non-GAAP) 13,790  16,793  12,621  50,313  48,187 
Divided: Average tangible common equity (denominator) (GAAP) 511,758  496,968  468,779  489,888  450,257 
Core return on average tangible common equity (non-GAAP) 10.72%  13.44%  10.68%   10.27%   10.70%   
                   
Core efficiency ratio                  
Core non-interest expense (numerator) 32,670  31,473  32,432  125,355  126,400 
Core operating revenue (denominator) 55,695  57,391  49,808  217,621  195,755 
Core efficiency ratio 58.66%  54.84%  65.11%   57.60%   64.57%   

(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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