NEW YORK, July 28, 2020 (GLOBE NEWSWIRE) -- Amalgamated Bank (Nasdaq: AMAL) (“Amalgamated”) today announced financial results for the second quarter ended June 30, 2020. 

Second Quarter 2020 Highlights

  • Net income of $10.4 million, or $0.33 per diluted share, compared to $9.5 million, or $0.30 per diluted share, for the second quarter of 2019
  • Core net income (non-GAAP)¹ of $10.6 million, or $0.34 per diluted share, compared to $9.2 million, or $0.29 per diluted share, for the second quarter of 2019
  • Deposit growth of $793.8 million, or 62.9% annualized, to approximately $5.9 billion compared to a balance of $5.1 billion on March 31, 2020
  • Loan growth of $123.0 million, or 14.1% annualized, from a balance of $3.5 billion on March 31, 2020
  • PACE assessment growth of $68.1 million, or 106.7% annualized, from a balance of $255.3 million on March 31, 2020
  • Cost of deposits was 0.20%, compared to 0.33% for the first quarter of 2020 and 0.34% for the second quarter of 2019
  • Net interest margin was 3.10%, compared to 3.46% for the first quarter of 2020 and 3.66% for the second quarter of 2019
  • Common Equity Tier 1, Total Risk-Based, and Tier 1 Leverage capital ratios were 12.29%, 13.54%, and 7.69%, respectively, at June 30, 2020
  • Total nonperforming assets were $74.3 million or 1.15% of total assets as of June 30, 2020, compared to $65.6 million or 1.14% of total assets at March 31, 2020 and $73.9 million, or 1.50% of total assets at June 30, 2019

Keith Mestrich, President and Chief Executive Officer of Amalgamated Bank, commented, “For almost 100 years, Amalgamated Bank has stood with companies, organizations and individuals that have led the charge to make a more just and sustainable world. Social responsibility is embedded in Amalgamated’s history, policies, products, programs, operations and culture. Now more than ever, we need to act boldly in addressing the racism embedded in our society, including the private sector. As a result, and after long conversations both inside and outside of the Bank, we have outlined a series of near-term commitments and actions intended to drive tangible results over time. It will take time to drive meaningful change and we are committed to keeping this at the forefront of our work.”

Mr. Mestrich, continued, “We have always believed that a Bank can do good in the world while also delivering profitable growth. Our second quarter results not only validate this view but further emphasize the value that we provide to our core customer base as can be seen in our average deposit growth of $606 million during the quarter, or 50.5% on an annualized basis. Additionally, we have nearly doubled our West Coast deposits since acquiring New Resource two years ago. On the asset side of the balance sheet, we continue to grow our PACE portfolio, having effectively added $68 million in PACE securities during the quarter. While the pandemic has negatively affected the cities where we have physical locations, our customer base has a geographic diversity that, along with our conservative underwriting, should benefit the performance of our loan portfolio. Lastly, the pandemic has allowed the Bank to benefit from higher levels of digital adoption, effectively obliging our customers to utilize our technology when the ability for in-person banking was not an option. This successful transition to online banking allowed us to close several of the Bank’s branches earlier than anticipated. We expect to realize a one-time, non-core expense increase of approximately $6 million in the third quarter as we exit the branches, however, moving forward, beginning in 2021, our non-interest expense is expected to benefit by approximately $4 million annually.”

____________________________________

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 wellbeing of the Company’s employees, customers, and communities. Our employees continue to manage from a work from home environment, and our operations 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 the week ending July 25, 2020, we have provided payment deferrals on the following amount of loan balances.

 Total LoansDeferrals as of:% of
Exited
 6/30/207/25/206/20/20Portfolio
Deferral
Multifamily$972$178$21818%$39
CRE + Construction46911112224%12
C&I61839396%-
Residential1,433901226%33
Consumer & Student18810116%1
Total$3,680$428$51212%$84

Results of Operations, Quarter Ended June 30, 2020

Net income for the second quarter of 2020 was $10.4 million, or $0.33 per diluted share, compared to $9.5 million, or $0.30 per diluted share, for the first quarter of 2020 and $11.2 million, or $0.35 per diluted share, for the second quarter of 2019. The $0.8 million decrease in net income for the second quarter of 2020, compared to the second quarter of 2019, was primarily due to a $6.1 million increase in provision for loan losses, partially offset by a $2.6 million increase in net interest income and a $2.3 million increase in non-interest income.

Core net income (non-GAAP) for the second quarter of 2020 was $10.6 million, or $0.34 per diluted share, compared to $9.2 million, or $0.29 per diluted share, for the first quarter of 2020 and $11.6 million, or $0.36 per diluted share, for the second quarter of 2019. Core net income for the second quarter of 2020 excludes $0.5 million of non-interest income gains on the sale of securities, $0.7 million in expense related to the closure of six branches, and other adjustments, including the tax effect of such adjustments.

Net interest income was $44.4 million for the second quarter of 2020, compared to $44.7 million for the first quarter of 2020 and $41.9 million for the second quarter of 2019. The $2.5 million year-over-year increase 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 and loans of $509.5 million and $383.9 million, respectively with lower yields. These impacts were partially offset by an increase in average interest-bearing deposits of $340.4 million.

Net interest margin was 3.10% for the second quarter of 2020, a decrease of 36 basis points from 3.46% in the first quarter of 2020, and a decrease of 56 basis points from 3.66% in the second quarter of 2019. The accretion of the loan mark from the loans we acquired in our New Resource Bank acquisition contributed three basis points to our net interest margin in the second quarter of 2020, compared to four and six basis points in the first quarter of 2020 and the second quarter of 2019, respectively. Prepayment penalties earned through loan income contributed $0.2 million, or two basis points, to our net interest margin in the second quarter of 2020, compared to six and three basis points in the first quarter of 2020 and the second quarter of 2019, respectively.

Provisions for loan loss expense totaled $8.2 million in the second quarter of 2020 compared to $8.6 million in the first quarter of 2020 and $2.1 million for the second quarter of 2019. The provision expense in the second quarter of 2020 was primarily driven by a $3.2 million increase in allowance related to payment deferrals in our loan portfolio, a $2.7 million increase in specific reserves related to one hotel which was downgraded to non-accrual, and $1.5 million related to downgrades to the risk rating of loans, primarily construction loans.

Non-interest income was $8.7 million in the second quarter of 2020 compared to $9.1 million in the first quarter of 2020, and $6.3 million in the second quarter of 2019. The $2.3 million increase in the second quarter of 2020, compared to the like period in 2019, was primarily due to $1.3 million tax credit on an equity investment in a solar project, a $0.5 million gain on the sale of securities compared to a loss of $0.4 million in the comparable quarter of 2019, and a $0.7 million increase in Bank-owned life insurance income due to the receipt of a death benefit payout. These increases were partially offset by a $0.5 million decrease in Trust Department fees primarily related to the decrease in revenue from a real estate fund which is liquidating assets.

Non-interest expense was $31.1 million in the second quarter of 2020 compared to $32.3 million in the first quarter of 2020, and $31.0 million in the second quarter of 2019. Expenses in the second quarter of 2020 were relatively unchanged compared to the same period in 2019. The $1.2 million decrease in the second quarter of 2020 compared to the linked quarter was primarily due to a $1.3 million decrease in branch closure expense in occupancy and depreciation and a $1.0 million decrease in professional fees from external audit, subadvisors and consultants. These decreases were partially offset by an increase in data processing and other expenses of $0.7 million and $0.5 million, respectively.

Our provision for income tax expense was $3.4 million for the second quarter of 2020, compared to a provision of $3.4 million for the first quarter of 2020 and a provision of $3.9 million for the second quarter of 2019. Our effective tax rate for the second quarter of 2020 was 24.9%, compared to 26.3% for the first quarter of 2020 and 25.8% for the second quarter of 2019.

Results of Operations, Six Months Ended June 30, 2020

Net income for the six months ended June 30, 2020 of $19.9 million, or $0.64 per diluted share, compared to $22.0 million, or $0.68 per diluted share, for same period in 2019. The $2.1 million decrease was primarily due to a $12.5 million increase in the provision for loan losses and a $0.9 million increase in non-interest expense, partially offset by a $6.5 million increase in net interest income and a $4.0 million increase in non-interest income.

Core net income (non-GAAP) for the six months ended June 30, 2020 of $19.7 million, or $0.63 per diluted share, compared to $22.3 million or $0.69 per diluted share, for the same period last year. Core net income for the first six months of 2020 exclude branch closure expenses and the gain on sale of a closed branch, gains on the sale of securities, severance, and the tax effect of such adjustments.

Net interest income was $89.1 million for the six months ended June 30, 2020, an increase of $6.5 million from the same period in 2019. This increase 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 and loans of $433.1 million and $292.9 million, respectively with lower yields. These impacts were partially offset by an increase in average interest-bearing deposits of $273.4 million.

Provisions for loan loss expense totaled $16.8 million for the six months ended June 30, 2020, an increase of $12.5 million compared to $4.3 million in the same period of 2019. The provision expense in the six months ended June 30, 2020 was primarily driven by a $6.2 million increase in COVID-19 qualitative factors tied to economic factors and payment deferrals in our loan portfolio, a $6.1 million increase in specific reserves related to indirect C&I and hotel loans, and other factors.

Non-interest income was $17.8 million for the six months ended June 30, 2020 compared to $13.8 million for the same period in 2019. The $4.0 million increase for the six months ended June 30, 2020, compared to the like period in 2019, was primarily due to a $1.4 million gain on the sale of a closed branch included in other non-interest income, a $1.3 million tax credit on an equity investment in a solar project, a $1.0 million gain on the sale of securities, and a $0.7 million increase in Bank-owned life insurance income due to the receipt of a death benefit payout. These increases were partially offset by a $1.2 million decrease in Trust Department fees primarily related to the decrease in revenue from a real estate fund which is liquidating assets.

Non-interest expense was $63.3 million for the six months ended June 30, 2020 compared to $62.5 million for the same period in 2019. The $0.9 million increase in expenses for the six months ended June 30, 2020 compared to the same period in 2019 was primarily due to the $1.3 million increase in branch closure expense in occupancy and depreciation, partially offset by a $0.6 million decrease in professional fees.

We had income tax expense of $6.9 million for the six months ended June 30, 2020, compared to $7.6 million for the same period in 2019. The $0.8 million decrease in income tax expense was primarily due to a decrease in pre-tax earnings of $2.9 million in the six months ended June 30, 2020, compared to the same period in 2019. Our effective tax rate was 25.6% for the six months ended June 30, 2020, compared to 25.8% for the same period in 2019.

Financial Condition

Total assets were $6.5 billion at June 30, 2020, compared to $5.3 billion at December 31, 2019. The increase of $1.1 billion was driven primarily by a $465.4 million increase in cash and cash equivalents, a $428.2 million increase in investment securities, and a $199.2 million increase in loans receivable, net. In the second quarter of 2020, the Bank also made a $2.7 million investment in a solar project with federal tax benefits and added $45.6 million of reverse repurchase agreements backed by Government Guaranteed loans.

Total loans, net at June 30, 2020 were $3.6 billion, an increase of $199.2 million, or 11.7% annualized, compared to December 31, 2019. Loan growth in the first six months of 2020 was primarily driven by a $143.2 million increase in C&I loans including $80.7 million of government guaranteed and Paycheck Protection Program loans, a $69.4 million increase in residential first liens, and a $41.9 million increase in consumer residential solar loans. These increases were partially offset by a $19.1 million decrease in commercial real estate and multifamily loans.

Deposits at June 30, 2020 were $5.9 billion, an increase of $1.2 billion, or 53.3% 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 $1.1 billion as of June 30, 2020, an increase of $522.1 million compared to $578.6 million as of December 31, 2019. Noninterest-bearing deposits represent 49.2% of average deposits and 52.6% of ending deposits for the six months ended June 30, 2020, contributing to an average cost of deposits of 0.20% in the second quarter of 2020, a 13 basis point decrease from the linked quarter.

Nonperforming assets totaled $74.3 million, or 1.15% of period-end total assets at June 30, 2020, an increase of $7.6 million, compared with $66.7 million, or 1.25% of period end total assets at December 31, 2019. The increase in nonperforming assets at June 30, 2020 compared to the year-ended December 31, 2019 was primarily driven by a $14.7 million increase in non-accruing loans, including a $10.2 million hotel loan.

The allowance for loan losses increased $16.2 million to $50.0 million at June 30, 2020 from $33.8 million at December 31, 2019, primarily due to increases in the specific reserves for indirect C&I and hotel loans and an increase in allowance related to the coronavirus pandemic. At June 30, 2020, we had $70.3 million of impaired loans for which a specific allowance of $14.5 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 1.36% at June 30, 2020 and 0.98% at December 31, 2019.

Capital

As of June 30, 2020, our Common Equity Tier 1 Capital Ratio was 12.29%, Total Risk-Based Capital Ratio was 13.54%, and Tier-1 Leverage Capital Ratio was 7.69%, compared to 13.01%, 14.01% and 8.90%, respectively, as of December 31, 2019. Stockholders’ equity at June 30, 2020 was $503.7 million, compared to $490.5 million at December 31, 2019. The increase in stockholders’ equity was driven by $19.9 million of net income and a $4.0 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 and a $5.0 million decrease due to dividends to shareholders.

Our tangible book value per share was $15.61 as of June 30, 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 second quarter 2020 results today, July 28, 2020 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 Second 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 13706036. The telephonic replay will be available until 11:59 pm (Eastern Time) on August 4, 2020.

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 11 branches in New York City, Washington D.C., and San Francisco. 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 June 30, 2020, our total assets were $6.5 billion, total net loans were $3.6 billion, and total deposits were $5.9 billion. Additionally, as of June 30, 2020, the trust business held $32.0 billion in assets under custody and $13.3 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,” “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 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,” “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, and the expected charges and anticipated future expense savings resulting from branch closures. 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 recent outbreak of the novel coronavirus, or COVID-19, which may have an adverse impact on our business, operations and performance, and could 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”; and (xi) the risk that the preliminary financial information reported herein and our current preliminary analysis will be different when our review is finalized. 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 (Unaudited)
(Dollars in thousands, except for per share amount)

 Three Months Ended Six Months Ended
 June 30, March 31, June 30, June 30,
  2020   2020   2019   2020   2019 
          
INTEREST AND DIVIDEND INCOME         
Loans$35,225  $35,612  $35,559  $70,837  $70,855 
Securities 11,746   12,554   10,524   24,299   20,398 
Federal Home Loan Bank of New York stock 66   69   191   135   501 
Interest-bearing deposits in banks 83   396   254   479   548 
          
Total interest and dividend income 47,120   48,631   46,528   95,750   92,302 
          
INTEREST EXPENSE         
Deposits 2,681   3,915   3,499   6,596   6,444 
Borrowed funds -   27   1,173   27   3,229 
          
Total interest expense 2,681   3,942   4,672   6,623   9,673 
          
NET INTEREST INCOME 44,439   44,689   41,856   89,127   82,629 
Provision for (recovery of) loan losses 8,221   8,588   2,127   16,808   4,312 
          
Net interest income after provision for loan losses 36,218   36,101   39,729   72,319   78,317 
          
NON-INTEREST INCOME         
Trust Department fees 3,980   4,085   4,508   8,066   9,229 
Service charges on deposit accounts 1,850   2,411   2,068   4,261   3,939 
Bank-owned life insurance 1,111   384   408   1,495   828 
Gain (loss) on sale of investment securities available for sale, net 486   499   (377)  985   (85)
Gain (loss) on other real estate owned, net (283)  (23)  (315)  (306)  (564)
Equity method investments 1,289   -   -   1,289   - 
Other 238   1,762   57   1,999   419 
          
Total non-interest income 8,671   9,118   6,349   17,789   13,766 
          
NON-INTEREST EXPENSE         
Compensation and employee benefits, net 17,334   17,458   16,992   34,792   34,422 
Occupancy and depreciation 4,241   5,506   4,145   9,747   8,417 
Professional fees 1,988   2,983   2,401   4,971   5,566 
Data processing 2,977   2,264   2,729   5,241   5,478 
Office maintenance and depreciation 818   856   830   1,675   1,716 
Amortization of intangible assets 342   342   298   685   687 
Advertising and promotion 672   667   692   1,339   1,313 
Other 2,696   2,194   2,915   4,889   4,851 
          
Total non-interest expense 31,068   32,270   31,002   63,339   62,450 
          
Income before income taxes 13,821   12,949   15,076   26,769   29,633 
Income tax expense (benefit) 3,447   3,404   3,891   6,850   7,634 
          
Net income 10,374   9,545   11,185   19,919   21,999 
          
Net income attributable to noncontrolling interests -   -   -   -   - 
          
Net income attributable to Amalgamated Bank and subsidiaries$10,374  $9,545  $11,185  $19,919  $21,999 
          
Earnings per common share - basic$0.33  $0.30  $0.35  $0.64  $0.69 
          
Earnings per common share - diluted$0.33  $0.30  $0.35  $0.64  $0.68 


Consolidated Statements of Financial Condition (Unaudited)
(Dollars in thousands)

 June 30, December 31,
  2020   2019 
Assets(Unaudited)  
Cash and due from banks$9,209  $7,596 
Interest-bearing deposits in banks 578,752   114,942 
Total cash and cash equivalents 587,961   122,538 
Securities:   
Available for sale, at fair value (amortized cost of $1,562,033 and $1,217,087, respectively) 1,575,175   1,224,770 
Held-to-maturity (fair value of $382,830 and $292,837, respectively) 370,498   292,704 
    
Loans receivable, net of deferred loan origination costs (fees) 3,687,992   3,472,614 
Allowance for loan losses (50,010)  (33,847)
Loans receivable, net 3,637,982   3,438,767 
    
Resell agreements 45,653   - 
Accrued interest and dividends receivable 21,836   19,088 
Premises and equipment, net 16,180   17,778 
Bank-owned life insurance 80,694   80,714 
Right-of-use lease asset 42,758   47,299 
Deferred tax asset 34,251   31,441 
Goodwill and other intangible assets 18,980   19,665 
Other assets 38,376   30,574 
Total assets$6,470,344  $5,325,338 
Liabilities   
Deposits$5,870,319  $4,640,982 
Borrowed funds -   75,000 
Operating leases 56,842   62,404 
Other liabilities 39,481   56,408 
Total liabilities 5,966,642   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 capital 299,997   305,738 
Retained earnings 195,991   181,132 
Accumulated other comprehensive income (loss), net of income taxes 7,270   3,225 
Total Amalgamated Bank stockholders' equity 503,568   490,410 
Noncontrolling interests 134   134 
Total stockholders' equity 503,702   490,544 
Total liabilities and stockholders’ equity$6,470,344  $5,325,338 


Select Financial Data

 As of and for the Three
Months Ended		 As of and for the Six
Months Ended
 June 30, March 31, June 30, June 30,
  2020   2020   2019   2020   2019 
Selected Financial Ratios and Other Data         
Earnings per share         
Basic$0.33  $0.30  $0.35  $0.64  $0.69 
Diluted 0.33   0.30   0.35   0.64   0.68 
Core Earnings per share (non-GAAP)         
Basic$0.34  $0.29  $0.36  $0.63  $0.70 
Diluted 0.34   0.29   0.36   0.63   0.69 
Book value per common share 16.22   15.26   14.89   16.22   14.89 
(excluding minority interest)         
Tangible book value per share (non-GAAP) 15.61   14.64   14.25   15.61   14.25 
Common shares outstanding 31,049,525   31,000,299   31,886,669   31,049,525   31,886,669 
Weighted average common shares 31,022,517   31,410,848   31,824,930   31,216,683   31,798,405 
outstanding, basic         
Weighted average common shares 31,034,666   31,805,901   32,237,116   31,345,192   32,279,342 
outstanding, diluted         


Select Financial Data

 As of and for the Three As of and for the Six
 Months Ended Months Ended
 June 30, March 31, June 30, June 30,
 2020 2020 2019 2020 2019
          
Selected Performance Metrics:         
Return on average assets0.69% 0.71% 0.92% 0.70% 0.92%
Core return on average assets (non-GAAP)0.70% 0.68% 0.96% 0.69% 0.93%
Return on average equity8.56% 7.65% 9.65% 8.10% 9.73%
Core return on average tangible common equity (non-GAAP)9.07% 7.66% 10.45% 8.35% 10.32%
Loan yield3.97% 4.13% 4.42% 4.05% 4.43%
Securities yield2.59% 3.29% 3.34% 2.91% 3.35%
Deposit cost0.20% 0.33% 0.34% 0.26% 0.32%
Net interest margin3.10% 3.46% 3.66% 3.27% 3.66%
Efficiency ratio (1)58.50% 59.97% 64.31% 59.24% 64.79%
Core efficiency ratio (non-GAAP) (1)57.68% 59.44% 63.50% 58.56% 64.45%
          
          
          
Asset Quality Ratios:         
Nonaccrual loans to total loans1.24% 0.96% 0.49% 1.24% 0.49%
Nonperforming assets to total assets1.15% 1.14% 1.50% 1.15% 1.50%
Allowance for loan losses to nonaccrual loans109% 125% 209% 109% 209%
Allowance for loan losses to total loans1.36% 1.19% 1.01% 1.36% 1.01%
Net charge-offs (recoveries) to average loans0.06% 0.01% -0.01% 0.04% 0.49%
          
Capital Ratios:         
Tier 1 leverage capital ratio7.69% 8.47% 9.04% 7.69% 9.04%
Tier 1 risk-based capital ratio12.29% 12.74% 13.57% 12.29% 13.57%
Total risk-based capital ratio13.54% 13.96% 14.67% 13.54% 14.67%
Common equity tier 1 capital ratio12.29% 12.74% 13.57% 12.29% 13.57%
          
(1) Efficiency ratio is calculated by dividing total non-interest expense by the sum of net interest income and total non-interest income


Loan and Held-to-Maturity Securities Portfolio Composition

(In thousands)At June 30, 2020 At March 31, 2020 At June 30, 2019
 Amount % of total loans Amount % of total loans Amount % of total loans
Commercial portfolio:           
Commercial and industrial$617,579  16.8% $532,351  15.0% $424,319  12.8%
Multifamily 972,129  26.4%  936,350  26.4%  925,747  27.9%
Commercial real estate 404,064  11.0%  408,766  11.5%  453,393  13.7%
Construction and land development 65,259  1.8%  65,706  1.9%  58,696  1.7%
Total commercial portfolio 2,059,031  56.0%  1,943,173  54.8%  1,862,155  56.1%
            
Retail portfolio:           
Residential real estate lending 1,432,645  38.9%  1,416,796  39.9%  1,286,662  38.8%
Consumer and other 187,980  5.1%  189,152  5.3%  168,201  5.1%
Total retail 1,620,625  44.0%  1,605,948  45.2%  1,454,863  43.9%
Total loans 3,679,656  100.0%  3,549,121  100.0%  3,317,018  100.0%
            
Net deferred loan origination fees (costs) 8,336     8,214     7,562   
Allowance for loan losses (50,010)    (42,348)    (33,630)  
Total loans, net$3,637,982    $3,514,987    $3,290,950   
            
Held-to-maturity securities portfolio:           
PACE assessments$323,391  87.3% $255,298  89.2% $-  0.0%
Other securities 47,107  12.7%  30,953  10.8%  19,336  100.0%
Total held-to-maturity securities$370,498  100.0% $286,251  100.0% $19,336  100.0%


Net Interest Income Analysis

  Three Months Ended Three Months Ended Three Months Ended
  June 30, 2020 March 31, 2020 June 30, 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 $364,932  $83  0.09% $185,281  $396  0.86% $70,442  $254  1.45%
Securities and FHLB stock  1,834,892   11,812  2.59%  1,544,848   12,623  3.29%  1,287,520   10,715  3.34%
Total loans, net (1)  3,571,160   35,225  3.97%  3,464,438   35,612  4.13%  3,225,129   35,559  4.42%
Total interest earning assets  5,770,984   47,120  3.28%  5,194,567   48,631  3.77%  4,583,091   46,528  4.07%
Non-interest earning assets:                  
Cash and due from banks  74,877       9,539       6,838     
Other assets  224,531       222,757       264,046     
Total assets $6,070,392      $5,426,863      $4,853,975     
                   
Interest bearing liabilities:                  
Savings, NOW and money market deposits $2,313,772  $1,755  0.31% $2,143,247  $2,737  0.51% $1,857,715  $1,962  0.42%
Time deposits  370,969   926  1.00%  381,053   1,178  1.24%  486,652   1,537  1.27%
Total deposits  2,684,741   2,681  0.40%  2,524,300   3,915  0.62%  2,344,367   3,499  0.60%
Federal Home Loan Bank advances  -   -  0.00%  6,374   27  1.70%  190,501   1,166  2.46%
Other Borrowings  -   -  0.00%  -   -  0.00%  1,099   7  2.56%
Total interest bearing liabilities  2,684,741   2,681  0.40%  2,530,674   3,942  0.63%  2,535,967   4,672  0.74%
Non-interest bearing liabilities:                  
Demand and transaction deposits  2,746,529       2,300,999       1,762,426     
Other liabilities  151,591       93,309       90,680     
Total liabilities  5,582,861       4,924,982       4,389,073     
Stockholders' equity  487,531       501,881       464,902     
Total liabilities and stockholders' equity $6,070,392      $5,426,863      $4,853,975     
                   
Net interest income / interest rate spread   $44,439  2.88%   $44,689  3.14%   $41,856  3.33%
Net interest earning assets / net interest margin $3,086,243    3.10% $2,663,893    3.46% $2,047,124    3.66%
                   
Total Cost of Deposits     0.20%     0.33%     0.34%
                   
(1) Amounts are net of deferred origination costs / (fees) and the allowance for loan losses
* Net interest margin includes prepayment penalty income in 2Q20, 1Q20 and 2Q19 of $239,190, $761,568 and $320,633 respectively

 


Net Interest Income Analysis

  Six Months Ended Six Months Ended
  June 30, 2020 June 30, 2019
(In thousands) Average Balance Income / Expense Yield / Rate Average Balance Income / Expense Yield / Rate
             
Interest earning assets:            
Interest-bearing deposits in banks $275,107  $479  0.35% $71,861  $548  1.54%
Securities and FHLB stock  1,689,870   24,434  2.91%  1,256,781   20,899  3.35%
Total loans, net (1)  3,517,799   70,837  4.05%  3,224,868   70,855  4.43%
Total interest earning assets  5,482,776   95,750  3.51%  4,553,510   92,302  4.09%
Non-interest earning assets:            
Cash and due from banks  42,208       8,404     
Other assets  223,643       259,194     
Total assets $5,748,627      $4,821,108     
             
Interest bearing liabilities:            
Savings, NOW and money market deposits $2,228,509  $4,492  0.41% $1,867,478  $3,829  0.41%
Time deposits  376,011   2,104  1.13%  463,668   2,615  1.14%
Total deposits  2,604,520   6,596  0.51%  2,331,146   6,444  0.56%
Federal Home Loan Bank advances  3,187   27  1.70%  259,108   3,213  2.50%
Other Borrowings  -   -  0.00%  1,215   16  2.66%
Total interest bearing liabilities  2,607,707   6,623  0.51%  2,591,469   9,673  0.75%
Non-interest bearing liabilities:            
Demand and transaction deposits  2,523,764       1,680,984     
Other liabilities  122,450       92,921     
Total liabilities  5,253,921       4,365,374     
Stockholders' equity  494,706       455,734     
Total liabilities and stockholders' equity $5,748,627      $4,821,108     
             
Net interest income / interest rate spread   $89,127  3.00%   $82,629  3.33%
Net interest earning assets / net interest margin $2,875,069    3.27% $1,962,041    3.66%
             
Total Cost of Deposits     0.26%     0.32%
             
(1) Amounts are net of deferred origination costs / (fees) and the allowance for loan losses
* Net interest margin includes prepayment penalty income in Jun YTD 2020 and Jun YTD 2019 of $1,000,758 and $626,038 respectively

 


Deposit Portfolio Composition

(in thousands)June 30, 2020 March 31, 2020 June 30, 2019
      
Noninterest-bearing demand deposit accounts$3,089,004  $2,423,760  $1,908,741 
NOW accounts 198,653   234,268   216,834 
Money market deposit accounts 1,876,540   1,708,818   1,239,387 
Savings accounts 342,477   329,583   340,258 
Time deposits 363,645   380,128   411,250 
Brokered CD -   -   19,991 
Total deposits$5,870,319  $5,076,557  $4,136,462 
      
* Total deposit balance as of June 30, 2020 excludes off balance sheet Insured Cash Sweep (ICS) balance of $90.9 million


  Three Months Ended Three Months Ended Three Months Ended
  June 30, 2020 March 31, 2020 June 30, 2019
(In thousands) Average
Balance		 Average Rate
Paid		 Average
Balance		 Average Rate
Paid		 Average
Balance		 Average Rate
Paid
             
Noninterest-bearing demand deposit accounts $2,746,529  0.00% $2,300,999  0.00% $1,762,426  0.00%
NOW accounts  237,279  0.17%  231,707  0.40%  220,516  0.47%
Money market deposit accounts  1,741,466  0.36%  1,587,242  0.60%  1,298,033  0.41%
Savings accounts  335,027  0.12%  324,298  0.18%  339,165  0.22%
Time deposits  370,969  0.99%  381,053  1.23%  424,848  1.25%
Brokered CD  -  0.00%  -  0.00%  61,804  2.45%
Total deposits $5,431,270  0.20% $4,825,299  0.33% $4,106,792  0.34%


Asset Quality

 June 30, March 31, June 30,
(In thousands) 2020   2020   2019 
Loans 90 days past due and accruing$-  $3,856  $13,939 
Nonaccrual loans excluding held for sale loans and restructured loans 18,901   7,537   9,893 
Nonaccrual loans held for sale -   -   - 
Troubled debt restructured loans - nonaccrual 26,776   26,435   6,221 
Troubled debt restructured loans - accruing 28,031   26,968   43,277 
Other real estate owned 503   786   526 
Impaired securities 46   64   88 
Total nonperforming assets$74,257  $65,646  $73,944 
      
Nonaccrual loans:     
Commercial and industrial$15,742  $15,949  $4,180 
Multifamily -   -   - 
Commercial real estate 13,768   3,634   3,832 
Construction and land development 3,652   3,652   - 
Total commercial portfolio 33,162   23,235   8,012 
      
Residential 1-4 family 1st mortgages 11,106   9,173   6,330 
Residential 1-4 family 2nd mortgages 729   884   1,267 
Consumer and other 680   680   505 
Total retail portfolio 12,515   10,737   8,102 
Total nonaccrual loans$45,677  $33,972  $16,114 
      
      
Nonperforming assets to total assets 1.15%  1.14%  1.50%
Nonaccrual assets to total assets 0.71%  0.60%  0.34%
Nonaccrual loans to total loans 1.24%  0.96%  0.49%
Allowance for loan losses to nonaccrual loans 109%  125%  209%


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 Three As of and for the Six
  Months Ended Months Ended
(in thousands) June 30, March 31, June 30, June 30,
   2020   2020   2019   2020   2019 
           
Core operating revenue          
Net interest income (GAAP) $44,439  $44,689  $41,856  $89,127  $82,629 
Non-interest income (GAAP)  8,671   9,118   6,349   17,789   13,766 
Less: Branch sale loss (gain)(1)  34   (1,428)  -   (1,394)  - 
Less: Securities loss (gain)  (486)  (499)  377   (985)  85 
Core operating revenue (non-GAAP) $52,658  $51,880  $48,582  $104,537  $96,480 
           
Core non-interest expenses          
Non-interest expense (GAAP) $31,068  $32,270  $31,002  $63,339  $62,450 
Less: Branch closure expense(2)  (695)  (1,432)  -   (2,051)  - 
Less: Severance (3)  -   -   (154)  (76)  (271)
Core non-interest expense (non-GAAP) $30,373  $30,838  $30,848  $61,212  $62,179 
           
Core net income          
Net Income (GAAP) $10,374  $9,545  $11,185  $19,919  $21,999 
Less: Branch sale (gain)(1)  34   (1,428)  -   (1,394)  - 
Less: Securities loss (gain)  (486)  (499)  377   (985)  85 
Add: Branch closure expense(2)  695   1,432   -   2,051   - 
Add: Severance (3)  -   -   154   76   271 
Less: Tax on notable items  (61)  130   (137)  65   (92)
Core net income (non-GAAP) $10,556  $9,180  $11,579  $19,731  $22,264 
           
Tangible common equity          
Stockholders' Equity (GAAP) $503,702  $473,269  $474,944  $503,702  $474,944 
Less: Minority Interest (GAAP)  (134)  (134)  (134)  (134)  (134)
Less: Goodwill (GAAP)  (12,936)  (12,936)  (12,936)  (12,936)  (12,936)
Less: Core deposit intangible (GAAP)  (6,043)  (6,386)  (7,415)  (6,043)  (7,415)
Tangible common equity (non-GAAP) $484,589  $453,813  $454,458  $484,589  $454,458 
           
Average tangible common equity          
Average Stockholders' Equity (GAAP) $487,531  $501,881  $464,902  $494,706  $455,734 
Less: Minority Interest (GAAP)  (134)  (134)  (134)  (134)  (134)
Less: Goodwill (GAAP)  (12,936)  (12,936)  (12,936)  (12,936)  (12,936)
Less: Core deposit intangible (GAAP)  (6,210)  (6,552)  (7,575)  (6,381)  (7,738)
Average tangible common equity (non-GAAP) $468,250  $482,258  $444,256  $475,254  $434,925 
           
Core return on average assets           
Core net income (numerator) (non-GAAP)  10,556   9,180   11,579   19,731   22,264 
Divided: Total average assets (denominator) (GAAP)  6,070,392   5,426,863   4,853,975   5,748,627   4,821,107 
Core return on average assets (non-GAAP)  0.70%  0.68%  0.96%  0.69%  0.93%
           
Core return on average tangible common equity           
Core net income (numerator) (non-GAAP)  10,556   9,180   11,579   19,731   22,264 
Divided: Average tangible common equity (denominator) (non-GAAP)  468,250   482,258   444,256   475,254   434,925 
Core return on average tangible common equity (non-GAAP)  9.07%  7.66%  10.45%  8.35%  10.32%
           
Core efficiency ratio          
Core non-interest expense (numerator) (non-GAAP)  30,373   30,838   30,848   61,212   62,179 
Core operating revenue (denominator) (non-GAAP)  52,658   51,880   48,582   104,537   96,480 
Core efficiency ratio (non-GAAP)  57.68%  59.44%  63.50%  58.56%  64.45%
           
(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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