Amalgamated Financial (AMAL) Reports Q4 EPS of $0.50

January 27, 2022 6:25 AM EST
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(Updated - January 27, 2022 6:26 AM EST)

Amalgamated Financial Corp. (Nasdaq: AMAL), the holding company for Amalgamated Bank, today announced financial results for the fourth quarter ended December 31, 20211.

Fourth Quarter 2021 Highlights

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

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

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

Results of Operations, Quarter Ended December 31, 2021

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

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

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

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

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

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

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

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

Results of Operations, Full Year Ended December 31, 2021

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

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

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

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

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

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

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

Financial Condition

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

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

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

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

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

Capital

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

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

Conference Call

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

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

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

About Amalgamated Financial Corp.

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

Non-GAAP Financial Measures

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

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

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

Terminology

Certain terms used in this release are defined as follows:

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

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

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

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

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

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

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

Forward-Looking Statements

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

Investor Contact:Jamie LillisSolebury Trout[email protected] 800-895-4172

Consolidated Statements of Income (unaudited)

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

Consolidated Statements of Financial Condition

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

Select Financial Data

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

Select Financial Data

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

Loan and Held-to-Maturity Securities Portfolio Composition

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

Net Interest Income Analysis

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

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

Net Interest Income Analysis

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

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

Deposit Portfolio Composition

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

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

Asset Quality

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

Credit Quality

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

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

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

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

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

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

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

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Source: Amalgamated Financial Corp.



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