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Amalgamated Financial Corp. Reports Record Third Quarter 2022 Financial Results
来源: Nasdaq GlobeNewswire / 27 10月 2022 06:25:01 America/New_York
NEW YORK, Oct. 27, 2022 (GLOBE NEWSWIRE) -- Amalgamated Financial Corp. (the “Company” or “Amalgamated”) (Nasdaq: AMAL), the holding company for Amalgamated Bank (the “Bank”), today announced record financial results for the third quarter ended September 30, 2022.
Third Quarter 2022 Highlights
- Record earnings of $22.9 million, or $0.74 per diluted share, compared to $19.6 million, or $0.63 per diluted share, on a linked quarter basis.
- Excluding the impact of solar tax equity investments, core net income was $24.8 million, or $0.80 per diluted share, as compared to $20.9 million, or $0.67 per diluted share, on a linked quarter basis.
- Average deposits increased by $191.1 million, or 2.7%, to $7.3 billion, on a linked quarter basis.
- Industry leading average cost of deposits of 14 basis points, where non-interest bearing deposits comprised 54% of total deposits.
- Loans receivable, net of allowance and deferred fees and costs, increased $220.2 million, or 6.1%, to $3.8 billion, on a linked quarter basis.
- PACE assessments grew $114.6 million to $856.7 million on a linked quarter basis, comprised of an $8.7 million increase in commercial and $105.9 million increase in residential.
- Net interest income grew $11.1 million, or 19.6%, to $67.6 million compared to $56.5 million, while net interest margin grew by 47 basis points to 3.50%, compared to 3.03%, each on a linked quarter basis.
- Nonaccrual loans improved to $19.8 million or 0.51% of total loans, compared to $24.4 million or 0.67% of total loans on a linked quarter basis.
- Credit quality improved with criticized loans declining $22.8 million, or 16.8%, to $113.0 million, on a linked quarter basis.
- Regulatory capital remains above bank “well capitalized” standards.
“I am proud to say that the momentum we have established in the last year demonstrates that our ‘Growth For Good’ strategy is working, as we reported record earnings for a second consecutive quarter,” said Priscilla Sims Brown, President and CEO. “We are progressing well toward our aspiration of achieving the most improved financial performance in U.S. banking, just as Amalgamated will celebrate its 100th anniversary in a few short months. I could not be more inspired by the team we have in place to propel this great bank into its next centennial.”
Third Quarter Earnings
Net income for the third quarter of 2022 was a record $22.9 million, or $0.74 per diluted share, compared to $19.6 million, or $0.63 per diluted share, for the second quarter of 2022. The $3.3 million increase for the third quarter of 2022 compared to the preceding quarter was primarily driven by an $11.1 million increase in net interest income, partially offset by a $2.5 million increase in provision for loan losses, a $2.2 million decrease in non-interest income, a $2.0 million increase in non-interest expense, and a $1.2 million increase in income tax expense related to our increased pre-tax income.
Core net income excluding the impact of solar tax equity investments (non-GAAP)1 for the third quarter of 2022 was $24.8 million, or $0.80 per diluted share, compared to $20.9 million, or $0.67 per diluted share, for the second quarter of 2022. Excluded from core net income for the third quarter of 2022 was $1.8 million of losses on sales of securities, $0.6 million of gains on subordinated debt repurchases, and $1.3 million of accelerated depreciation from our solar tax equity investments. Excluded from the second quarter of 2022 was $0.6 million of losses on the sale of securities, $0.3 million of non-interest one-time expenses, and $0.9 million of tax credits on solar tax equity investments in the second quarter of 2022. Presentation excluding the temporary effect of the tax credits and accelerated depreciation of solar tax equity investments reduces the financial statement volatility associated with these investments.
Net interest income was $67.6 million for the third quarter of 2022, compared to $56.5 million for the second quarter of 2022. The $11.1 million increase from the preceding quarter mainly reflected higher interest income on securities of $6.4 million driven by a $78.9 million increase in average securities and a 64 basis point increase in securities yield. Loan interest income increased $4.5 million driven by a $189.5 million increase in average loan balances and a 25 basis point increase in loan yields. Total interest income was offset slightly by higher interest expense driven by a 13 basis point increase in deposit costs. These increases in yields and costs are primarily due to the rising interest rate environment.
Net interest margin was 3.50% for the third quarter of 2022, an increase of 47 basis points from 3.03% in the second quarter of 2022. The margin increase compared to the preceding quarter was driven by large increases on floating rate yields from interest-earning assets, partially offset by increases in costs on interest-bearing liabilities. Prepayment penalties earned in loan income contributed four basis points to our net interest margin in the third quarter of 2022, compared to two basis points in the second quarter of 2022.
Provision for loan losses totaled $5.4 million for the third quarter of 2022 compared to $2.9 million in the second quarter of 2022. The increase in the provision expense on a linked quarter basis is primarily driven by higher loan balances, an increase in qualitative factors, and $1.6 million in charge-offs related to nonperforming loans that were transferred to held for sale.
Core non-interest income excluding the impact of solar tax equity investments (non-GAAP)1 was $7.5 million for the third quarter of 2022, compared to $8.7 million in the second quarter of 2022. The decrease of $1.2 million was primarily related to losses on sale of nonperforming loans held for sale.
Core non-interest expense (non-GAAP)1 for the third quarter of 2022 was $36.3 million, an increase of $2.3 million from the second quarter of 2022. This was primarily driven by a $1.5 million expected increase in compensation and employee benefits and a $0.4 million increase in professional fees.
Our provision for income tax expense was $8.1 million for the third quarter of 2022, compared to $6.9 million for the second quarter of 2022. The increase is based on a higher pre-tax income. Our effective tax rate for the third quarter of 2022 was 26.0%, compared to 25.9% for the second quarter of 2022.
Balance Sheet Quarterly Summary
Total assets were $7.9 billion at September 30, 2022, compared to $7.9 billion at June 30, 2022. Notable changes within individual balance sheet line items include a $222.9 million increase in loans receivable, net of allowance and deferred fees and costs, offset by a reduction in cash of $266.3 million, a $33.1 million decrease in resell agreements, and a $31.3 million decrease in investment securities.
Total loans receivable, net of allowance and deferred fees and costs at September 30, 2022 were $3.8 billion, an increase of $220.2 million, or 6.1%, compared to June 30, 2022. The increase in loans is primarily driven by a $95.9 million increase in residential loans, a $61.7 million increase in commercial and industrial loans, a $41.4 million increase in our consumer and other loans due to solar loan originations, and a $31.3 million increase in multifamily loans, offset by a $4.3 million decrease in construction and land loans, and a $3.0 million decrease in the commercial real estate portfolio as we selectively de-risk our exposure in metropolitan areas. Our continued focus on credit quality improvement in the commercial portfolio resulted in $16.9 million of payoffs of criticized or classified loans.
Deposits at September 30, 2022 were $7.2 billion, a decrease of $130.9 million, or 1.8%, as compared to $7.3 billion as of June 30, 2022. Total deposits year to date have increased $804.0 million, or 12.6%. Deposits held by politically active customers, such as campaigns, PACs, advocacy-based organizations, and state and national party committees were $1.2 billion as of September 30, 2022, a decrease of $123.7 million on a linked quarter basis. Accelerated runoff of political deposits is anticipated in the fourth quarter related to the conclusion of the congressional elections.
Noninterest-bearing deposits represent 56% of average deposits and 54% of ending deposits for the quarter ended September 30, 2022, contributing to an average cost of deposits of 14 basis points in the third quarter of 2022.
Nonperforming assets totaled $54.3 million, or 0.69% of period-end total assets at September 30, 2022, a decrease of $11.0 million, compared with $65.3 million, or 0.82% on a linked quarter basis. The decrease in non-performing assets was primarily driven by a $5.7 million paydown on one commercial and industrial loan, as well as $3.9 million in residential loans that were sold.
The allowance for loan losses increased $2.6 million to $42.1 million at September 30, 2022 from $39.5 million at June 30, 2022, primarily due to increases in loan balances and an increase in qualitative factors. At September 30, 2022, we had $38.2 million of impaired loans for which there was a specific allowance of $5.2 million, compared to $60.1 million of impaired loans at June 30, 2022 for which there was a specific allowance of $6.1 million. The ratio of allowance to total loans was 1.09% at September 30, 2022 and 1.08% at June 30, 2022. The ratio of allowance to nonaccrual loans improved to 212.51% at September 30, 2022.
Capital Quarterly Summary
As of September 30, 2022, our Common Equity Tier 1 Capital Ratio was 11.91%, Total Risk-Based Capital Ratio was 14.43%, and Tier-1 Leverage Capital Ratio was 7.16%, compared to 11.75%, 14.41%, and 7.08%, respectively, as of June 30, 2022. Stockholders’ equity at September 30, 2022 was $487.7 million, compared to $498.0 million at June 30, 2022. The decrease in stockholders’ equity was primarily driven by a $29.7 million increase in accumulated other comprehensive loss due to the tax effected mark-to-market on our securities portfolio, partially offset by $22.9 million of net income for the quarter.
Our tangible book value per share was $15.37 as of September 30, 2022 compared to $15.69 as of June 30, 2022, primarily as a result of a $29.7 million decline from the previous quarter in the tax effected mark-to-market adjustment for the fair value of our available-for-sale securities portfolio. The mark-to-market adjustment had no impact on our Tier 1 Capital Ratio or other risk based ratios. Tangible common equity was 6.00% of tangible assets, compared to 6.07% as of June 30, 2022.
Conference Call
As previously announced, Amalgamated Financial Corp. will host a conference call to discuss its third quarter 2022 results today, October 27th, 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. Third Quarter 2022 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 13731490. The telephonic replay will be available until November 3, 2022.
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 https://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 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 September 30, 2022, our total assets were $7.9 billion, total net loans were $3.8 billion, and total deposits were $7.2 billion. Additionally, as of September 30, 2022, our trust business held $37.6 billion in assets under custody and $12.5 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 operating revenue excluding solar tax impact,” “Core non-interest expense,” “Core net income,” “Core net income excluding solar tax impact,” “Tangible common equity,” “Average tangible common equity,” “Core return on average assets,” “Core return on average assets excluding solar tax impact,” “Core return on average tangible common equity,” “Core return on average tangible common equity excluding solar tax impact,” “Core efficiency ratio,” and “Core efficiency ratio excluding solar tax impact.”
Our management utilizes this information to compare our operating performance for September 30, 2022 versus certain periods in 2022 and 2021 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 “core non-interest income”, defined as 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 operating revenue excluding solar tax impact” is defined as total net interest income plus non-interest income excluding gains and losses on sales of securities, gains on the sale of owned property, and tax credits and depreciation on solar equity investments. 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, restructuring/severance, and acquisitions. 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.
“Core net income excluding solar tax impact” 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, tax credits and depreciation on solar equity investments, 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 assets excluding solar tax impact” is defined as “Core net income excluding solar tax impact” 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 return on average tangible common equity excluding solar tax impact” is defined as “Core net income excluding solar tax impact” 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.
“Core efficiency ratio excluding solar tax impact” is defined as “Core non-interest expense” divided by “Core operating revenue excluding solar tax impact.” 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. 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) continued fluctuation of the 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, which may have an adverse impact on our business, operations and performance, and could have a negative impact on our credit portfolio, share price, and borrowers; (vii) fluctuations or unanticipated changes in interest rates on loans or deposits or that affect the yield curve; (viii) any matter that would cause us to conclude that there was impairment of any asset, including intangible assets; (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; (xii) the risk that the preliminary financial information reported herein and our current preliminary analysis will be different when our review is finalized; (xiii) increased competition for experienced executives in the banking industry; (xiv) a failure in or breach of our operational or security systems or infrastructure, or those of third party vendors or other service providers, including as a result of unauthorized access, computer viruses, phishing schemes, spam attacks, human error, natural disasters, power loss and other security breaches; and (xv) the outcome of any legal proceedings that may be instituted against us in connection with the termination of the merger agreement with Amalgamated Bank of Chicago. Additional factors which could affect the forward-looking statements can be found in our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K filed with the SEC and available on the SEC's website at https://www.sec.gov/. We disclaim any obligation to update or revise any forward-looking statements contained in this release, which speak only as of the date hereof, whether as a result of new information, future events or otherwise, except as required by law.
Investor Contact:
Jamie Lillis
Solebury Strategic Communications
shareholderrelations@amalgamatedbank.com
800-895-4172Consolidated Statements of Income (unaudited)
Three Months Ended Nine Months Ended September 30, June 30, September 30, September 30, ($ in thousands) 2022 2022 2021 2022 2021 INTEREST AND DIVIDEND INCOME Loans $ 38,264 $ 33,766 $ 29,915 $ 103,157 $ 91,180 Securities 31,580 24,352 14,655 75,087 40,008 Interest-bearing deposits in banks 971 551 230 1,701 451 Total interest and dividend income 70,815 58,669 44,800 179,945 131,639 INTEREST EXPENSE Deposits 2,491 1,481 1,413 5,374 4,416 Borrowed funds 696 690 — 2,077 — Total interest expense 3,187 2,171 1,413 7,451 4,416 NET INTEREST INCOME 67,628 56,498 43,387 172,494 127,223 Provision for (recovery of) loan losses 5,363 2,912 (2,276 ) 10,568 (3,855 ) Net interest income after provision for loan losses 62,265 53,586 45,663 161,926 131,078 NON-INTEREST INCOME Trust Department fees 3,872 3,479 3,353 10,842 10,471 Service charges on deposit accounts 2,735 2,826 2,466 8,008 6,941 Bank-owned life insurance 785 1,283 539 2,882 1,858 Gain (loss) on sale of securities (1,844 ) (582 ) 413 (2,264 ) 755 Gain (loss) on sale of loans, net (367 ) 492 280 (32 ) 1,706 Gain (loss) on other real estate owned, net — — — — (407 ) Equity method investments (1,151 ) (638 ) (483 ) (1,357 ) (5,720 ) Other 973 386 134 1,592 424 Total non-interest income 5,003 7,246 6,702 19,671 16,028 NON-INTEREST EXPENSE Compensation and employee benefits 19,527 18,046 17,482 55,242 52,485 Occupancy and depreciation 3,481 3,457 3,440 10,378 10,293 Professional fees 3,173 2,745 2,348 8,733 9,219 Data processing 4,149 4,327 4,521 13,660 10,848 Office maintenance and depreciation 807 784 887 2,316 2,362 Amortization of intangible assets 262 261 301 785 905 Advertising and promotion 795 761 1,023 2,410 2,248 Other 4,064 3,965 3,032 11,477 8,863 Total non-interest expense 36,258 34,346 33,034 105,001 97,223 Income before income taxes 31,010 26,486 19,331 76,596 49,883 Income tax expense (benefit) 8,066 6,873 4,915 19,874 12,870 Net income $ 22,944 $ 19,613 $ 14,416 $ 56,722 $ 37,013 Earnings per common share - basic $ 0.75 $ 0.64 $ 0.46 $ 1.84 $ 1.19 Earnings per common share - diluted $ 0.74 $ 0.63 $ 0.46 $ 1.82 $ 1.17 Consolidated Statements of Financial Condition
($ in thousands) September 30,
2022December 31,
2021Assets (unaudited) Cash and due from banks $ 3,404 $ 8,622 Interest-bearing deposits in banks 62,819 321,863 Total cash and cash equivalents 66,223 330,485 Securities: Available for sale, at fair value (amortized cost of $2,087,187 and $2,103,049, respectively) 1,957,486 2,113,410 Held-to-maturity (fair value of $1,369,383 and $849,704, respectively) 1,492,423 843,569 Loans held for sale 17,916 3,279 Loans receivable, net of deferred loan origination costs (fees) 3,871,290 3,312,224 Allowance for loan losses (42,122 ) (35,866 ) Loans receivable, net 3,829,168 3,276,358 Resell agreements 192,834 229,018 Accrued interest and dividends receivable 34,767 28,820 Premises and equipment, net 10,539 11,735 Bank-owned life insurance 105,915 107,266 Right-of-use lease asset 29,991 33,115 Deferred tax asset 64,046 26,719 Goodwill 12,936 12,936 Other intangible assets 3,366 4,151 Equity investments 7,683 6,856 Other assets 42,924 50,159 Total assets $ 7,868,217 $ 7,077,876 Liabilities Deposits $ 7,160,307 $ 6,356,255 Subordinated debt 77,679 83,831 Borrowed funds 75,000 — Operating leases 43,229 48,160 Other liabilities 24,264 25,755 Total liabilities 7,380,479 6,514,001 Stockholders’ equity Common stock, par value $.01 per share (70,000,000 shares authorized; 30,672,303 and 31,130,143 shares issued and outstanding, respectively) 307 311 Additional paid-in capital 286,431 297,975 Retained earnings 308,743 260,047 Accumulated other comprehensive income (loss), net of income taxes (107,876 ) 5,409 Total Amalgamated Financial Corp. stockholders' equity 487,605 563,742 Noncontrolling interests 133 133 Total stockholders' equity 487,738 563,875 Total liabilities and stockholders’ equity $ 7,868,217 $ 7,077,876 Select Financial Data
As of and for the As of and for the Three Months Ended Nine Months Ended September 30, June 30, September 30, September 30, (Shares in thousands) 2022 2022 2021 2022 2021 Selected Financial Ratios and Other Data: Earnings per share Basic $ 0.75 $ 0.64 $ 0.46 $ 1.84 $ 1.19 Diluted 0.74 0.63 0.46 1.82 1.17 Core net income (non-GAAP) Basic $ 0.78 $ 0.66 $ 0.46 $ 1.90 $ 1.20 Diluted 0.77 0.65 0.46 1.87 1.19 Basic $ 0.81 $ 0.68 $ 0.48 $ 1.95 $ 1.36 Diluted 0.80 0.67 0.48 1.92 1.34 Book value per common share (excluding minority interest) $ 15.90 $ 16.23 $ 17.89 $ 15.90 $ 17.89 Tangible book value per share (non-GAAP) $ 15.37 $ 15.69 $ 17.33 $ 15.37 $ 17.33 Common shares outstanding 30,672 30,684 31,097 30,672 31,097 Weighted average common shares outstanding, basic 30,673 30,818 31,094 30,864 31,216 Weighted average common shares outstanding, diluted 31,032 31,189 31,462 31,223 31,584 Select Financial Data
As of and for the As of and for the Three Months Ended Nine Months Ended September 30, June 30, September 30, September 30, 2022 2022 2021 2022 2021 Selected Performance Metrics: Return on average assets 1.15 % 1.01 % 0.86 % 0.98 % 0.77 % Core return on average assets (non-GAAP) 1.19 % 1.05 % 0.86 % 1.02 % 0.78 % Core return on average assets excluding solar tax impact (non-GAAP) 1.24 % 1.08 % 0.90 % 1.04 % 0.88 % Return on average equity 17.79 % 15.20 % 10.29 % 14.32 % 9.02 % Core return on average tangible common equity (non-GAAP) 19.11 % 16.25 % 10.62 % 15.25 % 9.46 % Core return on average tangible common equity excluding solar tax impact (non-GAAP) 19.88 % 16.76 % 11.05 % 15.65 % 10.65 % Average equity to average assets 6.44 % 6.67 % 8.38 % 6.88 % 8.55 % Tangible common equity to tangible assets 6.00 % 6.07 % 7.88 % 6.00 % 7.88 % Loan yield 4.11 % 3.86 % 3.84 % 3.95 % 3.83 % Securities yield 3.35 % 2.66 % 2.19 % 2.82 % 2.17 % Deposit cost 0.14 % 0.08 % 0.09 % 0.10 % 0.10 % Net interest margin 3.50 % 3.03 % 2.70 % 3.11 % 2.77 % Efficiency ratio (1) 49.92 % 53.88 % 65.95 % 54.64 % 67.87 % Core efficiency ratio (non-GAAP) 49.09 % 52.90 % 65.71 % 53.80 % 67.19 % Core efficiency ratio excluding solar tax impact (non-GAAP) 48.24 % 52.20 % 64.67 % 53.22 % 64.30 % Asset Quality Ratios: Nonaccrual loans to total loans 0.51 % 0.67 % 1.46 % 0.51 % 1.46 % Nonperforming assets to total assets 0.69 % 0.82 % 0.99 % 0.69 % 0.99 % Allowance for loan losses to nonaccrual loans 212.51 % 161.81 % 78.83 % 212.51 % 78.83 % Allowance for loan losses to total loans 1.09 % 1.08 % 1.15 % 1.09 % 1.15 % Annualized net charge-offs (recoveries) to average loans 0.29 % 0.11 % -0.02 % 0.16 % 0.08 % Capital Ratios: Tier 1 leverage capital ratio 7.16 % 7.08 % 7.85 % 7.16 % 7.85 % Tier 1 risk-based capital ratio 11.91 % 11.75 % 13.98 % 11.91 % 13.98 % Total risk-based capital ratio 14.43 % 14.41 % 14.99 % 14.43 % 14.99 % Common equity tier 1 capital ratio 11.91 % 11.75 % 13.98 % 11.91 % 13.98 % (1) Efficiency ratio is calculated by dividing total non-interest expense by the sum of net interest income and total non-interest income Loan and Held-to-Maturity Securities Portfolio Composition
(In thousands) At September 30, 2022 At June 30, 2022 At September 30, 2021 Amount % of total loans Amount % of total loans Amount % of total loans Commercial portfolio: Commercial and industrial $ 805,087 20.8 % $ 743,403 20.4 % $ 628,388 20.2 % Multifamily 884,790 22.9 % 853,514 23.4 % 826,143 26.5 % Commercial real estate 338,002 8.7 % 340,987 9.4 % 346,996 11.1 % Construction and land development 38,946 1.0 % 43,212 1.2 % 34,863 1.1 % Total commercial portfolio 2,066,825 53.4 % 1,981,116 54.4 % 1,836,390 58.9 % Retail portfolio: Residential real estate lending 1,332,010 34.5 % 1,236,088 33.9 % 1,032,947 33.1 % Consumer and other 467,793 12.1 % 426,394 11.7 % 249,050 8.0 % Total retail 1,799,803 46.6 % 1,662,482 45.6 % 1,281,997 41.1 % Total loans held for investment 3,866,628 100.0 % 3,643,598 100.0 % 3,118,387 100.0 % Net deferred loan origination costs (fees) 4,662 4,806 4,942 Allowance for loan losses (42,122 ) (39,477 ) (35,863 ) Total loans, net $ 3,829,168 $ 3,608,927 $ 3,087,466 Held-to-maturity securities portfolio: PACE assessments $ 856,701 57.4 % $ 742,146 53.9 % $ 627,195 86.5 % Other securities 635,722 42.6 % 633,520 46.1 % 97,881 13.5 % Total held-to-maturity securities $ 1,492,423 100.0 % $ 1,375,666 100.0 % $ 725,076 100.0 % Net Interest Income Analysis
Three Months Ended September 30, 2022 June 30, 2022 September 30, 2021 (In thousands) Average
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RateAverage
BalanceIncome / Expense Yield /
RateInterest earning assets: Interest-bearing deposits in banks $ 222,071 $ 971 1.73 % $ 305,134 $ 551 0.72 % $ 632,526 $ 230 0.14 % Securities 3,522,863 29,735 3.35 % 3,443,987 23,308 2.71 % 2,545,703 14,192 2.21 % Resell agreements 232,956 1,845 3.14 % 231,468 1,044 1.81 % 114,100 463 1.61 % Total loans, net (1)(2) 3,693,688 38,264 4.11 % 3,504,223 33,766 3.86 % 3,087,744 29,915 3.84 % Total interest earning assets 7,671,578 70,815 3.66 % 7,484,812 58,669 3.14 % 6,380,073 44,800 2.79 % Non-interest earning assets: Cash and due from banks 4,783 9,296 8,464 Other assets 265,736 266,186 243,969 Total assets $ 7,942,097 $ 7,760,294 $ 6,632,506 Interest bearing liabilities: Savings, NOW and money market deposits $ 3,031,402 $ 2,329 0.30 % $ 3,030,788 $ 1,332 0.18 % $ 2,641,719 $ 1,173 0.18 % Time deposits 184,476 162 0.35 % 192,181 149 0.31 % 241,009 240 0.40 % Total deposits 3,215,878 2,491 0.31 % 3,222,969 1,481 0.18 % 2,882,728 1,413 0.19 % Other borrowings 85,323 696 3.24 % 83,886 690 3.30 % — — 0.00 % Total interest bearing liabilities 3,301,201 3,187 0.38 % 3,306,855 2,171 0.26 % 2,882,728 1,413 0.19 % Non-interest bearing liabilities: Demand and transaction deposits 4,053,953 3,855,735 3,077,231 Other liabilities 75,143 80,274 116,790 Total liabilities 7,430,297 7,242,864 6,076,749 Stockholders' equity 511,800 517,430 555,757 Total liabilities and stockholders' equity $ 7,942,097 $ 7,760,294 $ 6,632,506 Net interest income / interest rate spread $ 67,628 3.28 % $ 56,498 2.88 % $ 43,387 2.60 % Net interest earning assets / net interest margin $ 4,370,377 3.50 % $ 4,177,957 3.03 % $ 3,497,345 2.70 % Total Cost of Deposits 0.14 % 0.08 % 0.09 % (1) Amounts are net of deferred origination costs (fees) and the allowance for loan losses
(2) Includes prepayment penalty interest income in 3Q2022, 2Q2022, and 3Q2021 of $800, $379, and $169, respectively (in thousands)Net Interest Income Analysis
Nine Months Ended September 30, 2022 September 30, 2021 (In thousands) Average
BalanceIncome / Expense Yield /
RateAverage
BalanceIncome / Expense Yield /
RateInterest earning assets: Interest-bearing deposits in banks $ 316,288 $ 1,701 0.72 % $ 508,421 $ 451 0.12 % Securities 3,387,707 71,477 2.82 % 2,321,979 38,643 2.23 % Resell agreements 227,932 3,610 2.12 % 138,967 1,365 1.31 % Total loans, net (1)(2) 3,493,405 103,157 3.95 % 3,180,890 91,180 3.83 % Total interest earning assets 7,425,332 179,945 3.24 % 6,150,257 131,639 2.86 % Non-interest earning assets: Cash and due from banks 7,752 7,780 Other assets 267,315 263,170 Total assets $ 7,700,399 $ 6,421,207 Interest bearing liabilities: Savings, NOW and money market deposits $ 2,986,588 $ 4,908 0.22 % $ 2,574,463 $ 3,568 0.19 % Time deposits 191,944 466 0.32 % 259,609 848 0.44 % Total deposits 3,178,532 5,374 0.23 % 2,834,072 4,416 0.21 % Other borrowings 84,604 2,077 3.28 % 165 — 0.00 % Total interest bearing liabilities 3,263,136 7,451 0.31 % 2,834,237 4,416 0.21 % Non-interest bearing liabilities: Demand and transaction deposits 3,821,571 2,925,516 Other liabilities 85,996 112,721 Total liabilities 7,170,703 5,872,474 Stockholders' equity 529,696 548,733 Total liabilities and stockholders' equity $ 7,700,399 $ 6,421,207 Net interest income / interest rate spread $ 172,494 2.93 % $ 127,223 2.65 % Net interest earning assets / net interest margin $ 4,162,196 3.11 % $ 3,316,020 2.77 % Total Cost of Deposits 0.10 % 0.10 % (1) Amounts are net of deferred origination costs (fees) and the allowance for loan losses
(2) Includes prepayment penalty interest income in September YTD 2022 and September YTD 2021 of $1.6 million and $1.3 million, respectivelyDeposit Portfolio Composition
(In thousands) September 30, 2022 June 30, 2022 September 30, 2021 Non-interest bearing demand deposit accounts $ 3,839,155 $ 3,965,907 $ 3,189,155 NOW accounts 204,473 208,795 206,610 Money market deposit accounts 2,549,024 2,540,657 2,241,914 Savings accounts 384,644 388,185 364,568 Time deposits 183,011 187,623 222,259 Total deposits $ 7,160,307 $ 7,291,167 $ 6,224,506 Three Months Ended September 30, 2022 June 30, 2022 September 30, 2021 (In thousands) Average
BalanceAverage Rate Paid Average
BalanceAverage Rate Paid Average
BalanceAverage Rate Paid Non-interest bearing demand deposit accounts $ 4,053,953 0.00 % $ 3,855,735 0.00 % $ 3,077,231 0.00 % NOW accounts 210,972 0.19 % 211,007 0.09 % 205,417 0.09 % Money market deposit accounts 2,437,920 0.33 % 2,431,571 0.19 % 2,066,830 0.20 % Savings accounts 382,510 0.19 % 388,210 0.11 % 369,472 0.10 % Time deposits 184,476 0.35 % 192,181 0.31 % 241,009 0.40 % Total deposits $ 7,269,831 0.14 % $ 7,078,704 0.08 % $ 5,959,959 0.09 % Asset Quality
(In thousands) September 30, 2022 June 30, 2022 September 30, 2021 Loans 90 days past due and accruing $ — $ — $ — Nonaccrual loans held for sale 5,858 4,841 — Troubled debt restructured loans - accruing loans held for sale 10,179 — — Nonaccrual loans excluding held for sale loans and restructured loans 7,499 8,109 24,960 Troubled debt restructured loans - nonaccrual 12,322 16,288 20,534 Troubled debt restructured loans - accruing 18,396 35,683 21,958 Other real estate owned — 307 307 Impaired securities 37 56 64 Total nonperforming assets $ 54,291 $ 65,284 $ 67,823 Nonaccrual loans: Commercial and industrial $ 9,356 $ 9,550 $ 13,709 Multifamily 3,494 3,494 6,079 Commercial real estate 4,914 3,931 4,023 Construction and land development — 5,053 — Total commercial portfolio 17,764 22,028 23,811 Residential real estate lending 675 898 20,797 Consumer and other 1,382 1,471 886 Total retail portfolio 2,057 2,369 21,683 Total nonaccrual loans $ 19,821 $ 24,397 $ 45,494 Nonaccrual loans to total loans 0.51 % 0.67 % 1.46 % Nonperforming assets to total assets 0.69 % 0.82 % 0.99 % Allowance for loan losses to nonaccrual loans 212.51 % 161.81 % 78.83 % Allowance for loan losses to total loans 1.09 % 1.08 % 1.15 % Annualized net charge-offs (recoveries) to average loans 0.29 % 0.11 % -0.02 % Credit Quality
September 30, 2022 ($ in thousands) Pass Special Mention Substandard Doubtful Total Commercial and industrial $ 778,331 $ 7,797 $ 17,213 $ 1,746 $ 805,087 Multifamily 842,685 23,866 18,239 — 884,790 Commercial real estate 298,374 20,948 18,680 — 338,002 Construction and land development 36,522 — 2,424 — 38,946 Residential real estate lending 1,331,335 — 675 — 1,332,010 Consumer and other 466,411 — 1,382 — 467,793 Total loans $ 3,753,658 $ 52,611 $ 58,613 $ 1,746 $ 3,866,628 June 30, 2022 ($ in thousands) Pass Special Mention Substandard Doubtful Total Commercial and industrial $ 710,534 $ 7,923 $ 24,946 $ — $ 743,403 Multifamily 800,167 25,433 27,914 — 853,514 Commercial real estate 301,243 20,966 18,778 — 340,987 Construction and land development 35,736 — 7,476 — 43,212 Residential real estate lending 1,235,190 — 898 — 1,236,088 Consumer and other 424,923 — 1,471 — 426,394 Total loans $ 3,507,793 $ 54,322 $ 81,483 $ — $ 3,643,598 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 Reconciliation of GAAP to Non-GAAP Financial Measures
The information provided below presents a reconciliation of each of our non-GAAP financial measures to the most directly comparable GAAP financial measure.As of and for the As of and for the Three Months Ended Nine Months Ended (in thousands) September 30, 2022 June 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021 Core operating revenue Net Interest income (GAAP) $ 67,628 $ 56,498 $ 43,387 $ 172,494 $ 127,223 Non-interest income 5,003 7,246 6,702 19,671 16,028 Less: Securities (gain) loss 1,844 582 (413 ) 2,264 (755 ) Less: Subdebt repurchase (gain) loss (617 ) — — (617 ) — Core operating revenue (non-GAAP) 73,858 64,326 49,676 193,812 142,496 Add: Tax (credits) depreciation on solar investments 1,306 862 796 2,105 6,393 Core operating revenue excluding solar tax impact (non-GAAP) 75,164 65,188 50,472 195,917 148,889 Core non-interest expense Non-interest expense (GAAP) $ 36,258 $ 34,346 $ 33,034 $ 105,001 $ 97,224 Less: Other one-time expenses(1) — (316 ) (392 ) (738 ) (1,482 ) Core non-interest expense (non-GAAP) 36,258 34,030 32,642 104,263 95,742 Core net income Net Income (GAAP) $ 22,944 $ 19,613 $ 14,416 $ 56,722 $ 37,013 Less: Securities (gain) loss 1,844 582 (413 ) 2,264 (755 ) Less: Subdebt repurchase (gain) loss (617 ) — — (617 ) — Add: Other one-time expenses — 316 392 738 1,482 Less: Tax on notable items (319 ) (233 ) 5 (619 ) (188 ) Core net income (non-GAAP) 23,852 20,278 14,400 58,488 37,552 Add: Tax (credits) depreciation on solar investments 1,306 862 796 2,105 6,393 Add: Tax effect of solar income (340 ) (224 ) (202 ) (546 ) (1,649 ) Core net income excluding solar tax impact (non-GAAP) 24,818 20,916 14,994 60,047 42,296 Tangible common equity Stockholders' equity (GAAP) $ 487,738 $ 498,041 $ 556,390 $ 487,738 $ 556,390 Less: Minority interest (133 ) (133 ) (133 ) (133 ) (133 ) Less: Goodwill (12,936 ) (12,936 ) (12,936 ) (12,936 ) (12,936 ) Less: Core deposit intangible (3,366 ) (3,628 ) (4,453 ) (3,366 ) (4,453 ) Tangible common equity (non-GAAP) 471,303 481,344 538,868 471,303 538,868 Average tangible common equity Average stockholders' equity (GAAP) $ 511,800 $ 517,430 $ 555,757 $ 529,696 $ 548,733 Less: Minority interest (133 ) (133 ) (133 ) (133 ) (133 ) Less: Goodwill (12,936 ) (12,936 ) (12,936 ) (12,936 ) (12,936 ) Less: Core deposit intangible (3,494 ) (3,755 ) (4,602 ) (3,754 ) (4,900 ) Average tangible common equity (non-GAAP) 495,237 500,606 538,086 512,873 530,764 Core return on average assets Denominator: Total average assets 7,942,097 7,760,294 6,632,506 7,700,399 6,421,208 Core return on average assets (non-GAAP) 1.19 % 1.05 % 0.86 % 1.02 % 0.78 % Core return on average assets excluding solar tax impact (non-GAAP) 1.24 % 1.08 % 0.90 % 1.04 % 0.88 % Core return on average tangible common equity Denominator: Average tangible common equity 495,237 500,606 538,086 512,873 530,764 Core return on average tangible common equity (non-GAAP) 19.11 % 16.25 % 10.62 % 15.25 % 9.46 % Core return on average tangible common equity excluding solar tax impact (non-GAAP) 19.88 % 16.76 % 11.05 % 15.65 % 10.65 % Core efficiency ratio Numerator: Core non-interest expense (non-GAAP) $ 36,258 $ 34,030 $ 32,642 $ 104,263 $ 95,742 Core efficiency ratio (non-GAAP) 49.09 % 52.90 % 65.71 % 53.80 % 67.19 % Core efficiency ratio excluding solar tax impact (non-GAAP) 48.24 % 52.20 % 64.67 % 53.22 % 64.30 % (1) Salary and COBRA reimbursement expense for positions eliminated, plus expenses related to the termination of the merger agreement with Amalgamated Bank of Chicago
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1 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.
