Amalgamated Financial Corp. Reports First Quarter 2023 Financial Results; Exhibiting Deposit Stability and Solid Liquidity
Amalgamated Financial Corp. (AMAL) reported its Q1 2023 financial results, showing a net income of $21.3 million or $0.69 per diluted share, down from $24.8 million and $0.80 per share in Q4 2022. Core net income fell to $23.0 million or $0.74 per diluted share. Total deposits increased by $446.4 million (6.8%) to $7.0 billion, though deposits excluding brokered CDs declined by $74.3 million (1.1%). Loans receivable grew by $92.2 million (2.2%) to $4.2 billion. Net interest income remained steady at $67.3 million, with a net interest margin of 3.59%. The bank's capital ratios remain strong, with a Common Equity Tier 1 ratio of 12.23%. Amalgamated's management highlighted their solid capital and liquidity positions, aligning with their 'Growth for Good' strategy.
- Total deposits increased by $446.4 million (6.8%) to $7.0 billion.
- Loans receivable grew by $92.2 million (2.2%) to $4.2 billion.
- Net interest margin rose to 3.59%, up 5 basis points from Q4 2022.
- Common Equity Tier 1 Capital Ratio remains strong at 12.23%.
- Net income decreased by $3.5 million compared to the previous quarter.
- Core net income excluding solar tax equity investments fell to $23.0 million from $27.2 million.
- Deposits excluding Brokered CDs declined by $74.3 million (1.1%).
- Nonperforming assets increased to $38.7 million (0.49% of total assets), up from $28.6 million.
NEW YORK, April 27, 2023 (GLOBE NEWSWIRE) -- Amalgamated Financial Corp. (the “Company” or “Amalgamated”) (Nasdaq: AMAL), the holding company for Amalgamated Bank (the “Bank”), today announced financial results for the first quarter ended March 31, 2023.
First Quarter 2023 Highlights (on a linked quarter basis)
- Net income of
$21.3 million , or$0.69 per diluted share, compared to$24.8 million , or$0.80 per diluted share. - Core net income excluding the impact of solar tax equity investments (non-GAAP)1 was
$23.0 million , or$0.74 per diluted share, as compared to$27.2 million , or$0.87 per diluted share. - Total deposits increased
$446.4 million or6.8% to$7.0 billion . Excluding Brokered CDs, deposits declined$74.3 million or1.1% to$6.4 billion , reflecting a stable deposit base. - Excluding Brokered CDs, average cost of deposits was 61 basis points for the quarter, where non-interest bearing deposits comprised
47% of total deposits. - Loans receivable, net of deferred loan origination costs, increased
$92.2 million , or2.2% , to$4.2 billion . - PACE assessments grew
$84.5 million to$996.4 million , comprised of a$7.0 million increase in commercial and$77.5 million increase in residential. - Net interest income was level at
$67.3 million compared to$67.3 million , while net interest margin grew by 5 basis points to3.59% , compared to3.54% .
First Quarter 2023 Liquidity Summary and Key Balance Sheet Insights
- Super-core deposits totaled approximately
$3.5 billion , had a weighted average life of 17.2 years, and comprised54% of total deposits excluding Brokered CDs. - Total uninsured deposits were
$4.4 billion or62% of total deposits. Excluding uninsured super-core deposits of approximately$2.5 billion , remaining uninsured deposits were approximately 25-28% of total deposits with immediate liquidity coverage of137% . - Cash and borrowing capacity totaled
$2.6 billion (immediately available) plus unpledged securities (two-day availability) of$868.0 million for total liquidity within two-days of$3.4 billion (79% of total uninsured deposits). - Tangible common equity ratio of
6.43% . - Available for sale securities had unrealized losses of
6.6% , with an effective duration of 1.8 years. - Held-to-maturity securities had unrealized losses of
8.0% , with an effective duration of 4.9 years, and an effective duration of 4.2 years excluding PACE assessments. - Regulatory capital remains above bank “well capitalized” standards, and remains strong after the adoption of the CECL standard on January 1, 2023.
Priscilla Sims Brown, President and Chief Executive Officer, commented, “Amalgamated has a differentiated position in the market as a mission-based bank, that has been run conservatively with long tenured client relationships. Over half our core deposit franchise is comprised of customers that have banked with us for decades given our shared values and labor union heritage. Our first quarter results again validate our mission and our beliefs. In fact, our results demonstrate the resiliency of our strategy as well as the strength of our customer relationships. Our strong capital and liquidity positions us well to pursue the next leg of our Growth for Good strategy.”
______________________________
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.
First Quarter Earnings
Net income for the first quarter of 2023 was
Core net income excluding the impact of solar tax equity investments (non-GAAP)1 for the first quarter of 2023 was
Net interest income was
Net interest margin was
On January 1, 2023, the Current Expected Credit Loss (“CECL”) methodology for establishing the allowance for credit losses was adopted which increased the allowance for credit losses on loans and securities for on- and off-balance sheet credit exposures. Provision for credit losses totaled
Core non-interest income excluding the impact of solar tax equity investments (non-GAAP)1 was
Core non-interest expense (non-GAAP)1 for the first quarter of 2023 was
Our provision for income tax expense was
Balance Sheet Quarterly Summary
Total assets were
Total loans receivable, net of deferred loan origination costs at March 31, 2023 were
Deposits at March 31, 2023 were
Non-interest-bearing deposits represent
Nonperforming assets totaled
During the quarter, the allowance for credit losses on loans increased
Capital Quarterly Summary
As of March 31, 2023, our Common Equity Tier 1 Capital Ratio was
Our tangible book value per share was
Conference Call
As previously announced, Amalgamated Financial Corp. will host a conference call to discuss its first quarter 2023 results today, April 27, 2023 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. First Quarter 2023 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 13737335. The telephonic replay will be available until May 4, 2023.
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 March 31, 2023, our total assets were
Non-GAAP Financial Measures
This release (and the accompanying financial information and tables) refer to certain non-GAAP financial measures including, without limitation, “Core operating revenue,” “Core non-interest expense,” “Core non-interest income,” “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 March 31, 2023 versus certain periods in 2023 and 2022 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:
“Super-core deposits” are defined as total deposits from commercial and consumer customers, with a relationship length of greater than 5 years. We believe the most directly comparable GAAP financial measure is total deposits.
“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.
“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 accelerated depreciation on solar equity investments, and taxes on notable pre-tax items. We believe the most directly comparable GAAP financial measure is net 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 non-interest income excluding the impact of solar tax equity investments” is defined as total 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 non-interest income.
“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 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.
“Tangible assets” are defined as total assets excluding, as applicable, goodwill and core deposit intangibles. We believe the most directly comparable GAAP financial measure is total assets.
“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.
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,” “aspire,” “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) uncertain conditions in the banking industry and in national, regional and local economies in our core markets, which may have an adverse impact on our business, operations and financial performance; (ii) deterioration in the financial condition of borrowers resulting in significant increases in loan losses and provisions for those losses; (iii) deposit outflows and subsequent declines in liquidity caused by factors that could include lack of confidence in the banking system, a deterioration in market conditions or the financial condition of depositors; (iv) changes in our deposits, including an increase in uninsured deposits; (v) unfavorable conditions in the capital markets, which may cause declines in our stock price and the value of our investments; (vi) continued fluctuation of the interest rate environment, including changes in net interest margin or changes that affect the yield curve on investments; (vii) potential deterioration in real estate collateral values; (viii) changes in legislation, regulation, public policies, or administrative practices impacting the banking industry, including increased regulation and FDIC assessments in the aftermath of the Silicon Valley and Signature Bank failures; (ix) the outcome of legal or regulatory proceedings that may be instituted against us; (x) our inability to maintain the historical growth rate of the loan portfolio; (xi) changes in loan underwriting, credit review or loss reserve policies associated with economic conditions, examination conclusions, or regulatory developments; (xii) 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; (xiii) any matter that would cause us to conclude that there was impairment of any asset, including intangible assets; (xiv) the risk that the preliminary financial information reported herein and our current preliminary analysis will be different when our review is finalized; (xv) increased competition for experienced members of the workforce including executives in the banking industry; (xvi) 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; (xvii) a downgrade in our credit rating; (xviii) increased political opposition to Environmental, Social and Governance (“ESG”) practices; (xix) recessionary conditions; (xx) the ongoing economic effects of the COVID-19 pandemic; and (xxi) physical and transitional risks related to climate change as they impact our business and the businesses that we finance. 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
800-895-4172
Consolidated Statements of Income (unaudited)
| Three Months Ended | |||||||||||
| March 31, | December 31, | March 31, | |||||||||
| ($ in thousands) | 2023 | 2022 | 2022 | ||||||||
| INTEREST AND DIVIDEND INCOME | |||||||||||
| Loans | $ | 44,806 | $ | 42,492 | $ | 31,127 | |||||
| Securities | 39,512 | 35,567 | 19,155 | ||||||||
| Interest-bearing deposits in banks | 618 | 485 | 179 | ||||||||
| Total interest and dividend income | 84,936 | 78,544 | 50,461 | ||||||||
| INTEREST EXPENSE | |||||||||||
| Deposits | 13,835 | 5,682 | 1,402 | ||||||||
| Borrowed funds | 3,821 | 5,516 | 691 | ||||||||
| Total interest expense | 17,656 | 11,198 | 2,093 | ||||||||
| NET INTEREST INCOME | 67,280 | 67,346 | 48,368 | ||||||||
| Provision for credit losses(1) | 4,958 | 4,434 | 2,293 | ||||||||
| Net interest income after provision for credit losses | 62,322 | 62,912 | 46,075 | ||||||||
| NON-INTEREST INCOME | |||||||||||
| Trust Department fees | 3,929 | 3,607 | 3,491 | ||||||||
| Service charges on deposit accounts | 2,455 | 2,991 | 2,447 | ||||||||
| Bank-owned life insurance | 781 | 986 | 814 | ||||||||
| Gain (loss) on sale of securities | (3,086 | ) | (1,373 | ) | 162 | ||||||
| Gain (loss) on sale of loans, net | 3 | (578 | ) | (157 | ) | ||||||
| Loss on other real estate owned, net | — | (168 | ) | — | |||||||
| Equity method investments | 153 | (1,416 | ) | 432 | |||||||
| Other | 973 | 177 | 233 | ||||||||
| Total non-interest income | 5,208 | 4,226 | 7,422 | ||||||||
| NON-INTEREST EXPENSE | |||||||||||
| Compensation and employee benefits | 22,014 | 19,470 | 17,669 | ||||||||
| Occupancy and depreciation | 3,399 | 3,345 | 3,440 | ||||||||
| Professional fees | 2,230 | 1,684 | 2,815 | ||||||||
| Data processing | 4,549 | 4,072 | 5,184 | ||||||||
| Office maintenance and depreciation | 728 | 696 | 725 | ||||||||
| Amortization of intangible assets | 222 | 262 | 262 | ||||||||
| Advertising and promotion | 1,587 | 1,331 | 854 | ||||||||
| Federal deposit insurance premiums | 718 | 788 | 667 | ||||||||
| Other | 3,180 | 3,922 | 2,781 | ||||||||
| Total non-interest expense | 38,627 | 35,570 | 34,397 | ||||||||
| Income before income taxes | 28,903 | 31,568 | 19,100 | ||||||||
| Income tax expense | 7,565 | 6,813 | 4,935 | ||||||||
| Net income | $ | 21,338 | $ | 24,755 | $ | 14,165 | |||||
| Earnings per common share - basic | $ | 0.69 | $ | 0.81 | $ | 0.46 | |||||
| Earnings per common share - diluted | $ | 0.69 | $ | 0.80 | $ | 0.45 | |||||
| (1) In accordance with the adoption of the CECL standard on January 1, 2023, the provision for credit losses as of March 31, 2023 is calculated under the current expected credit losses model. For December 31, 2022 and March 31, 2022, the provision presented is the provision for loan losses calculated using the incurred loss model. | |||||||||||
Consolidated Statements of Financial Condition
| ($ in thousands) | March 31, 2023 | December 31, 2022 | |||||
| Assets | (unaudited) | ||||||
| Cash and due from banks | $ | 5,192 | $ | 5,110 | |||
| Interest-bearing deposits in banks | 125,705 | 58,430 | |||||
| Total cash and cash equivalents | 130,897 | 63,540 | |||||
| Securities: | |||||||
| Available for sale, at fair value | 1,639,105 | 1,812,476 | |||||
| Held-to-maturity, at amortized cost and net of allowance of | 1,618,507 | 1,541,301 | |||||
| Loans held for sale | 5,653 | 7,943 | |||||
| Loans receivable, net of deferred loan origination costs | 4,198,170 | 4,106,002 | |||||
| Allowance for credit losses(1) | (67,323 | ) | (45,031 | ) | |||
| Loans receivable, net | 4,130,847 | 4,060,971 | |||||
| Resell agreements | 15,431 | 25,754 | |||||
| Federal Home Loan Bank of New York ("FHLBNY") stock, at cost | 3,507 | 29,607 | |||||
| Accrued interest and dividends receivable | 40,844 | 41,441 | |||||
| Premises and equipment, net | 9,250 | 9,856 | |||||
| Bank-owned life insurance | 105,405 | 105,624 | |||||
| Right-of-use lease asset | 26,516 | 28,236 | |||||
| Deferred tax asset, net | 62,504 | 62,507 | |||||
| Goodwill | 12,936 | 12,936 | |||||
| Intangible assets, net | 2,883 | 3,105 | |||||
| Equity investments | 8,170 | 8,305 | |||||
| Other assets | 24,001 | 29,522 | |||||
| Total assets | $ | 7,836,456 | $ | 7,843,124 | |||
| Liabilities | |||||||
| Deposits | $ | 7,041,361 | $ | 6,595,037 | |||
| Subordinated debt | 73,737 | 77,708 | |||||
| FHLBNY advances | — | 580,000 | |||||
| Federal funds purchased | 140,000 | — | |||||
| Operating leases | 38,333 | 40,779 | |||||
| Other liabilities | 23,867 | 40,645 | |||||
| Total liabilities | 7,317,298 | 7,334,169 | |||||
| Stockholders’ equity | |||||||
| Common stock, par value $.01 per share | 307 | 307 | |||||
| Additional paid-in capital | 287,514 | 286,947 | |||||
| Retained earnings | 330,673 | 330,275 | |||||
| Accumulated other comprehensive loss, net of income taxes | (97,317 | ) | (108,707 | ) | |||
| Treasury stock, at cost | (2,152 | ) | — | ||||
| Total Amalgamated Financial Corp. stockholders' equity | 519,025 | 508,822 | |||||
| Noncontrolling interests | 133 | 133 | |||||
| Total stockholders' equity | 519,158 | 508,955 | |||||
| Total liabilities and stockholders’ equity | $ | 7,836,456 | $ | 7,843,124 | |||
| (1) In accordance with the adoption of the CECL standard on January 1, 2023, the allowance for credit losses on both loans and securities as of March 31, 2023 is calculated under the current expected credit losses model. For December 31, 2022 and March 31, 2022, no allowance was calculated on securities, and the allowance on loans presented is the allowance for loan losses calculated using the incurred loss model. | |||||||
Select Financial Data
| As of and for the | ||||||||
| Three Months Ended | ||||||||
| March 31, | December 31, | March 31, | ||||||
| (Shares in thousands) | 2023 | 2022 | 2022 | |||||
| Selected Financial Ratios and Other Data: | ||||||||
| Earnings per share | ||||||||
| Basic | $ | 0.69 | $ | 0.81 | $ | 0.46 | ||
| Diluted | 0.69 | 0.80 | 0.45 | |||||
| Core net income (non-GAAP) | ||||||||
| Basic | $ | 0.75 | $ | 0.84 | $ | 0.46 | ||
| Diluted | 0.74 | 0.83 | 0.46 | |||||
| Core net income excluding solar tax impact (non-GAAP) | ||||||||
| Basic | $ | 0.75 | $ | 0.89 | $ | 0.46 | ||
| Diluted | 0.74 | 0.87 | 0.45 | |||||
| Book value per common share (excluding minority interest) | $ | 16.94 | $ | 16.57 | $ | 16.99 | ||
| Tangible book value per share (non-GAAP) | $ | 16.42 | $ | 16.05 | $ | 16.45 | ||
| Common shares outstanding, par value $.01 per share(1) | 30,642 | 30,700 | 30,995 | |||||
| Weighted average common shares outstanding, basic | 30,706 | 30,679 | 31,107 | |||||
| Weighted average common shares outstanding, diluted | 30,939 | 31,055 | 31,456 | |||||
| (1) 70,000,000 shares authorized; 30,736,141, 30,700,198, and 30,995,271 shares issued for the periods ended March 31, 2023, December 31, 2022, and March 31, 2022 respectively, and 30,642,299, 30,700,198, and 30,995,271 shares outstanding for the periods ended March 31, 2023, December 31, 2022, and March 31, 2022, respectively. | ||||||||
Select Financial Data
| As of and for the | ||||||||
| Three Months Ended | ||||||||
| March 31, | December 31, | March 31, | ||||||
| 2023 | 2022 | 2022 | ||||||
| Selected Performance Metrics: | ||||||||
| Return on average assets | 1.11 | % | 1.26 | % | 0.78 | % | ||
| Core return on average assets (non-GAAP) | 1.19 | % | 1.31 | % | 0.79 | % | ||
| Core return on average assets excluding solar tax impact (non-GAAP) | 1.19 | % | 1.38 | % | 0.79 | % | ||
| Return on average equity | 17.22 | % | 19.89 | % | 10.25 | % | ||
| Core return on average tangible common equity (non-GAAP) | 19.21 | % | 21.47 | % | 10.72 | % | ||
| Core return on average tangible common equity excluding solar tax impact (non-GAAP) | 19.21 | % | 22.58 | % | 10.68 | % | ||
| Average equity to average assets | 6.42 | % | 6.32 | % | 7.58 | % | ||
| Tangible common equity to tangible assets | 6.43 | % | 6.30 | % | 6.68 | % | ||
| Loan yield | 4.40 | % | 4.19 | % | 3.81 | % | ||
| Securities yield | 4.73 | % | 4.08 | % | 2.34 | % | ||
| Deposit cost | 0.81 | % | 0.34 | % | 0.09 | % | ||
| Net interest margin | 3.59 | % | 3.54 | % | 2.74 | % | ||
| Efficiency ratio (1) | 53.29 | % | 49.70 | % | 61.65 | % | ||
| Core efficiency ratio (non-GAAP) | 51.64 | % | 48.76 | % | 61.07 | % | ||
| Core efficiency ratio excluding solar tax impact (non-GAAP) | 51.64 | % | 47.65 | % | 61.14 | % | ||
| Asset Quality Ratios: | ||||||||
| Nonaccrual loans to total loans | 0.71 | % | 0.53 | % | 0.84 | % | ||
| Nonperforming assets to total assets | 0.49 | % | 0.44 | % | 0.80 | % | ||
| Allowance for credit losses on loans to nonaccrual loans(2) | 224.74 | % | 207.53 | % | 129.71 | % | ||
| Allowance for credit losses on loans to total loans(2) | 1.61 | % | 1.10 | % | 1.08 | % | ||
| Annualized net charge-offs (recoveries) to average loans | 0.25 | % | 0.15 | % | 0.08 | % | ||
| Capital Ratios: | ||||||||
| Tier 1 leverage capital ratio | 7.50 | % | 7.52 | % | 7.34 | % | ||
| Tier 1 risk-based capital ratio | 12.23 | % | 12.31 | % | 12.36 | % | ||
| Total risk-based capital ratio | 15.00 | % | 14.87 | % | 15.16 | % | ||
| Common equity tier 1 capital ratio | 12.23 | % | 12.31 | % | 12.36 | % | ||
| (1) Efficiency ratio is calculated by dividing total non-interest expense by the sum of net interest income and total non-interest income. | ||||||||
| (2) In accordance with the adoption of the CECL standard on January 1, 2023, the allowance for credit losses on loans as of March 31, 2023 is calculated under the current expected credit losses model. For December 31, 2022 and March 31, 2022, the allowance on loans presented is the allowance for loan losses calculated using the incurred loss model. | ||||||||
Loan and Held-to-Maturity Securities Portfolio Composition
| (In thousands) | At March 31, 2023 | At December 31, 2022 | At March 31, 2022 | |||||||||||||||||
| Amount | % of total loans | Amount | % of total loans | Amount | % of total loans | |||||||||||||||
| Commercial portfolio: | ||||||||||||||||||||
| Commercial and industrial | $ | 923,853 | 22.0 | % | $ | 925,641 | 22.5 | % | $ | 724,177 | 20.9 | % | ||||||||
| Multifamily | 1,062,826 | 25.3 | % | 967,521 | 23.6 | % | 813,702 | 23.5 | % | |||||||||||
| Commercial real estate | 327,477 | 7.8 | % | 335,133 | 8.2 | % | 354,173 | 10.2 | % | |||||||||||
| Construction and land development | 37,828 | 0.9 | % | 37,696 | 0.9 | % | 40,242 | 1.2 | % | |||||||||||
| Total commercial portfolio | 2,351,984 | 56.0 | % | 2,265,991 | 55.2 | % | 1,932,294 | 55.8 | % | |||||||||||
| Retail portfolio: | ||||||||||||||||||||
| Residential real estate lending | 1,390,135 | 33.1 | % | 1,371,779 | 33.4 | % | 1,143,175 | 33.0 | % | |||||||||||
| Consumer solar(1) | 410,725 | 9.8 | % | 416,849 | 10.2 | % | 347,548 | 10.0 | % | |||||||||||
| Consumer and other(1) | 45,326 | 1.1 | % | 47,150 | 1.1 | % | 41,904 | 1.2 | % | |||||||||||
| Total retail portfolio | 1,846,186 | 44.0 | % | 1,835,778 | 44.8 | % | 1,532,627 | 44.2 | % | |||||||||||
| Total loans held for investment | 4,198,170 | 100.0 | % | 4,101,769 | 100.0 | % | 3,464,921 | 100.0 | % | |||||||||||
| Net deferred loan origination costs(2) | — | 4,233 | 5,252 | |||||||||||||||||
| Allowance for credit losses(3) | (67,323 | ) | (45,031 | ) | (37,542 | ) | ||||||||||||||
| Loans receivable, net | $ | 4,130,847 | $ | 4,060,971 | $ | 3,432,631 | ||||||||||||||
| Held-to-maturity securities portfolio: | ||||||||||||||||||||
| PACE assessments | $ | 996,395 | 61.5 | % | $ | 911,877 | 59.2 | % | $ | 723,646 | 76.5 | % | ||||||||
| Other securities | 622,799 | 38.5 | % | 629,424 | 40.8 | % | 222,701 | 23.5 | % | |||||||||||
| Total held-to-maturity securities | 1,619,194 | 100.0 | % | 1,541,301 | 100.0 | % | 946,347 | 100.0 | % | |||||||||||
| Allowance for credit losses(3) | (687 | ) | — | — | ||||||||||||||||
| Total held-to-maturity securities, net | $ | 1,618,507 | $ | 1,541,301 | $ | 946,347 | ||||||||||||||
| (1) The Company adopted the CECL standard on January 1, 2023. As a result, the classification of loan segments was updated, and all loan balances for presented periods have been reclassified. | ||||||||||||||||||||
| (2) With the adoption of the CECL standard, loans balances as of March 31, 2023 are presented at amortized cost, net of deferred loan origination costs. | ||||||||||||||||||||
| (3) With the adoption of the CECL standard, the allowance for credit losses on both loans and securities as of March 31, 2023 is calculated under the current expected credit losses model. For December 31, 2022 and March 31, 2022, no allowance was calculated on securities, and the allowance on loans presented is the allowance for loan losses calculated using the incurred loss model. | ||||||||||||||||||||
Net Interest Income Analysis
| Three Months Ended | ||||||||||||||||||||||||||
| March 31, 2023 | December 31, 2022 | March 31, 2022 | ||||||||||||||||||||||||
| (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 | $ | 90,962 | $ | 618 | 2.76 | % | $ | 85,886 | $ | 485 | 2.24 | % | $ | 423,878 | $ | 179 | 0.17 | % | ||||||||
| Securities(1) | 3,361,750 | 39,193 | 4.73 | % | 3,400,994 | 34,939 | 4.08 | % | 3,192,642 | 18,435 | 2.34 | % | ||||||||||||||
| Resell agreements | 18,644 | 319 | 6.94 | % | 46,909 | 628 | 5.31 | % | 219,221 | 720 | 1.33 | % | ||||||||||||||
| Loans receivable, net (2)(3) | 4,129,460 | 44,806 | 4.40 | % | 4,019,297 | 42,492 | 4.19 | % | 3,315,155 | 31,127 | 3.81 | % | ||||||||||||||
| Total interest-earning assets | 7,600,816 | 84,936 | 4.53 | % | 7,553,086 | 78,544 | 4.13 | % | 7,150,896 | 50,461 | 2.86 | % | ||||||||||||||
| Non-interest-earning assets: | ||||||||||||||||||||||||||
| Cash and due from banks | 4,015 | 5,267 | 9,226 | |||||||||||||||||||||||
| Other assets | 217,020 | 248,236 | 232,649 | |||||||||||||||||||||||
| Total assets | $ | 7,821,851 | $ | 7,806,589 | $ | 7,392,771 | ||||||||||||||||||||
| Interest-bearing liabilities: | ||||||||||||||||||||||||||
| Savings, NOW and money market deposits | $ | 3,091,228 | $ | 9,555 | 1.25 | % | $ | 2,967,150 | $ | 5,161 | 0.69 | % | $ | 2,896,086 | $ | 1,247 | 0.17 | % | ||||||||
| Time deposits | 149,814 | 297 | 0.80 | % | 167,138 | 174 | 0.41 | % | 199,340 | 155 | 0.32 | % | ||||||||||||||
| Brokered CDs | 367,684 | 3,983 | 4.39 | % | 37,047 | 347 | 3.72 | % | — | — | 0.00 | % | ||||||||||||||
| Total interest-bearing deposits | 3,608,726 | 13,835 | 1.55 | % | 3,171,335 | 5,682 | 0.71 | % | 3,095,426 | 1,402 | 0.18 | % | ||||||||||||||
| Other borrowings | 347,878 | 3,821 | 4.45 | % | 545,303 | 5,516 | 4.01 | % | 84,597 | 691 | 3.31 | % | ||||||||||||||
| Total interest-bearing liabilities | 3,956,604 | 17,656 | 1.81 | % | 3,716,638 | 11,198 | 1.20 | % | 3,180,023 | 2,093 | 0.27 | % | ||||||||||||||
| Non-interest-bearing liabilities: | ||||||||||||||||||||||||||
| Demand and transaction deposits | 3,286,964 | 3,522,352 | 3,549,483 | |||||||||||||||||||||||
| Other liabilities | 75,798 | 73,838 | 102,874 | |||||||||||||||||||||||
| Total liabilities | 7,319,366 | 7,312,828 | 6,832,380 | |||||||||||||||||||||||
| Stockholders' equity | 502,485 | 493,761 | 560,391 | |||||||||||||||||||||||
| Total liabilities and stockholders' equity | $ | 7,821,851 | $ | 7,806,589 | $ | 7,392,771 | ||||||||||||||||||||
| Net interest income / interest rate spread | $ | 67,280 | 2.72 | % | $ | 67,346 | 2.93 | % | $ | 48,368 | 2.59 | % | ||||||||||||||
| Net interest-earning assets / net interest margin | $ | 3,644,212 | 3.59 | % | $ | 3,836,448 | 3.54 | % | $ | 3,970,873 | 2.74 | % | ||||||||||||||
| Total deposits excluding Brokered CDs / total cost of deposits excluding Brokered CDs | $ | 6,528,006 | 0.61 | % | $ | 6,656,640 | 0.32 | % | $ | 6,644,909 | 0.09 | % | ||||||||||||||
| Total deposits / total cost of deposits | $ | 6,895,690 | 0.81 | % | $ | 6,693,687 | 0.34 | % | $ | 6,644,909 | 0.09 | % | ||||||||||||||
| Total borrowings / total cost of funds | $ | 7,243,568 | 0.99 | % | $ | 7,238,990 | 0.61 | % | $ | 6,729,506 | 0.13 | % | ||||||||||||||
| (1) Includes FHLBNY stock in the average balance, and dividend income on FHLBNY stock in interest income. | ||||||||||||||||||||||||||
| (2) Amounts are net of deferred origination costs. With the adoption of the CECL standard on January 1, 2023, the average balance of the allowance for credit losses on loans was reclassified for all presented periods to other assets to allow for comparability. | ||||||||||||||||||||||||||
| (3) Includes prepayment penalty interest income in 1Q2023, 4Q2022, and 1Q2022 of | ||||||||||||||||||||||||||
Deposit Portfolio Composition
| Three Months Ended | |||||||||||||||||
| (In thousands) | March 31, 2023 | December 31, 2022 | March 31, 2022 | ||||||||||||||
| Ending Balance | Average Balance | Ending Balance | Average Balance | Ending Balance | Average Balance | ||||||||||||
| Non-interest-bearing demand deposit accounts | $ | 3,015,558 | $ | 3,286,964 | $ | 3,331,067 | $ | 3,522,352 | $ | 3,759,349 | $ | 3,549,482 | |||||
| NOW accounts | 199,518 | 196,499 | 206,434 | 200,633 | 212,550 | 208,134 | |||||||||||
| Money market deposit accounts | 2,702,464 | 2,514,835 | 2,445,396 | 2,385,446 | 2,416,201 | 2,310,294 | |||||||||||
| Savings accounts | 371,240 | 379,894 | 386,190 | 381,071 | 386,253 | 377,659 | |||||||||||
| Time deposits | 157,697 | 149,814 | 151,699 | 167,138 | 199,120 | 199,340 | |||||||||||
| Brokered CDs | 594,884 | 367,684 | 74,251 | 37,047 | — | — | |||||||||||
| Total deposits | $ | 7,041,361 | $ | 6,895,690 | $ | 6,595,037 | $ | 6,693,687 | $ | 6,973,473 | $ | 6,644,909 | |||||
| Total deposits excluding Brokered CDs | $ | 6,446,477 | $ | 6,528,006 | $ | 6,520,786 | $ | 6,656,640 | $ | 6,973,473 | $ | 6,644,909 | |||||
| Three Months Ended | |||||||||||||||||
| March 31, 2023 | December 31, 2022 | March 31, 2022 | |||||||||||||||
| (In thousands) | Average Rate Paid(1) | Cost of Funds | Average Rate Paid(1) | Cost of Funds | Average Rate Paid(1) | Cost of Funds | |||||||||||
| Non-interest bearing demand deposit accounts | 0.00 | % | 0.00 | % | 0.00 | % | 0.00 | % | 0.00 | % | 0.00 | % | |||||
| NOW accounts | 0.89 | % | 0.76 | % | 0.74 | % | 0.52 | % | 0.08 | % | 0.08 | % | |||||
| Money market deposit accounts | 1.59 | % | 1.36 | % | 1.16 | % | 0.74 | % | 0.16 | % | 0.19 | % | |||||
| Savings accounts | 0.95 | % | 0.78 | % | 0.75 | % | 0.49 | % | 0.11 | % | 0.11 | % | |||||
| Time deposits | 1.25 | % | 0.80 | % | 0.69 | % | 0.41 | % | 0.28 | % | 0.32 | % | |||||
| Brokered CDs | 4.52 | % | 4.39 | % | 3.83 | % | 3.72 | % | — | — | |||||||
| Total deposits | 1.10 | % | 0.81 | % | 0.57 | % | 0.34 | % | 0.07 | % | 0.09 | % | |||||
| Interest-bearing deposits excluding Brokered CDs | 1.47 | % | 1.23 | % | 1.15 | % | 0.68 | % | 0.16 | % | 0.18 | % | |||||
| (1) Average rate paid is calculated as the weighted average of spot rates on deposit accounts as of March 31, 2023. | |||||||||||||||||
Asset Quality
| (In thousands) | March 31, 2023 | December 31, 2022 | March 31, 2022 | ||||||||
| Loans 90 days past due and accruing | $ | 1,299 | $ | — | $ | — | |||||
| Nonaccrual loans held for sale | 5,653 | 6,914 | 2,490 | ||||||||
| Nonaccrual loans - Commercial | 25,779 | 18,308 | 20,677 | ||||||||
| Nonaccrual loans - Retail | 4,177 | 3,391 | 8,265 | ||||||||
| Other real estate owned | — | — | 307 | ||||||||
| Nonaccrual securities | 1,835 | 36 | 59 | ||||||||
| Total nonperforming assets | $ | 38,743 | $ | 28,649 | $ | 31,798 | |||||
| Nonaccrual loans: | |||||||||||
| Commercial and industrial | $ | 9,521 | $ | 9,629 | $ | 8,099 | |||||
| Multifamily | 2,710 | 3,828 | 3,537 | ||||||||
| Commercial real estate | 4,745 | 4,851 | 3,988 | ||||||||
| Construction and land development | 8,803 | — | 5,053 | ||||||||
| Total commercial portfolio | 25,779 | 18,308 | 20,677 | ||||||||
| Residential real estate lending | 2,016 | 1,807 | 7,404 | ||||||||
| Consumer solar | 2,021 | 1,584 | 838 | ||||||||
| Consumer and other | 140 | — | 23 | ||||||||
| Total retail portfolio | 4,177 | 3,391 | 8,265 | ||||||||
| Total nonaccrual loans | $ | 29,956 | $ | 21,699 | $ | 28,942 | |||||
| Nonaccrual loans to total loans | 0.71 | % | 0.53 | % | 0.84 | % | |||||
| Nonperforming assets to total assets | 0.49 | % | 0.44 | % | 0.80 | % | |||||
| Allowance for credit losses on loans to nonaccrual loans | 224.74 | % | 207.53 | % | 129.71 | % | |||||
| Allowance for credit losses on loans to total loans | 1.61 | % | 1.10 | % | 1.08 | % | |||||
| Annualized net charge-offs (recoveries) to average loans | 0.25 | % | 0.15 | % | 0.08 | % | |||||
Credit Quality
| March 31, 2023 | December 31, 2022 | March 31, 2022 | ||||||
| ($ in thousands) | ||||||||
| Criticized and classified loans | ||||||||
| Commercial and industrial | $ | 35,823 | $ | 32,004 | $ | 32,343 | ||
| Multifamily | 18,710 | 19,860 | 68,353 | |||||
| Commercial real estate | 35,121 | 35,180 | 62,854 | |||||
| Construction and land development | 16,426 | 16,426 | 7,476 | |||||
| Residential real estate lending | 2,016 | 1,807 | 7,694 | |||||
| Consumer solar | 2,021 | 1,584 | 838 | |||||
| Consumer and other | 140 | — | 23 | |||||
| Total loans | $ | 110,257 | $ | 106,861 | $ | 179,581 | ||
| Criticized and classified loans to total loans | ||||||||
| Commercial and industrial | 0.85 | % | 0.78 | % | 0.93 | % | ||
| Multifamily | 0.45 | % | 0.48 | % | 1.97 | % | ||
| Commercial real estate | 0.84 | % | 0.86 | % | 1.81 | % | ||
| Construction and land development | 0.39 | % | 0.40 | % | 0.22 | % | ||
| Residential real estate lending | 0.05 | % | 0.04 | % | 0.22 | % | ||
| Consumer solar | 0.05 | % | 0.04 | % | 0.02 | % | ||
| Consumer and other | 0.00 | % | 0.00 | % | 0.00 | % | ||
| 2.63 | % | 2.60 | % | 5.17 | % | |||
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 Months Ended | |||||||||||
| (in thousands) | March 31, 2023 | December 31, 2022 | March 31, 2022 | ||||||||
| Core operating revenue | |||||||||||
| Net Interest income (GAAP) | $ | 67,280 | $ | 67,346 | $ | 48,368 | |||||
| Non-interest income | 5,208 | 4,226 | 7,422 | ||||||||
| Less: Securities (gain) loss | 3,086 | 1,373 | (162 | ) | |||||||
| Less: Subdebt repurchase gain | (780 | ) | — | — | |||||||
| Core operating revenue (non-GAAP) | 74,794 | 72,945 | 55,628 | ||||||||
| Add: Tax (credits) depreciation on solar investments | — | 1,706 | (64 | ) | |||||||
| Core operating revenue excluding solar tax impact (non-GAAP) | 74,794 | 74,651 | 50,472 | ||||||||
| Core non-interest expense | |||||||||||
| Non-interest expense (GAAP) | $ | 38,627 | $ | 35,570 | $ | 34,397 | |||||
| Less: Other one-time expenses(1) | — | — | (423 | ) | |||||||
| Core non-interest expense (non-GAAP) | 38,627 | 35,570 | 33,974 | ||||||||
| Core net income | |||||||||||
| Net Income (GAAP) | $ | 21,338 | $ | 24,755 | $ | 14,165 | |||||
| Less: Securities (gain) loss | 3,086 | 1,373 | (162 | ) | |||||||
| Less: Subdebt repurchase gain | (780 | ) | — | — | |||||||
| Add: Other one-time expenses | — | — | 423 | ||||||||
| Less: Tax on notable items | (604 | ) | (296 | ) | (67 | ) | |||||
| Core net income (non-GAAP) | 23,040 | 25,832 | 14,359 | ||||||||
| Add: Tax (credits) depreciation on solar investments | — | 1,706 | (64 | ) | |||||||
| Add: Tax effect of solar income | — | (368 | ) | 17 | |||||||
| Core net income excluding solar tax impact (non-GAAP) | 23,040 | 27,170 | 14,312 | ||||||||
| Tangible common equity | |||||||||||
| Stockholders' equity (GAAP) | $ | 519,158 | $ | 508,955 | $ | 526,762 | |||||
| Less: Minority interest | (133 | ) | (133 | ) | (133 | ) | |||||
| Less: Goodwill | (12,936 | ) | (12,936 | ) | (12,936 | ) | |||||
| Less: Core deposit intangible | (2,883 | ) | (3,105 | ) | (3,890 | ) | |||||
| Tangible common equity (non-GAAP) | 503,206 | 492,781 | 509,803 | ||||||||
| Average tangible common equity | |||||||||||
| Average stockholders' equity (GAAP) | $ | 502,485 | $ | 493,761 | $ | 560,391 | |||||
| Less: Minority interest | (133 | ) | (133 | ) | (133 | ) | |||||
| Less: Goodwill | (12,936 | ) | (12,936 | ) | (12,936 | ) | |||||
| Less: Core deposit intangible | (2,991 | ) | (3,232 | ) | (4,017 | ) | |||||
| Average tangible common equity (non-GAAP) | 486,425 | 477,460 | 543,305 | ||||||||
| Core return on average assets | |||||||||||
| Denominator: Total average assets | $ | 7,821,851 | $ | 7,806,589 | $ | 7,392,771 | |||||
| Core return on average assets (non-GAAP) | 1.19 | % | 1.31 | % | 0.79 | % | |||||
| Core return on average assets excluding solar tax impact (non-GAAP) | 1.19 | % | 1.38 | % | 0.79 | % | |||||
| Core return on average tangible common equity | |||||||||||
| Denominator: Average tangible common equity | $ | 486,425 | $ | 477,460 | $ | 543,305 | |||||
| Core return on average tangible common equity (non-GAAP) | 19.21 | % | 21.47 | % | 10.72 | % | |||||
| Core return on average tangible common equity excluding solar tax impact (non-GAAP) | 19.21 | % | 22.58 | % | 10.68 | % | |||||
| Core efficiency ratio | |||||||||||
| Numerator: Core non-interest expense (non-GAAP) | $ | 38,627 | $ | 35,570 | $ | 33,974 | |||||
| Core efficiency ratio (non-GAAP) | 51.64 | % | 48.76 | % | 61.07 | % | |||||
| Core efficiency ratio excluding solar tax impact (non-GAAP) | 51.64 | % | 47.65 | % | 61.14 | % | |||||
| (1) Salary and COBRA reimbursement expense for positions eliminated, plus expenses related to the termination of the merger agreement with Amalgamated Bank of Chicago | |||||||||||
FAQ
What were Amalgamated Financial Corp.'s Q1 2023 earnings?
How did deposits perform for Amalgamated Financial Corp. in Q1 2023?
What is the outlook for Amalgamated Financial Corp.'s loan growth?
What is the net interest margin for Amalgamated Financial Corp. in Q1 2023?
How did Amalgamated Financial Corp.'s stockholders' equity change in Q1 2023?
