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Amalgamated Financial Corp. Reports Record Third Quarter 2024 Financial Results; Margin Expands to 3.51%; Return on Average Assets of 1.32%
Globe Newswire 24-Oct-2024 6:25 AM
NEW YORK, Oct. 24, 2024 (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 third quarter ended September 30, 2024.
Third Quarter 2024 Highlights (on a linked quarter basis)
Net income of $27.9 million, or $0.90 per diluted share, compared to $26.8 million, or $0.87 per diluted share.
Core net income1 of $28.0 million, or $0.91 per diluted share, compared to $26.2 million, or $0.85 per diluted share.
Deposits and Liquidity
Total deposits increased $145.6 million, or 2.0%, to $7.6 billion including a $51.3 million decline in Brokered CDs.
Excluding Brokered CDs, on-balance sheet deposits increased $196.9 million, or 2.7%, to $7.5 billion.
Political deposits increased $231.9 million, or 13%, to $2.0 billion, which includes both on and off-balance sheet deposits.
Off-balance sheet deposits increased $114.1 million, or 11%, to $1.2 billion, comprised of both transactional political deposits and other segment deposits.
Average cost of deposits, excluding Brokered CDs, increased 3 basis points to 151 basis points, where non-interest-bearing deposits comprised 51% of total deposits excluding Brokered CDs.
Assets and Margin
Net loans receivable increased $78.0 million, or 1.8%, to $4.5 billion.
Excluding a $40.9 million package of low yielding residential loans marked-to-market and moved to held-for-sale, net loans receivable increased $118.9 million or 2.7%.
Total PACE assessments grew $10.6 million, or 0.9%, to $1.2 billion.
Net interest income grew $2.9 million, or 4.2%, to $72.1 million.
Net interest margin increased 5 basis points to 3.51%.
Capital and Returns
Tier 1 leverage ratio of 8.63%, increased by 21 basis points, and Common Equity Tier 1 ratio of 13.82%.
Tangible common equity1 ratio of 8.14%, representing an eighth consecutive quarter of improvement.
Tangible book value per share1 increased $1.69, or 8.2%, to $22.29, and has increased $4.87, or 27.9% since September 2023.
Strong core return on average tangible common equity1 of 17.04% and core return on average assets1 of 1.33%.
________________________ 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.
Priscilla Sims Brown, President and Chief Executive Officer, commented, "Our third quarter financial results continue to demonstrate that Amalgamated remains positioned to achieve sustainable earnings and profitability. During the quarter, we delivered outstanding deposit and loan growth, strong profitability and returns, and a growing capital base that positions us to invest in our strategic initiatives which will sustain our growth into the future."
Third Quarter Earnings
Net income for the third quarter of 2024 was $27.9 million, or $0.90 per diluted share, compared to $26.8 million, or $0.87 per diluted share, for the second quarter of 2024. The $1.1 million increase during the quarter was primarily driven by a $3.2 million increase in non-core ICS One-Way Sell fee income from our off-balance sheet deposits, a $2.9 million increase in net interest income, a $1.3 million decrease in provision for credit losses, and a $0.7 million increase in non-core income from solar tax equity investments, which was expected. This was offset by a $4.3 million reduction in fair value on a pool of lower yielding residential loans moved to held for sale, a $1.5 million increase in non-interest expense, and a $1.3 million increase in income tax expense, and a $0.5 million increase in losses on securities sales.
Core net income1 for the third quarter of 2024 was $28.0 million, or $0.91 per diluted share, compared to $26.2 million, or $0.85 per diluted share, for the second quarter of 2024. Excluded from core net income for the quarter, pre-tax, was $8.1 million of ICS One-Way Sell fee income, a $4.3 million reduction in fair value of held for sale residential loans, $3.2 million of losses on the sale of securities, $1.1 million of accelerated depreciation from solar tax equity investments, $0.7 million of gains on subordinated debt repurchases, and $0.2 million in severance costs. Excluded from core net income for the second quarter of 2024, pre-tax, was $4.9 million of ICS One-Way Sell fee income, $2.7 million of losses on the sale of securities, $1.8 million of accelerated depreciation from our solar tax equity investments, $0.4 million of gains on subordinated debt repurchases.
Net interest income was $72.1 million for the third quarter of 2024, compared to $69.2 million for the second quarter of 2024. Loan interest income increased $2.8 million and loan yields increased 11 basis points mainly as a result of a $86.7 million increase in average loan balances. Adjusted for two discrete items; the effect of $2.1 million of accelerated amortization related to purchase premiums last quarter and the recognition in the current quarter of a $1.3 million acceleration of deferred costs on certain loans, loan interest income increased by $2.1 million in the quarter. Interest income on securities increased $1.7 million driven by an increase in the average balance of securities of $79.7 million. Interest expense on total interest-bearing deposits increased $1.2 million driven by a 26 basis point increase in cost despite a decrease in the average balance of total interest-bearing deposits of $235.6 million. The increase in deposit cost was primarily related to adjustments to rates on money market products and select non-time deposit accounts late in second quarter and early in the current quarter. The decrease in the average balance of interest-bearing deposits was primarily driven by a mix shift as newly raised political deposits were mainly non-interest-bearing whereas related outflows were mainly interest-bearing. Additionally, the average balance on Brokered CD's declined $25.0 million as certain long-term issuances were called. The average balance of borrowings also decreased $32.6 million, now substantially consisting of lower-cost subordinated debt.
Net interest margin was 3.51% for the third quarter of 2024, an increase of 5 basis points from 3.46% in the second quarter of 2024. As noted above, there were two discrete items that affected the third quarter and second quarter margin. Excluding these discrete items, net interest margin improved 2 basis points from the prior quarter, all else equal. Prepayment penalties had no impact on our net interest margin in the third quarter of 2024, which is the same as in the prior quarter.
Provision for credit losses totaled an expense of $1.8 million for the third quarter of 2024 compared to an expense of $3.2 million in the second quarter of 2024. The expense in the third quarter was primarily driven by charge-offs on our consumer solar and small business portfolios, and updates to CECL model assumptions, offset by decreases in reserves for unfunded loan commitments.
Non-interest income was $8.9 million for the third quarter of 2024, compared to $9.3 million in the second quarter of 2024. Excluding all non-core income adjustments noted above, core non-interest income1 was $8.8 million for the third quarter of 2024, compared to $8.5 million in the second quarter of 2024. The increase was primarily related to higher commercial banking fees, increased fees from our treasury investment services, and modestly higher income from our trust business.
Non-interest expense for the third quarter of 2024 was $41.0 million, an increase of $1.5 million from the second quarter of 2024. Core non-interest expense1 for the third quarter of 2024 was $40.7 million, an increase of $1.3 million from the second quarter of 2024. This was mainly driven by a $0.7 million increase in compensation and employee benefits expense due to strategic new hires and corporate performance accruals, as well as higher data processing expense related to the advance of digital initiatives scheduled for 2025.
Our provision for income tax expense was $10.3 million for the third quarter of 2024, compared to $9.0 million for the second quarter of 2024. The effective tax rate for the third quarter of 2024 was 26.9%. In the prior quarter, there were $0.5 million of discrete tax benefits resulting in an effective tax rate of 25.2%, or 26.6% excluding the discrete items.
Balance Sheet Quarterly Summary
Total assets were $8.4 billion at September 30, 2024, compared to $8.3 billion at June 30, 2024, which modestly grew the balance sheet above its target range but also carried $40.9 million in loans held for sale related to the residential loan sale that settled shortly after the quarter closed. Notable changes within individual balance sheet line items include a $91.2 million increase in cash and cash equivalents, a $24.1 million increase in securities, and a $78.0 million increase in net loans receivable. Additionally, deposits excluding Brokered CDs increased by $196.9 million while Brokered CDs decreased $51.3 million, and borrowings decreased by $8.8 million. Our off-balance sheet deposits increased by $114.1 million, or 11%, to $1.2 billion.
Total net loans receivable, at September 30, 2024 were $4.5 billion, an increase of $78.0 million, or 1.8% for the quarter. The increase in loans is primarily driven by a $60.8 million increase in multifamily loans, a $46.0 million increase in commercial and industrial loans, and a $37.6 million increase in commercial real estate loans, offset by an $11.1 million decrease in consumer solar loans, and a $54.3 million decrease in residential loans, primarily due to the noted loan pool sale. During the quarter, criticized or classified loans decreased $5.9 million, largely related to a $6.9 million note sale (with a related fully reserved $4.5 million charge-off) on a legacy non-accrual leveraged loan. Additionally, payoffs of two delinquent commercial and industrial loans totaling $1.7 million and charge-offs of smaller commercial and industrial loans totaling $1.0 million were offset by the downgrade of one $3.2 million multifamily loan to substandard and accruing and downgrades of small business loans totaling $1.1 million.
Total deposits at September 30, 2024 were $7.6 billion, an increase of $145.6 million, or 2.0%, during the quarter. Total deposits excluding Brokered CDs increased by $196.9 million to $7.5 billion, or a 2.7% increase. Including accounts currently held off-balance sheet, deposits held by politically active customers, such as campaigns, PACs, advocacy-based organizations, and state and national party committees were $2.0 billion as of September 30, 2024, an increase of $231.9 million during this quarter. Non-interest-bearing deposits represented 50% of average total deposits and 51% of ending total deposits for the quarter, excluding Brokered CDs, contributing to an average cost of total deposits of 158 basis points. Super-core deposits2 totaled approximately $4.5 billion, had a weighted average life of 16 years, and comprised 60% of total deposits, excluding Brokered CDs. Total uninsured deposits were $4.5 billion, comprising 59% of total deposits.
Nonperforming assets totaled $28.6 million, or 0.34% of period-end total assets at September 30, 2024, a decrease of $7.1 million, compared with $35.7 million, or 0.43% on a linked quarter basis. The decrease in nonperforming assets was primarily driven by the note sale mentioned above, a $0.2 million decrease in residential real estate nonaccrual loans, a $0.2 million decrease in consumer and consumer solar nonaccrual loans, offset by a $0.3 million increase in commercial and industrial nonaccrual loans.
During the quarter, the allowance for credit losses on loans decreased $1.9 million to $61.5 million. The ratio of allowance to total loans was 1.35%, a decrease of 7 basis points from 1.42% in the second quarter of 2024. The decrease was primarily the result of a release of reserves from the previously noted legacy leveraged commercial and industrial note sale, which carried a reserve of $4.5 million.
________________________ 2 Refer to Terminology on page 6 for definitions of certain terms used in this release.
Capital Quarterly Summary
As of September 30, 2024, the Common Equity Tier 1 Capital ratio was 13.82%, the Total Risk-Based Capital ratio was 16.25%, and the Tier 1 Leverage Capital ratio was 8.63%, compared to 13.48%, 16.04% and 8.42%, respectively, as of June 30, 2024. Stockholders' equity at September 30, 2024 was $698.3 million, an increase of $52.2 million during the quarter. The increase in stockholders' equity was primarily driven by $27.9 million of net income for the quarter and a $26.9 million improvement in accumulated other comprehensive loss due to the tax effected mark-to-market on our available for sale securities portfolio, offset by $3.7 million in dividends paid at $0.12 per outstanding share.
Tangible book value per share was $22.29 as of September 30, 2024 compared to $20.61 as of June 30, 2024. Tangible common equity1 improved to 8.14% of tangible assets, compared to 7.66% as of June 30, 2024.
Conference Call
As previously announced, Amalgamated Financial Corp. will host a conference call to discuss its third quarter 2024 results today, October 24, 2024 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 2024 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 13748697. The telephonic replay will be available until October 31, 2024.
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, 2024, our total assets were $8.4 billion, total net loans were $4.5 billion, and total deposits were $7.6 billion. Additionally, as of September 30, 2024, our trust business held $35.4 billion in assets under custody and $14.6 billion in assets under management.
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 September 30, 2024 versus certain periods in 2024 and 2023 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 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 net income" is defined as net income after tax excluding gains and losses on sales of securities, ICS One-Way Sell fee income, 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" is defined as total non-interest income excluding gains and losses on sales of securities, ICS One-Way Sell fee income, gains on the sale of owned property, and tax credits and accelerated 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". 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 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.
"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.
"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.
"Traditional securities portfolio" is defined as total investment securities excluding PACE assessments. We believe the most directly comparable GAAP financial measure is total investment securities.
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 are not statements of historical or current fact nor are they assurances of future performance and generally can be identified by the use of forward-looking terminology, such as "may," "approximately," "will," "anticipate," "should," "would," "believe," "contemplate," "expect," "estimate," "continue," "plan," "possible," and "intend," or the negative thereof as well as other similar words and expressions of the future. Forward-looking statements are subject to risks, uncertainties and assumptions that are difficult to predict as to timing, extent, likelihood and degree of occurrence, which could cause our actual results to differ materially from those anticipated in or by such statements. Potential risks and uncertainties include, but are not limited to, the following: (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) our ability to maintain sufficient liquidity to meet our deposit and debt obligations as they come due, which may require that we sell investment securities at a loss, negatively impacting our net income, earnings and capital; (vi) unfavorable conditions in the capital markets, which may cause declines in our stock price and the value of our investments; (vii) negative economic and political conditions that adversely affect the general economy, housing prices, the real estate market, the job market, consumer confidence, the financial condition of our borrowers and consumer spending habits, which may affect, among other things, the level of non-performing assets, charge-offs and provision expense; (viii) fluctuations or unanticipated changes in the interest rate environment including changes in net interest margin or changes in the yield curve that affect investments, loans or deposits; (ix) the general decline in the real estate and lending markets, particularly in commercial real estate in our market areas, and the effects of the enactment of or changes to rent-control and other similar regulations on multi-family housing; (x) changes in legislation, regulation, public policies, or administrative practices impacting the banking industry, including increased minimum capital requirements and other regulation in the aftermath of recent bank failures; (xi) the outcome of any legal proceedings that may be instituted against us (xii) our inability to achieve organic loan and deposit growth and the composition of that growth; (xiii) the composition of our loan portfolio, including any concentration in industries or sectors that may experience unanticipated or anticipated adverse conditions greater than other industries or sectors in the national or local economies in which we operate; (xiv) inaccuracy of the assumptions and estimates we make and policies that we implement in establishing our allowance for credit losses; (xv) changes in loan underwriting, credit review or loss reserve policies associated with economic conditions, examination conclusions, or regulatory developments; (xvi) any matter that would cause us to conclude that there was impairment of any asset, including intangible assets; (xvii) limitations on our ability to declare and pay dividends; (xviii) 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; (xix) increased competition for experienced members of the workforce including executives in the banking industry; (xx) 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; (xxi) increased regulatory scrutiny and exposure from the use of "big data" techniques, machine learning, and artificial intelligence; (xxii) downgrade in our credit rating; (xxiii) "greenwashing claims" against us and our Environmental, Social and Governance ("ESG") products and increased scrutiny and political opposition to ESG and Diversity, Equity and Inclusion ("DEI") practices; (xxiv) any unanticipated or greater than anticipated adverse conditions (including the possibility of earthquakes, wildfires, and other natural disasters)affecting the markets in which we operate; (xxv) physical and transitional risks related to climate change as they impact our business and the businesses that we finance; (xxvi) future repurchase of our shares through our common stock repurchase program; and (xxvii) descriptions of assumptions underlying or relating to any of the foregoing. 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.
Net interest income after provision for credit losses
70,258
66,031
61,714
202,738
183,079
NON-INTEREST INCOME
Trust Department fees
3,704
3,657
3,678
11,215
11,613
Service charges on deposit accounts
12,091
8,614
2,731
26,841
7,897
Bank-owned life insurance income
613
615
727
1,837
2,054
Losses on sale of securities
(3,230
)
(2,691
)
(1,699
)
(8,695
)
(5,052
)
Gain (loss) on sale of loans and changes in fair value on loans held-for-sale, net
(4,223
)
69
26
(4,107
)
30
Equity method investments income (loss)
(823
)
(1,551
)
550
(301
)
1,261
Other income
807
545
767
1,636
2,127
Total non-interest income
8,939
9,258
6,780
28,426
19,930
NON-INTEREST EXPENSE
Compensation and employee benefits
23,757
23,045
21,345
69,075
64,525
Occupancy and depreciation
3,423
3,379
3,349
9,705
10,184
Professional fees
2,575
2,332
2,222
7,284
7,211
Data processing
5,087
4,786
4,545
14,503
13,176
Office maintenance and depreciation
651
580
685
1,894
2,130
Amortization of intangible assets
183
182
222
548
666
Advertising and promotion
1,023
1,175
816
3,417
3,431
Federal deposit insurance premiums
900
1,050
1,200
3,000
3,018
Other expense
3,365
2,983
2,955
9,203
9,154
Total non-interest expense
40,964
39,512
37,339
118,629
113,495
Income before income taxes
38,233
35,777
31,155
112,535
89,514
Income tax expense
10,291
9,024
8,847
30,591
24,230
Net income
$
27,942
$
26,753
$
22,308
$
81,944
$
65,284
Earnings per common share - basic
$
0.91
$
0.88
$
0.73
$
2.68
$
2.13
Earnings per common share - diluted
$
0.90
$
0.87
$
0.73
$
2.65
$
2.12
Consolidated Statements of Financial Condition
($ in thousands)
September 30, 2024
June 30, 2024
December 31, 2023
Assets
(unaudited)
(unaudited)
Cash and due from banks
$
3,946
$
4,081
$
2,856
Interest-bearing deposits in banks
145,261
53,912
87,714
Total cash and cash equivalents
149,207
57,993
90,570
Securities:
Available for sale, at fair value
Traditional securities
1,617,045
1,581,338
1,429,739
Property Assessed Clean Energy ("PACE") assessments
149,500
112,923
53,303
1,766,545
1,694,261
1,483,042
Held-to-maturity, at amortized cost:
Traditional securities, net of allowance for credit losses of $51, $53, and $54, respectively
583,788
606,013
620,232
PACE assessments, net of allowance for credit losses of $641, $655, and $667, respectively
1,028,588
1,054,569
1,076,602
1,612,376
1,660,582
1,696,834
Loans held for sale
38,623
1,926
1,817
Loans receivable, net of deferred loan origination costs
4,547,903
4,471,839
4,411,319
Allowance for credit losses
(61,466
)
(63,444
)
(65,691
)
Loans receivable, net
4,486,437
4,408,395
4,345,628
Resell agreements
74,883
137,461
50,000
Federal Home Loan Bank of New York ("FHLBNY") stock, at cost
4,625
4,823
4,389
Accrued interest receivable
54,268
52,575
55,484
Premises and equipment, net
6,413
6,599
7,807
Bank-owned life insurance
107,365
106,752
105,528
Right-of-use lease asset
16,125
17,971
21,074
Deferred tax asset, net
38,510
47,654
56,603
Goodwill
12,936
12,936
12,936
Intangible assets, net
1,669
1,852
2,217
Equity method investments
11,514
12,710
13,024
Other assets
32,144
26,214
25,371
Total assets
$
8,413,640
$
8,250,704
$
7,972,324
Liabilities
Deposits
$
7,594,564
$
7,448,988
$
7,011,988
Borrowings
68,436
77,252
304,927
Operating leases
22,292
24,784
30,646
Other liabilities
30,016
53,568
39,399
Total liabilities
7,715,308
7,604,592
7,386,960
Stockholders' equity
Common stock, par value $.01 per share
308
307
307
Additional paid-in capital
287,167
286,021
288,232
Retained earnings
459,398
435,202
388,033
Accumulated other comprehensive loss, net of income taxes
(46,702
)
(73,579
)
(86,004
)
Treasury stock, at cost
(1,972
)
(1,972
)
(5,337
)
Total Amalgamated Financial Corp. stockholders' equity
698,199
645,979
585,231
Noncontrolling interests
133
133
133
Total stockholders' equity
698,332
646,112
585,364
Total liabilities and stockholders' equity
$
8,413,640
$
8,250,704
$
7,972,324
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)
2024
2024
2023
2024
2023
Selected Financial Ratios and Other Data:
Earnings per share
Basic
$
0.91
$
0.88
$
0.73
$
2.68
$
2.13
Diluted
0.90
0.87
0.73
2.65
2.12
Core net income (non-GAAP)
Basic
$
0.91
$
0.86
$
0.76
$
2.61
$
2.23
Diluted
0.91
0.85
0.76
2.59
2.22
Book value per common share (excluding minority interest)
$
22.77
$
21.09
$
17.93
$
22.77
$
17.93
Tangible book value per share (non-GAAP)
$
22.29
$
20.61
$
17.43
$
22.29
$
17.43
Common shares outstanding, par value $.01 per share(1)
30,663
30,630
30,459
30,663
30,459
Weighted average common shares outstanding, basic
30,646
30,551
30,481
30,558
30,601
Weighted average common shares outstanding, diluted
30,911
30,832
30,590
30,868
30,738
(1) 70,000,000 shares authorized; 30,776,163, 30,743,666, and 30,736,141 shares issued for the periods ended September 30, 2024, June 30, 2024, and September 30, 2023 respectively, and 30,662,883, 30,630,386, and 30,458,781 shares outstanding for the periods ended September 30, 2024, June 30, 2024, and September 30, 2023, respectively.
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,
2024
2024
2023
2024
2023
Selected Performance Metrics:
Return on average assets
1.32
%
1.30
%
1.12
%
1.33
%
1.11
%
Core return on average assets (non-GAAP)
1.33
%
1.27
%
1.17
%
1.29
%
1.17
%
Return on average equity
16.63
%
17.27
%
16.43
%
17.35
%
16.69
%
Core return on average tangible common equity (non-GAAP)
17.04
%
17.34
%
17.67
%
17.31
%
18.02
%
Average equity to average assets
7.96
%
7.53
%
6.82
%
7.65
%
6.67
%
Tangible common equity to tangible assets (non-GAAP)
8.14
%
7.66
%
6.72
%
8.14
%
6.72
%
Loan yield
4.79
%
4.68
%
4.56
%
4.74
%
4.43
%
Securities yield
5.25
%
5.22
%
4.94
%
5.23
%
4.84
%
Deposit cost
1.58
%
1.55
%
1.33
%
1.53
%
1.08
%
Net interest margin
3.51
%
3.46
%
3.29
%
3.48
%
3.40
%
Efficiency ratio (1)
50.54
%
50.37
%
52.96
%
49.89
%
53.05
%
Core efficiency ratio (non-GAAP)
50.35
%
50.80
%
51.71
%
50.52
%
51.88
%
Asset Quality Ratios:
Nonaccrual loans to total loans
0.61
%
0.78
%
0.79
%
0.61
%
0.79
%
Nonperforming assets to total assets
0.34
%
0.43
%
0.46
%
0.34
%
0.46
%
Allowance for credit losses on loans to nonaccrual loans
222.30
%
182.83
%
197.58
%
222.30
%
197.58
%
Allowance for credit losses on loans to total loans
1.35
%
1.42
%
1.56
%
1.35
%
1.56
%
Annualized net charge-offs to average loans
0.61
%
0.25
%
0.27
%
0.35
%
0.27
%
Capital Ratios:
Tier 1 leverage capital ratio
8.63
%
8.42
%
7.89
%
8.63
%
7.89
%
Tier 1 risk-based capital ratio
13.82
%
13.48
%
12.63
%
13.82
%
12.63
%
Total risk-based capital ratio
16.25
%
16.04
%
15.28
%
16.25
%
15.28
%
Common equity tier 1 capital ratio
13.82
%
13.48
%
12.63
%
13.82
%
12.63
%
(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 PACE Assessments Portfolio Composition
(In thousands)
At September 30, 2024
At June 30, 2024
At September 30, 2023
Amount
% of total
Amount
% of total
Amount
% of total
Commercial portfolio:
Commercial and industrial
$
1,058,376
23.3
%
$
1,012,400
22.6
%
$
1,050,355
24.1
%
Multifamily
1,291,380
28.4
%
1,230,545
27.5
%
1,094,955
25.1
%
Commercial real estate
415,077
9.1
%
377,484
8.4
%
324,139
7.4
%
Construction and land development
22,224
0.5
%
23,254
0.5
%
28,326
0.6
%
Total commercial portfolio
2,787,057
61.3
%
2,643,683
59.0
%
2,497,775
57.2
%
Retail portfolio:
Residential real estate lending
1,350,347
29.7
%
1,404,624
31.4
%
1,409,530
32.3
%
Consumer solar
374,499
8.2
%
385,567
8.6
%
415,324
9.5
%
Consumer and other
36,000
0.8
%
37,965
1.0
%
42,116
1.0
%
Total retail portfolio
1,760,846
38.7
%
1,828,156
41.0
%
1,866,970
42.8
%
Total loans held for investment
4,547,903
100.0
%
4,471,839
100.0
%
4,364,745
100.0
%
Allowance for credit losses
(61,466
)
(63,444
)
(67,815
)
Loans receivable, net
$
4,486,437
$
4,408,395
$
4,296,930
PACE assessments:
Available for sale, at fair value
Residential PACE assessments
149,500
12.7
%
112,923
9.7
%
38,526
3.5
%
Held-to-maturity, at amortized cost
Commercial PACE assessments
256,128
21.7
%
256,663
22.0
%
270,020
24.3
%
Residential PACE assessments
773,101
65.6
%
798,561
68.4
%
800,484
72.2
%
Total Held-to-maturity PACE assessments
1,029,229
87.3
%
1,055,224
90.4
%
1,070,504
96.5
%
Total PACE assessments
1,178,729
100.0
%
1,168,147
100.0
%
1,109,030
100.0
%
Allowance for credit losses
(641
)
(655
)
(670
)
Total PACE assessments, net
$
1,178,088
$
1,167,492
$
1,108,360
Loans receivable, net and total PACE assessments, net as a % of Deposits
74.6
%
74.9
%
77.3
%
Loans receivable, net and total PACE assessments, net as a % of Deposits excluding Brokered CDs
75.6
%
76.4
%
81.9
%
Net Interest Income Analysis
Three Months Ended
September 30, 2024
June 30, 2024
September 30, 2023
(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
$
182,981
$
2,274
4.94
%
$
213,725
$
2,690
5.06
%
$
170,830
$
1,687
3.92
%
Securities(1)
3,388,580
44,678
5.25
%
3,308,881
42,937
5.22
%
3,208,334
39,971
4.94
%
Resell agreements
104,933
1,754
6.65
%
122,618
2,041
6.69
%
—
—
0.00
%
Loans receivable, net (2)
4,493,520
54,110
4.79
%
4,406,843
51,293
4.68
%
4,314,767
49,578
4.56
%
Total interest-earning assets
8,170,014
102,816
5.01
%
8,052,067
98,961
4.94
%
7,693,931
91,236
4.70
%
Non-interest-earning assets:
Cash and due from banks
6,144
6,371
6,129
Other assets
217,332
217,578
204,506
Total assets
$
8,393,490
$
8,276,016
$
7,904,566
Interest-bearing liabilities:
Savings, NOW and money market deposits
$
3,506,499
$
26,168
2.97
%
$
3,729,858
$
24,992
2.69
%
$
3,446,027
$
17,157
1.98
%
Time deposits
223,337
2,148
3.83
%
210,565
1,898
3.63
%
176,171
1,122
2.53
%
Brokered CDs
131,103
1,789
5.43
%
156,086
1,992
5.13
%
371,329
4,879
5.21
%
Total interest-bearing deposits
3,860,939
30,105
3.10
%
4,096,509
28,882
2.84
%
3,993,527
23,158
2.30
%
Borrowings
71,948
604
3.34
%
104,560
887
3.41
%
376,585
4,350
4.58
%
Total interest-bearing liabilities
3,932,887
30,709
3.11
%
4,201,069
29,769
2.85
%
4,370,112
27,508
2.50
%
Non-interest-bearing liabilities:
Demand and transaction deposits
3,721,398
3,390,941
2,920,737
Other liabilities
70,804
60,982
74,964
Total liabilities
7,725,089
7,652,992
7,365,813
Stockholders' equity
668,401
623,024
538,753
Total liabilities and stockholders' equity
$
8,393,490
$
8,276,016
$
7,904,566
Net interest income / interest rate spread
$
72,107
1.90
%
$
69,192
2.09
%
$
63,728
2.20
%
Net interest-earning assets / net interest margin
$
4,237,127
3.51
%
$
3,850,998
3.46
%
$
3,323,819
3.29
%
Total deposits excluding Brokered CDs / total cost of deposits excluding Brokered CDs
$
7,451,234
1.51
%
$
7,331,364
1.48
%
$
6,542,935
1.11
%
Total deposits / total cost of deposits
$
7,582,337
1.58
%
$
7,487,450
1.55
%
$
6,914,264
1.33
%
Total funding / total cost of funds
$
7,654,285
1.60
%
$
7,592,010
1.58
%
$
7,290,849
1.50
%
(1) Includes FHLBNY stock in the average balance, and dividend income on FHLBNY stock in interest income. (2) No material impact of prepayment penalty interest income in 3Q2024, 2Q2024, or 3Q2023
Net Interest Income Analysis
Nine Months Ended
September 30, 2024
September 30, 2023
(In thousands)
Average Balance
Income / Expense
Yield / Rate
Average Balance
Income / Expense
Yield / Rate
Interest-earning assets:
Interest-bearing deposits in banks
$
200,627
$
7,556
5.03
%
$
125,560
$
3,360
3.58
%
Securities
3,289,635
128,679
5.23
%
3,276,065
118,557
4.84
%
Resell agreements
102,197
5,122
6.69
%
8,003
432
7.22
%
Total loans, net (1)(2)
4,431,801
157,355
4.74
%
4,216,391
139,744
4.43
%
Total interest-earning assets
8,024,260
298,712
4.97
%
7,626,019
262,093
4.60
%
Non-interest-earning assets:
Cash and due from banks
5,862
5,067
Other assets
219,096
210,112
Total assets
$
8,249,218
$
7,841,198
Interest-bearing liabilities:
Savings, NOW and money market deposits
$
3,608,927
$
73,033
2.70
%
$
3,248,278
$
40,010
1.65
%
Time deposits
207,374
5,622
3.62
%
161,756
2,030
1.68
%
Brokered CDs
159,041
6,224
5.23
%
383,521
13,769
4.80
%
Total interest-bearing deposits
3,975,342
84,879
2.85
%
3,793,555
55,809
1.97
%
Borrowings
154,564
4,497
3.89
%
365,262
12,292
4.50
%
Total interest-bearing liabilities
4,129,906
89,376
2.89
%
4,158,817
68,101
2.19
%
Non-interest-bearing liabilities:
Demand and transaction deposits
3,417,970
3,086,482
Other liabilities
70,476
72,821
Total liabilities
7,618,352
7,318,120
Stockholders' equity
630,866
523,078
Total liabilities and stockholders' equity
$
8,249,218
$
7,841,198
Net interest income / interest rate spread
$
209,336
2.08
%
$
193,992
2.41
%
Net interest-earning assets / net interest margin
$
3,894,354
3.48
%
$
3,467,202
3.40
%
Total deposits excluding Brokered CDs / total cost of deposits excluding Brokered CDs
$
7,234,271
1.45
%
$
6,496,516
0.87
%
Total deposits / total cost of deposits
$
7,393,312
1.53
%
$
6,880,037
1.08
%
Total funding / total cost of funds
$
7,547,876
1.58
%
$
7,245,299
1.26
%
(1) Includes Federal Home Loan Bank (FHLB) stock in the average balance, and dividend income on FHLB stock in interest income. (2) Includes prepayment penalty interest income in September YTD 2024 and September YTD 2023 of $18 thousand and $0, respectively.
Deposit Portfolio Composition
Three Months Ended
(In thousands)
September 30, 2024
June 30, 2024
September 30, 2023
Ending Balance
Average Balance
Ending Balance
Average Balance
Ending Balance
Average Balance
Non-interest-bearing demand deposit accounts
$
3,801,834
$
3,721,398
$
3,445,068
$
3,390,941
$
2,808,300
$
2,920,737
NOW accounts
186,557
188,250
192,452
191,253
192,654
192,883
Money market deposit accounts
2,959,264
2,986,434
3,093,644
3,202,365
3,059,982
2,893,930
Savings accounts
327,935
331,816
336,943
336,240
357,470
359,214
Time deposits
216,901
223,337
227,437
210,565
180,529
176,171
Brokered certificates of deposit ("CDs")
102,073
131,103
153,444
156,086
391,919
371,329
Total deposits
$
7,594,564
$
7,582,338
$
7,448,988
$
7,487,450
$
6,990,854
$
6,914,264
Total deposits excluding Brokered CDs
$
7,492,491
$
7,451,235
$
7,295,544
$
7,331,364
$
6,598,935
$
6,542,935
Three Months Ended
September 30, 2024
June 30, 2024
September 30, 2023
(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
0.90
%
1.09
%
1.07
%
1.07
%
0.95
%
1.01
%
Money market deposit accounts
3.00
%
3.24
%
3.08
%
2.93
%
2.31
%
2.14
%
Savings accounts
1.42
%
1.64
%
1.67
%
1.37
%
1.16
%
1.14
%
Time deposits
3.83
%
3.83
%
3.50
%
3.63
%
2.88
%
2.53
%
Brokered CDs
4.89
%
5.43
%
4.98
%
5.13
%
5.14
%
5.21
%
Total deposits
1.43
%
1.58
%
1.59
%
1.55
%
1.46
%
1.33
%
Interest-bearing deposits excluding Brokered CDs
2.80
%
3.02
%
2.88
%
2.74
%
2.16
%
2.00
%
(1) Average rate paid is calculated as the weighted average of spot rates on deposit accounts. Off-balance sheet deposits are excluded from all calculations shown.
Asset Quality
(In thousands)
September 30, 2024
June 30, 2024
September 30, 2023
Loans 90 days past due and accruing
$
—
$
—
$
—
Nonaccrual loans held for sale
989
989
2,189
Nonaccrual loans - Commercial
17,108
23,778
28,041
Nonaccrual loans - Retail
10,542
10,924
6,283
Nonaccrual securities
8
29
31
Total nonperforming assets
$
28,647
$
35,720
$
36,544
Nonaccrual loans:
Commercial and industrial
$
1,849
$
8,428
$
7,575
Multifamily
—
—
—
Commercial real estate
4,146
4,231
4,575
Construction and land development
11,113
11,119
15,891
Total commercial portfolio
17,108
23,778
28,041
Residential real estate lending
7,578
7,756
3,009
Consumer solar
2,848
2,794
2,817
Consumer and other
116
374
457
Total retail portfolio
10,542
10,924
6,283
Total nonaccrual loans
$
27,650
$
34,702
$
34,324
Credit Quality
September 30, 2024
June 30, 2024
September 30, 2023
($ in thousands)
Criticized and classified loans
Commercial and industrial
$
45,329
$
53,940
$
45,959
Multifamily
13,386
10,242
10,999
Commercial real estate
8,186
8,311
8,762
Construction and land development
11,113
11,119
15,891
Residential real estate lending
7,578
7,756
3,009
Consumer solar
2,848
2,794
2,817
Consumer and other
116
374
457
Total loans
$
88,556
$
94,536
$
87,894
Criticized and classified loans to total loans
Commercial and industrial
1.00
%
1.21
%
1.05
%
Multifamily
0.29
%
0.23
%
0.25
%
Commercial real estate
0.18
%
0.19
%
0.20
%
Construction and land development
0.24
%
0.25
%
0.36
%
Residential real estate lending
0.17
%
0.17
%
0.07
%
Consumer solar
0.06
%
0.06
%
0.06
%
Consumer and other
—
%
0.01
%
0.01
%
Total loans
1.94
%
2.12
%
2.00
%
September 30, 2024
June 30, 2024
September 30, 2023
Annualized net charge-offs (recoveries) to average loans
ACL to total portfolio balance
Annualized net charge-offs (recoveries) to average loans
ACL to total portfolio balance
Annualized net charge-offs (recoveries) to average loans
ACL to total portfolio balance
Commercial and industrial
2.14
%
1.01
%
0.32
%
1.44
%
—
%
1.71
%
Multifamily
—
%
0.37
%
—
%
0.38
%
0.45
%
0.46
%
Commercial real estate
—
%
0.40
%
—
%
0.40
%
—
%
0.64
%
Construction and land development
—
%
3.73
%
—
%
3.60
%
—
%
3.68
%
Residential real estate lending
(0.03
)%
0.91
%
(0.18
)%
0.88
%
(0.07
)%
1.13
%
Consumer solar
1.58
%
7.68
%
2.57
%
7.00
%
1.88
%
6.72
%
Consumer and other
1.05
%
6.44
%
0.01
%
6.49
%
0.04
%
6.00
%
Total loans
0.61
%
1.35
%
0.25
%
1.42
%
0.27
%
1.60
%
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, 2024
June 30, 2024
September 30, 2023
September 30, 2024
September 30, 2023
Core operating revenue
Net Interest Income (GAAP)
$
72,107
$
69,192
$
63,728
$
209,336
$
193,992
Non-interest income (GAAP)
8,939
9,258
6,780
28,426
19,930
Add: Securities loss
3,230
2,691
1,699
8,695
5,052
Less: ICS One-Way Sell Fee Income(1)
(8,085
)
(4,859
)
—
(15,847
)
—
Less: Changes in fair value of loans held-for-sale
4,265
—
—
4,265
—
Less: Subdebt repurchase gain(2)
(669
)
(406
)
(637
)
(1,076
)
(1,417
)
Add: Tax (credits) depreciation on solar investments(3)
1,089
1,815
—
1,095
—
Core operating revenue (non-GAAP)
80,876
77,691
71,570
234,894
217,557
Core non-interest expense
Non-interest expense (GAAP)
$
40,964
$
39,512
$
37,339
$
118,629
$
113,495
Add: Gain on settlement of lease termination(4)
—
—
—
499
—
Less: Severance costs(5)
(241
)
(44
)
(332
)
(471
)
(617
)
Core non-interest expense (non-GAAP)
40,723
39,468
37,007
118,657
112,878
Core net income
Net Income (GAAP)
$
27,942
$
26,753
$
22,308
$
81,944
$
65,284
Add: Securities loss
3,230
2,691
1,699
8,695
5,052
Less: ICS One-Way Sell Fee Income(1)
(8,085
)
(4,859
)
—
(15,847
)
—
Less: Changes in fair value of loans held-for-sale
4,265
—
—
4,265
—
Less: Gain on settlement of lease termination(4)
—
—
—
(499
)
—
Less: Subdebt repurchase gain(2)
(669
)
(406
)
(637
)
(1,076
)
(1,417
)
Add: Severance costs(5)
241
44
332
471
617
Add: Tax (credits) depreciation on solar investments(3)
1,089
1,815
—
1,095
—
Less: Tax on notable items
(19
)
180
(396
)
764
(1,151
)
Core net income (non-GAAP)
27,994
26,218
23,306
79,812
68,385
Tangible common equity
Stockholders' equity (GAAP)
$
698,332
$
646,112
$
546,291
$
698,332
$
546,291
Less: Minority interest
(133
)
(133
)
(133
)
(133
)
(133
)
Less: Goodwill
(12,936
)
(12,936
)
(12,936
)
(12,936
)
(12,936
)
Less: Core deposit intangible
(1,669
)
(1,852
)
(2,439
)
(1,669
)
(2,439
)
Tangible common equity (non-GAAP)
683,594
631,191
530,783
683,594
530,783
Average tangible common equity
Average stockholders' equity (GAAP)
$
668,401
$
623,024
$
538,753
$
630,866
$
523,078
Less: Minority interest
(133
)
(133
)
(133
)
(133
)
(133
)
Less: Goodwill
(12,936
)
(12,936
)
(12,936
)
(12,936
)
(12,936
)
Less: Core deposit intangible
(1,759
)
(1,941
)
(2,547
)
(1,940
)
(2,768
)
Average tangible common equity (non-GAAP)
653,573
608,014
523,137
615,857
507,241
(1) Included in service charges on deposit accounts in the Consolidated Statements of Income (2) Included in other income in the Consolidated Statements of Income (3) Included in equity method investments income in the Consolidated Statements of Income (4) Included in occupancy and depreciation in the Consolidated Statements of Income (5) Included in compensation and employee benefits in the Consolidated Statements of Income
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, 2024
June 30, 2024
September 30, 2023
September 30, 2024
September 30, 2023
Core return on average assets
Numerator: Core net income (non-GAAP)
$
27,994
$
26,218
$
23,306
$
79,812
$
68,385
Denominator: Total average assets (GAAP)
$
8,393,490
$
8,276,016
$
7,904,566
8,249,218
7,841,198
Core return on average assets (non-GAAP)
1.33
%
1.27
%
1.17
%
1.29
%
1.17
%
Core return on average tangible common equity
Numerator: Core net income (non-GAAP)
$
27,994
$
26,218
$
23,306
$
79,812
$
68,385
Denominator: Average tangible common equity (non-GAAP)
$
653,573
$
608,014
$
523,137
615,857
507,241
Core return on average tangible common equity (non-GAAP)
