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Amalgamated Bank Reports Third Quarter 2019 Financial Results

NEW YORK, Oct. 28, 2019 (GLOBE NEWSWIRE) — Amalgamated Bank (Nasdaq: AMAL) (“Amalgamated”) today announced financial results for the period ended September 30, 2019. 
Third Quarter 2019 HighlightsNet income for the quarter of $13.2 million, or $0.41 per diluted share, compared to $9.4 million, or $0.29 per diluted share, for the third quarter of 2018Core net income (non-GAAP) for the quarter of $13.3 million, or $0.41 per diluted share, compared to $12.1 million, or $0.38 per diluted share, for the third quarter of 2018Deposit growth of $185.9 million, or 17.8% annualized, from $4.1 billion at June 30, 2019Average deposit growth of $117.4 million, or 11.3% annualized, as compared to the second quarter of 2019Loan growth of $176.3 million, or 21.4% annualized, as compared to June 30, 2019Cost of deposits of 0.37%, as compared to 0.34% for the second quarter of 2019 and 0.25% for the third quarter of 2018Net interest margin of 3.50%, compared to 3.66% for the second quarter of 2019 and 3.65% for the third quarter of 2018Tier 1 Leverage, Common Equity Tier 1, and Total Risk-Based capital ratios were 9.03%, 13.49%, and 14.55%, respectively, at September 30, 2019First U.S. bank to endorse  United Nations’ Principles for Responsible Banking (UNPRB); Joined UNPRB Collective Commitment to Climate Action and Global Partnership for Carbon Accounting Financials  Received the Small Cap Board Diversity Award by the National Association of Corporate DirectorsKeith Mestrich, President and Chief Executive Officer of Amalgamated Bank, commented, “Our third quarter results demonstrate the continued growth of our franchise as we surpassed $5.0 billion in assets, a significant milestone for Amalgamated.  This growth was driven by continued strength in our average deposits which increased at an 11.3% annualized rate in the quarter, including $91.5 million growth in political deposits at period end as we continue to bank a majority of the candidates running for President.  We also delivered 21.4% annualized loan growth as our expansion into ‘sustainable’ lending continues to gain traction and the headwind from our decision to run off our indirect C&I portfolio abates.  Looking to the balance of the year, we are well positioned as our pipelines in alternative energy, C&I, CRE, and Multifamily are healthy.  Lastly, we have remained disciplined on costs, having reduced our forward looking expense base by approximately $2.4 million annually through the renegotiation of a major vendor contract and the closure of our Chelsea bank branch.  Expense control remains a priority of our management team as we strive to improve the Bank’s profitability.”Results of Operations, Quarter Ended September 30, 2019Net income for the third quarter of 2019 was $13.2 million, or $0.41 per diluted share, compared to $11.2 million, or $0.35 per diluted share, for the second quarter of 2019 and $9.4 million, or $0.29 per diluted share, for the third quarter of 2018.  The $3.8 million increase in net income for the third quarter of 2019, compared to the third quarter of 2018, was primarily due to a $2.2 million decrease in non-interest expense due to the initial public offering of our stock in the third quarter of 2018, a $1.7 million increase in net interest income, and a $1.3 million decrease in provision expense due to a $1.7 million recovery in the quarter, partially offset by a $1.6 million increase in income tax expense.Core net income (non-GAAP) for the third quarter of 2019 was $13.3 million, or $0.41 per diluted share, compared to $11.6 million, or $0.36 per diluted share, for the second quarter of 2019 and $12.1 million, or $0.38 per diluted share, for the third quarter of 2018. Core net income for the third quarter of 2019 exclude branch closure expenses, loss on the sale of securities, severance, and the tax effect of such adjustments.Net interest income was $41.8 million for the third quarter of 2019, compared to $41.9 million for the second quarter of 2019 and $40.0 million for the third quarter of 2018.  The year-over-year increase of $1.7 million, or 4.3%, was primarily attributable to an increase in average loans of $266.5 million, an increase in average securities of $164.2 million, and an increase in the yield on average securities of 17 basis points. These increases were partially offset by an increase in average interest bearing deposits of $48.4 million, an increase in average FHLB borrowings of $60.2 million, an increase in the average rate paid on interest bearing deposits of 24 basis points, and an increase in the rate paid on FHLB borrowings of 49 basis points. We also recognized $0.8 million of accretion income on acquired loans, adding seven basis points to our net interest margin in the third quarter of 2019.Net interest margin was 3.50% for the third quarter of 2019, compared to 3.66% in the second quarter of 2019, and 3.65% in the third quarter of 2018.  The 16 basis point decrease in the third quarter compared to the linked quarter, was primarily due to a 20 basis point decrease in the yield on loans as the result of the indirect C&I portfolio run-off and lower market rates and due to higher rates on interest bearing deposits.Provisions for loan losses totaled a release of $0.6 million in the third quarter of 2019, compared to an expense of $2.1 million in the second quarter of 2019 and an expense of $0.8 million for the third quarter of 2018.  The provision release in the third quarter of 2019 was primarily driven by the recovery of $1.7 million related to one indirect C&I loan that had previously been charged-off, partially offset by $0.8 million in net charge-offs in C&I and by other factors. The provision for the third quarter of 2018 was primarily due to an increase in loan balances, partially offset by a reduction in loss factors.Non-interest income was $7.7 million in the third quarter of 2019 compared to $6.3 million in the second quarter of 2019, and $7.5 million in the third quarter of 2018.  The $1.3 million increase in the third quarter of 2019 compared to the linked quarter was primarily due to an increase in Trust Department and service charge fees as well as a lower losses on investment securities and no losses in the sale of other real estate owned in the third quarter of 2019.  The $0.1 million, or 1.5%, increase in the third quarter of 2019, compared to the same period in 2018, was primarily due to a $0.2 million increase in Trust Department fees, partially offset by other factors.Non-interest expense for the third quarter of 2019 was $31.9 million, an increase of $0.9 million from $31.0 million in the second quarter of 2019, and a decrease of $2.2 million from $34.1 million in the third quarter of 2018. The $0.9 million increase in the third quarter compared to the linked quarter was due to higher expenses related to projects, such as SOX readiness and an increase in bonus pool for employees, partially offset by a reduction in the off balance sheet provision and FDIC assessment expense. The third quarter of 2019 included a provision for income tax expense of $4.9 million, compared to a provision of $3.9 million for second quarter of 2019, and provision of $3.3 million for the third quarter of 2018.  Our effective tax rate was 27.1% for the three months ended September 30, 2019, compared to 26.1% and 25.8% for the same period in 2018 and the linked quarter respectively.Total loans at September 30, 2019 were $3.5 billion, an increase of $176.3 million, or 21.4% annualized, compared to June 30, 2019, and an increase of $302.8 million, or 9.6%, as compared to $3.2 billion as of September 30, 2018.  Loan growth in the third quarter of 2019 was primarily driven by a $83.3 million increase in residential first lien and PACE loans, a $56.9 million increase in multifamily loans, and a $45.6 million increase in C&I loans.Deposits at September 30, 2019 were $4.3 billion, an increase of $185.9 million, or 17.8% annualized, as compared to $4.1 billion as of June 30, 2019, and an increase of $289.6 million, or 7.2%, compared to $4.0 billion as of September 30, 2018. Deposits held by politically-active customers, such as campaigns, PACs and state and national party committees were $510.9 million as of September 30, 2019, an increase of $91.5 million, compared to $419.4 million as of June 30, 2019, and an increase of $113.1 million compared to $397.8 million, as of September 30, 2018.  Noninterest-bearing deposits represented 45.9% of average deposits and 45.4% of ending deposits for the three months ended September 30, 2019.Results of Operations, Nine Months Ended September 30, 2019Net income for the nine months ended September 30, 2019 was $35.2 million, or $1.09 per diluted share, compared to $28.7 million, or $0.96 per diluted share, for same period in 2018.  The $6.5 million increase in net income for the nine months ended September 30, 2019, compared to the same period in 2018, was primarily due to a $14.8 million increase in net interest income, partially offset by a $4.9 million increase in the provision for loan losses, a $2.7 million increase in income tax expense, and $1.4 million increase in non-interest expense.Core net income (non-GAAP) for the nine months ended September 30, 2019 were $35.6 million, or $1.10 per diluted share, compared to $31.9 million or $0.97 per diluted share, for the same period last year. Core net income for the first nine months of 2019 exclude branch closures, severance, loss on the sale of securities, and the tax effect of such adjustments.Net interest income was $124.4 million for the nine months ended September 30, 2019, an increase of $14.8 million, or 13.6%, from the same period in 2018.  This increase was primarily attributable to an increase in average loans of $292.8 million, an increase in average securities of $227.0 million, and an increase in the yield on average securities and FHLB stock of 36 basis points. These increases were partially offset by an increase in average interest bearing deposits of $280.6 million, an increase in the rate paid on interest bearing deposits of 15 basis points, and an increase in the rate paid on FHLB borrowings of 81 basis points.We had income tax expense of $12.5 million for the nine months ended September 30, 2019, compared to $9.8 million for the same period in 2018. The $2.7 million increase in income tax expense was primarily due to an increase in pre-tax earnings of $9.3 million in the nine months ended September 30, 2019, compared to the same period in 2018. Our effective tax rate was 26.3% for the nine months ended September 30, 2019, compared to 25.4% for the same period in 2018.Financial ConditionTotal assets were $5.0 billion at September 30, 2019, compared to $4.7 billion at December 31, 2018. The increase of $344.3 million was driven primarily by a $256.4 million increase in loans, net, a $67.1 million increase in investment securities and the addition of a $53.3 million “Rights to use” asset as the result of adopting ASC 842 – leases in the first quarter of 2019.Nonperforming assets totaled $71.6 million, or 1.42% of total assets at September 30, 2019, a decrease of $2.4 million, compared with $73.9 million, or 1.50% of period end total assets at June 30, 2019.  The decrease in nonperforming assets at September 30, 2019 compared to June 30, 2019 was primarily driven by a $13.9 million reduction in loans 90 days past due and accruing, partially offset by the addition of a $9.3 million accruing restructured loan due to the restructuring of one indirect C&I loan and the addition of a $3.7 million non-accruing restructured construction loan.The allowance for loan losses increased $0.1 million to $33.7 million at September 30, 2019 from $33.6 million at June 30, 2019.  At September 30, 2019, the Bank had $71.0 million of impaired loans for which a specific allowance of $6.2 million was made, compared to $59.3 million of impaired loans at June 30, 2019 for which a specific allowance of $3.9 million was made. The ratio of allowance to total loans was 0.96% at September 30, 2019, 1.01% at June 30, 2019 and 1.14% at September 30, 2018.CapitalAs of September 30, 2019, our Tier 1 Leverage Capital Ratio was 9.03%, Common Equity Tier 1 Capital Ratio was 13.49%, and Total Risk-Based Capital Ratio was 14.55%, compared to 9.04%, 13.57%, and 14.67%, respectively, as of June 30, 2019. As of September 30, 2018, our Tier 1 Leverage, Common Equity Tier 1, and Total Risk-Based capital ratios were 8.94%, 12.95%, and 14.20%, respectively.  Stockholders’ equity at September 30, 2019 was $486.3 million, compared to $474.9 million at June 30, 2019.Tangible book value (or tangible common equity) per share was $14.74 as of September 30, 2019 compared to $14.25 as of June 30, 2019 and $12.57 as of September 30, 2018. Conference CallAs previously announced, Amalgamated Bank will host a conference call to discuss its third quarter 2019 results today, October 28, 2019 at 10:00am (Eastern Time). The conference call can be accessed by dialing 1-877-407-9716 (domestic) or 1-201-493-6779 (international) and asking for the Amalgamated Bank Third Quarter 2019 Earnings Call. A telephonic replay will be available approximately two hours after the conclusion of 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 13695040. The telephonic replay will be available until 11:59 pm (Eastern Time) on November 4, 2019.Interested investors and other parties may also listen to a simultaneous webcast of the conference call by logging onto the investor relations section of our website at http://ir.amalgamatedbank.com/. The online replay will remain available for a limited time beginning immediately following the call.The presentation materials for the call can be accessed on the investor relations section of our website at http://ir.amalgamatedbank.com/.About Amalgamated Bank Amalgamated Bank is a New York-based full-service commercial bank and a chartered trust company with a combined network of 13 branches in New York City, Washington D.C., and San Francisco. Amalgamated was formed in 1923 as Amalgamated Bank of New York by the Amalgamated Clothing Workers of America, one of the country’s oldest labor unions. Amalgamated provides commercial banking and trust services nationally and offers a full range of products and services to both commercial and retail customers. Amalgamated is a proud member of the Global Alliance for Banking on Values and is a certified B Corporation®. As of September 30, 2019, our total assets were $5.0 billion, total net loans were $3.5 billion, and total deposits were $4.3 billion. Additionally, as of September 30, 2019, the trust business held $32.0 billion in assets under custody and $12.6 billion in assets under management.Non-GAAP Financial MeasuresThis release contains certain non-GAAP financial measures including, without limitation, “Core operating revenue,” “Core non-interest expense,” “Core net income,” “Tangible common equity,” “Tangible book value,” “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 2019 versus certain periods in 2018 and to internally prepared 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 that 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 what we believe to be the most directly comparable GAAP measures are set forth in the final pages of this release and also may be viewed on our website, amalgamatedbank.com.Media Contact:
Kaye Verville
The Levinson Group
kaye@mollylevinson.com
202-244-1785
Investor Contact:
Jamie Lillis
Solebury Trout
shareholderrelations@amalgamatedbank.com 
800-895-4172
Consolidated Statements of Income (Unaudited)
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Consolidated Statements of Financial Condition (Unaudited)
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Asset QualityReconciliation 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.

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