Categories: Wire Stories

Amalgamated Financial Corp. Reports Record Second Quarter 2022 Financial Results

NEW YORK, July 28, 2022 (GLOBE NEWSWIRE) — Amalgamated Financial Corp. (the �Company” or “Amalgamated”) (Nasdaq: AMAL), the holding company for Amalgamated Bank (the “Bank”), today announced record financial results for the second quarter ended June 30, 2022.

Second Quarter 2022 Highlights

  • Record earnings of $19.6 million, or $0.63 per diluted share, compared to $14.2 million, or $0.45 per diluted share, on a linked quarter basis.
  • Excluding the tax credit or accelerated depreciation impact of our solar tax equity investments, core net income was $20.9 million, or $0.67 per diluted share, as compared to $14.3 million, or $0.45 per diluted share, on a linked quarter basis.
  • Deposits increased $317.7 million, or 4.6%, to $7.3 billion on a linked quarter basis and political deposits increased by $131.5 million to $1.3 billion on a linked quarter basis.
  • Industry leading average cost of deposits of eight basis points, where non-interest bearing deposits comprised 54% of total deposits.
  • Loans, including net deferred origination costs increased $176.3 million, or 5.1%, to $3.6 billion, on a linked quarter basis.
  • PACE assessments grew $18.5 million to $742.1 million on a linked quarter basis, comprised of a $15.7 million increase in commercial and $2.8 million increase in residential.
  • Net interest income grew $8.1 million, or 16.7%, to $56.5 million compared to $48.4 million, while net interest margin grew by 27 basis points to 3.03%, compared to 2.76%, each on a linked quarter basis.
  • Credit quality improved with criticized loans declining $43.5 million, or 24.26%, to $135.8 million, on a linked quarter basis.
  • Repurchased approximately 463,900 shares, or $8.8 million of common stock under our $40 million share repurchase program announced in the first quarter of 2022.
  • Regulatory capital remains above bank “well capitalized” standards.

Priscilla Sims Brown, President and Chief Executive Officer, commented, “Our second quarter results are a clear validation of executing our strategy as we reported record earnings driven by our third consecutive quarter of approximately 5% loan growth. As I reflect on my first year as CEO of Amalgamated, we have done what we said we would do. We have implemented our lending strategy and financed the investment through earnings. We leaned deeper into our mission by lending to customer segments focused on sustainability, economic justice, community financing, and other social causes. We built a reliable lending platform staffed with experienced bankers, enabling us to sustain profitable growth and continue developing our industry-leading deposit franchise. And all of these accomplishments have resulted in financial performance that proves socially responsible banking and profitability can exist together to create our uniquely valuable franchise.”

Second Quarter Earnings

Net income for the second quarter of 2022 was $19.6 million, or $0.63 per diluted share, compared to $14.2 million, or $0.45 per diluted share, for the first quarter of 2022. The $5.4 million increase for the second quarter of 2022 compared to the preceding quarter was primarily driven by an $8.1 million increase in net interest income, partially offset by a $0.6 million increase in provision for loan losses, a $0.6 million loss on sales of securities, and a $2.0 million increase in income tax expense related to our increased pre-tax income.

Core net income excluding the effect of tax credits and accelerated depreciation from our solar investments (non-GAAP)1 for the second quarter of 2022 was $20.9 million, or $0.67 per diluted share, compared to $14.3 million, or $0.45 per diluted share, for the first quarter of 2022. Excluded from core net income for the second quarter of 2022 was $0.6 million of non-interest income related to losses on sales of securities, $0.3 million of non-interest expenses related to the now-terminated acquisition of Amalgamated Bank of Chicago (“ABOC”), and $0.9 million of accelerated depreciation from our solar investments (recorded as equity method non-interest income). Excluded for the first quarter of 2022 was $0.2 million of non-interest income related to gains on the sale of securities, $0.4 million of non-interest expenses related to the aforementioned terminated acquisition, and $0.1 million of tax credits on solar investments in the first quarter of 2022. Presentation excluding the temporary effect of the tax credits and accelerated depreciation of solar investments reduces the financial statement volatility associated with these investments.

Net interest income was $56.5 million for the second quarter of 2022, compared to $48.4 million for the first quarter of 2022. The $8.1 million increase from the preceding quarter mainly reflected higher interest income on securities and FHLB stock of $4.9 million driven by a $251.3 million increase in average securities and a 37 basis point increase in securities yield due to the rising interest rate environment. Loan interest income increased $2.6 million driven by a $224.1 million increase in average loan balances, offset by slightly higher interest expense on deposits driven by a $127.6 million increase in average interest bearing deposit balances.

Net interest margin was 3.03% for the second quarter of 2022, an increase of 27 basis points from 2.76% in the first quarter of 2022. The margin increase compared to the preceding quarter was driven by large increases on floating rate yields from interest-earning assets, while costs on interest-bearing liabilities remained flat. Prepayment penalties earned in loan income contributed two basis points to our net interest margin in the second quarter of 2022, compared to three basis points in the first quarter of 2022.

Provision for loan losses totaled an expense of $2.9 million for the second quarter of 2022 compared to an expense of $2.3 million in the first quarter of 2022. The increase in the provision expense on a linked quarter basis is primarily driven by a specific reserve from the downgrade of one legacy commercial and industrial loan.

Core non-interest income excluding the effect of tax credits and accelerated depreciation from our solar investments was $8.7 million for the second quarter of 2022, compared to $7.2 million in the first quarter of 2022. The increase of $1.5 million was primarily related to one-time beneficiary income on BOLI, as well as higher gains on sale of nonperforming commercial loans.

Non-interest expense for the second quarter of 2022 was $34.3 million, a decrease of $0.1 million from the first quarter of 2022. The decrease of $0.1 million from the preceding quarter is primarily driven by a $0.9 million decrease to data processing mainly related to the pass-through of certain Trust Department operating expense to related funds, offset by an expected $0.4 million increase in compensation and employee benefits and a $0.4 million increase in residential lending foreclosure expense.

Our provision for income tax expense was $6.9 million for the second quarter of 2022, compared to $4.9 million for the first quarter of 2022. The increase is based on a higher pre-tax income. Our effective tax rate for the second quarter of 2022 was 25.9%, compared to 25.8% for the first quarter of 2022.

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1Reconciliations 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. 

Balance Sheet Quarterly Summary

Total assets were $7.9 billion at June 30, 2022, compared to $7.7 billion at March 31, 2022. The increase of $0.2 billion was driven primarily by a $178.2 million increase in loans receivable net of deferred fees and costs and a $113.8 million increase in investment securities offset by a reduction in cash of $41.5 million. To reduce exposure to interest rate volatility we also transferred $277.3 million of available-for-sale securities to held-to-maturity, resulting in $12.3 million of tax effected other comprehensive losses which will accrete out of balance sheet equity over the duration of the transferred securities.

Total loans, net of deferred loan origination costs at June 30, 2022 were $3.6 billion, an increase of $178.2 million, or 5.1%, compared to March 31, 2022. The increase in loans is primarily driven by a $92.9 million increase in residential loans mainly from direct originations, a $39.8 million increase in multifamily loans, a $36.9 million increase in our consumer and other loans due to solar loan originations from existing flow arrangements, and a $19.2 million increase in commercial and industrial loans, offset by a $13.2 million decrease in the commercial real estate portfolio as we selectively de-risk our exposure in metropolitan areas. Our continued focus on credit quality improvement in the commercial portfolio resulted in $15.6 million of payoffs of criticized loans in addition to certain other pass grade loans.

Deposits at June 30, 2022 were $7.3 billion, an increase of $317.7 million, or 4.6%, as compared to $7.0 billion as of March 31, 2022. Deposits held by politically active customers, such as campaigns, PACs, advocacy-based organizations, and state and national party committees were $1.3 billion as of June 30, 2022, an increase of $131.5 million on a linked quarter basis.
Noninterest-bearing deposits represent 54% of average deposits and 54% of ending deposits for the quarter ended June 30, 2022, contributing to an average cost of deposits of eight basis points in the second quarter of 2022.

Nonperforming assets totaled $65.3 million, or 0.82% of period-end total assets at June 30, 2022, an increase of $4.2 million, compared with $61.1 million, or 0.80% of period-end total assets at March 31, 2022. The increase in non-performing assets was primarily driven by the restructuring of $6.5 million in loans that are part of one borrower relationship, as well as two loans totaling $5.2 million that were moved to nonaccrual in the second quarter of 2022, partially offset by one $3.5 million nonaccrual multifamily loan that was paid off.

The allowance for loan losses increased $2.0 million to $39.5 million at June 30, 2022 from $37.5 million at March 31, 2022, primarily due to increases in loan balances, offset by improved credit quality. At June 30, 2022, we had $60.1 million of impaired loans for which there was a specific allowance of $6.1 million, compared to $58.2 million of impaired loans at March 31, 2022 for which there was a specific allowance of $4.6 million. The ratio of allowance to total loans was 1.08% at June 30, 2022 and 1.08% at March 31, 2022.

Capital Quarterly Summary

As of June 30, 2022, our Common Equity Tier 1 Capital Ratio was 11.76%, Total Risk-Based Capital Ratio was 14.42%, and Tier-1 Leverage Capital Ratio was 7.08%, compared to 12.36%, 15.16%, and 7.34%, respectively, as of March 31, 2022. Stockholders’ equity at June 30, 2022 was $498.0 million, compared to $526.8 million at March 31, 2022. The decrease in stockholders’ equity was driven by a $37.4 million increase in accumulated other comprehensive loss due to the tax effected mark-to-market on our securities portfolio and a $8.5 million decrease in additional paid-in capital due to our common stock repurchase activity, partially offset by $19.6 million of net income for the quarter.

Our tangible book value per share was $15.69 as of June 30, 2022 compared to $16.45 as of March 31, 2022, primarily as a result of a $37.4 million decline from the previous quarter in the tax effected mark-to-market adjustment for the fair value of our available-for-sale securities portfolio. The mark-to-market adjustment had no impact on our Tier 1 Capital Ratio or other risk based ratios. Tangible common equity was 6.07% of total assets, compared to 6.68% as of March 31, 2022.

Conference Call

As previously announced, Amalgamated Financial Corp. will host a conference call to discuss its second quarter 2022 results today, July 28th, 2022 at 11:00am (Eastern Time). The conference call can be accessed by dialing 1-877-407-9716 (domestic) or 1-201-493-6779 (international) and asking for the Amalgamated Financial Corp. Second Quarter 2022 Earnings Call. A telephonic replay will be available approximately two hours after the call and can be accessed by dialing 1-844-512-2921, or for international callers 1-412-317-6671 and providing the access code 13730114. The telephonic replay will be available until August 4, 2022.

Interested investors and other parties may also listen to a simultaneous webcast of the conference call by logging onto the investor relations section of our website at 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 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 six branches in New York City, Washington D.C., San Francisco, and 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 June 30, 2022, our total assets were $7.9 billion, total net loans were $3.6 billion, and total deposits were $7.3 billion. Additionally, as of June 30, 2022, our trust business held $38.9 billion in assets under custody and $12.9 billion in assets under management.

Non-GAAP Financial Measures

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

Our management utilizes this information to compare our operating performance for June 30, 2022 versus certain periods in 2022 and 2021 and to prepare internal projections. We believe these non-GAAP financial measures facilitate making period-to-period comparisons and are meaningful indications of our operating performance. In addition, because intangible assets such as goodwill and other discrete items unrelated to our core business, which are excluded, vary extensively from company to company, we believe that the presentation of this information allows investors to more easily compare our results to those of other companies.

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

Terminology

Certain terms used in this release are defined as follows:

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

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

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

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

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

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

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

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

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

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

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

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

Forward-Looking Statements

Statements included in this release that are not historical in nature are intended to be, and are hereby identified as, forward-looking statements within the meaning of the Private Securities Litigation Reform Act, Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements generally can be identified through the use of forward-looking terminology such as “may,” “will,” “anticipate,” “should,” “would,” “believe,” “contemplate,” “expect,” “estimate,” “continue,” “in the future,” “may” and “intend,” as well as other similar words and expressions of the future, and in this release include statements related to the tax effected other comprehensive losses cycling out of balance sheet equity in the future. Forward-looking statements are subject to known and unknown risks, uncertainties and other factors, any or all of which could cause actual results to differ materially from the results expressed or implied by such forward-looking statements. These risks and uncertainties include, but are not limited to: (i) deterioration in the financial condition of borrowers resulting in significant increases in loan losses and provisions for those losses; (ii) continued fluctuation of the interest rate environment; (iii) our inability to maintain the historical growth rate of the loan portfolio; (iv) changes in loan underwriting, credit review or loss reserve policies associated with economic conditions, examination conclusions, or regulatory developments; (v) the impact of competition with other financial institutions, including pricing pressures and the resulting impact on our results, including as a result of compression to net interest margin; (vi) greater than anticipated adverse conditions in the national or local economies including in our core markets, including, but not limited to, the negative impacts and disruptions resulting from the outbreak of the novel coronavirus, or COVID-19, which may continue to have an adverse impact on our business, operations and performance, and could continue to have a negative impact on our credit portfolio, share price, borrowers, and on the economy as a whole, both domestically and globally; (vii) fluctuations or unanticipated changes in interest rates on loans or deposits or that affect the yield curve; (vii) any matter that would cause us to conclude that there was impairment of any asset, including intangible assets; (ix) the results of regulatory examinations; (x) potential deterioration in real estate values; (xi) changes in legislation, regulation, policies, or administrative practices, whether by judicial, governmental, or legislative action; (xii) the risk that the preliminary financial information reported herein and our current preliminary analysis will be different when our review is finalized; (xii) increased competition for experienced executives in the banking industry; (xiv) a failure in or breach of our operational or security systems or infrastructure, or those of third party vendors or other service providers, including as a result of unauthorized access, computer viruses, phishing schemes, spam attacks, human error, natural disasters, power loss and other security breaches; and (xv) the outcome of any legal proceedings that may be instituted against us in connection with the termination of the merger agreement with ABOC. 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 Trout
shareholderrelations@amalgamatedbank.com
800-895-4172

Consolidated Statements of Income (unaudited)
  Three Months Ended   Six Months Ended
  June 30,   March 31,   June 30,   June 30,
($ in thousands) 2022   2022   2021   2022   2021
INTEREST AND DIVIDEND INCOME                  
Loans $ 33,766     $ 31,127     $ 30,156     $ 64,893     $ 61,265  
Securities   24,307       19,115       13,094       43,422       25,264  
Federal Home Loan Bank of New York stock   45       40       41       85       89  
Interest-bearing deposits in banks   551       179       131       730       221  
Total interest and dividend income   58,669       50,461       43,422       109,130       86,839  
INTEREST EXPENSE                  
Deposits   1,481       1,402       1,431       2,883       3,003  
Borrowed funds   690       691       —       1,381       —  
Total interest expense   2,171       2,093       1,431       4,264       3,003  
NET INTEREST INCOME   56,498       48,368       41,991       104,866       83,836  
Provision for (recovery of) loan losses   2,912       2,293       1,682       5,205       (1,579 )
Net interest income after provision for loan losses   53,586       46,075       40,309       99,661       85,415  
NON-INTEREST INCOME                  
Trust Department fees   3,479       3,491       3,292       6,970       7,118  
Service charges on deposit accounts   2,826       2,447       2,296       5,273       4,475  
Bank-owned life insurance   1,283       814       531       2,097       1,319  
Gain (loss) on sale of securities   (582 )     162       321       (420 )     342  
Gain (loss) on sale of loans, net   492       (157 )     720       335       1,426  
Gain (loss) on other real estate owned, net   —       —       (407 )     —       (407 )
Equity method investments   (638 )     432       (1,555 )     (206 )     (5,237 )
Other   386       233       129       619       290  
Total non-interest income   7,246       7,422       5,327       14,668       9,326  
NON-INTEREST EXPENSE                  
Compensation and employee benefits   18,046       17,669       16,964       35,715       35,003  
Occupancy and depreciation   3,457       3,440       3,352       6,897       6,853  
Professional fees   2,745       2,815       3,211       5,560       6,871  
Data processing   4,327       5,184       3,322       9,511       6,327  
Office maintenance and depreciation   784       725       820       1,509       1,475  
Amortization of intangible assets   261       262       302       523       604  
Advertising and promotion   761       854       628       1,615       1,225  
Other   3,965       3,448       2,796       7,413       5,831  
Total non-interest expense   34,346       34,397       31,395       68,743       64,189  
Income before income taxes   26,486       19,100       14,241       45,586       30,552  
Income tax expense (benefit)   6,873       4,935       3,833       11,808       7,955  
Net income $ 19,613     $ 14,165     $ 10,408     $ 33,778     $ 22,597  
Earnings per common share – basic $ 0.64     $ 0.46     $ 0.33     $ 1.09     $ 0.73  
Earnings per common share – diluted $ 0.63     $ 0.45     $ 0.33     $ 1.08     $ 0.72  

Consolidated Statements of Financial Condition
($ in thousands) June 30,
2022
  December 31,
2021
Assets (unaudited)    
Cash and due from banks $ 6,075     $ 8,622  
Interest-bearing deposits in banks   326,463       321,863  
Total cash and cash equivalents   332,538       330,485  
Securities:      
Available for sale, at fair value (amortized cost of $2,193,657 and $2,103,049, respectively)   2,105,547       2,113,410  
Held-to-maturity (fair value of $1,317,058 and $849,704, respectively)   1,375,666       843,569  
Loans held for sale   5,657       3,279  
Loans receivable, net of deferred loan origination costs (fees)   3,648,404       3,312,224  
Allowance for loan losses   (39,477 )     (35,866 )
Loans receivable, net   3,608,927       3,276,358  
       
Resell agreements   225,926       229,018  
Accrued interest and dividends receivable   31,001       28,820  
Premises and equipment, net   10,870       11,735  
Bank-owned life insurance   106,163       107,266  
Right-of-use lease asset   31,728       33,115  
Deferred tax asset   56,194       26,719  
Goodwill   12,936       12,936  
Other intangible assets   3,628       4,151  
Equity investments   6,271       6,856  
Other assets   30,205       50,159  
Total assets $ 7,943,257     $ 7,077,876  
Liabilities      
Deposits $ 7,291,167     $ 6,356,255  
Subordinated debt   83,899       83,831  
Operating leases   45,605       48,160  
Other liabilities   24,545       25,755  
Total liabilities   7,445,216       6,514,001  
       
Stockholders’ equity      
Common stock, par value $.01 per share (70,000,000 shares authorized; 30,684,246 and 31,130,143 shares issued and outstanding, respectively)   307       311  
Additional paid-in capital   286,901       297,975  
Retained earnings   288,868       260,047  
Accumulated other comprehensive income (loss), net of income taxes   (78,168 )     5,409  
Total Amalgamated Financial Corp. stockholders’ equity   497,908       563,742  
Noncontrolling interests   133       133  
Total stockholders’ equity   498,041       563,875  
Total liabilities and stockholders’ equity $ 7,943,257     $ 7,077,876  

Select Financial Data
 
  As of and for the   As of and for the
  Three Months Ended   Six Months Ended
  June 30,   March 31,   June 30,   June 30,
(Shares in thousands) 2022   2022   2021   2022   2021
Selected Financial Ratios and Other Data:                  
Earnings per share                  
Basic $ 0.64   $ 0.46   $ 0.33   $ 1.09   $ 0.73
Diluted   0.63     0.45     0.33     1.08     0.72
Core net income (non-GAAP)                  
Basic $ 0.66   $ 0.46   $ 0.33   $ 1.12   $ 0.74
Diluted   0.65     0.46     0.32     1.11     0.73
Core net income excluding solar tax impact (non-GAAP)                   
Basic $ 0.68   $ 0.46   $ 0.37   $ 1.14   $ 0.88
Diluted   0.67     0.45     0.36     1.12     0.87
Book value per common share (excluding minority interest) $ 16.23   $ 16.99   $ 17.64   $ 16.23   $ 17.64
Tangible book value per share (non-GAAP) $ 15.69   $ 16.45   $ 17.07   $ 15.69   $ 17.07
Common shares outstanding   30,684     30,995     31,074     30,684     31,074
Weighted average common shares outstanding, basic   30,818     31,107     31,136     30,962     31,109
Weighted average common shares outstanding, diluted   31,189     31,456     31,572     31,332     31,545

Select Financial Data
 
  As of and for the   As of and for the
  Three Months Ended   Six Months Ended
  June 30,   March 31,   June 30,   June 30,
  2022   2022   2021   2022   2021
Selected Performance Metrics:                  
Return on average assets 1.01 %   0.78 %   0.65 %   0.90 %   0.72 %
Core return on average assets (non-GAAP) 1.05 %   0.79 %   0.64 %   0.92 %   0.74 %
Core return on average assets excluding solar tax impact (non-GAAP) 1.08 %   0.79 %   0.72 %   0.94 %   0.87 %
Return on average equity 15.20 %   10.25 %   7.62 %   12.64 %   8.36 %
Core return on average tangible common equity (non-GAAP) 16.25 %   10.72 %   7.70 %   13.38 %   8.86 %
Core return on average tangible common equity excluding solar tax impact (non-GAAP) 16.76 %   10.68 %   8.68 %   13.61 %   10.44 %
Average equity to average assets 6.67 %   7.58 %   8.57 %   7.11 %   8.63 %
Tangible common equity to tangible assets 6.07 %   6.68 %   8.09 %   6.07 %   8.09 %
Loan yield 3.86 %   3.85 %   3.82 %   3.86 %   3.83 %
Securities yield 2.66 %   2.28 %   2.15 %   2.48 %   2.17 %
Deposit cost 0.08 %   0.09 %   0.10 %   0.08 %   0.11 %
Net interest margin 3.03 %   2.76 %   2.75 %   2.90 %   2.80 %
Efficiency ratio(1) 53.88 %   61.65 %   66.35 %   57.51 %   68.90 %
Core efficiency ratio (non-GAAP) 52.90 %   61.07 %   66.80 %   56.69 %   67.98 %
Core efficiency ratio excluding solar tax impact (non-GAAP) 52.20 %   61.14 %   64.39 %   56.32 %   64.11 %
                   
Asset Quality Ratios:                  
Nonaccrual loans to total loans 0.67 %   0.84 %   1.64 %   0.67 %   1.64 %
Nonperforming assets to total assets 0.82 %   0.80 %   1.08 %   0.82 %   1.08 %
Allowance for loan losses to nonaccrual loans 161.81 %   129.71 %   73.20 %   161.81 %   73.20 %
Allowance for loan losses to total loans 1.08 %   1.08 %   1.20 %   1.08 %   1.20 %
Annualized net charge-offs (recoveries) to average loans 0.11 %   0.08 %   0.04 %   0.09 %   0.12 %
                   
Capital Ratios:                  
Tier 1 leverage capital ratio 7.08 %   7.34 %   7.93 %   7.08 %   7.93 %
Tier 1 risk-based capital ratio 11.76 %   12.36 %   13.63 %   11.76 %   13.63 %
Total risk-based capital ratio 14.42 %   15.16 %   14.68 %   14.42 %   14.68 %
Common equity tier 1 capital ratio 11.76 %   12.36 %   13.63 %   11.76 %   13.63 %
                   
(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 Held-to-Maturity Securities Portfolio Composition
 
(In thousands) At June 30, 2022   At March 31, 2022   At June 30, 2021
  Amount   % of total
loans
  Amount   % of total
loans
  Amount   % of total
loans
Commercial portfolio:                      
Commercial and industrial $ 743,403     20.4 %   $ 724,177     20.9 %   $ 619,037     19.5 %
Multifamily   853,514     23.4 %     813,702     23.5 %     848,651     26.8 %
Commercial real estate   340,987     9.4 %     354,174     10.2 %     351,707     11.1 %
Construction and land development   43,212     1.2 %     40,242     1.2 %     42,303     1.3 %
Total commercial portfolio   1,981,116     54.4 %     1,932,295     55.8 %     1,861,698     58.7 %
                       
Retail portfolio:                      
Residential real estate lending   1,236,088     33.9 %     1,143,175     33.0 %     1,085,791     34.3 %
Consumer and other   426,394     11.7 %     389,452     11.2 %     222,265     7.0 %
Total retail   1,662,482     45.6 %     1,532,627     44.2 %     1,308,056     41.3 %
Total loans held for investment   3,643,598     100.0 %     3,464,922     100.0 %     3,169,754     100.0 %
                       
Net deferred loan origination costs (fees)   4,806           5,252           5,707      
Allowance for loan losses   (39,477 )         (37,542 )         (38,012 )    
Total loans, net $ 3,608,927         $ 3,432,632         $ 3,137,449      
                       
Held-to-maturity securities portfolio:                      
PACE assessments $ 742,146     53.9 %   $ 723,646     76.5 %   $ 545,795     87.4 %
Other securities   633,520     46.1 %     222,701     23.5 %     79,031     12.6 %
Total held-to-maturity securities $ 1,375,666     100.0 %   $ 946,347     100.0 %   $ 624,826     100.0 %

Net Interest Income Analysis
 
  Three Months Ended
  June 30, 2022   March 31, 2022   June 30, 2021
(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 $ 305,134   $ 551   0.72 %   $ 423,878   $ 179   0.17 %   $ 510,473   $ 131   0.10 %
Securities and FHLB stock   3,443,987     23,308   2.71 %     3,192,642     18,435   2.34 %     2,298,264     12,651   2.21 %
Resell Agreements   231,468     1,044   1.81 %     219,221     720   1.33 %     148,977     484   1.30 %
Total loans, net(1)(2)   3,504,223     33,766   3.86 %     3,280,115     31,127   3.85 %     3,162,896     30,156   3.82 %
Total interest earning assets   7,484,812     58,669   3.14 %     7,115,856     50,461   2.88 %     6,120,610     43,422   2.85 %
Non-interest earning assets:                                  
Cash and due from banks   9,296             9,226             7,545        
Other assets   266,186             267,689             266,613        
Total assets $ 7,760,294           $ 7,392,771           $ 6,394,768        
                                   
Interest bearing liabilities:                                  
Savings, NOW and money market deposits $ 3,030,788   $ 1,332   0.18 %   $ 2,896,086   $ 1,247   0.17 %   $ 2,567,396   $ 1,174   0.18 %
Time deposits   192,181     149   0.31 %     199,340     155   0.32 %     258,257     257   0.40 %
Total deposits   3,222,969     1,481   0.18 %     3,095,426     1,402   0.18 %     2,825,653     1,431   0.20 %
Other Borrowings   83,886     690   3.30 %     84,597     691   3.31 %     —     —   0.00 %
Total interest bearing liabilities   3,306,855     2,171   0.26 %     3,180,023     2,093   0.27 %     2,825,653     1,431   0.20 %
Non-interest bearing liabilities:                                  
Demand and transaction deposits   3,855,735             3,549,483             2,909,555        
Other liabilities   80,274             102,874             111,794        
Total liabilities   7,242,864             6,832,380             5,847,002        
Stockholders’ equity   517,430             560,391             547,766        
Total liabilities and stockholders’ equity $ 7,760,294           $ 7,392,771           $ 6,394,768        
                                   
Net interest income / interest rate spread     $ 56,498   2.88 %       $ 48,368   2.61 %       $ 41,991   2.65 %
Net interest earning assets / net interest margin $ 4,177,957       3.03 %   $ 3,935,833       2.76 %   $ 3,294,957       2.75 %
                                   
Total Cost of Deposits         0.08 %           0.09 %           0.10 %

(1) Amounts are net of deferred origination costs (fees) and the allowance for loan losses
(2) Includes prepayment penalty interest income in 2Q2022, 1Q2022, and 2Q2021 of $379, $399, and $504, respectively (in thousands)

Net Interest Income Analysis
 
  Six Months Ended
  June 30, 2022   June 30, 2021
(In thousands) Average
Balance
Income /
Expense
Yield /
Rate
  Average
Balance
Income /
Expense
Yield /
Rate
                       
Interest earning assets:                      
Interest-bearing deposits in banks $ 364,178   $ 730   0.40 %   $ 445,340   $ 221   0.10 %
Securities and FHLB stock   3,319,009     41,743   2.54 %     2,208,263     24,451   2.23 %
Resell Agreements   225,378     1,764   1.58 %     151,607     902   1.20 %
Total loans, net(1)(2)   3,392,788     64,893   3.86 %     3,228,235     61,265   3.83 %
Total interest earning assets   7,301,353     109,130   3.01 %     6,033,445     86,839   2.90 %
Non-interest earning assets:                      
Cash and due from banks   9,261             7,432        
Other assets   266,932             272,930        
Total assets $ 7,577,546           $ 6,313,807        
                       
Interest bearing liabilities:                      
Savings, NOW and money market deposits $ 2,963,809   $ 2,579   0.18 %   $ 2,540,277   $ 2,395   0.19 %
Time deposits   195,741     304   0.31 %     269,063     608   0.46 %
Total deposits   3,159,550     2,883   0.18 %     2,809,340     3,003   0.22 %
Other Borrowings   84,239     1,381   3.31 %     249     —   0.00 %
Total interest bearing liabilities   3,243,789     4,264   0.27 %     2,809,589     3,003   0.22 %
Non-interest bearing liabilities:                      
Demand and transaction deposits   3,703,455             2,848,401        
Other liabilities   91,510             110,654        
Total liabilities   7,038,754             5,768,644        
Stockholders’ equity   538,792             545,163        
Total liabilities and stockholders’ equity $ 7,577,546           $ 6,313,807        
                       
Net interest income / interest rate spread     $ 104,866   2.74 %       $ 83,836   2.68 %
Net interest earning assets / net interest margin $ 4,057,564       2.90 %   $ 3,223,856       2.80 %
                       
Total Cost of Deposits         0.08 %           0.11 %

(1) Amounts are net of deferred origination costs (fees) and the allowance for loan losses
(2) Includes prepayment penalty interest income in June YTD 2022 and June YTD 2021 of $778 and $1,146, respectively (in thousands)

Deposit Portfolio Composition
 
(In thousands) June 30, 2022   March 31, 2022   June 30, 2021
           
Non-interest bearing demand deposit accounts $ 3,965,907   $ 3,759,349   $ 2,948,718
NOW accounts   208,795     212,550     200,758
Money market deposit accounts   2,540,657     2,416,201     2,136,719
Savings accounts   388,185     386,253     371,047
Time deposits   187,623     199,120     252,750
Total deposits $ 7,291,167   $ 6,973,473   $ 5,909,992

  Three Months Ended
  June 30, 2022   March 31, 2022   June 30, 2021
(In thousands) Average
Balance
  Average
Rate Paid
  Average
Balance
  Average
Rate Paid
  Average
Balance
  Average
Rate Paid
                       
Non-interest bearing demand deposit accounts $ 3,855,735   0.00 %   $ 3,549,482   0.00 %   $ 2,909,554   0.00 %
NOW accounts   211,007   0.09 %     208,134   0.08 %     204,341   0.08 %
Money market deposit accounts   2,431,571   0.19 %     2,310,294   0.19 %     1,993,643   0.21 %
Savings accounts   388,210   0.11 %     377,659   0.11 %     369,412   0.10 %
Time deposits   192,181   0.31 %     199,340   0.32 %     258,257   0.43 %
Total deposits $ 7,078,704   0.08 %   $ 6,644,909   0.09 %   $ 5,735,207   0.10 %

Asset Quality
 
(In thousands) June 30, 2022   March 31, 2022   June 30, 2021
Loans 90 days past due and accruing $ —     $ —     $ —  
Nonaccrual loans held for sale   4,841       2,490       —  
Nonaccrual loans excluding held for sale loans and restructured loans   8,109       10,835       31,437  
Troubled debt restructured loans – nonaccrual   16,288       18,107       20,494  
Troubled debt restructured loans – accruing   35,683       29,259       18,683  
Other real estate owned   307       307       307  
Impaired securities   56       59       59  
Total nonperforming assets $ 65,284     $ 61,057     $ 70,980  
           
Nonaccrual loans:          
Commercial and industrial $ 9,550     $ 8,099     $ 14,561  
Multifamily   3,494       3,537       10,266  
Commercial real estate   3,931       3,988       4,066  
Construction and land development   5,053       5,053       —  
Total commercial portfolio   22,028       20,677       28,893  
           
Residential real estate lending   898       7,404       22,320  
Consumer and other   1,471       861       718  
Total retail portfolio   2,369       8,265       23,038  
Total nonaccrual loans $ 24,397     $ 28,942     $ 51,931  
           
Nonaccrual loans to total loans   0.67 %     0.84 %     1.64 %
Nonperforming assets to total assets   0.82 %     0.80 %     1.08 %
Allowance for loan losses to nonaccrual loans   161.81 %     129.71 %     73.20 %
Allowance for loan losses to total loans   1.08 %     1.08 %     1.20 %
Annualized net charge-offs (recoveries) to average loans   0.11 %     0.08 %     0.04 %

Credit Quality
 
  June 30, 2022
($ in thousands) Pass   Special Mention   Substandard   Doubtful   Total
Commercial and industrial $ 710,534   $ 7,923   $ 24,946   $ —   $ 743,403
Multifamily   800,167     25,433     27,914     —     853,514
Commercial real estate   301,243     20,966     18,778     —     340,987
Construction and land development   35,736     —     7,476     —     43,212
Residential real estate lending   1,235,190     —     898     —     1,236,088
Consumer and other   424,923     —     1,471     —     426,394
Total loans $ 3,507,793   $ 54,322   $ 81,483   $ —   $ 3,643,598

  March 31, 2022
($ in thousands) Pass   Special Mention   Substandard   Doubtful   Total
Commercial and industrial $ 691,834   $ 7,221   $ 25,122   $ —   $ 724,177
Multifamily   745,349     32,737     35,616     —     813,702
Commercial real estate   291,320     2,899     59,955     —     354,174
Construction and land development   32,766     —     7,476     —     40,242
Residential real estate lending   1,135,481     290     7,404     —     1,143,175
Consumer and other   388,907     —     545     —     389,452
Total loans $ 3,285,657   $ 43,147   $ 136,118   $ —   $ 3,464,922

  June 30, 2021
($ in thousands) Pass   Special Mention   Substandard   Doubtful   Total
Commercial and industrial $ 568,878   $ 17,569   $ 32,133   $ 457   $ 619,037
Multifamily   711,551     101,579     32,348     3,173     848,651
Commercial real estate   234,018     45,236     72,453     —     351,707
Construction and land development   34,414     535     7,354     —     42,303
Residential real estate lending   1,063,176     295     22,320     —     1,085,791
Consumer and other   221,835     —     430     —     222,265
Total loans $ 2,833,872   $ 165,214   $ 167,038   $ 3,630   $ 3,169,754


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   Six Months Ended
(in thousands) June 30, 2022   March 31, 2022   June 30, 2021   June 30, 2022   June 30, 2021
Core operating revenue                  
Net Interest income (GAAP) $ 56,498     $ 48,368     $ 41,991     $ 104,866     $ 83,836  
Non-interest income   7,246       7,422       5,327       14,668       9,327  
Less: Securities (gain) loss   582       (162 )     (321 )     420       (339 )
Core operating revenue (non-GAAP)   64,326       55,628       46,997       119,954       92,824  
Add: Tax (credits) depreciation on solar investments   862       (64 )     1,760       798       5,597  
Core operating revenue excluding solar tax impact (non-GAAP)   65,188       55,564       48,757       120,752       98,421  
                   
Core non-interest expense                  
Non-interest expense (GAAP) $ 34,346     $ 34,397     $ 31,395     $ 68,743     $ 64,189  
Less: Severance(1)   (34 )     (52 )     —       (86 )     (1,090 )
Less: ABOC   (282 )     (371 )     —       (653 )     —  
Core non-interest expense (non-GAAP)   34,030       33,974       31,395       68,004       63,099  
                   
Core net income                  
Net Income (GAAP) $ 19,613     $ 14,165     $ 10,408     $ 33,778     $ 22,598  
Less: Securities (gain) loss   582       (162 )     (321 )     420       (339 )
Add: Severance(1)   34       52       —       86       1,090  
Add: ABOC   282       371       —       653       —  
Less: Tax on notable items   (233 )     (67 )     86       (300 )     (196 )
Core net income (non-GAAP)   20,278       14,359       10,173       34,637       23,153  
Add: Tax (credits) depreciation on solar investments   862       (64 )     1,760       798       5,597  
Add: Tax effect of solar income   (224 )     17       (474 )     (207 )     (1,457 )
Core net income excluding solar tax impact (non-GAAP)   20,916       14,312       11,459       35,228       27,293  
                   
Tangible common equity                  
Stockholders’ equity (GAAP) $ 498,041     $ 526,762     $ 548,211     $ 498,041     $ 548,211  
Less: Minority interest   (133 )     (133 )     (133 )     (133 )     (133 )
Less: Goodwill   (12,936 )     (12,936 )     (12,936 )     (12,936 )     (12,936 )
Less: Core deposit intangible   (3,628 )     (3,890 )     (4,755 )     (3,628 )     (4,755 )
Tangible common equity (non-GAAP)   481,344       509,803       530,387       481,344       530,387  
                   
Average tangible common equity                  
Average stockholders’ equity (GAAP) $ 517,430     $ 560,391     $ 547,766     $ 538,792     $ 545,163  
Less: Minority interest   (133 )     (133 )     (133 )     (133 )     (133 )
Less: Goodwill   (12,936 )     (12,936 )     (12,936 )     (12,936 )     (12,936 )
Less: Core deposit intangible   (3,755 )     (4,017 )     (4,903 )     (3,886 )     (5,052 )
Average tangible common equity (non-GAAP)   500,606       543,305       529,794       521,837       527,042  
                   
Core return on average assets                  
Denominator: Total average assets   7,760,294       7,392,773       6,394,768       7,577,547       6,313,807  
Core return on average assets (non-GAAP)   1.05 %     0.79 %     0.64 %     0.92 %     0.74 %
Core return on average assets excluding solar tax impact (non-GAAP)   1.08 %     0.79 %     0.72 %     0.94 %     0.87 %
                   
Core return on average tangible common equity                  
Denominator: Average tangible common equity   500,606       543,305       529,794       521,837       527,042  
Core return on average tangible common equity (non-GAAP)   16.25 %     10.72 %     7.70 %     13.38 %     8.86 %
Core return on average tangible common equity excluding solar tax impact (non-GAAP)   16.76 %     10.68 %     8.68 %     13.61 %     10.44 %
                   
Core efficiency ratio                  
Numerator: Core non-interest expense (non-GAAP) $ 34,030     $ 33,974     $ 31,395     $ 68,004     $ 63,099  
Core efficiency ratio (non-GAAP)   52.90 %     61.07 %     66.80 %     56.69 %     67.98 %
Core efficiency ratio excluding solar tax impact (non-GAAP)   52.20 %     61.14 %     64.39 %     56.32 %     64.11 %

(1) Salary and COBRA reimbursement expense for positions eliminated

Alex

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