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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
[email protected]
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 assets1.01% 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 equity15.20% 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 assets6.67% 7.58% 8.57% 7.11% 8.63%
Tangible common equity to tangible assets6.07% 6.68% 8.09% 6.07% 8.09%
Loan yield3.86% 3.85% 3.82% 3.86% 3.83%
Securities yield2.66% 2.28% 2.15% 2.48% 2.17%
Deposit cost0.08% 0.09% 0.10% 0.08% 0.11%
Net interest margin3.03% 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 loans0.67% 0.84% 1.64% 0.67% 1.64%
Nonperforming assets to total assets0.82% 0.80% 1.08% 0.82% 1.08%
Allowance for loan losses to nonaccrual loans161.81% 129.71% 73.20% 161.81% 73.20%
Allowance for loan losses to total loans1.08% 1.08% 1.20% 1.08% 1.20%
Annualized net charge-offs (recoveries) to average loans0.11% 0.08% 0.04% 0.09% 0.12%
          
Capital Ratios:         
Tier 1 leverage capital ratio7.08% 7.34% 7.93% 7.08% 7.93%
Tier 1 risk-based capital ratio11.76% 12.36% 13.63% 11.76% 13.63%
Total risk-based capital ratio14.42% 15.16% 14.68% 14.42% 14.68%
Common equity tier 1 capital ratio11.76% 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

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