Amalgamated Financial Corp. Reports First Quarter 2024 Financial Results; Stellar Deposit Growth; Net Interest Margin Rises to 3.49%
Common Equity Tier 1 Capital Ratio of 13.68% | Return on Average Assets of 1.36%
NEW YORK, April 25, 2024 (GLOBE NEWSWIRE) -- Amalgamated Financial Corp. (the “Company” or “Amalgamated”) (Nasdaq: AMAL), the holding company for Amalgamated Bank (the “Bank”), today announced financial results for the first quarter ended March 31, 2024.*First Quarter 2024 Highlights (on a linked quarter basis)*
· Net income of $27.2 million, or $0.89 per diluted share, compared to $22.7 million, or $0.74 per diluted share.
· Core net income^1 of $25.6 million, or $0.83 per diluted share, compared to $22.1 million, or $0.72 per diluted share.
*Deposits and Liquidity*
· Total deposits increased $293.8 million, or 4.2%, to $7.3 billion including an $80.0 million decline in Brokered CDs.
· Excluding Brokered CDs, on-balance sheet deposits increased $373.8 million, or 5.5%, to $7.1 billion.
· Political deposits increased $250.4 million, or 21%, to $1.4 billion.
· Off-balance sheet deposits totaled $456.8 million, comprised primarily of transactional political deposits and transitional deposits scheduled for our Trust business.
· Average cost of deposits, excluding Brokered CDs, increased 11 basis points to 136 basis points for the quarter, where non-interest-bearing deposits comprised 44.5% of total deposits, nearly identical to the prior quarter.
*Assets and Margin*
· Net loans receivable increased $13.8 million, or 0.3%, to $4.4 billion.
· Total PACE assessments grew $10.1 million, or 0.9%, to $1.1 billion.
· Net interest income grew $0.7 million, or 1.1%, to $68.0 million.
· Net interest margin expanded 5 basis points to 3.49%.
*Capital and Returns*
· Leverage ratio of 8.29%, increasing 22 basis points, and Common Equity Tier 1 ratio of 13.68%.
· Tangible common equity^1 ratio of 7.41%, representing the sixth consecutive quarter of improvement.
· Tangible book value per share^1 increased $0.99, or 5.3%, to $19.73.
· Strong core return on average tangible common equity^1 of 17.59%.
*Share Repurchase*
· Repurchased approximately 10,000 shares, or $0.2 million of common stock under the Company’s $40 million share repurchase program announced in the first quarter of 2022, with $19.5 million of remaining capacity.
Priscilla Sims Brown, President and Chief Executive Officer, commented, “Our first quarter results show Amalgamated as a banking industry leader and we proved once again that our unique and valuable business model is well positioned to thrive in varying economic conditions. This clearly separates Amalgamated from our peers and affirms my incredible optimism for the future.”
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^1 Reconciliations of non-GAAP financial measures to the most comparable GAAP measure are set forth on the last page of the financial information accompanying this press release and may also be found on our website, www.amalgamatedbank.com.
*First** Quarter Earnings *
Net income for the first quarter of 2024 was $27.2 million, or $0.89 per diluted share, compared to $22.7 million, or $0.74 per diluted share, for the fourth quarter of 2023. The $4.5 million increase during the quarter was primarily driven by a $2.2 million decrease in provision for credit losses, a $1.2 million decrease in income tax expense, a $0.8 million increase in non-interest income, and a $0.7 million increase in net interest income.
Core net income^1 for the first quarter of 2024 was $25.6 million, or $0.83 per diluted share, compared to $22.1 million, or $0.72 per diluted share, for the fourth quarter of 2023. Excluded from core net income for the quarter, pre-tax, was $2.9 million of ICS One-Way Sell fee income, $2.8 million of losses on the sale of securities, $1.8 million of tax credits from solar tax equity investments, $0.5 million in gains on the settlement of a lease termination, and $0.2 million in severance costs. Excluded from core net income for the fourth quarter of 2023, pre-tax, was $2.3 million of losses on the sale of securities and $3.3 million of tax credits from our solar tax equity investments.
Net interest income was $68.0 million for the first quarter of 2024, compared to $67.3 million for the fourth quarter of 2023. Loan interest income increased $0.4 million driven by a $19.5 million increase in average loan balances coupled with an 8 basis point increase in loan yields. Interest income on securities decreased $0.7 million driven by a decrease in the average balance of securities of $5.4 million. Interest income on resell agreements increased $1.1 million driven by a $62.2 million increase in the average balance and a 32 basis point increase in yields. The increase in interest income was offset by higher interest expense on total interest-bearing deposits of $0.6 million driven by an 18 basis point increase in cost offset by a decrease in the average balance of total interest-bearing deposits of $152.4 million. The changes in deposit costs were primarily related to increased rates on select non-time deposit products and a 29 basis point increase in the cost of time deposits. The decrease in the average balance of interest-bearing deposits was primarily driven by a decrease in the average balance of higher cost brokered deposits of $119.1 million.
Net interest margin was 3.49% for the first quarter of 2024, an increase of 5 basis points from 3.44% in the fourth quarter of 2023. The increase is largely due to increased yields on increased loan related average balances. In addition, $81.2 million in short-term resell agreements were deployed to utilize excess deposit liquidity. Prepayment penalties had no impact on our net interest margin in the first quarter of 2024, which is the same as in the prior quarter.
Provision for credit losses totaled an expense of $1.6 million for the first quarter of 2024 compared to an expense of $3.8 million in the fourth quarter of 2023. The expense in the first quarter is primarily driven by increases in specific loan reserves, charge-offs on the solar loan portfolio, and an increase in reserve for multifamily loans to reflect the current market repricing conditions, offset by improvements in macro-economic forecasts used in the CECL model.
Non-interest income was $10.2 million for the first quarter of 2024, compared to $9.4 million in the fourth quarter of 2023. Core non-interest income^1 was $8.3 million for the first quarter of 2024, compared to $8.5 million in the fourth quarter of 2023. The decrease was primarily related to lower BOLI income and commercial banking fees, offset by an increase from fees from our treasury investment services.
Non-interest expense for the first quarter of 2024 was $38.2 million, an increase of $0.4 million from the fourth quarter of 2023. Core non-interest expense^1 for the first quarter of 2024 was $38.5 million, an increase of $0.8 million from the fourth quarter of 2023. This was mainly driven by a $1.1 million increase in compensation and employee benefits expense due to select differential investments in employees as well as increased payroll taxes.
Our provision for income tax expense was $11.3 million for the first quarter of 2024, compared to $12.5 million for the fourth quarter of 2023. In the prior quarter a state and city tax examination resulted in a $3.3 million adjustment, while the conclusion of the analysis in the first quarter of 2024 resulted in an adjustment of $0.9 million. Excluding the tax adjustment, our effective tax rate for the first quarter of 2024 was 26.9%, compared to 26.2% for the fourth quarter of 2023.
*Balance Sheet Quarterly Summary *
Total assets were $8.1 billion at March 31, 2024, compared to $8.0 billion at December 31, 2023, in line with our strategy to keep our balance sheet growth flat. Notable changes within individual balance sheet line items include an $81.2 million increase in resell agreements, a $64.6 million increase in cash and cash equivalents, a $22.1 million increase in securities, and a $13.8 million increase in net loans receivable. Additionally, deposits excluding Brokered CDs increased by $373.8 million while Brokered CDs decreased $80.0 million, and other borrowings decreased by $165.3 million. Our off-balance sheet deposits increased $153.7 million, or 51%, to $456.8 million.
Total net loans receivable, at March 31, 2024 were $4.4 billion, an increase of $13.8 million, or 0.3% for the quarter. The increase in loans is primarily driven by a $27.3 million increase in multifamily loans, and a $3.1 million increase in commercial and industrial loans, offset by a $9.8 million decrease in consumer solar loans, and a $6.3 million decrease in residential loans. During the quarter, criticized or classified loans decreased $9.0 million largely related to the payoff of $7.0 million of commercial and industrial loans and an upgrade of $3.0 million of commercial and industrial loans.
Total deposits at March 31, 2024 were $7.3 billion, an increase of $293.8 million, or 4.2%, during the quarter. Total deposits excluding Brokered CDs increased by $373.8 million to $7.1 billion, or a 5.5% increase. Deposits held by politically active customers, such as campaigns, PACs, advocacy-based organizations, and state and national party committees were $1.4 billion as of March 31, 2024, an increase of $250.4 million during this quarter, of which a substantial portion were moved off-balance sheet. Non-interest-bearing deposits represented 44% of average total deposits and 44% of ending total deposits for the quarter, contributing to an average cost of total deposits of 146 basis points. Super-core deposits^2 totaled approximately $4.0 billion, had a weighted average life of 17 years, and comprised 55% of total deposits, excluding Brokered CDs. Total uninsured deposits were $4.1 billion, comprising 56% of total deposits. Excluding uninsured super-core deposits of approximately $2.9 billion, remaining uninsured deposits were approximately 16%-19% of total deposits with immediate liquidity coverage of 323%.
Nonperforming assets totaled $34.0 million, or 0.42% of period-end total assets at March 31, 2024, a decrease of $0.2 million, compared with $34.2 million, or 0.43% on a linked quarter basis. The decrease in nonperforming assets was primarily driven by a $2.5 million decrease in residential real estate nonaccrual loans, offset by a $1.2 million increase in commercial and industrial nonaccrual loans, and a $1.2 million increase in consumer solar nonaccrual loans.
During the quarter, the allowance for credit losses on loans decreased $1.3 million to $64.4 million. The ratio of allowance to total loans was 1.46%, a decrease of 3 basis points from 1.49% in the fourth quarter of 2023.
*Capital Quarterly Summary*
As of March 31, 2024, our Common Equity Tier 1 Capital ratio was 13.68%, Total Risk-Based Capital ratio was 16.35%, and Tier-1 Leverage Capital ratio was 8.29%, compared to 12.98%, 15.64% and 8.07%, respectively, as of December 31, 2023. Stockholders’ equity at March 31, 2024 was $616.9 million, an increase of $31.5 million during the quarter. The increase in stockholders’ equity was primarily driven by $27.2 million of net income for the quarter and a $7.1 million improvement in accumulated other comprehensive loss due to the tax effected mark-to-market on our available for sale securities portfolio, offset by $3.1 million in dividends paid at $0.10 per outstanding share, and $0.2 million of common stock repurchases.
Tangible book value per share was $19.73 as of March 31, 2024 compared to $18.74 as of December 31, 2023. Tangible common equity improved to 7.41% of tangible assets, compared to 7.16% as of December 31, 2023.
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^2 Refer to Terminology on page 5 for definitions of certain terms used in this release.
*Conference Call*
As previously announced, Amalgamated Financial Corp. will host a conference call to discuss its first quarter 2024 results today, April 25, 2024 at 11:00am (Eastern Time). The conference call can be accessed by dialing 1-877-407-9716 (domestic) or 1-201-493-6779 (international) and asking for the Amalgamated Financial Corp. First Quarter 2024 Earnings Call. A telephonic replay will be available approximately two hours after the call and can be accessed by dialing 1-844-512-2921, or for international callers 1-412-317-6671 and providing the access code 13745544. The telephonic replay will be available until May 2, 2024.
Interested investors and other parties may also listen to a simultaneous webcast of the conference call by logging onto the investor relations section of our website at https://ir.amalgamatedbank.com/. The online replay will remain available for a limited time beginning immediately following the call.
The presentation materials for the call can be accessed on the investor relations section of our website at https://ir.amalgamatedbank.com/.
*About Amalgamated Financial Corp.*
Amalgamated Financial Corp. is a Delaware public benefit corporation and a bank holding company engaged in commercial banking and financial services through its wholly-owned subsidiary, Amalgamated Bank. Amalgamated Bank is a New York-based full-service commercial bank and a chartered trust company with a combined network of five branches across New York City, Washington D.C., and San Francisco, and a commercial office in Boston. Amalgamated Bank was formed in 1923 as Amalgamated Bank of New York by the Amalgamated Clothing Workers of America, one of the country's oldest labor unions. Amalgamated Bank provides commercial banking and trust services nationally and offers a full range of products and services to both commercial and retail customers. Amalgamated Bank is a proud member of the Global Alliance for Banking on Values and is a certified B Corporation®. As of March 31, 2024, our total assets were $8.1 billion, total net loans were $4.4 billion, and total deposits were $7.3 billion. Additionally, as of March 31, 2024, our trust business held $35.0 billion in assets under custody and $13.9 billion in assets under management.
*Non-GAAP Financial Measures*
This release (and the accompanying financial information and tables) refer to certain non-GAAP financial measures including, without limitation, “Core operating revenue,” “Core non-interest expense,” “Core non-interest income,” “Core net income,” “Tangible common equity,” “Average tangible common equity,” “Core return on average assets,” “Core return on average tangible common equity,” and “Core efficiency ratio.”
Our management utilizes this information to compare our operating performance for March 31, 2024 versus certain periods in 2024 and 2023 and to prepare internal projections. We believe these non-GAAP financial measures facilitate making period-to-period comparisons and are meaningful indications of our operating performance. In addition, because intangible assets such as goodwill and other discrete items unrelated to our core business, which are excluded, vary extensively from company to company, we believe that the presentation of this information allows investors to more easily compare our results to those of other companies.
The presentation of non-GAAP financial information, however, is not intended to be considered in isolation or as a substitute for GAAP financial measures. We strongly encourage readers to review the GAAP financial measures included in this release and not to place undue reliance upon any single financial measure. In addition, because non-GAAP financial measures are not standardized, it may not be possible to compare the non-GAAP financial measures presented in this release with other companies’ non-GAAP financial measures having the same or similar names. Reconciliations of non-GAAP financial disclosures to comparable GAAP measures found in this release are set forth in the final pages of this release and also may be viewed on our website, amalgamatedbank.com.*Terminology *
Certain terms used in this release are defined as follows:
“Core efficiency ratio” is defined as “Core non-interest expense” divided by “Core operating revenue.” We believe the most directly comparable performance ratio derived from GAAP financial measures is an efficiency ratio calculated by dividing total non-interest expense by the sum of net interest income and total non-interest income.
“Core net income” is defined as net income after tax excluding gains and losses on sales of securities, ICS One-Way Sell fee income, gains on the sale of owned property, costs related to branch closures, restructuring/severance costs, acquisition costs, tax credits and accelerated depreciation on solar equity investments, and taxes on notable pre-tax items. We believe the most directly comparable GAAP financial measure is net income.
“Core non-interest expense” is defined as total non-interest expense excluding costs related to branch closures, restructuring/severance, and acquisitions. We believe the most directly comparable GAAP financial measure is total non-interest expense.
“Core non-interest income” is defined as total non-interest income excluding gains and losses on sales of securities, ICS One-Way Sell fee income, gains on the sale of owned property, and tax credits and accelerated depreciation on solar equity investments. We believe the most directly comparable GAAP financial measure is non-interest income.
“Core operating revenue” is defined as total net interest income plus “core non-interest income”. We believe the most directly comparable GAAP financial measure is the total of net interest income and non-interest income.
“Core return on average assets” is defined as “Core net income” divided by average total assets. We believe the most directly comparable performance ratio derived from GAAP financial measures is return on average assets calculated by dividing net income by average total assets.
“Core return on average tangible common equity” is defined as “Core net income” divided by average “tangible common equity.” We believe the most directly comparable performance ratio derived from GAAP financial measures is return on average equity calculated by dividing net income by average total stockholders’ equity.
“Super-core deposits” are defined as total deposits from commercial and consumer customers, with a relationship length of greater than 5 years. We believe the most directly comparable GAAP financial measure is total deposits.
“Tangible assets” are defined as total assets excluding, as applicable, goodwill and core deposit intangibles. We believe the most directly comparable GAAP financial measure is total assets.
“Tangible common equity”, and “Tangible book value” are defined as stockholders’ equity excluding, as applicable, minority interests, preferred stock, goodwill and core deposit intangibles. We believe that the most directly comparable GAAP financial measure is total stockholders’ equity.
"Traditional securities portfolio" is defined as total investment securities excluding PACE assessments. We believe the most directly comparable GAAP financial measure is total investment securities.
*Forward-Looking Statements*
Statements included in this release that are not historical in nature are intended to be, and are hereby identified as, forward-looking statements within the meaning of the Private Securities Litigation Reform Act, Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements generally can be identified through the use of forward-looking terminology such as “may,” “will,” “anticipate,” “aspire,” “should,” “would,” “believe,” “contemplate,” “expect,” “estimate,” “continue,” “in the future,” “may” and “intend,” as well as other similar words and expressions of the future. Forward-looking statements are subject to known and unknown risks, uncertainties and other factors, any or all of which could cause actual results to differ materially from the results expressed or implied by such forward-looking statements. These risks and uncertainties include, but are not limited to: (i) uncertain conditions in the banking industry and in national, regional and local economies in our core markets, which may have an adverse impact on our business, operations and financial performance; (ii) deterioration in the financial condition of borrowers resulting in significant increases in loan losses and provisions for those losses; (iii) deposit outflows and subsequent declines in liquidity caused by factors that could include lack of confidence in the banking system, a deterioration in market conditions or the financial condition of depositors; (iv) changes in our deposits, including an increase in uninsured deposits; (v) unfavorable conditions in the capital markets, which may cause declines in our stock price and the value of our investments; (vi) continued fluctuation of the interest rate environment, including changes in net interest margin or changes that affect the yield curve on investments; (vii) potential deterioration in real estate collateral values; (viii) changes in legislation, regulation, public policies, or administrative practices impacting the banking industry, including increased regulation in the aftermath of recent bank failures; (ix) the outcome of legal or regulatory proceedings that may be instituted against us; (x) our inability to maintain the historical growth rate of the loan portfolio; (xi) changes in loan underwriting, credit review or loss reserve policies associated with economic conditions, examination conclusions, or regulatory developments; (xii) the impact of competition with other financial institutions, including pricing pressures and the resulting impact on our results, including as a result of compression to net interest margin; (xiii) any matter that would cause us to conclude that there was impairment of any asset, including intangible assets; (xiv) the risk that the preliminary financial information reported herein and our current preliminary analysis will be different when our review is finalized; (xv) increased competition for experienced members of the workforce including executives in the banking industry; (xvi) a failure in or breach of our operational or security systems or infrastructure, or those of third party vendors or other service providers, including as a result of unauthorized access, computer viruses, phishing schemes, spam attacks, human error, natural disasters, power loss and other security breaches; (xvii) increased regulatory scrutiny and exposure from the use of “big data” techniques, machine learning, and artificial intelligence; (xviii) a downgrade in our credit rating; (xix) increased political opposition to Environmental, Social and Governance (“ESG”) practices and Diversity, Equity and Inclusion (“DEI”) practices; (xx) physical and transitional risks related to climate change as they impact our business and the businesses that we finance; and (xxi) future repurchase of our shares through our common stock repurchase program. Additional factors which could affect the forward-looking statements can be found in our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K filed with the SEC and available on the SEC's website at https://www.sec.gov/. We disclaim any obligation to update or revise any forward-looking statements contained in this release, which speak only as of the date hereof, whether as a result of new information, future events or otherwise, except as required by law.
*Investor Contact*:
Jamie Lillis
Solebury Strategic Communications
shareholderrelations@amalgamatedbank.com
800-895-4172
*
Consolidated Statements of Income (unaudited)*
*Three Months Ended* *March 31,* *December 31,* *March 31,*
($ in thousands) *2024* *2023* *2023*
INTEREST AND DIVIDEND INCOME
Loans $ 51,952 $ 51,551 $ 44,806
Securities 42,390 42,014 39,512
Interest-bearing deposits in banks 2,592 2,419 618
Total interest and dividend income 96,934 95,984 84,936
INTEREST EXPENSE
Deposits 25,891 25,315 13,835
Borrowed funds 3,006 3,350 3,821
Total interest expense 28,897 28,665 17,656
NET INTEREST INCOME 68,037 67,319 67,280
Provision for credit losses 1,588 3,756 4,958
Net interest income after provision for credit losses 66,449 63,563 62,322
NON-INTEREST INCOME
Trust Department fees 3,854 3,562 3,929
Service charges on deposit accounts 6,136 3,102 2,455
Bank-owned life insurance income 609 828 781
Losses on sale of securities (2,774 ) (2,340 ) (3,086 )
Gains on sale of loans, net 47 2 3
Equity method investments income 2,072 3,671 153
Other income 285 581 973
Total non-interest income 10,229 9,406 5,208
NON-INTEREST EXPENSE
Compensation and employee benefits 22,273 21,249 22,014
Occupancy and depreciation 2,904 3,421 3,399
Professional fees 2,376 2,426 2,230
Data processing 4,629 4,568 4,549
Office maintenance and depreciation 663 700 728
Amortization of intangible assets 183 222 222
Advertising and promotion 1,219 750 1,587
Federal deposit insurance premiums 1,050 1,000 718
Other expense 2,855 3,416 3,180
Total non-interest expense 38,152 37,752 38,627
Income before income taxes 38,526 35,217 28,903
Income tax expense 11,277 12,522 7,565
Net income $ 27,249 $ 22,695 $ 21,338
Earnings per common share - basic $ 0.89 $ 0.75 $ 0.69
Earnings per common share - diluted $ 0.89 $ 0.74 $ 0.69
*
Consolidated Statements of Financial Condition*
($ in thousands) *March 31, 2024* *December 31, 2023* *March 31, 2023*
*Assets* *(unaudited)* *(unaudited)*
Cash and due from banks $ 3,830 $ 2,856 $ 5,192
Interest-bearing deposits in banks 151,374 87,714 125,705
Total cash and cash equivalents 155,204 90,570 130,897
Securities:
Available for sale, at fair value
Traditional securities 1,445,793 1,429,739 1,639,105
Property Assessed Clean Energy (“PACE”) assessments 82,258 53,303 — 1,528,051 1,483,042 1,639,105
Held-to-maturity, at amortized cost:
Traditional securities, net of allowance for credit losses of $53, $54, and $58, respectively 616,172 620,232 622,741
PACE assessments, net of allowance for credit losses of $657, $667, and $629, respectively 1,057,790 1,076,602 995,766 1,673,962 1,696,834 1,618,507
Loans held for sale 2,137 1,817 5,653
Loans receivable, net of deferred loan origination costs 4,423,780 4,411,319 4,198,170
Allowance for credit losses (64,400 ) (65,691 ) (67,323 )
Loans receivable, net 4,359,380 4,345,628 4,130,847
Resell agreements 131,242 50,000 15,431
Federal Home Loan Bank of New York ("FHLBNY") stock, at cost 4,603 4,389 3,507
Accrued interest receivable 53,436 55,484 40,844
Premises and equipment, net 7,128 7,807 9,250
Bank-owned life insurance 106,137 105,528 105,405
Right-of-use lease asset 19,797 21,074 26,516
Deferred tax asset, net 49,171 56,603 62,504
Goodwill 12,936 12,936 12,936
Intangible assets, net 2,034 2,217 2,883
Equity method investments 14,801 13,024 8,170
Other assets 16,663 25,371 24,001
Total assets $ 8,136,682 $ 7,972,324 $ 7,836,456
*Liabilities*
Deposits $ 7,305,765 $ 7,011,988 $ 7,041,361
Subordinated debt, net 70,570 70,546 73,737
Other borrowings 69,135 234,381 140,000
Operating leases 27,250 30,646 38,333
Other liabilities 47,024 39,399 23,867
Total liabilities 7,519,744 7,386,960 7,317,298
*Stockholders’ equity*
Common stock, par value $.01 per share 307 307 307
Additional paid-in capital 287,198 288,232 287,514
Retained earnings 412,190 388,033 330,673
Accumulated other comprehensive loss, net of income taxes (78,872 ) (86,004 ) (97,317 )
Treasury stock, at cost (4,018 ) (5,337 ) (2,152 )
Total Amalgamated Financial Corp. stockholders' equity 616,805 585,231 519,025
Noncontrolling interests 133 133 133
Total stockholders' equity 616,938 585,364 519,158
Total liabilities and stockholders’ equity $ 8,136,682 $ 7,972,324 $ 7,836,456
*
Select Financial Data*
*As of and for the* *Three Months Ended* *March 31,* *December 31,* *March 31,*
(Shares in thousands) *2024* *2023* *2023*
*Selected Financial Ratios and Other Data:*
Earnings per share
Basic $ 0.89 $ 0.75 $ 0.69
Diluted 0.89 0.74 0.69
Core net income (non-GAAP)
Basic $ 0.84 $ 0.73 $ 0.75
Diluted 0.83 0.72 0.74
Book value per common share (excluding minority interest) $ 20.22 $ 19.23 $ 16.94
Tangible book value per share (non-GAAP) $ 19.73 $ 18.74 $ 16.42
Common shares outstanding, par value $.01 per share^(1) 30,510 30,428 30,642
Weighted average common shares outstanding, basic 30,476 30,418 30,706
Weighted average common shares outstanding, diluted 30,737 30,616 30,939
(1) 70,000,000 shares authorized; 30,736,141, 30,736,141, and 30,736,141 shares issued for the periods ended March 31, 2024, December 31, 2023, and March 31, 2023 respectively, and 30,510,393, 30,428,359, and 30,642,299 shares outstanding for the periods ended March 31, 2024, December 31, 2023, and March 31, 2023, respectively.
*
Select Financial Data*
*As of and for the* *Three Months Ended* *March 31,* *December 31,* *March 31,* *2024* *2023* *2023*
*Selected Performance Metrics:*
Return on average assets 1.36 % 1.13 % 1.11 %
Core return on average assets (non-GAAP) 1.27 % 1.10 % 1.19 %
Return on average equity 18.24 % 16.23 % 17.22 %
Core return on average tangible common equity (non-GAAP) 17.59 % 16.22 % 19.21 %
Average equity to average assets 7.44 % 6.95 % 6.42 %
Tangible common equity to tangible assets (non-GAAP) 7.41 % 7.16 % 6.43 %
Loan yield 4.76 % 4.68 % 4.40 %
Securities yield 5.21 % 5.21 % 4.73 %
Deposit cost 1.46 % 1.43 % 0.81 %
Net interest margin 3.49 % 3.44 % 3.59 %
Efficiency ratio^ (1) 48.75 % 49.20 % 53.29 %
Core efficiency ratio (non-GAAP) 50.40 % 49.73 % 51.64 %
*Asset Quality Ratios:*
Nonaccrual loans to total loans 0.75 % 0.75 % 0.71 %
Nonperforming assets to total assets 0.42 % 0.43 % 0.49 %
Allowance for credit losses on loans to nonaccrual loans 195.04 % 197.97 % 224.74 %
Allowance for credit losses on loans to total loans 1.46 % 1.49 % 1.60 %
Annualized net charge-offs to average loans 0.20 % 0.51 % 0.25 %
*Capital Ratios:*
Tier 1 leverage capital ratio 8.29 % 8.07 % 7.50 %
Tier 1 risk-based capital ratio 13.68 % 12.98 % 12.23 %
Total risk-based capital ratio 16.35 % 15.64 % 15.00 %
Common equity tier 1 capital ratio 13.68 % 12.98 % 12.23 %
(1) Efficiency ratio is calculated by dividing total non-interest expense by the sum of net interest income and total non-interest income
*
Loan and PACE Assessments Portfolio Composition*
(In thousands) *At March 31, 2024* *At December 31, 2023* *At March 31, 2023* *Amount* *% of total* *Amount* *% of total* *Amount* *% of total*
Commercial portfolio:
Commercial and industrial $ 1,014,084 22.9 % $ 1,010,998 22.9 % $ 923,853 22.0 %
Multifamily 1,175,467 26.6 % 1,148,120 26.1 % 1,062,826 25.3 %
Commercial real estate 353,598 8.0 % 353,432 8.0 % 327,477 7.8 %
Construction and land development 23,266 0.5 % 23,626 0.5 % 37,828 0.9 %
Total commercial portfolio 2,566,415 58.0 % 2,536,176 57.5 % 2,351,984 56.0 %
Retail portfolio:
Residential real estate lending 1,419,321 32.1 % 1,425,596 32.3 % 1,390,135 33.1 %
Consumer solar 398,501 9.0 % 408,260 9.3 % 410,726 9.8 %
Consumer and other 39,543 0.9 % 41,287 0.9 % 45,325 1.1 %
Total retail portfolio 1,857,365 42.0 % 1,875,143 42.5 % 1,846,186 44.0 %
Total loans held for investment 4,423,780 100.0 % 4,411,319 100.0 % 4,198,170 100.0 %
Allowance for credit losses (64,400 ) (65,691 ) (67,323 )
Loans receivable, net $ 4,359,380 $ 4,345,628 $ 4,130,847
PACE assessments:
Available for sale, at fair value
Residential PACE assessments 82,258 7.2 % 53,303 4.7 % — — %
Held-to-maturity, at amortized cost
Commercial PACE assessments 256,661 22.5 % 258,306 22.8 % 262,398 26.3 %
Residential PACE assessments 801,786 70.3 % 818,963 72.5 % 733,997 73.7 % 1,058,447 92.8 % 1,077,269 95.3 % 996,395 100.0 %
Total PACE assessments 1,140,705 100.0 % 1,130,572 100.0 % 996,395 100.0 %
Allowance for credit losses (657 ) (667 ) (629 )
Total PACE assessments, net $ 1,140,048 $ 1,129,905 $ 995,766
Loans receivable, net and total PACE assessments, net as a % of Deposits 75.3 % 78.1 % 72.8 %
Loans receivable, net and total PACE assessments, net as a % of Deposits excluding Brokered CDs 77.0 % 80.9 % 79.5 %
*
Net Interest Income Analysis*
*Three Months Ended* *March 31, 2024* *December 31, 2023* *March 31, 2023*
(In thousands) *Average*
*Balance* *Income / Expense* *Yield /*
*Rate* *Average*
*Balance* *Income / Expense* *Yield /*
*Rate* *Average*
*Balance* *Income / Expense* *Yield /*
*Rate*
Interest-earning assets:
Interest-bearing deposits in banks $ 205,369 $ 2,592 5.08 % $ 190,994 $ 2,419 5.02 % $ 90,962 $ 618 2.76 %
Securities^(1) 3,170,356 41,064 5.21 % 3,175,784 41,741 5.21 % 3,361,750 39,193 4.73 %
Resell agreements 79,011 1,326 6.75 % 16,848 273 6.43 % 18,644 319 6.94 %
Loans receivable, net^ (2) 4,390,489 51,952 4.76 % 4,370,946 51,551 4.68 % 4,129,460 44,806 4.40 %
Total interest-earning assets 7,845,225 96,934 4.97 % 7,754,572 95,984 4.91 % 7,600,816 84,936 4.53 %
Non-interest-earning assets:
Cash and due from banks 5,068 5,357 4,015
Other assets 226,270 220,580 217,020
Total assets $ 8,076,563 $ 7,980,509 $ 7,821,851
Interest-bearing liabilities:
Savings, NOW and money market deposits $ 3,591,551 $ 21,872 2.45 % $ 3,629,658 $ 19,808 2.17 % $ 3,091,228 $ 9,555 1.25 %
Time deposits 188,045 1,576 3.37 % 183,225 1,423 3.08 % 149,814 297 0.80 %
Brokered CDs 190,240 2,443 5.16 % 309,378 4,084 5.24 % 367,684 3,983 4.39 %
Total interest-bearing deposits 3,969,836 25,891 2.62 % 4,122,261 25,315 2.44 % 3,608,726 13,835 1.55 %
Other borrowings 288,093 3,006 4.20 % 304,869 3,350 4.36 % 347,878 3,821 4.45 %
Total interest-bearing liabilities 4,257,929 28,897 2.73 % 4,427,130 28,665 2.57 % 3,956,604 17,656 1.81 %
Non-interest-bearing liabilities:
Demand and transaction deposits 3,138,238 2,921,961 3,286,964
Other liabilities 79,637 76,588 75,798
Total liabilities 7,475,804 7,425,679 7,319,366
Stockholders' equity 600,759 554,830 502,485
Total liabilities and stockholders' equity $ 8,076,563 $ 7,980,509 $ 7,821,851
Net interest income / interest rate spread $ 68,037 2.24 % $ 67,319 2.34 % $ 67,280 2.72 %
Net interest-earning assets / net interest margin $ 3,587,296 3.49 % $ 3,327,442 3.44 % $ 3,644,212 3.59 %
Total deposits excluding Brokered CDs / total cost of deposits excluding Brokered CDs $ 6,917,834 1.36 % $ 6,734,844 1.25 % $ 6,528,006 0.61 %
Total deposits / total cost of deposits $ 7,108,074 1.46 % $ 7,044,222 1.43 % $ 6,895,690 0.81 %
Total funding / total cost of funds $ 7,396,167 1.57 % $ 7,349,091 1.55 % $ 7,243,568 0.99 %
(1) Includes FHLBNY stock in the average balance, and dividend income on FHLBNY stock in interest income.
(2) Includes prepayment penalty interest income in 1Q2024, 4Q2023, and 1Q2023 of $18, $167, and $0, respectively (in thousands).
*
Deposit Portfolio Composition*
*Three Months Ended*
(In thousands) *March 31, 2024* *December 31, 2023* *March 31, 2023* *Ending Balance* *Average Balance* *Ending Balance* *Average Balance* *Ending Balance* *Average Balance*
Non-interest-bearing demand deposit accounts $ 3,182,047 $ 3,138,238 $ 2,940,398 $ 2,921,961 $ 3,015,558 $ 3,286,964
NOW accounts 200,900 197,659 200,382 191,889 199,518 196,499
Money market deposit accounts 3,222,271 3,051,670 3,100,681 3,090,805 2,702,464 2,514,835
Savings accounts 341,054 342,222 340,860 346,964 371,240 379,894
Time deposits 197,265 188,045 187,457 183,225 157,697 149,814
Brokered CDs 162,228 190,240 242,210 309,378 594,884 367,684
Total deposits $ 7,305,765 $ 7,108,074 $ 7,011,988 $ 7,044,222 $ 7,041,361 $ 6,895,690
Total deposits excluding Brokered CDs $ 7,143,537 $ 6,917,834 $ 6,769,778 $ 6,734,844 $ 6,446,477 $ 6,528,006
*Three Months Ended* *March 31, 2024* *December 31, 2023* *March 31, 2023*
(In thousands) *Average*
*Rate Paid*^*(1)* *Cost of Funds* *Average*
*Rate Paid*^*(1)* *Cost of Funds* *Average*
*Rate Paid*^*(1)* *Cost of Funds*
Non-interest bearing demand deposit accounts 0.00 % 0.00 % 0.00 % 0.00 % 0.00 % 0.00 %
NOW accounts 1.05 % 1.03 % 0.99 % 1.00 % 0.87 % 0.76 %
Money market deposit accounts 2.96 % 2.67 % 2.89 % 2.35 % 1.32 % 1.36 %
Savings accounts 1.34 % 1.29 % 1.20 % 1.15 % 0.95 % 0.78 %
Time deposits 3.44 % 3.37 % 3.01 % 3.08 % 1.25 % 0.80 %
Brokered CDs 4.99 % 5.16 % 5.09 % 5.24 % 4.52 % 4.37 %
Total deposits 1.60 % 1.46 % 1.62 % 1.43 % 0.99 % 0.81 %
Interest-bearing deposits excluding Brokered CDs 2.75 % 2.50 % 2.65 % 2.21 % 1.25 % 1.23 %
^(1) Average rate paid is calculated as the weighted average of spot rates on deposit accounts as of March 31, 2024.
*
Asset Quality *
(In thousands) *March 31, 2024* *December 31, 2023* *March 31, 2023*
Loans 90 days past due and accruing $ — $ — $ 1,299
Nonaccrual loans held for sale 989 989 5,653
Nonaccrual loans - Commercial 24,228 23,189 25,779
Nonaccrual loans - Retail 8,791 9,994 4,177
Nonaccrual securities 31 31 1,835
Total nonperforming assets $ 34,039 $ 34,203 $ 38,743
*Nonaccrual loans:*
Commercial and industrial $ 8,750 $ 7,533 $ 9,521
Multifamily — — 2,710
Commercial real estate 4,354 4,490 4,745
Construction and land development 11,124 11,166 8,803
Total commercial portfolio 24,228 23,189 25,779
Residential real estate lending 4,763 7,218 2,016
Consumer solar 3,852 2,673 2,021
Consumer and other 176 103 140
Total retail portfolio 8,791 9,994 4,177
Total nonaccrual loans $ 33,019 $ 33,183 $ 29,956
Nonaccrual loans to total loans 0.75 % 0.75 % 0.71 %
Nonperforming assets to total assets 0.42 % 0.43 % 0.49 %
Allowance for credit losses on loans to nonaccrual loans 195.04 % 197.97 % 224.74 %
Allowance for credit losses on loans to total loans 1.46 % 1.49 % 1.60 %
Annualized net charge-offs (recoveries) to average loans 0.20 % 0.51 % 0.25 %
*
Credit Quality*
*March 31, 2024* *December 31, 2023* *March 31, 2023*
($ in thousands)
*Criticized and classified loans*
Commercial and industrial $ 62,242 $ 69,843 $ 35,823
Multifamily 10,274 10,306 18,710
Commercial real estate 8,475 8,637 35,121
Construction and land development 11,124 11,166 16,426
Residential real estate lending 4,763 7,218 2,016
Consumer solar 3,785 2,673 2,021
Consumer and other 243 103 140
Total loans $ 100,906 $ 109,946 $ 110,257
*Criticized and classified loans to total loans*
Commercial and industrial 1.41 % 1.58 % 0.85 %
Multifamily 0.23 % 0.23 % 0.45 %
Commercial real estate 0.19 % 0.20 % 0.84 %
Construction and land development 0.25 % 0.25 % 0.39 %
Residential real estate lending 0.11 % 0.16 % 0.05 %
Consumer solar 0.09 % 0.06 % 0.05 %
Consumer and other 0.01 % 0.00 % 0.00 %
Total loans 2.29 % 2.48 % 2.63 %
*March 31, 2024* *December 31, 2023* *March 31, 2023* *Annualized net charge-offs to average loans* *ACL to total portfolio balance* *Annualized net charge-offs to average loans* *ACL to total portfolio balance* *Annualized net charge-offs to average loans* *ACL to total portfolio balance*
Commercial and industrial 0.16 % 1.58 % — % 1.81 % — % 1.78 %
Multifamily — % 0.38 % — % 0.19 % 0.44 % 0.66 %
Commercial real estate — % 0.40 % — % 0.36 % — % 0.75 %
Construction and land development — % 3.67 % 71.82 % 0.10 % — % 0.94 %
Residential real estate lending — % 0.87 % (0.04 ) % 0.93 % (0.05 ) % 1.07 %
Consumer solar 1.67 % 6.72 % 0.99 % 6.85 % 1.54 % 6.81 %
Consumer and other 0.86 % 6.36 % 0.05 % 6.48 % 1.22 % 5.90 %
Total loans 0.20 % 1.46 % 0.51 % 1.49 % 0.25 % 1.60 %
*
Reconciliation of GAAP to Non-GAAP Financial Measures*
The information provided below presents a reconciliation of each of our non-GAAP financial measures to the most directly comparable GAAP financial measure.
*As of and for the * *Three Months Ended*
(in thousands) *March 31, 2024* *December 31, 2023* *March 31, 2023*
*Core operating revenue*
Net Interest income (GAAP) $ 68,037 $ 67,319 $ 67,280
Non-interest income 10,229 9,406 5,208
Add: Securities loss 2,774 2,340 3,086
Less: ICS One-Way Sell Fee Income^(1) (2,903 ) — —
Less: Subdebt repurchase gain^(2) — — (780 )
Less: Tax credits on solar investments^(3) (1,808 ) (3,251 ) —
Core operating revenue (non-GAAP) 76,329 75,814 74,794
*Core non-interest expense*
Non-interest expense (GAAP) $ 38,152 $ 37,752 $ 38,627
Add: Gain on settlement of lease termination^(^4^) 499 — —
Less: Severance costs^(5) (184 ) (47 ) —
Core non-interest expense (non-GAAP) 38,467 37,705 38,627
*Core net income*
Net Income (GAAP) $ 27,249 $ 22,695 $ 21,338
Add: Securities loss 2,774 2,340 3,086
Less: ICS One-Way Sell Fee Income^(1) (2,903 ) — —
Less: Gain on settlement of lease termination^(^4^) (499 ) — —
Less: Subdebt repurchase gain^(2) — — (780 )
Add: Severance costs^(5) 184 47 —
Less: Tax credits on solar investments^(3) (1,808 ) (3,251 ) —
Less: Tax on notable items 607 227 (604 )
Core net income (non-GAAP) 25,604 22,058 23,040
*Tangible common equity*
Stockholders' equity (GAAP) $ 616,938 $ 585,364 $ 519,158
Less: Minority interest (133 ) (133 ) (133 )
Less: Goodwill (12,936 ) (12,936 ) (12,936 )
Less: Core deposit intangible (2,034 ) (2,217 ) (2,883 )
Tangible common equity (non-GAAP) 601,835 570,078 503,206
*Average tangible common equity*
Average stockholders' equity (GAAP) $ 600,759 $ 554,830 $ 502,485
Less: Minority interest (133 ) (133 ) (133 )
Less: Goodwill (12,936 ) (12,936 ) (12,936 )
Less: Core deposit intangible (2,123 ) (2,325 ) (2,991 )
Average tangible common equity (non-GAAP) 585,567 539,436 486,425
*Core return on average assets*
Denominator: Total average assets (GAAP) $ 8,076,563 $ 7,980,509 $ 7,821,851
Core return on average assets (non-GAAP) 1.28 % 1.10 %