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Amalgamated Bank Reports First Quarter 2019 Financial Results

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NEW YORK, April 30, 2019 (GLOBE NEWSWIRE) -- Amalgamated Bank (NASDAQ:AMAL) ("Amalgamated") today announced financial results for the first quarter ended March 31, 2019. 

First Quarter 2019 Highlights

  • Net income of $10.8 million, or $0.33 per diluted share, compared to $7.7 million, or $0.27 per diluted share, for the first quarter of 2018
  • Core earnings (non-GAAP) of $10.7 million, or $0.33 per diluted share, compared to $7.9 million, or $0.28 per diluted share, for the first quarter of 2018
  • Deposit growth of $1.8 million, or 0.2% annualized, compared to a balance of $4.1 billion on December 31, 2018
    • Deposits at December 31, 2018 included $326.7 million of short term deposits that exited the bank on January 2, 2019, resulting in beginning year 2019 deposits of $3.8 billion
    • On an adjusted basis, excluding these short-term deposits we had deposit growth of $328.5 million, or 34.8% annualized, compared to $3.8 billion on January 2, 2019
  • Loan growth of $56.4 million, or 7.0% annualized, compared to a balance of $3.2 billion on December 31, 2018
  • Cost of deposits was 0.31%, compared to 0.27% for the fourth quarter of 2018 and 0.26% for the first quarter of 2018
  • Net interest margin was 3.65%, compared to 3.57% for the fourth quarter of 2018 and 3.43% for the first quarter of 2018
  • Tier 1 Leverage, Common Equity Tier 1, and Total Risk-Based capital ratios were 8.90%, 13.31%, and 14.33%, respectively, at March 31, 2019
  • Total nonperforming assets were $56.6 million or 1.15% of total assets as of March 31, 2019, compared to $59.3 million or 1.27% of total assets at December 31, 2018 and $56.0 million, or 1.35% of total assets at March 31, 2018

Keith Mestrich, President and Chief Executive Officer of Amalgamated Bank, commented, "I am quite pleased with our first quarter results as they clearly demonstrate the attractive position that Amalgamated Bank holds as we work to service the needs of values-based institutions and further our reputation as ‘America's socially responsible bank.'  Signs of our continued success can be seen in our deposit franchise which experienced 34.8% adjusted annualized organic growth in the first quarter.  This included an $89.0 million increase in political deposits as well as vibrant deposit growth across our customer categories of unions and their funds, non-profits and philanthropies.  Importantly, our cost of funds remained relatively stable at 31 basis points and contributed to our strong profitability as our net interest margin increased to 3.65% in the first quarter of 2019 from 3.43% in the first quarter of 2018.  Lastly, while our loan growth was modestly below our expectations, our acquisition of New Resource Bank ("NRB") allowed us to continue to make very good progress expanding our loan origination capabilities into sustainable industries.  We have seen a recovery in the purchased Commercial and Industrial ("C&I") credit market and decided to sell a significant amount of that portfolio and have commitments to reduce that portfolio by approximately $127 million in the second quarter of 2019."

Results of Operations, Quarter Ended March 31, 2019

Net income for the first quarter of 2019 was $10.8 million, or $0.33 per diluted share, compared to $16.0 million, or $0.49 per diluted share, for the fourth quarter of 2018 and a net income of $7.7 million, or $0.27 per diluted share, for the first quarter of 2018.  The $3.2 million increase in net income for the first quarter of 2019, compared to the first quarter of 2018, was primarily due to an $8.0 million increase in net interest income, partially offset by a $2.7 million increase in non-interest expense, a $1.3 million increase in our provision for loan losses, and a $1.2 million increase in our provision for income taxes.

Core earnings (non-GAAP) for the first quarter of 2019 were $10.7 million, or $0.33 per diluted share, compared to $9.7 million or $0.30 per diluted share, for the fourth quarter of 2018 and $7.9 million, or $0.28 per diluted share, for the first quarter of 2018.  Core earnings for the fourth quarter of 2018 excluded $1.6 million of expense related to the NRB acquisition, a deferred tax asset realization of approximately $7.6 million, and other adjustments including the tax effect of such adjustments.

Net interest income was $40.8 million for the first quarter of 2019, compared to $40.2 million for the fourth quarter of 2018 and $32.8 million for the first quarter of 2018.  The year-over-year increase was primarily attributable to an increase in average net loans of $375.3 million, an increase in the yield on average loans of 29 basis points, an increase in average securities of $275.6 million and an increase in the yield on average securities and FHLB stock of 54 basis points.  These increases were partially offset by an increase in average interest bearing deposits of $441.8 million, an increase in the rate paid on interest bearing deposits of seven basis points, and an increase in the rate paid on FHLB borrowings of 101 basis points.

Net interest margin was 3.65% for the first quarter of 2019, an increase of eight basis points from 3.57% in the fourth quarter of 2018 and an increase of 22 basis points from 3.43% in the first quarter of 2018.  The net interest margin in the fourth quarter of 2018 was also impacted by a one-time adjustment to write-off $0.8 million of accrued interest receivable from the fourth quarter of 2017.  Without this adjustment, our net interest margin increased by one basis point from the fourth quarter of 2018.

Provisions for loan losses totaled an expense of $2.2 million in the first quarter of 2019 compared to $0.9 million in the fourth quarter of 2018 and $0.9 million for the first quarter of 2018.  The provision expense in the first quarter of 2019 was primarily driven by an increase in our allowance for loan losses on two leveraged loans and increasing historical loss factors related to the charge-off activity.  This increase in provision was partially offset by a release of an off-balance sheet provision of $0.6 million, which is reported through non-interest expense.

Non-interest income was $7.4 million in the first quarter of 2019 compared to $7.6 million in the fourth quarter of 2018, and $7.0 million in the first quarter of 2018. The $0.4 million, or 5.7%, increase in the first quarter of 2019, compared to the like period in 2018, was primarily due to higher gains on the sale of investment securities of $0.3 million in the first quarter of 2019 compared to a loss of $0.1 million in the first quarter of 2018 and modest increases in Trust Department fees, service charges on deposit accounts, and other income.  These increases were partially offset by higher losses on other real estate owned resulting from the liquidation of residential real estate acquired as the result of foreclosure on delinquent residential mortgages.

Non-interest expense for the first quarter of 2019 was $31.4 million, a decrease of $3.6 million from $35.0 million in the fourth quarter of 2018, and an increase of $2.7 million from $28.8 million in the first quarter of 2018.  The increase compared to the first quarter of 2018 was primarily due to a $2.1 million increase in compensation and employee benefits, a $0.4 million increase in data processing, a $0.4 million expense from the addition of amortization of the core deposit intangible from the NRB acquisition, partially offset by a $0.2 million reduction in other expenses driven primarily by the release of $0.6 million in off-balance sheet provision in the first quarter of 2019.

We had a provision for income tax expense of $3.7 million for the first quarter of 2019, compared to a credit of $4.1 million for fourth quarter of 2018 and provision of $2.5 million for the first quarter of 2018.  Our effective tax rate for the first quarter of 2019 was 25.7%, compared to 24.7% for the first quarter of 2018.

Financial Condition

Total assets were $4.9 billion at March 31, 2019, compared to $4.7 billion at December 31, 2018. The increase of $229.0 million was driven primarily by a $72.7 million increase in investment securities, a $51.3 million increase in cash and cash equivalents, a $56.4 million increase in loans receivable, net and the addition of a $53.3 million "Right of use" asset as the result of adopting ASC 842 – Leases in the first quarter of 2019.

Total loans at March 31, 2019 were $3.3 billion, an increase of $56.4 million, or 7.0% annualized, compared to December 31, 2018, and an increase of $385.1 million, or 13.4%, as compared to $2.9 billion as of March 31, 2018.  Loan growth in the first quarter of 2019 was primarily driven by a $93.3 million increase in residential first liens and property assessed clean energy ("PACE") loans and offset by a strategic reduction in indirect C&I loans of $29.3 million, and a $12.2 million reduction in commercial real estate loans.

Deposits at March 31, 2019 were $4.1 billion, an increase of $1.8 million, or 0.2% annualized, as compared to $4.1 billion as of December 31, 2018, and an increase of $771.5 million, or 23.1%, compared to $3.3 billion as of March 31, 2018. December 31, 2018 deposits included $326.7 million of short term deposits that exited the bank on January 2, 2019, resulting in beginning year 2019 deposits of $3.8 billion.  On an adjusted basis, excluding these short-term deposits, deposits increased $328.5 million or 34.8% annualized for the quarter.  Deposits held by politically-active customers, such as campaigns, PACs and state and national party committees were $271.0 million as of March 31, 2019, an increase of $89.0 million compared to $181.9 million as of December 31, 2018, and a decrease of $50.4 million compared to $321.4 million as of March 31, 2018.  Noninterest-bearing deposits represented 40.8% of average deposits and 41.6% of ending deposits for the three months ended March 31, 2019, contributing to an average cost of deposits of 0.31% in the first quarter of 2019, a four basis point increase from the linked quarter.

Nonperforming assets totaled $56.6 million, or 1.15% of period end total assets at March 31, 2019, a decrease of $2.7 million, compared with $59.3 million, or 1.27% of period end total assets at December 31, 2018.  The decrease in nonperforming assets at March 31, 2019 compared to the year-ended December 31, 2018 was primarily driven by an $8.4 million charge-off related to one C&I loan partially offset by an increase of $7.2 million in loans 90 days past due and accruing related to delays in renewing loans from one borrower.

The allowance for loan losses decreased $5.8 million to $31.4 million at March 31, 2019 from $37.2 million at December 31, 2018, primarily due to the charge-off of one C&I loan that had a specific reserve of $8.1 million in the first quarter of 2019, partially offset by increases on the allowance for classified and criticized C&I loans.  At March 31, 2019, we had $48.1 million of impaired loans for which a specific allowance of $1.5 million was made, compared to $58.3 million of impaired loans at December 31, 2018 for which a specific allowance of $9.6 million was made. The ratio of allowance to total loans was 0.95% at March 31, 2019 and 1.15% at December 31, 2018.

Capital

As of March 31, 2019, our Tier 1 Leverage Capital Ratio was 8.90%, Common Equity Tier 1 Capital Ratio was 13.31%, and Total Risk-Based Capital Ratio was 14.33%, compared to 8.88%, 13.22%, and 14.46%, respectively, as of December 31, 2018. As of  March 31, 2018, our Tier 1 Leverage, Common Equity Tier 1, and Total Risk-Based capital ratios were 8.60%, 11.36%, and 12.83%, respectively.  Stockholders' equity at March 31, 2019 was $455.5 million, compared to $439.4 million at December 31, 2018. 

Our tangible book value per share was $13.68 as of March 31, 2019 compared to $13.16 as of December 31, 2018 and $12.11 as of March 31, 2018. 

Conference Call

As previously announced, Amalgamated Bank will host a conference call to discuss its first quarter 2019 results today, April 30, 2019 at 10:00am (Eastern Time). The conference call can be accessed by dialing 1-877-407-9716 (domestic) or 1-201-493-6779 (international) and asking for the Amalgamated Bank First Quarter 2019 Earnings Call. A telephonic replay will be available approximately three 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 13689479. The telephonic replay will be available until 11:59 pm (Eastern Time) on May 7, 2019.

Interested investors and other parties may also listen to a simultaneous webcast of the conference call by logging onto the investor relations section of our website at http://ir.amalgamatedbank.com/. The online replay will remain available for a limited time beginning immediately following the call.

The presentation materials for the call can be accessed on the investor relations section of our website at http://ir.amalgamatedbank.com/.

About Amalgamated Bank 

Amalgamated Bank is a New York-based full-service commercial bank and a chartered trust company with a combined network of 14 branches in New York City, Washington D.C., and San Francisco, and a presence in Pasadena, CA and Boulder, CO. Amalgamated was formed in 1923 as Amalgamated Bank of New York by the Amalgamated Clothing Workers of America, one of the country's oldest labor unions. Amalgamated provides commercial banking and trust services nationally and offers a full range of products and services to both commercial and retail customers. Amalgamated is a proud member of the Global Alliance for Banking on Values and is a certified B Corporation®. As of March 31, 2019, our total assets were $4.9 billion, total net loans were $3.3 billion, and total deposits were $4.1 billion. Additionally, as of March 31, 2019, the trust business held $30.1 billion in assets under custody and $11.8 billion in assets under management.

Non-GAAP Financial Measures

This release contains certain non-GAAP financial measures including, without limitation, "Core operating revenue," "Core non-interest expense," "Core earnings," "Tangible common equity," "Tangible book value," "Core return on average assets," "Core return on average tangible common equity," and "Core efficiency ratio."

Our management utilizes this information to compare our operating performance for 2019 versus certain periods in 2018 and to internally prepared projections.  We believe these non-GAAP financial measures facilitate making period-to-period comparisons and are meaningful indications of our operating performance.  In addition, because intangible assets such as goodwill and other discrete items unrelated to our core business that are excluded vary extensively from company to company, we believe that the presentation of this information allows investors to more easily compare our results to those of other companies. 

The presentation of non-GAAP financial information, however, is not intended to be considered in isolation or as a substitute for GAAP financial measures.  We strongly encourage readers to review the GAAP financial measures included in this release and not to place undue reliance upon any single financial measure. In addition, because non-GAAP financial measures are not standardized, it may not be possible to compare the non-GAAP financial measures presented in this release with other companies' non-GAAP financial measures having the same or similar names. Reconciliations of non-GAAP financial disclosures to 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 non-interest income excluding gains and losses on sales of securities and excluding other than temporary impairment charges ("OTTI").  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 bank acquisitions, our initial public offering and follow on costs, or restructuring/severance costs. We believe the most directly comparable GAAP financial measure is total non-interest expense. 
             
"Core earnings" is defined as net income after tax excluding gains and losses on sales of securities and excluding OTTI,  costs related to bank acquisitions, initial public offering and follow on costs, restructuring/severance, taxes on notable pre-tax items, deferred tax asset realization, and changes in tax laws. We believe the most directly comparable GAAP financial measure is net income.
             
"Tangible common equity" and "Tangible book value" and 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 earnings" 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 earnings" 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.

Forward Looking Statements

This press release may contain statements that are not historical in nature that 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 by forward-looking language such as  "may," "will," "anticipate," "should," "would," "believe," "contemplate," "expect," "estimate," "continue" and "intend," as well as other similar words and expressions of the future, and include, without limitation, our intentions to sell a portion of our indirect C&I portfolio. 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 risk associated with the sale of our C&I portfolio that may result in that sale failing to close. Additional factors which could affect any forward looking statements can be found in Amalgamated's Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K filed with the FDIC and available on the FDIC's website at https://efr.fdic.gov/fcxweb/efr/index.html.  Amalgamated Bank disclaims 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.

Media Contact:
Kaye Verville
The Levinson Group
kaye@mollylevinson.com
202-244-1785

Investor Contact:
Jamie Lillis
Solebury Trout
shareholderrelations@amalgamatedbank.com
800-895-4172


Consolidated Statements of Income (Unaudited)
(Dollars in thousands, except for per share amount)

  Three Months Ended
 
     
  March 31,
    December 31,
    March 31,
 
  2019
    2018
    2018
 
                 
           
INTEREST AND DIVIDEND INCOME          
Loans $ 35,296     $ 34,620     $ 29,173  
Securities   9,875       9,251       6,243  
Federal Home Loan Bank of New York stock   310       239       391  
Interest-bearing deposits in banks     293         350         436  
                       
           
Total interest and dividend income     45,774         44,460         36,243  
                       
           
INTEREST EXPENSE          
Deposits   2,946       2,713       2,089  
Borrowed funds     2,055         1,542         1,353  
                       
           
Total interest expense     5,001         4,255         3,442  
                       
           
NET INTEREST INCOME   40,773       40,205       32,801  
Provision for (recovery of) loan losses     2,186         864         851  
                       
           
Net interest income after provision for loan losses   38,587       39,341       31,950  
           
NON-INTEREST INCOME          
Trust Department fees   4,721       4,807       4,649  
Service charges on deposit accounts   1,871       2,187       1,779  
Bank-owned life insurance   420       430       404  
Gain (loss) on sale of investment securities available for sale, net   292       (139 )     (101 )
Gain (loss) on other real estate owned, net   (249 )     19       (27 )
Other     362         251         311  
                       
           
Total non-interest income     7,417         7,555         7,015  
                       
           
NON-INTEREST EXPENSE          
Compensation and employee benefits, net   17,430       18,166       15,376  
Occupancy and depreciation   4,271       4,247       4,002  
Professional fees   3,165       2,825       3,193  
FDIC deposit insurance   491       406       554  
Data processing   2,749       3,986       2,336  
Office maintenance and depreciation   887       974       947  
Amortization of intangible assets   389       389       -  
Advertising and promotion   622       819       646  
Other     1,444         3,213         1,734  
                       
           
Total non-interest expense     31,448         35,025         28,788  
                       
           
Income before income taxes   14,556       11,871       10,177  
Income tax expense (benefit)     3,743         (4,113 )       2,516  
                       
           
Net income   10,813       15,984       7,661  
           
Net income attributable to noncontrolling interests     -          -          -   
                       
                       
                       
                       
           
Net income attributable to Amalgamated Bank and subsidiaries $   10,813     $   15,984     $   7,661  
                       
                       
                       
                       
           
Earnings per common share - basic (1) $   0.34     $   0.50     $   0.27  
                       
                       
                       
                       
           
Earnings per common share - diluted (1) $   0.33     $   0.49     $   0.27  
                       
                       
                       
                       
           
(1) effected for stock split that occurred on July 27, 2018          
           


Consolidated Statements of Financial Condition (Unaudited)
(Dollars in thousands)

       
  March 31,
  December 31,
  2019   2018
           
Assets (Unaudited)    
Cash and due from banks $ 6,691     $ 10,510  
Interest-bearing deposits in banks   125,463       70,335  
Total cash and cash equivalents   132,154       80,845  
Securities:      
Available for sale, at fair value (amortized cost of $1,246,843 and $1,188,710, respectively)   1,242,721       1,175,170  
Held-to-maturity (fair value of $9,481 and $4,105, respectively)   9,317       4,081  
       
Loans receivable, net of deferred loan origination costs (fees)   3,298,407       3,247,831  
Allowance for loan losses   (31,392 )     (37,195 )
Loans receivable, net   3,267,015       3,210,636  
       
Accrued interest and dividends receivable   14,872       14,387  
Premises and equipment, net   20,743       21,654  
Bank-owned life insurance   79,485       79,149  
Right-of-use lease asset   53,306       -  
Deferred tax asset   35,017       39,697  
Goodwill and other intangible assets   20,650       21,039  
Other assets   39,199       38,831  
Total assets $ 4,914,479     $ 4,685,489  
Liabilities      
Deposits $ 4,107,075     $ 4,105,306  
Borrowed funds   253,775       92,875  
Operating leases   68,404       -  
Other liabilities   29,746       47,937  
Total liabilities   4,459,000       4,246,118  
       
Commitments and contingencies   -       -  
       
Stockholders' equity      
Common stock, par value $.01 per share (70,000,000 shares authorized; 31,771,585      
shares issued and outstanding)   318       318  
Additional paid-in capital   309,033       308,678  
Retained earnings   151,138       142,231  
Accumulated other comprehensive loss, net of income taxes   (5,144 )     (11,990 )
Total Amalgamated Bank stockholders' equity   455,345       439,237  
Noncontrolling interests   134       134  
Total stockholders' equity   455,479       439,371  
Total liabilities and stockholders' equity $ 4,914,479     $ 4,685,489  
       


Select Financial Data

  As of and for the Three
  Months Ended
  March 31,   December 31, March 31,
  2019   2018 2018
Selected Financial Ratios and Other Data (1)        
Earnings per share        
Basic $ 0.34   $ 0.50 $ 0.27
Diluted   0.33     0.49   0.27
Core Earnings per share (non-GAAP)        
Basic $ 0.34   $ 0.30 $ 0.28
Diluted   0.33     0.30   0.28
Book value per common share   14.33     13.82   12.35
(excluding minority interest)        
Tangible book value per share (non-GAAP)   13.68     13.16   12.11
Common shares outstanding   31,771,585     31,771,585   28,060,984
Weighted average common shares   31,771,585     31,771,585   28,060,984
outstanding, basic        
Weighted average common shares   32,321,585     32,460,024   28,060,984
outstanding, diluted        
         
(1) Effected for stock split that occurred on July 27, 2018        
     


Select Financial Data

    As of and for the Three
    Months Ended
    March 31,     December 31,     March 31,  
    2019     2018     2018  
             
Selected Performance Metrics:            
Return on average assets   0.92%     1.35%     0.77%  
Core return on average assets (non-GAAP)   0.90%     0.82%     0.79%  
Return on average equity   9.82%     14.88%     8.96%  
Core return on average tangible common equity (non-GAAP)   10.18%     9.50%     9.46%  
Loan yield   4.44%     4.32%     4.15%  
Securities yield   3.37%     3.14%     2.83%  
Deposit cost   0.31%     0.27%     0.26%  
Net interest margin   3.65%     3.57%     3.43%  
Efficiency ratio   65.26%     73.33%     71.67%  
Core efficiency ratio (non-GAAP)   65.41%     69.44%     71.48%  
             
Asset Quality Ratios:            
Nonaccrual loans to total loans   0.45%     0.74%     0.71%  
Nonperforming assets to total assets   1.15%     1.27%     1.35%  
Allowance for loan losses to nonaccrual loans   212%     156%     180%  
Allowance for loan losses to total loans   0.95%     1.15%     1.26%  
Net charge-offs (recoveries) to average loans   1.00%     0.01%     (0.02%)  
             
Capital Ratios:            
Tier 1 leverage capital ratio   8.90%     8.88%     8.60%  
Tier 1 risk-based capital ratio   13.31%     13.22%     11.58%  
Total risk-based capital ratio   14.33%     14.46%     12.83%  
Common equity tier 1 capital ratio   13.31%     13.22%     11.36%  
             


Loan Portfolio Composition

(In thousands)   At March 31, 2019   At December 31, 2018   At March 31, 2018  
  Amount   % of total loans   Amount   % of total loans   Amount   % of total loans  
Commercial portfolio:                  
Commercial and industrial   $ 527,200     16.0 %   $ 556,537     17.2 %   $ 666,827     22.9 %  
Multifamily mortgages     921,588     28.0 %     916,337     28.3 %     892,773     30.6 %  
Commercial real estate mortgages     428,534     13.0 %     440,704     13.6 %     338,064     11.6 %  
Construction and land development mortgages       45,734     1.4 %       46,178     1.4 %       11,582     0.4 %  
Total commercial portfolio     1,923,056     58.4 %     1,959,756     60.5 %     1,909,246     65.5 %  
       
Retail portfolio:              
Residential 1-4 family (1st mortgage)     1,176,551     35.8 %     1,083,204     33.4 %     890,027     30.5 %  
Residential 1-4 family (2nd mortgage)     26,906     0.8 %     27,206     0.8 %     30,360     1.0 %  
Consumer and other       164,412     5.0 %       171,184     5.3 %       88,040     3.0 %  
Total retail       1,367,869     41.6 %       1,281,594     39.5 %       1,008,427     34.5 %  
Total loans     3,290,925     100.0 %     3,241,350     100.0 %     2,917,673     100.0 %  
   
Net deferred loan origination fees (costs)     7,482           6,481           1,618        
Allowance for loan losses       (31,392 )           (37,195 )           (37,382 )      
Total loans, net   $   3,267,015         $   3,210,636         $   2,881,909        
               


Net Interest Income Analysis

    Three Months Ended   Three Months Ended   Three Months Ended
    March 31, 2019   December 31, 2018   March 31, 2018
(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   $ 73,296   $ 293   1.62 %   $ 85,789   $ 350   1.62 %   $ 75,078   $ 436   2.35 %
Securities and FHLB stock     1,225,700     10,185   3.37 %     1,198,477     9,490   3.14 %     950,143     6,633   2.83 %
Loans held for sale     2,818     -   -       -     -   -       -     -   -  
Total loans, net (1)       3,224,604       35,296   4.44 %       3,180,168       34,620   4.32 %       2,849,310       29,174   4.15 %
Total interest earning assets     4,526,418     45,774   4.10 %     4,464,434     44,460   3.95 %     3,874,531     36,243   3.79 %
Non-interest earning assets:                                    
Cash and due from banks     9,988             12,480             6,906        
Other assets       251,468               203,321               173,339        
Total assets   $   4,787,874           $   4,680,235           $   4,054,776        
                                     
Interest bearing liabilities:                                    
Savings, NOW and money market deposits     1,877,349   $ 1,867   0.40 %     1,839,662   $ 1,731   0.37 %     1,489,690   $ 1,301   0.35 %
Time deposits       440,428       1,079   0.99 %       444,131       982   0.88 %       386,256       788   0.83 %
Total deposits     2,317,777     2,946   0.52 %     2,283,793     2,713   0.47 %     1,875,946     2,089   0.45 %
Federal Home Loan Bank advances     328,476     2,046   2.53 %     258,505     1,542   2.37 %     360,101     1,353   1.52 %
Other Borrowings       1,333       9   2.64 %       -        -    0.00 %       -        -    0.00 %
Total interest bearing liabilities     2,647,586     5,001   0.77 %     2,542,298     4,255   0.66 %     2,236,047     3,442   0.62 %
Non interest bearing liabilities:                                    
Demand and transaction deposits     1,598,637             1,669,670             1,423,451        
Other liabilities       95,187               41,976               48,352        
Total liabilities     4,341,410             4,253,944             3,707,850        
Stockholders' equity       446,464               426,291               346,926        
Total liabiliites and stockholders' equity   $   4,787,874           $   4,680,235           $   4,054,776        
                                     
Net interest income / interest rate spread           40,773   3.34 %           40,205   3.29 %           32,801   3.17 %
Net interest earning assets / net interest margin   $   1,878,832       3.65 %   $   1,922,136       3.57 %   $   1,638,484       3.43 %
                                     
(1) Amounts are net of deferred origination costs / (fees) and the allowance for loan losses                            
                                     


Deposit Portfolio Composition

    Three Months Ended
(in thousands)   March 31, 2019
    December 31, 2018
    March 31, 2018
                 
Non-interest bearing demand deposit accounts   $ 1,709,921     $ 1,565,503     $ 1,455,428
NOW accounts     223,195       230,859       204,936
Savings accounts     342,713       335,254       309,751
Money market deposit accounts     1,377,130       1,548,699       984,092
Time deposits     439,135       424,991       381,358
Brokered CD     14,981       -       -
    $ 4,107,075     $ 4,105,306     $ 3,335,565
                 


    Three Months  Ended 
(in thousands)   March 31, 2019   December 31, 2018   March 31, 2018
    Average
Amount
  Weighted
Average Rate
  Average
Amount
  Weighted
Average Rate
  Average
Amount
  Weighted
Average Rate
                         
Non-interest bearing demand deposit accounts   $ 1,598,637     0.00 %   $ 1,669,670     0.00 %   $ 1,423,451   0.00 %
NOW accounts     224,686     0.45 %     206,107     0.45 %     206,625   0.29 %
Savings accounts     337,477     0.21 %     329,192     0.19 %     305,192   0.14 %
Money market deposit accounts     1,315,186     0.44 %     1,304,363     0.41 %     977,874   0.43 %
Time deposits     432,771     0.96 %     444,131     0.88 %     386,256   0.83 %
Brokered CD     7,657     2.93 %     -     -       -   -  
    $ 3,916,414     0.31 %   $ 3,953,463     0.27 %   $ 3,299,398   0.26 %
 


Asset Quality

  March 31,   December 31,   March 31,
(In thousands) 2019   2018   2018
Loans 90 days past due and accruing $ 7,157     $ -     $ 488  
Nonaccrual loans excluding held for sale loans and restructured loans   9,351       8,379       4,785  
Nonaccrual loans held for sale   -       -       635  
Restructured loans - nonaccrual   5,455       15,482       15,962  
Restructured loans - accruing   33,441       34,457       32,891  
Other real estate owned   1,057       844       1,098  
Impaired securities     90         93         113  
Total nonperforming assets $ 56,551     $ 59,255     $ 55,972  
           
Nonaccrual loans:          
Commercial and industrial $ 3,734     $ 12,153     $ 12,408  
Multifamily   -       -       -  
Commercial real estate   4,019       4,112       -  
Construction and land development     -          -          -   
Total commercial portfolio     7,753         16,265         12,408  
           
Residential 1-4 family 1st mortgages   5,769       6,287       7,684  
Residential 1-4 family 2nd mortgages   1,078       1,299       627  
Consumer and other     206         10         28  
Total retail portfolio     7,053         7,596         8,339  
Total nonaccrual loans $ 14,806     $ 23,861     $ 20,747  
           
           
Nonperforming assets to total assets   1.15 %     1.27 %     1.35 %
Nonaccrual assets to total assets   0.32 %     0.53 %     0.54 %
Nonaccrual loans to total loans   0.45 %     0.74 %     0.71 %
Allowance for loan losses to nonaccrual loans   212 %     156 %     180 %
           
Troubled debt restructurings:          
TDRs included in nonaccrual loans $ 5,455     $ 15,482     $ 15,962  
TDRs in compliance with modified terms $ 33,441     $ 34,457     $ 32,891  
           


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.

    For the Three
    Months Ended
(in thousands)   March 31,   December 31, March 31,
      2019       2018     2018  
           
Core operating revenue          
Net interest income (GAAP)   $ 40,773     $ 40,205   $ 32,801  
Non interest income (GAAP)     7,417       7,555     7,015  
Less: Securities loss, net and OTTI     (293 )     129     103  
Core operating revenue (non-GAAP)   $ 47,897     $ 47,889   $ 39,919  
           
Core non-interest expenses          
Non-interest expense (GAAP)   $ 31,448     $ 35,025   $ 28,788  
Less: Acquisition cost(1)     -       (1,633 )   (275 )
Less: Initial public offering and follow on cost (2)     -       120     -  
Less: Severance (3)     (117 )     (257 )   23  
Core non-interest expense (non-GAAP)   $ 31,331     $ 33,255   $ 28,536  
           
Core Earnings           
Net Income  (GAAP)   $ 10,813     $ 15,984   $ 7,661  
Add: Securities loss, net and OTTI     (293 )     129     103  
Add: Acquisition cost(1)     -       1,633     275  
Add: Initial public offering and follow on cost (2)     -       (120 )   -  
Add: Severance (3)     117       257     (23 )
Less: Tax on notable items     45       (563 )   (88 )
Less: Deferred tax asset realization     -       (7,632 )   -  
Core earnings (non-GAAP)   $ 10,682     $ 9,688   $ 7,929  
           
Tangible common equity          
Stockholders Equity (GAAP)   $ 455,480     $ 439,371   $ 346,586  
Less: Minority Interest (GAAP)     (134 )     (134 )   (134 )
Less: Preferred Stock (GAAP)     -       -     (6,700 )
Less: Goodwill (GAAP)     (12,936 )     (12,936 )   -  
Less: Core deposit intangible (GAAP)     (7,713 )     (8,102 )   -  
Tangible common equity (non-GAAP)   $ 434,697     $ 418,199   $ 339,752  
           
Average tangible common equity          
Average Stockholders Equity (GAAP)   $ 446,464     $ 426,290   $ 346,927  
Less: Minority Interest (GAAP)     (134 )     (134 )   (134 )
Less: Preferred Stock (GAAP)     -       -     (6,700 )
Less: Goodwill (GAAP)     (12,936 )     (12,936 )   -  
Less: Core deposit intangible (GAAP)     (7,903 )     (8,291 )   -  
Average tangible common equity (non-GAAP)   $ 425,491     $ 404,929   $ 340,093  
           
Core return on average assets           
Core earnings (numerator) (non-GAAP)     10,682       9,688     7,929  
Divided: Total average assets (denominator) (GAAP)     4,787,874     $ 4,680,235     4,054,776  
Core return on average assets (non-GAAP)     0.90 %     0.82 %   0.79 %
           
Core return on average tangible common equity           
Core earnings (numerator) (non-GAAP)     10,682       9,688     7,929  
Divided: Total average tangible common equity (denominator) (non-GAAP)     425,491       404,929     340,093  
Core return on average tangible common equity (non-GAAP)     10.18 %     9.50 %   9.46 %
           
Core efficiency ratio          
Core non-interest expense (numerator) (non-GAAP)     31,331       33,255     28,536  
Core operating revenue (denominator) (non-GAAP)     47,897       47,889     39,919  
Core efficiency ratio (non-GAAP)     65.41 %     69.44 %   71.48 %
           
(1) Expense related to New Resource Bank acquisition          
(2) Costs related to first follow-on in November 2018          
(3) Salary and COBRA reimbursement expense for positions eliminated           

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