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Amalgamated Bank Reports Second Quarter 2019 Financial Results

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NEW YORK, July 29, 2019 (GLOBE NEWSWIRE) -- Amalgamated Bank (NASDAQ:AMAL) ("Amalgamated") today announced financial results for the second quarter ended June 30, 2019. 

Second Quarter 2019 Highlights

  • Net income for the quarter of $11.2 million, or $0.35 per diluted share, compared to $11.6 million, or $0.39 per diluted share, for the second quarter of 2018
  • Core earnings (non-GAAP) for the quarter of $11.6 million, or $0.36 per diluted share, compared to $11.8 million, or $0.40 per diluted share, for the second quarter of 2018
  • Deposit growth of $29.4 million, or 2.9% annualized, from $4.1 billion at March 31, 2019
  • Average deposit growth of $190.4 million during the second quarter, or 19.4% annualized, from an average balance of $4.0 billion in the first quarter of 2019
  • Loan growth of $23.9 million, or 2.9% annualized during the second quarter, net of $136.8 million strategic reduction of indirect C&I loans, as compared to March 31, 2019
  • Cost of deposits was 0.34%, or 0.31% excluding non-relationship brokered deposits, compared to 0.31% for the first quarter of 2019 and 0.24% for the second quarter of 2018
  • Net interest margin was 3.66%, compared to 3.65% for the first quarter of 2019 and 3.56% for the second quarter of 2018
  • Tier 1 Leverage, Common Equity Tier 1, and Total Risk-Based capital ratios were 9.04%, 13.57%, and 14.67%, respectively, at June 30, 2019

Keith Mestrich, President and Chief Executive Officer of Amalgamated Bank, commented, "Our second quarter results validate the successful execution of our strategy to grow our franchise while building on our reputation as ‘America's socially responsible bank.'  Signs of this can be seen in Amalgamated's deposit franchise which continues to offer a competitive advantage for the Bank, as we benefit from what is one of the lowest cost of funds in the industry.  The 2020 Presidential race and recent debates have provided an acceleration to the growth in our political deposit base with the addition of $148.5 million during the quarter.  We also made great strides this quarter reducing our indirect C&I portfolio which declined by $136.8 million as we took advantage of an attractive market this Spring to continue to de-risk our balance sheet.  Despite this deliberate run-off, we delivered 2.9% annualized loan growth driven by residential first lien and property assessed clean energy, ‘PACE', loans as we continue to gain traction in clean energy lending through our expansion into California last year."

Results of Operations, Quarter Ended June 30, 2019

Net income for the second quarter of 2019 was $11.2 million, or $0.35 per diluted share, compared to $10.8 million, or $0.33 per diluted share, for the first quarter of 2019 and $11.6 million, or $0.39 per diluted share, for the second quarter of 2018.  The $0.4 million decrease in net income for the second quarter of 2019, compared to the second quarter of 2018, was primarily due to a $4.9 million increase in provision for loan losses primarily due to an increase in allowance on criticized and classified loans in the indirect C&I portfolio compared to a release in 2018, and a $0.9 million increase in non-interest expense, partially offset by a $5.2 million increase in net interest income.

Core earnings (non-GAAP) for the second quarter of 2019 were $11.6 million, or $0.36 per diluted share, compared to $10.7 million, or $0.33 per diluted share, for the first quarter of 2019 and $11.8 million, or $0.40 per diluted share, for the second quarter of 2018.  Core earnings for the second quarter of 2019 exclude severance, loss on the sale of securities and the tax effect of such adjustments.

Net interest income was $41.9 million for the second quarter of 2019, compared to $40.8 million for the first quarter of 2019 and $36.7 million for the second quarter of 2018.  The year-over-year increase of $5.2 million, or 14.1%, was primarily attributable to an increase in average loans of $233.9 million, an increase in average securities of $242.3 million, an increase in the yield on average loans of nine basis points, and an increase in the yield on average securities and FHLB stock of 41 basis points. These increases were partially offset by an increase in average interest bearing deposits of $355.8 million, an increase in the average rate paid on interest bearing deposits of 15 basis points, and an increase in the rate paid on FHLB borrowings of 73 basis points. We also recognized $0.9 million of accretion income on acquired loans, adding eight basis points to our net interest margin in the second quarter of 2019.

Net interest margin was 3.66% for the second quarter of 2019, an increase of one basis point from 3.65% in the first quarter of 2019, and an increase of 10 basis points from 3.56% in the second quarter of 2018. 

Provisions for loan losses totaled an expense of $2.1 million in the second quarter of 2019 compared to $2.2 million in the first quarter of 2019 and a release of $2.8 million for the second quarter of 2018.  The provision expense in the second quarter of 2019 was primarily driven by the migration of an indirect C&I loan into the criticized and classified risk rating, an increase in qualitative factors related to multifamily loans due to recent regulatory changes, and other factors.  The provision release for the second quarter of 2018 was primarily due to the strategic reduction of the indirect C&I portfolio and a reduction in loss factors.

Non-interest income was $6.3 million in the second quarter of 2019 compared to $7.4 million in the first quarter of 2019, and $6.2 million in the second quarter of 2018.  The $1.1 million decrease in non-interest income in the second quarter of 2019 compared to the linked quarter was primarily due to a loss on the sale of securities compared to a gain on the sale of securities in the previous quarter.

Non-interest expense for the second quarter of 2019 was $31.0 million, a decrease of $0.4 million from $31.4 million in the first quarter of 2019, and an increase of $0.9 million from $30.1 million in the second quarter of 2018.

The second quarter of 2019 included a provision for income tax expense of $3.9, compared to a provision of $3.7 million for first quarter of 2019, and provision of $3.9 million for the second quarter of 2018.  Our effective tax rate was 25.8% for the three months ended June 30, 2019, compared to 25.3% and 25.7% for the same period in 2018 and the linked quarter respectively.

Total loans at June 30, 2019 were $3.3 billion, an increase of $23.9 million, or 2.9% annualized, compared to March 31, 2019, and an increase of $204.2 million, or 6.6%, as compared to $3.1 billion as of June 30, 2018.  Loan growth in the second quarter of 2019 was primarily driven by a $85.0 million increase in residential first lien and PACE loans and an increase of $24.9 million in commercial real estate loans, partially offset by $136.8 million strategic reduction in indirect C&I loans.

Deposits at June 30, 2019 were $4.1 billion, an increase of $29.4 million, or 2.9% annualized, as compared to $4.1 billion as of March 31, 2019, and an increase of $174.0 million, or 4.4%, compared to $4.0 billion as of June 30, 2018. Deposits held by politically-active customers, such as campaigns, PACs and state and national party committees were $419.4 million as of June 30, 2019, an increase of $148.5 million, compared to $271.0 million as of March 31, 2019, and an increase of $3.0 million compared to $416.4 million, as of June 30, 2018.  Noninterest-bearing deposits represented 42.9% of average deposits and 46.1% of ending deposits for the three months ended June 30, 2019.

Results of Operations, Six Months Ended June 30, 2019

Net income for the six months ended June 30, 2019 of $22.0 million, or $0.68 per diluted share, compared to $19.3 million, or $0.67 per diluted share, for same period in 2018.  The $2.7 million increase in net income for the six months ended June 30, 2019, compared to the same period in 2018, was primarily due to a $13.1 million increase in net interest income and a $0.5 million increase in non-interest income, partially offset by a $6.2 million increase in the provision for loan losses, a $3.5 million increase in non-interest expense, and a $1.2 million increase in income tax expense.

Core earnings (non-GAAP) for the six months ended June 30, 2019 were $22.3 million, or $0.69 per diluted share, compared to $19.7 million or $0.68 per diluted share, for the same period last year. Core earnings for the first six months of 2019 exclude severance, loss on the sale of securities, and the tax effect of such adjustments.

Net interest income was $82.6 million for the six months ended June 30, 2019, an increase of $13.1 million, or 18.9%, from the same period in 2018.  This increase was primarily attributable to an increase in average loans of $306.1 million, an increase in average securities of $258.8 million, an increase in the yield on average loans of 18 basis points, and an increase in the yield on average securities and FHLB stock of 47 basis points. These increases were partially offset by an increase in average interest bearing deposits of $398.6 million, an increase in the rate paid on interest bearing deposits of 11 basis points, and an increase in the rate paid on FHLB borrowings of 89 basis points.

We had income tax expense of $7.6 million for the six months ended June 30, 2019, compared to $6.5 million for the same period in 2018. The $1.2 million increase in income tax expense was primarily due to an increase in pre-tax earnings of $3.9 million in the six months ended June 30, 2019, compared to the same period in 2018. Our effective tax rate was 25.8% for the six months ended June 30, 2019, compared to 25.1% for the same period in 2018.

Financial Condition

Total assets were $4.9 billion at June 30, 2019, compared to $4.7 billion at December 31, 2018. The increase of $252.3 million was driven primarily by a $128.2 million increase in investments securities, an $80.3 million increase in loan receivables and the addition of a $53.3 million "Rights to use" asset as the result of adopting ASC 842 – leases in the first quarter of 2019.

Nonperforming assets totaled $73.9 million, or 1.50% of total assets at June 30, 2019, an increase of $17.4 million, compared with $56.6 million, or 1.15% of period end total assets at March 31, 2019.  The increase in nonperforming assets at June 30, 2019 compared to the quarter ended March 31, 2019 was primarily driven by an increase of $6.8 million in loans 90 days past due and accruing and the troubled-debt restructuring of one substandard loan of $10.8 million in the indirect C&I portfolio.

The allowance for loan losses increased $2.2 million to $33.6 million at June 30, 2019 from $31.4 million at March 31, 2019, primarily due to additional allowance on criticized and classified indirect C&I loans and an increase in qualitative loan factors related to multi-family loans.  At June 30, 2019, the Bank had $59.3 million of impaired loans for which a specific allowance of $3.9 million was made, compared to $48.1 million of impaired loans at March 31, 2019 for which a specific allowance of $1.5 million was made. The ratio of allowance to total loans was 1.01% at June 30, 2019, 0.95% at March 31, 2019 and 1.13% at June 30, 2018.

Capital

As of June 30, 2019, our Tier 1 Leverage Capital Ratio was 9.04%, Common Equity Tier 1 Capital Ratio was 13.57%, and Total Risk-Based Capital Ratio was 14.67%, compared to 8.90%, 13.31%, and 14.33%, respectively, as of March 31, 2019. As of  June 30, 2018, our Tier 1 Leverage, Common Equity Tier 1, and Total Risk-Based capital ratios were 8.59%, 12.46%, and 13.71%, respectively.  Stockholders' equity at June 30, 2019 was $474.9 million, compared to $455.5 million at March 31, 2019. 

Tangible book value (or tangible common equity) per share was $14.25 as of June 30, 2019 compared to $13.68 as of March 31, 2019 and $12.06 as of June 30, 2018. 

Conference Call

As previously announced, Amalgamated Bank will host a conference call to discuss its second quarter 2019 results today, July 29, 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 Second Quarter 2019 Earnings Call. A telephonic replay will be available approximately two hours after the conclusion of the call and can be accessed by dialing 1-844-512-2921, or for international callers 1-412-317-6671 and providing the access code 13692278. The telephonic replay will be available until 11:59 pm (Eastern Time) on August 5, 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 June 30, 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 June 30, 2019, the trust business held $31.0 billion in assets under custody and $12.4 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 what we believe to be the most directly comparable GAAP measures are set forth in the final pages of this release and also may be viewed on our website, amalgamatedbank.com.

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

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

 

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

  Three Months Ended   Six Months Ended
  June 30,   March 31,   June 30,   June 30,   June 30,
    2019       2019       2018       2019       2018  
                   
INTEREST AND DIVIDEND INCOME                  
  Loans $   35,559     $   35,296     $   32,322     $   70,855     $   61,496  
  Securities     10,524         9,875         7,374         20,398         13,618  
  Federal Home Loan Bank of New York stock     191         310         248         501         639  
  Interest-bearing deposits in banks     254         293         216         548         651  
  Total interest and dividend income     46,528         45,774         40,160         92,302         76,404  
INTEREST EXPENSE                  
  Deposits     3,499         2,946         2,212         6,444         4,301  
  Borrowed funds     1,173         2,055         1,253         3,229         2,606  
  Total interest expense     4,672         5,001         3,465         9,673         6,907  
NET INTEREST INCOME     41,856         40,773         36,695         82,629         69,497  
  Provision for (recovery of) loan losses     2,127         2,186         (2,766 )       4,312         (1,916 )
  Net interest income after provision for loan losses     39,729         38,587         39,461         78,317         71,413  
NON-INTEREST INCOME                  
  Trust Department fees      4,508         4,721         4,636         9,229         9,285  
  Service charges on deposit accounts      2,068         1,871         1,991         3,939         3,770  
  Bank-owned life insurance      408         420         399         828         803  
  Gain (loss) on sale of investment securities available for sale, net     (377 )       292         (9 )       (85 )       (110 )
  Gain (loss) on other real estate owned, net     (315 )       (249 )       (486 )       (564 )       (513 )
  Other     57         362         (327 )       419         (18 )
  Total non-interest income     6,349         7,417         6,204         13,766         13,217  
NON-INTEREST EXPENSE                  
  Compensation and employee benefits, net     16,992         17,430         16,839         34,422         32,215  
  Occupancy and depreciation     4,145         4,271         4,060         8,417         8,062  
  Professional fees     2,401         3,165         2,427         5,566         5,620  
  Data processing     2,729         2,749         2,462         5,478         4,798  
  Office maintenance and depreciation     830         887         927         1,716         1,873  
  Amortization of intangible assets     298         389         174         687         174  
  Advertising and promotion     692         622         871         1,313         1,517  
  Other     2,915         1,935         2,378         4,851         4,667  
  Total non-interest expense     31,002         31,448         30,138         62,450         58,926  
Income before income taxes     15,076         14,556         15,527         29,633         25,704  
  Income tax expense (benefit)     3,891         3,743         3,935         7,634         6,451  
  Net income     11,185         10,813         11,592         21,999         19,253  
Net income attributable to noncontrolling interests     -         -         -         -         -  
Net income attributable to Amalgamated Bank and subsidiaries $   11,185     $   10,813     $   11,592     $   21,999     $   19,253  
Earnings per common share - basic (1) $   0.35     $   0.34     $   0.39     $   0.69     $   0.67  
Earnings per common share - diluted (1) $   0.35     $   0.33     $   0.39     $   0.68     $   0.67  
                   
(1) effected for stock split that occurred on July 27, 2018                  
                   

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

       
  June 30,   December 31,
    2019       2018  
Assets (Unaudited)    
Cash and due from banks $   7,587     $   10,510  
Interest-bearing deposits in banks     98,301         70,335  
  Total cash and cash equivalents     105,888         80,845  
Securities:      
  Available for sale, at fair value (amortized cost of $1,279,722 and $1,246,844, respectively)     1,288,072         1,175,170  
  Held-to-maturity (fair value of $19,808 and $4,105, respectively)     19,336         4,081  
       
Loans receivable, net of deferred loan origination costs (fees)     3,324,580         3,247,831  
  Allowance for loan losses     (33,630 )       (37,195 )
Loans receivable, net     3,290,950         3,210,636  
       
Accrued interest and dividends receivable     16,249         14,387  
Premises and equipment, net     19,870         21,654  
Bank-owned life insurance     79,894         79,149  
Right-of-use lease asset     51,754         -  
Deferred tax asset     33,316         39,697  
Goodwill and other intangible assets     20,352         21,039  
Other assets     12,145         38,831  
  Total assets $   4,937,826     $   4,685,489  
Liabilities      
Deposits $   4,136,462     $   4,105,306  
Borrowed funds     227,675         92,875  
Operating leases     66,639         -  
Other liabilities     32,106         47,937  
  Total liabilities     4,462,882         4,246,118  
       
Commitments and contingencies     -         -  
       
Stockholders' equity      
  Common stock, par value $.01 per share (70,000,000 shares authorized; 31,886,669 and       
  31,771,585 shares issued and outstanding, respectively)     318         318  
  Additional paid-in capital     310,186         308,678  
  Retained earnings     160,412         142,231  
  Accumulated other comprehensive income (loss), net of income taxes     3,894         (11,990 )
  Total Amalgamated Bank stockholders' equity     474,810         439,237  
  Noncontrolling interests     134         134  
  Total stockholders' equity     474,944         439,371  
  Total liabilities and stockholders' equity $   4,937,826     $   4,685,489  
       

Select Financial Data

    As of and for the Three Months Ended   As of and for the Six Months
    June 30,   March 31,   June 30,   Ended June 30,
    2019   2019   2018   2019   2018
Selected Financial Ratios and Other Data (1)                    
Earnings per share                     
  Basic   $   0.35   $   0.34   $   0.39   $   0.69   $   0.67
  Diluted        0.35       0.33       0.39       0.68       0.67
Core Earnings per share (non-GAAP)                    
  Basic   $   0.36   $   0.34   $   0.40   $   0.70   $   0.68
  Diluted        0.36       0.33       0.40       0.69       0.68
Book value per common share        14.89       14.33       12.78       14.89       12.78
(excluding minority interest)                    
Tangible book value per share (non-GAAP)       14.25       13.68       12.06       14.25       12.06
Common shares outstanding       31,886,669       31,771,585       31,771,585       31,886,669       31,771,585
Weighted average common shares        31,824,930       31,771,585       29,814,353       31,798,405       28,942,520
  outstanding, basic                    
Weighted average common shares       32,237,116       32,321,585       29,814,353       32,279,342       28,942,520
  outstanding, diluted                    
                     
(1) Effected for stock split that occurred on July 27, 2018                    

Select Financial Data

                   
  As of and for the Three   As of and for the Six
  Months Ended   Months Ended
  June 30,   March 31,   June 30,   June 30,
  2019     2019     2018     2019     2018  
                   
Selected Performance Metrics:                  
Return on average assets 0.92 %   0.92 %   1.07 %   0.92 %   0.93 %
Core return on average assets (non-GAAP) 0.96 %   0.90 %   1.10 %   0.93 %   0.95 %
Return on average equity 9.65 %   9.82 %   12.31 %   9.73 %   10.71 %
Core return on average tangible common equity (non-GAAP) 10.45 %   10.18 %   13.08 %   10.32 %   11.32 %
Loan yield  4.42 %   4.44 %   4.33 %   4.43 %   4.25 %
Securities yield  3.34 %   3.37 %   2.93 %   3.35 %   2.88 %
Deposit cost  0.34 %   0.31 %   0.24 %   0.32 %   0.25 %
Net interest margin 3.66 %   3.65 %   3.56 %   3.66 %   3.50 %
Efficiency ratio 64.31 %   65.26 %   70.25 %   64.79 %   71.24 %
Core efficiency ratio (non-GAAP) 63.50 %   65.41 %   69.51 %   64.45 %   70.52 %
                   
Asset Quality Ratios:                  
Nonaccrual loans to total loans 0.49 %   0.45 %   0.63 %   0.49 %   0.63 %
Nonperforming assets to total assets 1.50 %   1.15 %   1.13 %   1.50 %   1.13 %
Allowance for loan losses to nonaccrual loans 209 %   212 %   179 %   209 %   179 %
Allowance for loan losses to total loans 1.01 %   0.95 %   1.13 %   1.01 %   1.13 %
Net charge-offs (recoveries) to average loans (0.01 %)   1.00 %   (0.02 %)   0.49 %   (0.04 %)
                   
Capital Ratios:                  
Tier 1 leverage capital ratio 9.04 %   8.90 %   8.59 %   9.04 %   8.59 %
Tier 1 risk-based capital ratio 13.57 %   13.31 %   12.46 %   13.57 %   12.46 %
Total risk-based capital ratio 14.67 %   14.33 %   13.71 %   14.67 %   13.71 %
Common equity tier 1 capital ratio 13.57 %   13.31 %   12.46 %   13.57 %   12.46 %
                   

Loan Portfolio Composition

(In thousands) At June 30, 2019   At March 31, 2019   At June 30, 2018
  Amount   % of total loans   Amount   % of total loans   Amount   % of total loans
Commercial portfolio:                
Commercial and industrial $   424,319     12.8 %   $   527,200     16.0 %   $   627,113     20.1 %
Multifamily mortgages     925,747     27.9 %       921,588     28.0 %       925,483     29.7 %
Commercial real estate mortgages     453,393     13.7 %       428,534     13.0 %       436,669     14.0 %
Construction and land development mortgages     58,696     1.7 %       45,734     1.4 %       32,727     1.0 %
  Total commercial portfolio      1,862,155     56.1 %       1,923,056     58.4 %       2,021,992     64.8 %
       
Retail portfolio:            
Residential 1-4 family (1st mortgage)     1,261,488     38.0 %       1,176,551     35.8 %       958,145     30.7 %
Residential 1-4 family (2nd mortgage)     25,174     0.8 %       26,906     0.8 %       29,278     0.9 %
Consumer and other      168,201     5.1 %       164,412     5.0 %       110,008     3.6 %
  Total retail      1,454,863     43.9 %       1,367,869     41.6 %       1,097,431     35.2 %
  Total loans      3,317,018     100.0 %       3,290,925     100.0 %       3,119,423     100.0 %
   
Net deferred loan origination fees (costs)     7,562             7,482             2,641      
Allowance for loan losses      (33,630 )           (31,392 )           (35,353 )    
  Total loans, net  $   3,290,950         $   3,267,015         $   3,086,711      
             

Net Interest Income Analysis

    Three Months Ended   Three Months Ended   Three Months Ended
    June 30, 2019   March 31, 2019   June 30, 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   $   70,442   $   254   1.45 %   $   73,296   $   293   1.62 %   $   74,668   $   216   1.16 %
Securities and FHLB stock       1,287,520       10,715   3.34 %       1,225,700       10,185   3.37 %       1,045,196       7,622   2.93 %
Loans held for sale       -       -   0.00 %       2,818       -   0.00 %       28,042       -   0.00 %
Total loans, net (1)       3,225,129       35,559   4.42 %       3,224,604       35,296   4.44 %       2,991,273       32,322   4.33 %
  Total interest earning assets       4,583,091       46,528   4.07 %       4,526,418       45,774   4.10 %       4,139,179       40,160   3.89 %
  Non-interest earning assets:                                    
Cash and due from banks       6,838               9,988               13,825        
Other assets       264,046               251,468               180,418        
  Total assets   $   4,853,975           $   4,787,874           $   4,333,422        
                                     
  Interest bearing liabilities:                                    
Savings, NOW and money market deposits   $   1,857,715   $   1,962   0.42 %   $   1,877,349   $   1,867   0.40 %   $   1,587,825   $   1,386   0.35 %
Time deposits       486,652       1,537   1.27 %       440,428       1,079   0.99 %       400,778       826   0.83 %
  Total deposits       2,344,367       3,499   0.60 %       2,317,777       2,946   0.52 %       1,988,603       2,212   0.45 %
Federal Home Loan Bank advances       190,501       1,166   2.46 %       328,476       2,046   2.53 %       291,023       1,253   1.73 %
Other Borrowings       1,099       7   2.56 %       1,333       9   2.64 %       -       -   0.00 %
  Total borrowings       191,600       1,173   2.46 %       329,809       2,055   2.53 %       291,023       1,253   1.73 %
  Total interest bearing liabilities       2,535,967       4,672   0.74 %       2,647,586       5,001   0.77 %       2,279,626       3,465   0.61 %
  Non interest bearing liabilities:                                    
Demand and transaction deposits       1,762,426               1,598,637               1,636,294        
Other liabilities       90,680               95,187               39,647        
  Total liabilities       4,389,073               4,341,410               3,955,567        
  Stockholders' equity       464,902               446,464               377,855        
  Total liabiliites and stockholders' equity   $   4,853,975           $   4,787,874           $   4,333,422        
                                     
  Net interest income / interest rate spread       $   41,856   3.33 %       $   40,773   3.34 %       $   36,695   3.28 %
  Net interest earning assets / net interest margin   $   2,047,124       3.66 %   $   1,878,832       3.65 %   $   1,859,553       3.56 %
                                     
                                     
(1) Amounts are net of deferred origination costs / (fees) and the allowance for loan losses 
                                     

Net Interest Income Analysis

    Six Months Ended   Six Months Ended
    June 30, 2019   June 30, 2018
(In thousands)   Average
Balance
  Income /
Expense
  Yield /
Rate
  Average
Balance
  Income /
Expense
  Yield /
Rate
                         
  Interest earning assets:                        
Interest-bearing deposits in banks   $   71,861   $   548   1.54 %   $   74,872   $   651   1.75 %
Securities and FHLB stock       1,256,781       20,899   3.35 %       997,932       14,257   2.88 %
Loans held for sale       -       -   0.00 %       14,607       -   0.00 %
Total loans, net (1)       3,224,868       70,855   4.43 %       2,918,726       61,496   4.25 %
  Total interest earning assets       4,553,510       92,302   4.09 %       4,006,137       76,404   3.85 %
  Non-interest earning assets:                        
Cash and due from banks       8,404               10,385        
Other assets       259,194               178,347        
  Total assets   $   4,821,108           $   4,194,869        
                         
  Interest bearing liabilities:                        
Savings, NOW and money market deposits   $   1,867,478   $   3,829   0.41 %   $   1,539,029   $   2,687   0.35 %
Time deposits       463,668       2,615   1.14 %       393,557       1,614   0.83 %
  Total deposits       2,331,146       6,444   0.56 %       1,932,586       4,301   0.45 %
Federal Home Loan Bank advances       259,108       3,213   2.50 %       325,371       2,606   1.62 %
Other Borrowings       1,215       16   2.66 %       -       -   0.00 %
  Total borrowings       260,323       3,229   2.50 %       325,371       2,606   1.62 %
  Total interest bearing liabilities       2,591,469       9,673   0.75 %       2,257,957       6,907   0.62 %
  Non interest bearing liabilities:                        
Demand and transaction deposits       1,680,984               1,530,460        
Other liabilities       92,921               43,975        
  Total liabilities       4,365,374               3,832,392        
  Stockholders' equity       455,734               362,477        
  Total liabiliites and stockholders' equity   $   4,821,108           $   4,194,869        
                         
  Net interest income / interest rate spread       $   82,629   3.33 %       $   69,497   3.23 %
  Net interest earning assets / net interest margin   $   1,962,041       3.66 %   $   1,748,180       3.50 %
                         
(1) Amounts are net of deferred origination costs / (fees) and the allowance for loan losses 
                         

Deposit Portfolio Composition

  Three Months Ended
(in thousands) June 30, 2019   March 31, 2019   June 30, 2018
           
Non-interest bearing demand deposit accounts $   1,908,741   $   1,709,921   $   1,814,851
NOW accounts     216,834       223,195       189,266
Savings accounts     340,258       342,713       320,767
Money market deposit accounts     1,239,387       1,377,129       1,214,833
Time deposits     411,251       439,136       422,719
Brokered CD     19,991       14,981       -
  $   4,136,462   $   4,107,075   $   3,962,436
           


             
    Three Months Ended 
(in thousands)   June 30, 2019   March 31, 2019   June 30, 2018
    Average
Amount
  Weighted
Average Rate
  Average
Amount
  Weighted
Average Rate
  Average
Amount
  Weighted
Average Rate
                         
Non-interest bearing demand deposit accounts   $   1,762,426   0.00 %   $   1,598,637   0.00 %   $   1,636,294   0.00 %
NOW accounts       220,517   0.47 %       224,686   0.45 %       202,309   0.38 %
Savings accounts       339,165   0.22 %       337,477   0.21 %       313,694   0.15 %
Money market deposit accounts       1,298,033   0.47 %       1,315,186   0.44 %       1,071,822   0.40 %
Time deposits       424,848   1.10 %       432,771   0.96 %       400,778   0.83 %
Brokered CD        61,804   2.45 %       7,657   2.93 %       -   -  
    $   4,106,793   0.34 %   $   3,916,414   0.31 %   $   3,624,897   0.24 %
                         


             
    Six  Months Ended June 30,
(in thousands)    2019     2018 
    Average
Amount
  Weighted
Average Rate
  Average
Amount
  Weighted
Average Rate
                 
Non-interest bearing demand deposit accounts   $   1,680,984   0.00 %   $   1,530,460   0.00 %
NOW accounts       222,589   0.46 %       204,455   0.34 %
Savings accounts       338,326   0.21 %       309,466   0.14 %
Money market deposit accounts       1,306,562   0.46 %       1,025,108   0.42 %
Time deposits       428,788   1.03 %       393,557   0.83 %
Brokered CD        34,880   2.50 %       -   -  
    $   4,012,129   0.32 %   $   3,463,046   0.25 %
                 


Asset Quality

  June 30,   March 31,   December 31,
(In thousands)   2019       2019       2018  
Loans 90 days past due and accruing  $   13,939     $   7,157     $   -  
Nonaccrual loans excluding held for sale loans and restructured loans     9,893         9,351         8,379  
Restructured loans - nonaccrual     6,221         5,455         15,482  
Restructured loans - accruing     43,277         33,441         34,457  
Other real estate owned      526         1,057         844  
Impaired securities     88         90         93  
Total nonperforming assets $   73,944     $   56,551     $   59,255  
           
Nonaccrual loans:          
  Commercial and industrial  $   4,180     $   3,734     $   12,153  
  Commercial real estate      3,832         4,019         4,112  
  Total commercial portfolio     8,012         7,753         16,265  
           
  Residential 1-4 family 1st mortgages      6,330         5,769         6,287  
  Residential 1-4 family 2nd mortgages     1,267         1,078         1,299  
  Consumer and other      505         206         10  
  Total retail portfolio     8,102         7,053         7,596  
  Total nonaccrual loans $   16,114     $   14,806     $   23,861  
           
           
Nonperforming assets to total assets   1.50 %     1.15 %     1.27 %
Nonaccrual assets to total assets   0.34 %     0.32 %     0.53 %
Nonaccrual loans to total loans    0.49 %     0.45 %     0.74 %
Allowance for loan losses to nonaccrual loans   209 %     212 %     156 %
           
Troubled debt restructurings:          
  TDRs included in nonaccrual loans  $   6,221     $   5,455     $   15,482  
  TDRs in compliance with modified terms  $   43,277     $   33,441     $   34,457  
           

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   For the Six
  Months Ended   Months Ended
(in thousands) June 30,   March 31,   June 30,   June 30,
    2019       2019       2018       2019       2018  
Core operating revenue                  
Net interest income (GAAP) $   41,856     $   40,773     $   36,695     $   82,629     $   69,497  
Non interest income (GAAP)     6,349         7,417         6,204         13,766         13,217  
Add: Securities loss (gain)     377         (292 )       9         85         110  
Core operating revenue (non-GAAP) $   48,582     $   47,898     $   42,908     $   96,480     $   82,824  
                   
                   
Core non-interest expenses                  
Non-interest expense (GAAP) $   31,002     $   31,448     $   30,138     $   62,450     $   58,926  
Less: Prepayment fees on borrowings     -         -         (4 )       -         (4 )
Less: Acquisition cost(1)     -         -         (307 )       -         (537 )
Less: Severance (2)     (154 )       (117 )       -         (271 )       23  
Core non-interest expense (non-GAAP) $   30,848     $   31,331     $   29,827     $   62,179     $   58,408  
                   
Core Earnings                   
Net Income  (GAAP) $   11,185     $   10,813     $   11,592     $   21,999     $   19,253  
Add: Securities loss (gain)     377         (292 )       9         85         110  
Add: Prepayment fees on borrowings     -         -         4         -         4  
Add: Acquisition cost(1)     -         -         307         -         537  
Add: Severance (2)     154         117         -         271         (23 )
Less: Tax on notable items      (137 )       45         (81 )       (92 )       (158 )
Core earnings (non-GAAP) $   11,579     $   10,683     $   11,831     $   22,263     $   19,723  
                   
Tangible common equity                  
Stockholders Equity (GAAP) $   474,944     $   455,480     $   406,311     $   474,944     $   406,311  
Less: Minority Interest (GAAP)     (134 )       (134 )       (134 )       (134 )       (134 )
Less: Goodwill (GAAP)     (12,936 )       (12,936 )       (14,124 )       (12,936 )       (14,124 )
Less: Core deposit intangible (GAAP)     (7,415 )       (7,713 )       (8,897 )       (7,415 )       (8,897 )
Tangible common equity (non-GAAP) $   454,459     $   434,697     $   383,156     $   454,459     $   383,156  
                   
Average tangible common equity                  
Average Stockholders Equity (GAAP) $   464,902     $   446,464     $   377,855     $   455,734     $   362,476  
Less: Minority Interest (GAAP)     (134 )       (134 )       (134 )       (134 )       (134 )
Less: Preferred Stock (GAAP)     -         -         (4,418 )       -         (5,552 )
Less: Goodwill (GAAP)     (12,936 )       (12,936 )       (6,612 )       (12,936 )       (3,324 )
Less: Core deposit intangible (GAAP)     (7,575 )       (7,903 )       (3,927 )       (7,738 )       (1,974 )
Average tangible common equity (non-GAAP) $   444,257     $   425,491     $   362,765     $   434,926     $   351,491  
                   
Core return on average assets                   
Core earnings (numerator) (non-GAAP)     11,579         10,683         11,831         22,263         19,723  
Divided: Total average assets (denominator) (GAAP)     4,853,975         4,787,874         4,333,422         4,821,107         4,194,869  
Core return on average assets (non-GAAP)   0.96 %     0.90 %     1.10 %     0.93 %     0.95 %
                   
Core return on average tangible common equity                   
Core earnings (numerator) (non-GAAP)     11,579         10,682         11,831         22,263         19,723  
Divided: Average tangible common equity (denominator) (non-GAAP)     444,257         425,491         362,765         434,926         351,491  
Core return on average tangible common equity (non-GAAP)   10.45 %     10.18 %     13.08 %     10.32 %     11.32 %
                   
Core efficiency ratio                  
Core non-interest expense (numerator) (non-GAAP)     30,848         31,331         29,827         62,179         58,408  
Core operating revenue (denominator) (non-GAAP)     48,582         47,897         42,908         96,480         82,824  
Core efficiency ratio (non-GAAP)   63.50 %     65.41 %     69.51 %     64.45 %     70.52 %
                   
(1) Expense related to New Resource Bank acquisition 
(2) Salary and COBRA reimbursement expense for positions eliminated  

 

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