Amalgamated Bank Reports Fourth Quarter and Full Year 2019 Financial Results

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NEW YORK, Jan. 31, 2020 (GLOBE NEWSWIRE) -- Amalgamated Bank AMAL ("Amalgamated") today announced financial results for the fourth quarter and full year ended December 31, 2019. 

Fourth Quarter 2019 Highlights

  • Net income of $12.0 million, or $0.37 per diluted share, as compared to $16.0 million, or $0.49 per diluted share, for the fourth quarter of 2018
  • Core net income (non-GAAP) of $12.6 million, or $0.39 per diluted share, as compared to $9.7 million, or $0.30 per diluted share, for the fourth quarter of 2018
  • Deposit growth of $318.6 million, or 29.5% annualized, compared to a balance of $4.3 billion on September 30, 2019
  • Growth in Property Assessed Clean Energy ("PACE") assessments (in held-to-maturity securities) of $177.5 million, bringing our total PACE assessments to $263.8 million
  • Cost of deposits was 0.36%, as compared to 0.37% for the third quarter of 2019 and 0.27% for the fourth quarter of 2018
  • Net interest margin was 3.43%, compared to 3.50% for the third quarter of 2019 and 3.57% for the fourth quarter of 2018.
  • Tier 1 Leverage, Common Equity Tier 1, and Total Risk-Based capital ratios were 8.90%, 13.01%, and 14.01%, respectively, at December 31, 2019
  • Total nonperforming assets were $66.7 million, or 1.25% of total assets, as of December 31, 2019, compared to $71.6 million or 1.42% of total assets, at September 30, 2019 and $59.3 million, or 1.27% of total assets, at December 31, 2018      

Full Year 2019 Highlights

  • Net income of $47.2 million, or $1.47 per diluted share, as compared to $44.7 million, or $1.46 per diluted share, for the full year of 2018
  • Core net income (non-GAAP) of $48.2 million, or $1.49 per diluted share, as compared to $41.6 million, or $1.37 per diluted share, for the full year of 2018
  • Deposit growth of $535.7 million, or 13.0%, compared to December 31, 2018
  • Loan growth of $228.1 million, or 7.1%, compared to December 31, 2018
  • Cost of deposits was 0.35%, compared to 0.26% for the full year of 2018
  • Net interest margin was 3.55%, compared to 3.56% for the full year of 2018            

Keith Mestrich, President and Chief Executive Officer of Amalgamated Bank, commented, "We are pleased with our results highlighted by $318.6 million in deposit growth, or 29.5% annualized,  and the addition of $177.5 million in PACE assessments for the fourth quarter which has contributed to our 13.6% growth in interest-earning assets for the full year of 2019.  As we continued to focus on ‘sustainable' investing, which we believe differentiates us in the market and aligns with our mission, we were able to deliver loan and securities growth above our expectations for the quarter and the year.  This strong growth was also achieved despite our strategic decision to accelerate the reduction of our indirect C&I portfolio over the course of this year.  Looking forward, we plan to continue to invest in our growth and we are excited with the opportunities that we see, including our planned market expansion as we execute on our de novo strategy with the goal of opening two offices in 2020 as well as exploring new product development.  Lastly, we are very proud of the recognition that we received this past year as we build upon our reputation as America's Socially Responsible Bank, including EuroMoney's Award for Corporate Social Responsibility in North America award and Forbes Best Bank in California."

Results of Operations, Quarter Ended December 31, 2019

Net income for the fourth quarter of 2019 was $12.0 million, or $0.37 per diluted share, compared to $13.2 million, or $0.41 per diluted share, for the third quarter of 2019 and $16.0 million, or $0.49 per diluted share, for the fourth quarter of 2018.  The $4.0 million decrease in net income for the fourth quarter of 2019 compared to the like period in 2018, was primarily due to a $8.6 million increase in income tax expense (primarily due to a $7.6 million realization of a deferred tax asset in 2018), partially offset by a $2.0 million increase in net interest income, a $1.5 million reduction in non-interest expense and a $0.8 million decrease in provision for loan losses.

Core net income (non-GAAP) for the fourth quarter of 2019 was $12.6 million, or $0.39 per diluted share, compared to $13.3 million, or $0.41 per diluted share, for the third quarter of 2019 and $9.7 million, or $0.30 per diluted share, for the fourth quarter of 2018.  Core earnings for the fourth quarter of 2019 excluded an aggregate of $1.1 million of expense related to branch closures and severance, $0.2 million in securities gains and the tax effect of such adjustments.

Net interest income was $42.3 million for the fourth quarter of 2019, compared to $41.8 million for the third quarter of 2019 and $40.2 million for the fourth quarter of 2018.  The year-over-year increase was primarily attributable to an increase in average loans of $226.6 million, an increase in average securities of $201.2 million, a decrease in total borrowings of $128.9 million and a decrease in the yield on total borrowings of 0.39%, partially offset by an increase in interest bearing deposits of $116.7 million and an increase in the rate paid on interest bearing deposits of 0.20% and a decrease in the yield on interest earnings assets of 0.14%.

Net interest margin was 3.43% for the fourth quarter of 2019, a decrease of seven basis points from 3.50% in the third quarter of 2019 and a decrease of 14 basis points from 3.57% in the fourth quarter of 2018.  The accretion of the loan mark from the loans we acquired in our New Resource Bank ("NRB") acquisition contributed five basis points to our net interest margin in the fourth quarter of 2019.

Our provision for loan losses was $0.1 million in the fourth quarter of 2019, compared to a recovery of provision of $0.6 million in the third quarter of 2019 and a provision of $0.9 million for the fourth quarter of 2018.  The provision expense in the fourth quarter of 2019 was primarily driven by an increase in specific reserves for our indirect C&I portfolio for one loan that was downgraded to non-accrual, partially offset by a release in allowance related to the classification of PACE assessment to held-to-maturity securities.

Non-interest income was $7.8 million in the fourth quarter of 2019 compared to $7.7 million in the third quarter of 2019, and $7.6 million in the fourth quarter of 2018. The $0.2 million increase in the fourth quarter of 2019, compared to the like period in 2018, was primarily driven by $0.2 million in gains from the sale of investment securities in the fourth quarter of 2019, compared to a $0.1 million loss on such sales in the fourth quarter of 2018 and a $0.2 million increase in service charges on deposits, partially offset by a $0.3 million decrease in Trust Department fees.

Non-interest expense for the fourth quarter of 2019 was $33.5 million, an increase of $1.6 million from $31.9 million in the third quarter of 2019, and a decrease of $1.5 million from $35.0 million in the fourth quarter of 2018.  The linked quarter increase was primarily due a $0.7 million increase in occupancy and depreciation due to the acceleration of expenses related to plans for closing two branches in New York City in 2020, a $0.6 million increase in other expenses from a smaller off balance sheet credit reserve release as compared to the previous quarter, and a $0.3 million increase in compensation and employee benefits due to an increase in temporary workers for special projects, partially offset by a $0.3 million reduction in data processing expense due to vendor contract renegotiations.

We had a provision for income tax expense of $4.4 million for the fourth quarter of 2019, compared to $4.9 million for third quarter of 2019 and a recovery of $4.1 million for the fourth quarter of 2018 due to the realization of additional deferred tax assets.  Our effective tax rate for the fourth quarter of 2019 was 27.0%, compared to 27.1% for the third quarter of 2019.

Total loans, net, at December 31, 2019 were $3.4 billion, a decrease of $28.3 million or 0.8% as compared to September 30, 2019 and an increase of $228.1 million, or 7.1%, as compared to $3.2 billion at December 31, 2018.  Loans as of September 30, 2019 included $86.3 million of Property Assessed Clean Energy ("PACE") assessments which have been classified as held-to-maturity securities at December 31, 2019.

Deposits at December 31, 2019 were $4.6 billion, an increase of $318.6 million, or 29.5% annualized, compared to $4.3 billion as of September 30, 2019, and an increase of $535.7 million, or 13.0%, as compared to $4.1 billion as of December 31, 2018.  Deposits at December 31, 2018 included $326.7 million of short-term deposits from one customer that moved off of our balance sheet in January 2019.  Deposits held by politically-active customers, such as campaigns, PACs and state and national party committees were $578.6 million as of December 31, 2019, an increase of $67.7 million, compared to $510.9 million as of September 30, 2019, and an increase of $396.7 million, compared to $181.9 million as of December 31, 2018.  Noninterest-bearing deposits represented 46% of average deposits and 47% of ending deposits for the three months ended December 31, 2019, contributing to an average cost of deposits of 0.36% in the fourth quarter of 2019, a one basis point decrease from the linked quarter.

Results of Operations, Full Year Ended December 31, 2019

Net income for the year ended December 31, 2019 was $47.2 million, or $1.47 per diluted share, compared to $44.7 million, or $1.46 per diluted share, for the year ended December 31, 2018.  The $2.5 million increase in net income for the year ended 2019 was primarily due to a $16.9 million increase in net interest income and a $0.9 million improvement in non interest income, partially offset by a $11.3 million increase in income tax expense (due to a $7.6 million realization of a deferred tax asset in 2018 and higher pre-tax income) and a $4.1 million increase in the provision for loan losses.

Core net income (non-GAAP) for the year ended December 31, 2019 was $48.2 million, or $1.49 per diluted share, compared to $41.6 million, or $1.37 per diluted share, for the year ended December 31, 2018.  Core earnings for the year ended December 31, 2019 excluded an aggregate of $1.4 million of expense related to branch closures and severance, $0.1 million in securities gains and the tax effect of such adjustments.

Net interest income was $166.6 million for the year ended December 31, 2019, compared to $149.7 million for the year ended December 31, 2018.  Net interest margin was 3.55% for the year ended December 31, 2019, compared to 3.56% for the same period in 2018, a decrease of one basis point.  The increase in net interest income was primarily due to the $236.8 million increase in average loans, the $256.4 million increase in average securities and the 0.35% increase in the yield on securities, partially offset by the $239.5 million increase in interest bearing deposits and the 0.16% increase in the rate paid on those deposits.

Non-interest income for the year ended December 31, 2019 was $29.2 million, an increase of $0.9 million, compared to $28.3 million for the year ended December 31, 2018.  The increase was primarily driven by a $0.5 million increase in other income due to a loss on the sale of loans in 2018, compared to a gain in 2019, a $0.4 million increase in service charges on deposit accounts and a $0.1 million gain on the sale of securities compared to a loss in 2018.  These increases were partially offset by a $0.2 million decrease in Trust Department fees driven primarily by the runoff of one fund.

Non-interest expense for the year ended December 31, 2019 was $127.8 million, compared to $128.0 million for the year ended December 31, 2018. Increases in compensation and benefits costs of $2.9 million (due to increased wages and temporary workers) and occupancy and depreciation costs of $1.2 million (due to branch closure expenses) were partially offset by decreases in professional fees of $1.8 million (due to our initial public offering and NRB acquisition in 2018) and other expenses of $1.6 million (primarily from a lower FDIC expense and release of an off balance sheet provision).

Financial Condition

Total assets were $5.3 billion at December 31, 2019, compared to $4.7 billion at December 31, 2018. The increase of $639.8 million was primarily driven by the addition of $228.1 million in loans receivable, net and an increase in investment securities of $338.2 million.

Nonperforming assets totaled $66.7 million, or 1.25% of period end total assets, at December 31, 2019, an increase of $7.4 million, compared with $59.3 million, or 1.27% of period end total assets, at December 31, 2018.  Nonaccrual loans totaled $31.0 million, or 0.90% of period end loans, at December 31, 2019, an increase of $7.2 million, compared with $23.9 million, or 0.74% of period end loans, at December 31, 2018.  One indirect C&I loan that had previously been modified to a performing restructured loan was downgraded to non-accrual in the fourth quarter of 2019.

The allowance for loan losses decreased $3.3 million to $33.8 million at December 31, 2019 from $37.2 million at December 31, 2018, which was primarily driven by a decrease in specific reserves on C&I loans and improvement in historical loss factors, partially offset by allowance increases due to loan growth.  At December 31, 2019, we had $65.4 million of impaired loans for which a specific allowance of $7.5 million was made, compared to $71.0 million of impaired loans at September 30, 2019 for which a specific allowance of $6.2 million was made. The ratio of allowance to total loans was 0.98% at December 31, 2019, 0.96% at September 30, 2019 and 1.15% at December 31, 2018.

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Capital

As of December 31, 2019, our Tier 1 Leverage Capital Ratio was 8.90%, Common Equity Tier 1 Capital Ratio was 13.01%, and Total Risk-Based Capital Ratio was 14.01%, compared to 9.03%, 13.49%, and 14.55%, respectively, as of September 30, 2019.  As of December 31, 2018, our Tier 1 Leverage, Common Equity Tier 1, and Total Risk-Based capital ratios were 8.88%, 13.22%, and 14.46%, respectively.  Stockholders' equity at December 31, 2019 was $490.5 million, compared to $439.4 million at December 31, 2018. 

Our book value per share was $15.56 as of December 31, 2019 compared to $15.37 as of September 30, 2019 and $13.82 as of December 31, 2018.  Our tangible book value per share was $14.93 as of December 31, 2019 compared to $14.74 as of September 30, 2019 and $13.16 as of December 31, 2018. 

Conference Call

As previously announced, we will host a conference call today, January 31, 2020, at 10:00 am (Eastern Time) to discuss our fourth quarter and full year 2019 results. 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 Fourth Quarter and Full Year 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 13697882. The telephonic replay will be available until 11:59 pm (Eastern Time) on February 7, 2020.

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.

About Amalgamated Bank 

Amalgamated Bank is a New York-based full-service commercial bank and a chartered trust company with a combined network of 13 branches in New York City, Washington D.C., and San Francisco.  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 December 31, 2019, our total assets were $5.3 billion, total net loans were $3.4 billion, and total deposits were $4.6 billion. Additionally, as of December 31, 2019, the trust business held $32.4 billion in assets under custody and $13.9 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," "Core return on average assets," "Core return on average tangible common equity," and "Core efficiency ratio."

Our management uses 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 the most comparable GAAP measures are set forth in the final pages of this release and also may be viewed on our website, amalgamatedbank.com.

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. The words "may," "will," "anticipate," "should," "would," "believe," "contemplate," "expect," "estimate," "continue," "may" and "intend," as well as other similar words and expressions of the future, are intended to identify forward-looking statements, but other statements not based on historical information may also be considered forward-looking statements. Forward-looking statements are subject to known and unknown risks, uncertainties and other factors, any or all of which could cause actual results to differ materially from the results expressed or implied by such forward-looking statements. These risks and uncertainties include, but are not limited to: (i) deterioration in the financial condition of borrowers resulting in significant increases in loan losses and provisions for those losses; (ii) continuation of the historically low short-term interest rate environment; (iii) the inability of Amalgamated Bank to maintain the historical growth rate of its loan portfolio; (iv) changes in loan underwriting, credit review or loss reserve policies associated with economic conditions, examination conclusions, or regulatory developments; (v) effectiveness of Amalgamated Bank's asset management activities in improving, resolving or liquidating lower-quality assets; (vi) the impact of competition with other financial institutions, including pricing pressures and the resulting impact on Amalgamated Bank's results, including as a result of compression to net interest margin; (vii) greater than anticipated adverse conditions in the national or local economies including in Amalgamated Bank's core markets (viii) fluctuations or unanticipated changes in interest rates on loans or deposits or that affect the yield curve; (ix) the results of regulatory examinations; (x) the ability to grow and retain low-cost core deposits and retain large, uninsured deposits; (xi) a merger or acquisition; (xii) risks of expansion into new geographic or product markets; (xiii) any matter that would cause Amalgamated Bank to conclude that there was impairment of any asset, including intangible assets; (xiv) inability to comply with regulatory capital requirements, including those resulting from changes to capital calculation methodologies, required capital maintenance levels or regulatory requests or directives; (xv) risks associated with litigation, including the applicability of insurance coverage; (xvi) the risk of successful integration of the businesses Amalgamated Bank may acquire; (xvii) the vulnerability of Amalgamated Bank's network and online banking portals, and the systems of parties with whom Amalgamated Bank contracts, to unauthorized access, computer viruses, phishing schemes, spam attacks, human error, natural disasters, power loss and other security breaches; (xviii) the possibility of increased compliance costs resulting from increased regulatory oversight as a result of Amalgamated Bank becoming a publicly traded company; (xix) volatile credit and financial markets both domestic and foreign; (xx) potential deterioration in real estate values; (xxi) the availability and access to capital and (xxii) the risk that the preliminary financial information reported herein and our current preliminary analysis will be different when our review is finalized. Additional factors which could affect the 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 Twelve Months Ended
 December 31,
 September 30,
  December 31,
  December 31,
  2019  2019   2018   2019   2018  
INTEREST AND DIVIDEND INCOME         
  Loans$35,202 $35,768  $34,620  $139,995  $129,904 
  Securities 11,426  10,542   9,251   44,197   31,576 
  Federal Home Loan Bank of New York stock 134  178   239   813   1,040 
  Interest-bearing deposits in banks 193  209   350   949   1,444 
                  
  Total interest and dividend income 46,955  46,697   44,460   185,954   163,964 
                
INTEREST EXPENSE       
  Deposits 4,065  3,952   2,713   14,461   9,573 
  Borrowed funds 640  988   1,542   4,856   4,646 
                   
  Total interest expense 4,705  4,940   4,255   19,317   14,219 
                  
NET INTEREST INCOME 42,250  41,757   40,205   166,637   149,745 
  Provision for (recovery of) loan losses 83  (558)  864   3,837   (260)
                  
  Net interest income after provision for loan losses 42,167  42,315   39,341   162,800   150,005 
          
NON-INTEREST INCOME       
  Trust Department fees 4,481  4,888   4,807   18,598   18,790 
  Service charges on deposit accounts 2,383  2,222   2,187   8,544   8,183 
  Bank-owned life insurance 405  415   430   1,649   1,667 
  Gain (loss) on sale of investment securities available for sale, net 218  (50)  (139)  83   (249)
  Gain (loss) on other real estate owned, net -  -   -   (564)  (494)
  Other 289  184   270   891   421 
          
  Total non-interest income 7,776  7,659   7,555   29,201   28,318 
                  
NON-INTEREST EXPENSE       
  Compensation and employee benefits, net 18,089  17,765   18,166   70,276   67,425 
  Occupancy and depreciation 5,007  4,298   4,247   17,721   16,481 
  Professional fees 3,248  3,120   2,825   11,934   13,688 
  Data processing 2,545  2,856   3,986   10,880   11,570 
  Office maintenance and depreciation 889  934   974   3,540   3,643 
  Amortization of intangible assets 344  344   389   1,374   969 
  Advertising and promotion 911  684   819   2,908   3,402 
  Other 2,457  1,885   3,619   9,194   10,825 
                  
  Total non-interest expense 33,490  31,886   35,025   127,827   128,003 
              
Income before income taxes 16,453  18,088   11,871   64,174   50,320 
  Income tax expense (benefit) 4,445  4,893   (4,113)  16,972   5,666 
                  
  Net income 12,008  13,195   15,984   47,202   44,654 
          
Net income attributable to noncontrolling interests -  -   -   -   - 
                  
Net income attributable to Amalgamated Bank and subsidiaries$12,008 $13,195  $15,984  $47,202  $44,654 
                  
Earnings per common share - basic (1)$0.38 $0.41  $0.50  $1.49  $1.47 
                  
Earnings per common share - diluted (1)$0.37 $0.41  $0.49  $1.47  $1.46 
                  

 


Consolidated Statements of Financial Condition (Unaudited)

(Dollars in thousands)



    
 December 31, December 31,
  2019   2018 
Assets(Unaudited)  
Cash and due from banks$7,596  $10,510 
Interest-bearing deposits in banks 114,942   70,335 
  Total cash and cash equivalents 122,538   80,845 
Securities:   
  Available for sale, at fair value (amortized cost of $1,217,087 and $1,188,710, respectively) 1,224,770   1,175,170 
  Held-to-maturity (fair value of $292,837 and $4,105, respectively) 292,704   4,081 
Loans held for sale, at fair value   - 
Loans receivable, net of deferred loan origination costs (fees) 3,472,614   3,247,831 
  Allowance for loan losses (33,847)  (37,195)
Loans receivable, net 3,438,767   3,210,636 
    
Accrued interest and dividends receivable 19,088   14,387 
Premises and equipment, net 17,778   21,654 
Bank-owned life insurance 80,714   79,149 
Right-of-use lease asset 47,299   - 
Deferred tax asset 31,441   39,697 
Goodwill and other intangible assets 19,665   21,039 
Other assets 30,574   38,831 
  Total assets$5,325,338  $4,685,489 
Liabilities   
Deposits$4,640,982  $4,105,306 
Borrowed funds 75,000   92,875 
Operating leases 62,404   - 
Other liabilities 56,408   47,937 
  Total liabilities 4,834,794   4,246,118 
    
Commitments and contingencies -   - 
    
Stockholders' equity   
  Preferred Stock:   
  Class B - par value $100,000 per share; 77 shares authorized; 67 shares  
  issued and outstanding as of December 31, 2017  - 
    
  Common stock, par value $.01 per share (70,000,000 shares authorized; 31,523,442 and 
  31,771,585 shares issued and outstanding, respectively) 315   318 
  Additional paid-in capital 305,738   308,678 
  Retained earnings 181,132   142,231 
  Accumulated other comprehensive income (loss), net of income taxes 3,225   (11,990)
  Total Amalgamated Bank stockholders' equity 490,410   439,237 
  Noncontrolling interests 134   134 
  Total stockholders' equity 490,544   439,371 
  Total liabilities and stockholders' equity$5,325,338  $4,685,489 
    

 

Select Financial Data

 As of and for the Three Months Ended As of and for the Twelve Months Ended 
 December 31, September 30, December 31, December 31, 
  2019  2019  2018  2019  2018 
Selected Financial Ratios and Other Data (1)          
Earnings per share          
  Basic$0.38 $0.41 $0.50 $1.49 $1.47 
  Diluted 0.37  0.41  0.49  1.47  1.46 
Core Earnings per share (non-GAAP)          
  Basic$0.40 $0.42 $0.30 $1.52 $1.37 
  Diluted 0.39  0.41  0.30  1.49  1.37 
Book value per common share 15.56  15.37  13.82  15.56  13.82 
(excluding minority interest)          
Tangible book value per share (non-GAAP) 14.93  14.74  13.16  14.93  13.16 
Common shares outstanding 31,523,442  31,633,691  31,771,585  31,523,442  31,771,585 
Weighted average common shares 31,529,014  31,809,083  31,771,585  31,733,195  30,368,673 
  outstanding, basic          
Weighted average common shares 32,125,683  32,176,439  32,460,024  32,205,248  30,633,270 
  outstanding, diluted          
           
(1) Effected for stock split that occurred on July 27, 2018 
           

 

Select Financial Data

 Months Ended Months Ended
 December 31, September 30, December 31, December 31,
 2019  2019  2018  2019  2018 
          
Selected Performance Metrics:         
Return on average assets0.93% 1.05% 1.35% 0.96% 1.01%
Core return on average assets (non-GAAP)0.97% 1.06% 0.82% 0.98% 0.94%
Return on average equity9.75% 10.86% 14.88% 10.03% 11.38%
Core return on average tangible common equity (non-GAAP)10.68% 11.43% 9.50% 10.70% 11.06%
Loan yield4.10% 4.22% 4.32% 4.27% 4.27%
Securities yield3.28% 3.28% 3.14% 3.36% 3.01%
Deposit cost0.36% 0.37% 0.27% 0.35% 0.26%
Net interest margin3.43% 3.50% 3.57% 3.55% 3.56%
Efficiency ratio (1)66.95% 64.53% 73.34% 65.27% 71.89%
Core efficiency ratio (non-GAAP) (1)65.11% 64.26% 69.43% 64.57% 68.47%
          
Asset Quality Ratios:         
Nonaccrual loans to total loans0.90% 0.53% 0.74% 0.90% 0.74%
Nonperforming assets to total assets1.25% 1.42% 1.27% 1.25% 1.27%
Allowance for loan losses to nonaccrual loans109% 183% 156% 109% 156%
Allowance for loan losses to total loans0.98% 0.96% 1.15% 0.98% 1.15%
Net charge-offs (recoveries) to average loans-0.01% -0.07% 0.01% 0.22% -0.05%
          
Capital Ratios:         
Tier 1 leverage capital ratio8.90% 9.03% 8.88% 8.90% 8.88%
Tier 1 risk-based capital ratio13.01% 13.49% 13.22% 13.01% 13.22%
Total risk-based capital ratio14.01% 14.55% 14.46% 14.01% 14.46%
Common equity tier 1 capital ratio13.01% 13.49% 13.22% 13.01% 13.22%
          
(1) Efficiency ratio is calculated by dividing total non-interest expense by the sum of net interest income and total non-interest income 

 


Loan and Held-to-Maturity Securities Portfolio Composition

(In thousands)At December 31, 2019 At September 30, 2019(1) At December 31, 2018
 Amount % of total loansAmount % of total loansAmount % of total loans
Commercial portfolio:           
Commercial and industrial$474,342  13.7% $469,882  13.5% $556,537  17.2%
Multifamily mortgages 976,380  28.2%  982,667  28.1%  916,337  28.3%
Commercial real estate mortgages 421,947  12.2%  441,612  12.6%  440,704  13.6%
Construction and land development mortgages 62,271  1.8%  59,309  1.7%  46,178  1.4%
  Total commercial portfolio 1,934,940  55.9%  1,953,470  55.9%  1,959,756  60.5%
            
Retail portfolio:           
Residential real estate lending 1,366,473  39.4%  1,369,616  39.2%  1,110,410  34.2%
Consumer and other 163,077  4.7%  169,463  4.9%  171,184  5.3%
  Total retail 1,529,550  44.1%  1,539,079  44.1%  1,281,594  39.5%
  Total loans 3,464,490  100.0%  3,492,549  100.0%  3,241,350  100.0%
            
Net deferred loan origination fees (costs) 8,124     8,175     6,481   
Allowance for loan losses (33,847)    (33,697)    (37,195)  
  Total loans, net$3,438,767    $3,467,027    $3,210,636   
            
Held-to-maturity securities portfolio:           
PACE assesments$263,805  90.1% $-  0.0% $-  0.0%
Other securities 28,899  9.9%  21,259  100.0%  4,081  100.0%
  Total HTM securities$292,704  100.0% $21,259  100.0% $4,081  100.0%
 
(1) Residential real estate lending balances at September 30, 2019 include $86.3 million in PACE assessments that are presented in held-to-maturity securities at December 31, 2019

 

Net Interest Income Analysis

  Three Months Ended Three Months Ended 
  December 31, 2019 September 30, 2019 
(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 $85,965 $193 0.89% $72,143 $209 1.15% $85,789 $350 1.62%
Securities and FHLB stock 1,399,657 11,560 3.28% 1,294,930 10,720 3.28% 1,198,477 9,490 3.14%
Total loans, net (1) 3,406,806 35,202 4.10% 3,363,837 35,768 4.22% 3,180,168 34,620 4.32%
  Total interest earning assets 4,892,428 46,955 3.81% 4,730,910 46,697 3.92% 4,464,434 44,460 3.95%
  Non-interest earning assets:                  
Cash and due from banks 8,852     6,985     12,480    
Other assets 238,421     228,076     203,321    
  Total assets $5,139,701     $4,965,971     $4,680,235    
                   
  Interest bearing liabilities:                  
Savings, NOW and money market deposits $2,003,888 $2,762 0.55% $1,869,675 $2,478 0.53% $1,839,662 $1,731 0.37%
Time deposits 396,631 1,303 1.30% 417,591 1,474 1.40% 444,131 982 0.88%
  Total deposits 2,400,519 4,065 0.67% 2,287,266 3,952 0.69% 2,283,793 2,713 0.47%
Federal Home Loan Bank advances 128,604 636 1.96% 166,363 987 2.35% 258,505 1,542 2.37%
Other Borrowings 978 4 1.62% 163 1 2.43% - - 0.00%
  Total borrowings 129,582 4,705 0.74% 166,526 988 2.38% 258,505 1,542 2.37%
  Total interest bearing liabilities 2,530,101     2,453,792 4,940 0.80% 2,542,299 4,255 0.66%
  Non interest bearing liabilities:                  
Demand and transaction deposits 2,024,521     1,936,915     1,669,670    
Other liabilities 96,335     93,056     41,976    
  Total liabilities 4,650,957     4,483,763     4,253,945    
  Stockholders' equity 488,744     482,208     426,290    
  Total liabilites and stockholders' equity $5,139,701     $4,965,971     $4,680,235    
                   
  Net interest income / interest rate spread   $42,250 3.07%   $41,757 3.12%   $40,205 3.29%
  Net interest earning assets / net interest
    margin
 $2,362,327   3.43% $2,277,118   3.50% $1,922,135   3.57%
                   
Total Cost of Deposits     0.36%     0.37%     0.27%
                   
                   
(1) Amounts are net of deferred origination costs / (fees) and the allowance for loan losses 

 


Net Interest Income Analysis

 Twelve Months Ended 
 December 31, 2019 
(In thousands)Average
Balance
 Income /
Expense
 Yield /
Rate
 Average
Balance
 Income /
Expense
 Yield /
Rate
            
  Interest earning assets:           
Interest-bearing deposits in banks$75,487 $949 1.26% $87,606 $1,444 1.65%
Securities and FHLB stock1,338,339 45,010 3.36% 1,081,950 32,616 3.01%
Total loans, net (1)3,276,603 139,995 4.27% 3,039,779 129,904 4.27%
  Total interest earning assets4,690,429 185,954 3.96% 4,209,335 163,964 3.90%
  Non-interest earning assets:           
Cash and due from banks8,159     13,243    
Other assets239,336     190,755    
  Total assets$4,937,924     $4,413,333    
            
  Interest bearing liabilities:           
Savings, NOW and money market deposits$1,902,414 $9,068 0.48% $1,681,545 $6,005 0.36%
Time deposits435,157 5,393 1.24% 416,482 3,568 0.86%
  Total deposits2,337,571 14,461 0.62% 2,098,027 9,573 0.46%
Federal Home Loan Bank advances202,837 4,835 2.38% 253,257 4,646 1.83%
Other Borrowings890 21 2.36% - - 0.00%
  Total borrowings203,727 4,856 2.38% 253,257 4,646 1.83%
  Total interest bearing liabilities2,541,298 19,317 0.76% 2,351,284 14,219 0.60%
  Non interest bearing liabilities:           
Demand and transaction deposits1,832,083     1,626,373    
Other liabilities93,816     43,421    
  Total liabilities4,467,196     4,021,078    
  Stockholders' equity470,727     392,254    
  Total liabilites and stockholders' equity$4,937,924     $4,413,333    
            
  Net interest income / interest rate spread  $166,637 3.20%   $149,745 3.29%
  Net interest earning assets / net interest margin$2,149,131   3.55% $1,858,051   3.56%
            
Total Cost of Deposits    0.35%     0.26%
            
            
(1) Amounts are net of deferred origination costs / (fees) and the allowance for loan losses 
            

 

Deposit Portfolio Composition

     
 Three Months Ended
(in thousands)December 31, 2019 September 30, 2019 December 31, 2018
      
Noninterest-bearing demand deposit accounts$2,179,247 $1,963,232 $1,562,902
NOW accounts 230,919  235,933  233,460
Money market deposit accounts 1,508,674  1,377,747  1,548,699
Savings accounts 328,587  337,590  335,254
Time deposits 393,555  402,877  424,991
Brokered CD -  5,000  -
 $4,640,982 $4,322,379 $4,105,306
      

 



 Three Months Ended Three Months Ended Three Months Ended
 December 31, 2019 September 30, 2019 December 31, 2018
(In thousands)Average Balance  Average Rate Paid Average Balance  Average Rate Paid Average Balance  Average Rate Paid
               
Noninterest-bearing demand deposit accounts$2,024,521  0.00% $1,936,915  0.00% $1,669,670  0.00%
NOW accounts 227,285  0.47%  227,525  0.46%  206,107  0.45%
Money market deposit accounts 1,442,567  0.64%  1,303,766  0.62%  1,304,363  0.35%
Savings accounts 334,036  0.18%  338,383  0.23%  329,192  0.19%
Time deposits 393,261  1.29%  410,310  1.38%  444,131  1.03%
Brokered CD 3,370  3.13%  7,281  2.76%  -  0.00%
  Total deposits$4,425,040  0.36% $4,224,180  0.37% $3,953,463  0.27%

 

Asset Quality

 December 31, September 30, December 31,
(In thousands) 2019  2019  2018
Loans 90 days past due and accruing$446 $36 $-
Nonaccrual loans excluding held for sale loans and restructured loans 5,992  8,874  8,379
Nonaccrual loans held for sale -  -  -
Restructured loans - nonaccrual 25,019  9,495  15,482
Restructured loans - accruing 34,367  52,555  34,457
Other real estate owned 809  526  844
Impaired securities 65  67  93
Total nonperforming assets$66,698 $71,553 $59,255
      
Nonaccrual loans:     
  Commercial and industrial$15,564 $3,089 $12,153
  Multifamily -  -  -
  Commercial real estate 3,693  3,693  4,112
  Construction and land development 3,652  3,702  -
  Total commercial portfolio 22,909  10,484  16,265
      
  Residential 1-4 family 1st mortgages 6,922  6,545  6,287
  Residential 1-4 family 2nd mortgages 852  888  1,299
  Consumer and other 328  452  10
  Total retail portfolio 8,102  7,885  7,596
  Total nonaccrual loans$31,011 $18,369 $23,861
      
      
Nonperforming assets to total assets 1.25%  1.42%  1.27%
Nonaccrual assets to total assets 0.60%  0.38%  0.53%
Nonaccrual loans to total loans 0.90%  0.53%  0.74%
Allowance for loan losses to nonaccrual loans 109%  183%  156%
      
Troubled debt restructurings:     
  TDRs included in nonaccrual loans$25,019 $9,495 $15,482
  TDRs in compliance with modified terms$34,367 $52,555 $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 Twelve
   Months Ended   Months Ended
(in thousands)December 31, September 30, December 31, December 31,
  2019   2019   2018   2019   2018 
          
Core operating revenue         
Net interest income (GAAP)$42,250  $41,757  $40,205  $166,637$149,745 
Non interest income (GAAP) 7,776   7,659   7,555   29,201   28,318 
Add: Securities loss (gain) (218)  50   139   (83)  249 
Less: Prepayment of borrowings -   -   -   -   - 
Core operating revenue (non-GAAP)$49,808  $49,466  $47,899  $195,755$178,304 
          
          
Core non-interest expenses         
Non-interest expense (GAAP)$33,490  $31,886  $35,025  $127,827$128,003 
Less: Prepayment fees on borrowings -   -   -   -   (8)
Less: Branch closure expense(1) (957)  (51)  -   (1,008)  - 
Less: Acquisition cost(2) -   -   (1,633)  -   (2,363)
Less: Initial public offering and follow on cost (3) -   -   120   -   (3,316)
Less: Severance (4) (101)  (47)  (257)  (419)  (235)
Core non-interest expense (non-GAAP)$32,432  $31,788  $33,254  $126,400$122,081 
          
Core net income         
Net Income (GAAP)$12,008  $13,195  $15,984  $47,202  $44,654 
Add: Securities loss (gain) (218)  50   139   (83)  249 
Add: Prepayment fees on borrowings - - - - -   -   8 
Add: Branch closure expense(1) 957   51   -   1,008   - 
Add: Acquisition cost(2) -   -   1,633   -   2,363 
Add: Initial public offering and follow on cost (3) -   -   (120)  -   3,316 
Add: Severance (4) 101   47   257   419   235 
Less: Tax on notable items (227)  (40)  (563)  (359)  (1,629)
Less: Deferred tax asset realization -   -   (7,632)  -   (7,632)
Core net income (non-GAAP)$12,621  $13,303  $9,698  $48,188  $41,564 
          
Tangible common equity         
Stockholders Equity (GAAP)$490,544  $486,312  $439,371  $490,544  $439,371 
Less: Minority Interest (GAAP) (134)  (134)  (134)  (134)  (134)
Less: Goodwill (GAAP) (12,936)  (12,936)  (12,936)  (12,936)  (12,936)
Less: Core deposit intangible (GAAP) (6,728)  (7,072)  (8,102)  (6,728)  (8,102)
Tangible common equity (non-GAAP)$470,746  $466,170  $418,198  $470,747  $418,198 
          
Average tangible common equity         
Average Stockholders Equity (GAAP)$488,744  $482,208  $426,290  $470,727  $392,255 
Less: Minority Interest (GAAP) (134)  (134)  (134)  (134)  (134)
Less: Preferred Stock (GAAP) -   -   -   -   (2,753)
Less: Goodwill (GAAP) (12,936)  (12,936)  (12,936)  (12,936)  (8,421)
Less: Core deposit intangible (GAAP) (6,895)  (7,240)  (8,291)  (7,400)  (5,187)
Average tangible common equity (non-GAAP)$468,778  $461,898  $404,928  $450,258  $375,760 
          
Core return on average assets          
Core net income (numerator) (non-GAAP) 12,621   13,303   9,698   48,188   41,564 
Divided: Total average assets (denominator) (GAAP) 5,139,701   4,965,971   4,680,235   4,937,924   4,413,328 
Core return on average assets (non-GAAP) 0.97%  1.06%  0.82%  0.98%  0.94%
          
Core return on average tangible common equity          
Core net income (numerator) (non-GAAP) 12,621   13,303   9,698   48,188   41,564 
Divided: Average tangible common equity (denominator) (non-GAAP) 468,778   461,898   404,929   450,258   375,760 
Core return on average tangible common equity (non-GAAP) 10.68%  11.43%  9.50%  10.70%  11.06%
          
Core efficiency ratio         
Core non-interest expense (numerator) (non-GAAP) 32,432   31,788   33,254   126,400   122,081 
Core operating revenue (denominator) (non-GAAP) 49,808   49,466   47,899   195,755   178,304 
Core efficiency ratio (non-GAAP) 65.11%  64.26%  69.43%  64.57%  68.47%
          
          
(1) Occupany and other expense related to closure of branches during our branch rationalization 
(2) Expense related to New Resource Bank acquisition 
(3) Costs related to initial public offering in Aug 2018 and follow on in Nov 2018 
(4) Salary and COBRA reimbursement expense for positions eliminated  

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