UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): July 27, 2023
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) | ||||||||||||
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code: (212 ) 895-8988
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR § 230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR § 240.12b-2).
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 Results of Operations and Financial Condition.
On July 27, 2023, Amalgamated Financial Corp. (the Company") issued a press release announcing financial results for the second quarter ended June 30, 2023. The press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.
The information in this Item 2.02, including Exhibit 99.1, shall not be deemed "“filed” for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of that section, and shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934.
Item 7.01 Regulation FD Disclosure.
On July 27, 2023, the Company will hold an earnings conference call and webcast at 11:00 a.m. (Eastern Time) to discuss financial results for the second quarter ended June 30, 2023. The press release contains information about how to access the conference call and webcast. A copy of the slide presentation to be used during the earnings call and webcast is furnished as Exhibit 99.2 to this Current Report on Form 8-K. The slide presentation is also available on our website, www.amalgamatedbank.com, under the “Investor Relations” section.
The information in this Item 7.01, including Exhibit 99.2, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of that section, and shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits The following exhibit index lists the exhibits that are either filed or furnished with this Current Report on Form 8-K:
EXHIBIT INDEX
| Exhibit No. | Description | |||||||||||||
| 99.1 | ||||||||||||||
| 99.2 | ||||||||||||||
| 104 | The cover page from this Current Report on Form 8-K, formatted in Inline XBRL. | |||||||||||||
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| AMALGAMATED FINANCIAL CORP. | |||||||||||
By: | /s/ Priscilla Sims Brown | ||||||||||
Name: | Priscilla Sims Brown | ||||||||||
Title: | Chief Executive Officer | ||||||||||
Date: | |||||||||||
2
Amalgamated Financial Corp. Reports Second Quarter 2023 Financial Results; Immediate Liquidity Coverage at 183% of Uninsured Non Super-Core Deposits Common Equity Tier 1 Capital Ratio of 12.51% NEW YORK, July 27, 2023 – (Globe Newswire) -- Amalgamated Financial Corp. (the “Company” or “Amalgamated”) (Nasdaq: AMAL), the holding company for Amalgamated Bank (the “Bank”), today announced its complete financial results for the second quarter ended June 30, 2023. Second Quarter 2023 Highlights (on a linked quarter basis) • Net income of $21.6 million, or $0.70 per diluted share, compared to $21.3 million, or $0.69 per diluted share. • Core net income1 of $22.0 million, or $0.72 per diluted share, as compared to $23.0 million, or $0.74 per diluted share. Deposits and Liquidity • Total deposits decreased $146.7 million, or 2.1%, to $6.9 billion including a $126.4 million decline in Brokered CD utilization. • Excluding Brokered CDs, deposits remained essentially unchanged at $6.4 billion, reflecting a strong and stable deposit base. • Political deposits increased $157.7 million, or 23.3%, to $835.8 million. • Average cost of deposits, excluding Brokered CDs, was 87 basis points for the quarter, where non-interest bearing deposits remained steady and comprised a noteworthy 46% of total deposits. • Super-core deposits totaled approximately $3.6 billion, had a weighted average life of 17 years, and comprised 55% of total deposits excluding Brokered CDs. • Total uninsured deposits were $3.9 billion, improving to 57% of total deposits. Excluding uninsured super-core deposits of approximately $2.5 billion, remaining uninsured deposits were approximately 20-23% of total deposits with immediate liquidity coverage of 183%. • Cash and borrowing capacity totaled $2.6 billion (immediately available) plus unpledged securities (two-day availability) of $758.3 million for total liquidity within two-days of $3.3 billion (85% of total uninsured deposits). Assets and Margin • Loans receivable, net of deferred loan origination costs, increased $53.5 million, or 1.3%, to $4.3 billion. • Held-to-maturity and available for sale PACE assessments grew $64.3 million to $1.1 billion. • Net interest income was $63.0 million, at the high-end of the guidance range provided in the first quarter. Net interest margin was 3.33%, in line with expectations. Share Repurchase • Repurchased approximately 139,000 shares, or $2.2 million of common stock under the Company’s $40 million share repurchase program announced in the first quarter of 2022. • The Company expects to continue repurchasing shares through its common stock share repurchase program, with $23.5 million of remaining capacity. The timing and exact amount of stock repurchase activity will be informed by economic and regulatory considerations as well as Amalgamated's overall position, earnings outlook, and capital deployment priorities. Investments and Capital • Tangible common equity ratio of 6.59%, represents another consecutive quarter of improvement. • Available for sale securities, which are 73% of the Company's traditional securities portfolio, had unrealized losses of 7.6%, with an effective duration of 1.8 years. • Traditional held-to-maturity securities, which are 27% of the Company's traditional securities portfolio, had unrecognized losses of 11.0%, with an effective duration of 4.1 years. • Regulatory capital remains above bank “well capitalized” standards, with a Common Equity Tier 1 ratio of 12.51% at June 30, 2023, and continues to increase in line with strategic plans. • Our leverage ratio was 7.78%, an increase of 28 basis points from the prior quarter. 1 1 Reconciliations of non-GAAP financial measures to the most comparable GAAP measure are set forth on the last page of the financial information accompanying this press release and may also be found on our website, www.amalgamatedbank.com.
Priscilla Sims Brown, President and Chief Executive Officer, commented, “Amalgamated is a conservatively managed bank with a simple model, prudent asset liability management practices, efficient operations, experienced management, strong asset quality and, importantly, a uniquely stable deposit base which is beginning to benefit from strong political deposit inflows as the presidential election cycle begins.” Second Quarter Earnings Net income for the second quarter of 2023 was $21.6 million, or $0.70 per diluted share, compared to $21.3 million, or $0.69 per diluted share, for the first quarter of 2023. The $0.3 million increase for the second quarter of 2023 compared to the preceding quarter was primarily driven by a $2.7 million increase in non-interest income, a $1.1 million decrease in provision expense, and a $1.1 million decrease in non-interest expense offset by a $4.3 million decrease in net interest income, and a $0.2 million increase in income tax expense. Core net income excluding the impact of solar tax equity investments (non-GAAP)1 for the second quarter of 2023 was $22.0 million, or $0.72 per diluted share, compared to $23.0 million, or $0.74 per diluted share, for the first quarter of 2023. Excluded from core net income for the second quarter of 2023 were $0.3 million of pre-tax losses on sales of securities and $0.3 million in severance costs. Excluded from the first quarter of 2023 were $3.1 million of pre-tax losses on the sale of securities and $0.8 million of pre-tax gains on subordinated debt repurchases. Net interest income was $63.0 million for the second quarter of 2023, compared to $67.3 million for the first quarter of 2023. Interest income on securities decreased $0.2 million driven by a 12 basis point increase in securities yield offset by a decrease in the average balance of securities of $102.0 million. Loan interest income increased $0.6 million driven by a $73.5 million increase in average loan balances offset by a 7 basis point decrease in loan yields. The increase in interest income was offset by higher interest expense on deposits of $5.0 million driven by a 45 basis point increase in deposit costs and an increase in the average balance of interest-bearing deposits of $165.5 million. The changes in deposit costs were primarily related to a $43.8 million increase in average Brokered CDs and a $112.5 million increase in average savings, NOW, and money market deposits. Net interest margin was 3.33% for the second quarter of 2023, a decrease of 26 basis points from 3.59% in the first quarter of 2023. The decrease is largely due to increased rates and average balances of interest-bearing liabilities, primarily costs for deposits. No prepayment penalties were earned in loan income in the first or second quarter of 2023. Provision for credit losses totaled $3.9 million for the second quarter of 2023 compared to $5.0 million in the first quarter of 2023. The decrease in the provision is largely due to a $1.2 million impairment charge on a Silicon Valley Bank (“SIVB”) senior note in the first quarter of 2023, which was subsequently sold during the second quarter. Core non-interest income excluding the impact of solar tax equity investments (non-GAAP)1 was $8.2 million for the second quarter of 2023, compared to $7.5 million in the first quarter of 2023. The increase of $0.7 million was primarily related to increased income from equity investments, higher Trust Department fees, and fees on treasury investments for certain clients seeking alternative yields to deposit pricing. Core non-interest expense (non-GAAP)1 for the second quarter of 2023 was $37.2 million, a decrease of $1.4 million from the first quarter of 2023. This was primarily driven by a $0.8 million decrease in compensation and employee benefits comprised mainly of increased payroll taxes given timing of corporate incentive payments, temporary personnel costs, and benefit insurance costs incurred during the first quarter of 2023. Additionally, advertising expense and data processing expense decreased during the quarter, offset by increased reserves for FDIC depository insurance and increased professional fees. 2
Our provision for income tax expense was $7.8 million for the second quarter of 2023, compared to $7.6 million for the first quarter of 2023. The increase reflects the higher pre-tax income in the second quarter. Our effective tax rate for the second quarter of 2023 was 26.5%, compared to 26.2% for the first quarter of 2023. Balance Sheet Quarterly Summary Total assets were $7.8 billion at June 30, 2023, compared to $7.8 billion at March 31, 2023, in keeping with our strategy to keep our balance sheet flat. Notable changes within individual balance sheet line items include a $53.5 million increase in loans receivable, net of deferred loan origination costs, funded mainly by a $58.9 million decrease in available-for-sale investment securities, and a $15.4 million decrease in resell agreements. Additionally, Brokered CDs declined by $126.4 million, offset by a $90.0 million increase in short-term borrowings. Total loans receivable, net of deferred loan origination costs at June 30, 2023 were $4.3 billion, an increase of $53.5 million, or 1.3%, compared to March 31, 2023. The increase in loans is primarily driven by a $32.9 million increase in multifamily loans, a $25.6 million increase in commercial and industrial loans, a $5.9 million increase in the commercial real estate portfolio, offset by a $1.6 million decrease in residential loans, and a $9.2 million decrease in construction loans. During the quarter we had $5.2 million of payoffs and upgrades of criticized or classified loans, including a payoff of a $3.8 million office related loan, as we continue to focus on the improving the credit quality of the commercial portfolio. Deposits at June 30, 2023 were $6.9 billion, a decrease of $146.7 million, or 2.1%, as compared to $7.0 billion as of March 31, 2023. Deposits excluding Brokered CDs decreased by $20.3 million to $6.4 billion, a 0.3% decrease compared to March 31, 2023. Deposits held by politically active customers, such as campaigns, PACs, advocacy-based organizations, and state and national party committees were $835.8 million as of June 30, 2023, an increase of $157.7 million compared to $678.1 million as of March 31, 2023. Non-interest-bearing deposits represented 45% of average total deposits and 43% of ending total deposits for the quarter ended June 30, 2023, contributing to an average cost of total deposits of 110 basis points. Nonperforming assets totaled $35.3 million, or 0.45% of period-end total assets at June 30, 2023, a decrease of $3.4 million, compared with $38.7 million, or 0.49% on a linked quarter basis. The decrease in non-performing assets was primarily driven by the $1.8 million SIVB senior note placed on nonaccrual status in the first quarter of 2023, which was subsequently sold in the second quarter, and a $1.3 million commercial real estate loan that was 90 days past due and accruing at March 31, 2023 was brought current in the second quarter. Additionally, a $1.7 million commercial loan was charged off in the quarter which was substantially reserved for as of the first quarter, offset by an additional $1.4 million in retail loans that were placed on nonaccrual status. During the quarter, the allowance for credit losses on loans increased $0.1 million to $67.4 million at June 30, 2023 from $67.3 million at March 31, 2023. The ratio of allowance to total loans was 1.59%, a decrease of 2 basis points from 1.61% in the first quarter of 2023. Capital Quarterly Summary As of June 30, 2023, our Common Equity Tier 1 Capital Ratio was 12.51%, Total Risk-Based Capital Ratio was 15.26%, and Tier-1 Leverage Capital Ratio was 7.78%, compared to 12.23%, 15.00%, and 7.50%, respectively, as of March 31, 2023. Stockholders’ equity at June 30, 2023 was $528.6 million, compared to $519.2 million at March 31, 2023. The increase in stockholders’ equity was primarily driven by $21.6 million of net income for the quarter offset by a $7.9 million increase in accumulated other comprehensive loss due to the tax effected mark-to-market on our available for sale securities portfolio. Our tangible book value per share was $16.78 as of June 30, 2023 compared to $16.42 as of March 31, 2023. Tangible common equity was 6.59% of tangible assets, compared to 6.43% as of March 31, 2023. 3
Conference Call As previously announced, Amalgamated Financial Corp. will host a conference call to discuss its second quarter 2023 results today, July 27, 2023 at 11:00am (Eastern Time). The conference call can be accessed by dialing 1-877-407-9716 (domestic) or 1-201-493-6779 (international) and asking for the Amalgamated Financial Corp. Second Quarter 2023 Earnings Call. A telephonic replay will be available approximately two hours after the call and can be accessed by dialing 1-844-512-2921, or for international callers 1-412-317-6671 and providing the access code 13739618. The telephonic replay will be available until August 3, 2023. Interested investors and other parties may also listen to a simultaneous webcast of the conference call by logging onto the investor relations section of our website at https://ir.amalgamatedbank.com/. The online replay will remain available for a limited time beginning immediately following the call. The presentation materials for the call can be accessed on the investor relations section of our website at https:// ir.amalgamatedbank.com/. About Amalgamated Financial Corp. Amalgamated Financial Corp. is a Delaware public benefit corporation and a bank holding company engaged in commercial banking and financial services through its wholly-owned subsidiary, Amalgamated Bank. Amalgamated Bank is a New York-based full-service commercial bank and a chartered trust company with a combined network of five branches across New York City, Washington D.C., and San Francisco, and a commercial office in Boston. Amalgamated Bank was formed in 1923 as Amalgamated Bank of New York by the Amalgamated Clothing Workers of America, one of the country's oldest labor unions. Amalgamated Bank provides commercial banking and trust services nationally and offers a full range of products and services to both commercial and retail customers. Amalgamated Bank is a proud member of the Global Alliance for Banking on Values and is a certified B Corporation®. As of June 30, 2023, our total assets were $7.8 billion, total net loans were $4.2 billion, and total deposits were $6.9 billion. Additionally, as of June 30, 2023, our trust business held $40.3 billion in assets under custody and $14.5 billion in assets under management. Non-GAAP Financial Measures This release (and the accompanying financial information and tables) refer to certain non-GAAP financial measures including, without limitation, “Core operating revenue,” “Core non-interest expense,” “Core non-interest income,” “Core net income,” “Tangible common equity,” “Average tangible common equity,” “Core return on average assets,” “Core return on average tangible common equity,” and “Core efficiency ratio.” Our management utilizes this information to compare our operating performance for June 30, 2023 versus certain periods in 2023 and 2022 and to prepare internal projections. We believe these non-GAAP financial measures facilitate making period-to-period comparisons and are meaningful indications of our operating performance. In addition, because intangible assets such as goodwill and other discrete items unrelated to our core business, which are excluded, vary extensively from company to company, we believe that the presentation of this information allows investors to more easily compare our results to those of other companies. The presentation of non-GAAP financial information, however, is not intended to be considered in isolation or as a substitute for GAAP financial measures. We strongly encourage readers to review the GAAP financial measures included in this release and not to place undue reliance upon any single financial measure. In addition, because non-GAAP financial measures are not standardized, it may not be possible to compare the non-GAAP financial measures presented in this release with other companies’ non-GAAP financial measures having the same or similar names. Reconciliations of non- GAAP financial disclosures to comparable GAAP measures found in this release are set forth in the final pages of this release and also may be viewed on our website, amalgamatedbank.com. 4
Terminology Certain terms used in this release are defined as follows: “Core efficiency ratio” is defined as “Core non-interest expense” divided by “Core operating revenue.” We believe the most directly comparable performance ratio derived from GAAP financial measures is an efficiency ratio calculated by dividing total non-interest expense by the sum of net interest income and total non-interest income. “Core efficiency ratio excluding solar tax impact” is defined as “Core non-interest expense” divided by “Core operating revenue excluding solar tax impact.” We believe the most directly comparable performance ratio derived from GAAP financial measures is an efficiency ratio calculated by dividing total non-interest expense by the sum of net interest income and total non-interest income. “Core net income” is defined as net income after tax excluding gains and losses on sales of securities, gains on the sale of owned property, costs related to branch closures, restructuring/severance costs, acquisition costs, and taxes on notable pre- tax items. We believe the most directly comparable GAAP financial measure is net income. “Core net income excluding solar tax impact” is defined as net income after tax excluding gains and losses on sales of securities, gains on the sale of owned property, costs related to branch closures, restructuring/severance costs, acquisition costs, tax credits and accelerated depreciation on solar equity investments, and taxes on notable pre-tax items. We believe the most directly comparable GAAP financial measure is net income. “Core non-interest expense” is defined as total non-interest expense excluding costs related to branch closures, restructuring/severance, and acquisitions. We believe the most directly comparable GAAP financial measure is total non- interest expense. “Core non-interest income excluding the impact of solar tax equity investments” is defined as total non-interest income excluding gains and losses on sales of securities, gains on the sale of owned property, and tax credits and depreciation on solar equity investments. We believe the most directly comparable GAAP financial measure is non-interest income. “Core operating revenue” is defined as total net interest income plus “core non-interest income”, defined as non-interest income excluding gains and losses on sales of securities and gains on the sale of owned property. We believe the most directly comparable GAAP financial measure is the total of net interest income and non-interest income. “Core operating revenue excluding solar tax impact” is defined as total net interest income plus non-interest income excluding gains and losses on sales of securities, gains on the sale of owned property, and tax credits and depreciation on solar equity investments. We believe the most directly comparable GAAP financial measure is the total of net interest income and non-interest income. “Core return on average assets” is defined as “Core net income” divided by average total assets. We believe the most directly comparable performance ratio derived from GAAP financial measures is return on average assets calculated by dividing net income by average total assets. “Core return on average assets excluding solar tax impact” is defined as “Core net income excluding solar tax impact” divided by average total assets. We believe the most directly comparable performance ratio derived from GAAP financial measures is return on average assets calculated by dividing net income by average total assets. 5
“Core return on average tangible common equity” is defined as “Core net income” divided by “Average tangible common equity.” We believe the most directly comparable performance ratio derived from GAAP financial measures is return on average equity calculated by dividing net income by average total stockholders’ equity. “Core return on average tangible common equity excluding solar tax impact” is defined as “Core net income excluding solar tax impact” divided by “Average tangible common equity.” We believe the most directly comparable performance ratio derived from GAAP financial measures is return on average equity calculated by dividing net income by average total stockholders’ equity. “Super-core deposits” are defined as total deposits from commercial and consumer customers, with a relationship length of greater than 5 years. We believe the most directly comparable GAAP financial measure is total deposits. “Tangible assets” are defined as total assets excluding, as applicable, goodwill and core deposit intangibles. We believe the most directly comparable GAAP financial measure is total assets. “Tangible common equity”, and “Tangible book value” are defined as stockholders’ equity excluding, as applicable, minority interests, preferred stock, goodwill and core deposit intangibles. We believe that the most directly comparable GAAP financial measure is total stockholders’ equity. "Traditional securities portfolio" is defined as total investment securities excluding PACE assessments. We believe the most directly comparable GAAP financial measure is total investment securities. 6
Forward-Looking Statements Statements included in this release that are not historical in nature are intended to be, and are hereby identified as, forward- looking statements within the meaning of the Private Securities Litigation Reform Act, Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements generally can be identified through the use of forward- looking terminology such as “may,” “will,” “anticipate,” “aspire,” “should,” “would,” “believe,” “contemplate,” “expect,” “estimate,” “continue,” “in the future,” “may” and “intend,” as well as other similar words and expressions of the future. Forward-looking statements are subject to known and unknown risks, uncertainties and other factors, any or all of which could cause actual results to differ materially from the results expressed or implied by such forward-looking statements. These risks and uncertainties include, but are not limited to: (i) uncertain conditions in the banking industry and in national, regional and local economies in our core markets, which may have an adverse impact on our business, operations and financial performance; (ii) deterioration in the financial condition of borrowers resulting in significant increases in loan losses and provisions for those losses; (iii) deposit outflows and subsequent declines in liquidity caused by factors that could include lack of confidence in the banking system, a deterioration in market conditions or the financial condition of depositors; (iv) changes in our deposits, including an increase in uninsured deposits; (v) unfavorable conditions in the capital markets, which may cause declines in our stock price and the value of our investments; (vi) continued fluctuation of the interest rate environment, including changes in net interest margin or changes that affect the yield curve on investments; (vii) potential deterioration in real estate collateral values; (viii) changes in legislation, regulation, public policies, or administrative practices impacting the banking industry, including increased regulation and FDIC assessments in the aftermath of recent bank failures; (ix) the outcome of legal or regulatory proceedings that may be instituted against us; (x) our inability to maintain the historical growth rate of the loan portfolio; (xi) changes in loan underwriting, credit review or loss reserve policies associated with economic conditions, examination conclusions, or regulatory developments; (xii) the impact of competition with other financial institutions, including pricing pressures and the resulting impact on our results, including as a result of compression to net interest margin; (xiii) any matter that would cause us to conclude that there was impairment of any asset, including intangible assets; (xiv) the risk that the preliminary financial information reported herein and our current preliminary analysis will be different when our review is finalized; (xv) increased competition for experienced members of the workforce including executives in the banking industry; (xvi) a failure in or breach of our operational or security systems or infrastructure, or those of third party vendors or other service providers, including as a result of unauthorized access, computer viruses, phishing schemes, spam attacks, human error, natural disasters, power loss and other security breaches; (xvii) a downgrade in our credit rating; (xviii) increased political opposition to Environmental, Social and Governance (“ESG”) practices; (xix) recessionary conditions; (xx) the ongoing economic effects of the COVID-19 pandemic; (xxi) physical and transitional risks related to climate change as they impact our business and the businesses that we finance, and (xxii) future repurchase of our shares through our common stock repurchase program. Additional factors which could affect the forward-looking statements can be found in our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K filed with the SEC and available on the SEC's website at https://www.sec.gov/. We disclaim any obligation to update or revise any forward-looking statements contained in this release, which speak only as of the date hereof, whether as a result of new information, future events or otherwise, except as required by law. Investor Contact: Jamie Lillis Solebury Strategic Communications shareholderrelations@amalgamatedbank.com 800-895-4172 7
Consolidated Statements of Income (unaudited) June 30, March 31, June 30, June 30, ($ in thousands) 2023 2023 2022 2023 2022 INTEREST AND DIVIDEND INCOME Loans $ 45,360 $ 44,806 $ 33,766 $ 90,166 $ 64,893 Securities 39,506 39,512 24,352 79,018 43,507 Interest-bearing deposits in banks 1,056 618 551 1,673 730 Total interest and dividend income 85,922 84,936 58,669 170,857 109,130 INTEREST EXPENSE Deposits 18,816 13,835 1,481 32,651 2,883 Borrowed funds 4,121 3,821 690 7,942 1,381 Total interest expense 22,937 17,656 2,171 40,593 4,264 NET INTEREST INCOME 62,985 67,280 56,498 130,264 104,866 Provision for credit losses(1) 3,940 4,958 2,912 8,899 5,205 Net interest income after provision for credit losses 59,045 62,322 53,586 121,365 99,661 NON-INTEREST INCOME Trust Department fees 4,006 3,929 3,479 7,935 6,970 Service charges on deposit accounts 2,712 2,455 2,826 5,166 5,273 Bank-owned life insurance income 546 781 1,283 1,327 2,097 Losses on sale of securities (267) (3,086) (582) (3,353) (420) Gains on sale of loans, net 2 3 492 4 335 Loss on other real estate owned, net — — — — — Equity method investments income 556 153 (638) 711 (206) Other income 389 973 386 1,360 619 Total non-interest income 7,944 5,208 7,246 13,150 14,668 NON-INTEREST EXPENSE Compensation and employee benefits 21,165 22,014 18,046 43,180 35,715 Occupancy and depreciation 3,436 3,399 3,457 6,835 6,897 Professional fees 2,759 2,230 2,745 4,989 5,560 Data processing 4,082 4,549 4,327 8,631 9,511 Office maintenance and depreciation 718 728 784 1,445 1,509 Amortization of intangible assets 222 222 261 444 523 Advertising and promotion 1,028 1,587 761 2,615 1,615 Federal deposit insurance premiums 1,100 718 761 1,818 1,427 Other expense 3,019 3,180 3,204 6,199 5,986 Total non-interest expense 37,529 38,627 34,346 76,156 68,743 Income before income taxes 29,460 28,903 26,486 58,359 45,586 Income tax expense 7,818 7,565 6,873 15,383 11,808 Net income $ 21,642 $ 21,338 $ 19,613 $ 42,976 $ 33,778 Earnings per common share - basic $ 0.71 $ 0.69 $ 0.64 $ 1.40 $ 1.09 Earnings per common share - diluted $ 0.70 $ 0.69 $ 0.63 $ 1.39 $ 1.08 Three Months Ended Six Months Ended (1) In accordance with the adoption of the Current Expected Credit Losses (“CECL”) standard on January 1, 2023, the provision for credit losses as of June 30, 2023 and March 31, 2023 is calculated under the current expected credit losses model. For June 30, 2022, the provision presented is the provision for loan losses calculated using the incurred loss model. 8
Consolidated Statements of Financial Condition ($ in thousands) June 30, 2023 March 31, 2023 December 31, 2022 Assets (unaudited) (unaudited) Cash and due from banks $ 4,419 $ 5,192 $ 5,110 Interest-bearing deposits in banks 61,296 125,705 58,430 Total cash and cash equivalents 65,715 130,897 63,540 Securities: Available for sale, at fair value 1,580,248 1,639,105 1,812,476 Held-to-maturity, at amortized cost: Traditional securities, net of allowance for credit losses of $57 and $58 at June 30, 2023 and March 31, 2023, respectively 617,380 622,741 629,424 PACE assessments, net of allowance for credit losses of $650 and $629 at June 30, 2023 and March 31, 2023, respectively 1,037,151 995,766 911,877 1,654,531 1,618,507 1,541,301 Loans held for sale 2,458 5,653 7,943 Loans receivable, net of deferred loan origination costs 4,251,738 4,198,170 4,106,002 Allowance for credit losses(1) (67,431) (67,323) (45,031) Loans receivable, net 4,184,307 4,130,847 4,060,971 Resell agreements — 15,431 25,754 Federal Home Loan Bank of New York ("FHLBNY") stock, at cost 4,192 3,507 29,607 Accrued interest and dividends receivable 44,104 40,844 41,441 Premises and equipment, net 8,933 9,250 9,856 Bank-owned life insurance 105,951 105,405 105,624 Right-of-use lease asset 24,721 26,516 28,236 Deferred tax asset, net 63,477 62,504 62,507 Goodwill 12,936 12,936 12,936 Intangible assets, net 2,661 2,883 3,105 Equity method investments 11,657 8,170 8,305 Other assets 26,921 24,001 29,522 Total assets $ 7,792,812 $ 7,836,456 $ 7,843,124 Liabilities Deposits $ 6,894,651 $ 7,041,361 $ 6,595,037 Subordinated debt, net 73,766 73,737 77,708 FHLBNY advances — — 580,000 Other borrowings 230,000 140,000 — Operating leases 35,801 38,333 40,779 Other liabilities 29,980 23,867 40,645 Total liabilities 7,264,198 7,317,298 7,334,169 Stockholders’ equity Common stock, par value $.01 per share 307 307 307 Additional paid-in capital 286,877 287,514 286,947 Retained earnings 349,204 330,673 330,275 Accumulated other comprehensive loss, net of income taxes (105,214) (97,317) (108,707) Treasury stock, at cost (2,693) (2,152) — Total Amalgamated Financial Corp. stockholders' equity 528,481 519,025 508,822 Noncontrolling interests 133 133 133 Total stockholders' equity 528,614 519,158 508,955 Total liabilities and stockholders’ equity $ 7,792,812 $ 7,836,456 $ 7,843,124 (1) In accordance with the adoption of the CECL standard on January 1, 2023, the allowance for credit losses on both loans and securities as of June 30, 2023 and March 31, 2023 is calculated under the current expected credit losses model. For December 31, 2022, no allowance was calculated on securities, and the allowance on loans presented is the allowance for loan losses calculated using the incurred loss model. 9
Select Financial Data As of and for the As of and for the Three Months Ended Six Months Ended June 30, March 31, June 30, June 30, (Shares in thousands) 2023 2023 2022 2023 2022 Selected Financial Ratios and Other Data: Earnings per share Basic $ 0.71 $ 0.69 $ 0.64 $ 1.40 $ 1.09 Diluted 0.70 0.69 0.63 1.39 1.08 Core net income (non-GAAP) Basic $ 0.72 $ 0.75 $ 0.66 $ 1.47 $ 1.12 Diluted 0.72 0.74 0.65 1.46 1.11 Core net income excluding solar tax impact (non-GAAP) Basic $ 0.72 $ 0.75 $ 0.68 $ 1.47 $ 1.14 Diluted 0.72 0.74 0.67 1.46 1.12 Book value per common share (excluding minority interest) $ 17.29 $ 16.94 $ 16.23 $ 17.29 $ 16.23 Tangible book value per share (non-GAAP) $ 16.78 $ 16.42 $ 15.69 $ 16.78 $ 15.69 Common shares outstanding, par value $.01 per share(1) 30,573 30,642 30,684 30,573 30,684 Weighted average common shares outstanding, basic 30,619 30,706 30,818 30,662 30,962 Weighted average common shares outstanding, diluted 30,776 30,939 31,189 30,820 31,332 (1) 70,000,000 shares authorized; 30,736,141, 30,700,198, and 30,995,271 shares issued for the periods ended June 30, 2023, March 31, 2023, and June 30, 2022 respectively, and 30,572,606, 30,700,198, and 30,995,271 shares outstanding for the periods ended June 30, 2023, March 31, 2023, and June 30, 2022, respectively. 10
Select Financial Data As of and for the As of and for the Three Months Ended Six Months Ended June 30, March 31, June 30, June 30, 2023 2023 2022 2023 2022 Selected Performance Metrics: Return on average assets 1.11 % 1.11 % 1.01 % 1.11 % 0.90 % Core return on average assets (non-GAAP) 1.13 % 1.19 % 1.05 % 1.16 % 0.92 % Core return on average assets excluding solar tax impact (non-GAAP) 1.13 % 1.19 % 1.08 % 1.16 % 0.94 % Return on average equity 16.45 % 17.22 % 15.20 % 16.83 % 12.64 % Core return on average tangible common equity (non-GAAP) 17.28 % 19.21 % 16.25 % 18.21 % 13.38 % Core return on average tangible common equity excluding solar tax impact (non-GAAP) 17.28 % 19.21 % 16.76 % 18.21 % 13.61 % Average equity to average assets 6.77 % 6.42 % 6.67 % 6.60 % 7.11 % Tangible common equity to tangible assets (non-GAAP) 6.59 % 6.43 % 6.07 % 6.59 % 6.07 % Loan yield 4.33 % 4.40 % 3.82 % 4.36 % 3.86 % Securities yield 4.85 % 4.73 % 2.71 % 4.79 % 2.54 % Deposit cost 1.10 % 0.81 % 0.08 % 0.96 % 0.08 % Net interest margin 3.33 % 3.59 % 3.03 % 3.46 % 2.90 % Efficiency ratio (1) 52.91 % 53.29 % 53.88 % 53.10 % 57.51 % Core efficiency ratio (non-GAAP) 52.31 % 51.64 % 52.90 % 51.97 % 56.69 % Core efficiency ratio excluding solar tax impact (non-GAAP) 52.31 % 51.64 % 52.20 % 51.97 % 56.32 % Asset Quality Ratios: Nonaccrual loans to total loans 0.79 % 0.71 % 0.67 % 0.79 % 0.67 % Nonperforming assets to total assets 0.45 % 0.49 % 0.82 % 0.45 % 0.82 % Allowance for credit losses on loans to nonaccrual loans(2) 200.19 % 224.74 % 161.81 % 200.19 % 161.81 % Allowance for credit losses on loans to total loans(2) 1.59 % 1.61 % 1.08 % 1.59 % 1.08 % Annualized net charge-offs (recoveries) to average loans 0.29 % 0.25 % 0.11 % 0.27 % 0.19 % Capital Ratios: Tier 1 leverage capital ratio 7.78 % 7.50 % 7.08 % 7.78 % 7.08 % Tier 1 risk-based capital ratio 12.51 % 12.23 % 11.75 % 12.51 % 11.75 % Total risk-based capital ratio 15.26 % 15.00 % 14.41 % 15.26 % 14.41 % Common equity tier 1 capital ratio 12.51 % 12.23 % 11.75 % 12.51 % 11.75 % (1) Efficiency ratio is calculated by dividing total non-interest expense by the sum of net interest income and total non-interest income (2) In accordance with the adoption of the CECL standard on January 1, 2023, the allowance for credit losses on loans as of June 30, 2023 and March 31, 2023 are calculated under the current expected credit losses model. For June 30, 2022, the allowance on loans presented is the allowance for loan losses calculated using the incurred loss model. 11
Loan and Held-to-Maturity Securities Portfolio Composition (In thousands) At June 30, 2023 At March 31, 2023 At June 30, 2022 Amount % of total loans Amount % of total loans Amount % of total loans Commercial portfolio: Commercial and industrial $ 949,403 22.3% $ 923,853 22.0% $ 743,403 20.4% Multifamily 1,095,752 25.8% 1,062,826 25.3% 860,514 23.6% Commercial real estate 333,340 7.8% 327,477 7.8% 333,987 9.2% Construction and land development 28,664 0.7% 37,828 0.9% 43,212 1.2% Total commercial portfolio 2,407,159 56.6% 2,351,984 56.0% 1,981,116 54.4% Retail portfolio: Residential real estate lending 1,388,571 32.7% 1,390,135 33.1% 1,236,088 33.9% Consumer solar(1) 411,873 9.7% 410,725 9.8% 382,097 10.5% Consumer and other(1) 44,135 1.0% 45,326 1.1% 44,297 1.2% Total retail portfolio 1,844,579 43.4% 1,846,186 44.0% 1,662,482 45.6% Total loans held for investment 4,251,738 100.0% 4,198,170 100.0% 3,643,598 100.0% Net deferred loan origination costs(2) — — 4,806 Allowance for credit losses(3) (67,431) (67,323) (39,477) Loans receivable, net $ 4,184,307 $ 4,130,847 $ 3,608,927 Held-to-maturity securities portfolio: PACE assessments $ 1,037,800 62.7% $ 996,395 61.5% $ 742,146 53.9% Other securities 617,437 37.3% 622,799 38.5% 633,520 46.1% Total held-to-maturity securities 1,655,237 100.0% 1,619,194 100.0% 1,375,666 100.0% Allowance for credit losses(3) (707) (687) — Total held-to-maturity securities, net $ 1,654,530 $ 1,618,507 $ 1,375,666 (1) The Company adopted the CECL standard on January 1, 2023. As a result, the classification of loan segments was updated, and all loan balances for presented periods have been reclassified. (2) With the adoption of the CECL standard, loans balances as of June 30, 2023 and March 31, 2023 are presented at amortized cost, net of deferred loan origination costs. (3) With the adoption of the CECL standard, the allowance for credit losses on both loans and securities as of June 30, 2023 and March 31, 2023 are calculated under the current expected credit losses model. For June 30, 2022, no allowance was calculated on securities, and the allowance on loans presented is the allowance for loan losses calculated using the incurred loss model. 12
Net Interest Income Analysis Three Months Ended June 30, 2023 March 31, 2023 June 30, 2022 (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 $ 114,010 $ 1,056 3.72 % $ 90,962 $ 618 2.76 % $ 305,134 $ 551 0.72 % Securities(1) 3,259,797 39,393 4.85 % 3,361,750 39,193 4.73 % 3,443,987 23,308 2.71 % Resell agreements 5,570 113 8.14 % 18,644 319 6.94 % 231,468 1,044 1.81 % Loans receivable, net (2)(3) 4,202,911 45,360 4.33 % 4,129,460 44,806 4.40 % 3,504,223 33,766 3.86 % Total interest-earning assets 7,582,288 85,922 4.55 % 7,600,816 84,936 4.53 % 7,484,812 58,669 3.14 % Non-interest-earning assets: Cash and due from banks 5,034 4,015 9,296 Other assets 208,944 217,020 266,186 Total assets $ 7,796,266 $ 7,821,851 $ 7,760,294 Interest-bearing liabilities: Savings, NOW and money market deposits $ 3,203,681 $ 13,298 1.66 % $ 3,091,228 $ 9,555 1.25 % $ 3,030,788 $ 1,332 0.18 % Time deposits 158,992 610 1.54 % 149,814 297 0.80 % 192,181 149 0.31 % Brokered CDs 411,510 4,908 4.78 % 367,684 3,983 4.39 % — — 0.00 % Total interest-bearing deposits 3,774,183 18,816 2.00 % 3,608,726 13,835 1.55 % 3,222,969 1,481 0.18 % Other borrowings 371,004 4,121 4.46 % 347,878 3,821 4.45 % 83,886 690 3.30 % Total interest-bearing liabilities 4,145,187 22,937 2.22 % 3,956,604 17,656 1.81 % 3,306,855 2,171 0.26 % Non-interest-bearing liabilities: Demand and transaction deposits 3,055,770 3,286,964 3,855,735 Other liabilities 67,710 75,798 80,274 Total liabilities 7,268,667 7,319,366 7,242,864 Stockholders' equity 527,599 502,485 517,430 Total liabilities and stockholders' equity $ 7,796,266 $ 7,821,851 $ 7,760,294 Net interest income / interest rate spread $ 62,985 2.33 % $ 67,280 2.72 % $ 56,498 2.88 % Net interest-earning assets / net interest margin $ 3,437,101 3.33 % $ 3,644,212 3.59 % $ 4,177,957 3.03 % Total deposits excluding Brokered CDs / total cost of deposits excluding Brokered CDs $ 6,418,443 0.87 % $ 6,528,006 0.61 % $ 7,078,704 0.08 % Total deposits / total cost of deposits $ 6,829,953 1.10 % $ 6,895,690 0.81 % $ 7,078,704 0.08 % Total funding / total cost of funds $ 7,200,957 1.28 % $ 7,243,568 0.99 % $ 7,162,590 0.12 % (1) Includes FHLBNY stock in the average balance, and dividend income on FHLBNY stock in interest income. (2) Amounts are net of deferred origination costs. With the adoption of the CECL standard on January 1, 2023, the average balance of the allowance for credit losses on loans was reclassified for all presented periods to other assets to allow for comparability. (3) Includes prepayment penalty interest income in 2Q2023, 1Q2023, and 2Q2022 of $0, $0, and $379, respectively (in thousands). 13
Net Interest Income Analysis Six Months Ended June 30, 2023 June 30, 2022 (In thousands) Average Balance Income / Expense Yield / Rate Average Balance Income / Expense Yield / Rate Interest-earning assets: Interest-bearing deposits in banks $ 102,550 $ 1,673 3.29 % $ 364,178 $ 730 0.40 % Securities(1) 3,310,492 78,586 4.79 % 3,319,009 41,743 2.54 % Resell agreements 12,071 432 7.22 % 225,378 1,764 1.58 % Total loans, net (2)(3) 4,166,389 90,166 4.36 % 3,392,788 64,893 3.86 % Total interest-earning assets 7,591,502 170,857 4.54 % 7,301,353 109,130 3.01 % Non-interest-earning assets: Cash and due from banks 4,527 9,261 Other assets 212,960 266,932 Total assets $ 7,808,989 $ 7,577,546 Interest-bearing liabilities: Savings, NOW and money market deposits $ 3,147,765 $ 22,853 1.46 % $ 2,963,809 $ 2,579 0.18 % Time deposits 154,429 907 1.18 % 195,741 304 0.31 % Brokered CDs 389,718 8,891 4.60 % — — 0.00 % Total interest-bearing deposits 3,691,912 32,651 1.78 % 3,159,550 2,883 0.18 % Other borrowings 359,505 7,942 4.45 % 84,239 1,381 3.31 % Total interest-bearing liabilities 4,051,417 40,593 2.02 % 3,243,789 4,264 0.27 % Non-interest-bearing liabilities: Demand and transaction deposits 3,170,729 3,703,455 Other liabilities 71,732 91,510 Total liabilities 7,293,878 7,038,754 Stockholders' equity 515,111 538,792 Total liabilities and stockholders' equity $ 7,808,989 $ 7,577,546 Net interest income / interest rate spread $ 130,264 2.52 % $ 104,866 2.74 % Net interest-earning assets / net interest margin $ 3,540,085 3.46 % $ 4,057,564 2.90 % Total deposits excluding Brokered CDs / total cost of deposits excluding Brokered CDs $ 6,472,923 0.74 % $ 6,863,005 0.08 % Total deposits / total cost of deposits $ 6,862,641 0.96 % $ 6,863,005 0.08 % Total funding / total cost of funds $ 7,222,146 1.13 % $ 6,947,244 0.12 % (1) Includes FHLBNY stock in the average balance, and dividend income on FHLBNY stock in interest income. (2) Amounts are net of deferred origination costs. With the adoption of the CECL standard on January 1, 2023, the average balance of the allowance for credit losses on loans was reclassified for all presented periods to other assets to allow for comparability. (3) Includes prepayment penalty interest income in June YTD 2023 and June YTD 2022 of $0 and $0.8 million, respectively 14
Deposit Portfolio Composition Three Months Ended (In thousands) June 30, 2023 March 31, 2023 June 30, 2022 Ending Balance Average Balance Ending Balance Average Balance Ending Balance Average Balance Non-interest-bearing demand deposit accounts $ 2,958,104 $ 3,055,770 $ 3,015,558 $ 3,286,964 $ 3,965,907 $ 3,855,735 NOW accounts 199,262 193,851 199,518 196,499 208,795 211,007 Money market deposit accounts 2,744,411 2,644,580 2,702,464 2,514,835 2,540,657 2,431,571 Savings accounts 363,058 365,250 371,240 379,894 388,185 388,210 Time deposits 161,335 158,992 157,697 149,814 187,623 192,181 Brokered CDs 468,481 411,510 594,884 367,684 — — Total deposits $ 6,894,651 $ 6,829,953 $ 7,041,361 $ 6,895,690 $ 7,291,167 $ 7,078,704 Total deposits excluding Brokered CDs $ 6,426,170 $ 6,418,443 $ 6,446,477 $ 6,528,006 $ 7,291,167 $ 7,078,704 Three Months Ended June 30, 2023 March 31, 2023 June 30, 2022 (In thousands) Average Rate Paid(1) Cost of Funds Average Rate Paid(1) Cost of Funds Average Rate Paid(1) Cost of Funds Non-interest bearing demand deposit accounts 0.00 % 0.00 % 0.00 % 0.00 % 0.00 % 0.00 % NOW accounts 0.95 % 0.96 % 0.76 % 0.76 % 0.13 % 0.09 % Money market deposit accounts 2.02 % 1.81 % 1.59 % 1.36 % 0.20 % 0.19 % Savings accounts 1.04 % 1.00 % 0.95 % 0.78 % 0.15 % 0.11 % Time deposits 1.77 % 1.54 % 1.25 % 0.80 % 0.30 % 0.31 % Brokered CDs 5.02 % 4.78 % 4.52 % 4.39 % 0.00 % — Total deposits 1.27 % 1.10 % 1.09 % 0.81 % 0.09 % 0.08 % Interest-bearing deposits excluding Brokered CDs 1.84 % 1.66 % 1.47 % 1.23 % 0.20 % 0.18 % (1) Average rate paid is calculated as the weighted average of spot rates on deposit accounts as of June 30, 2023. 15
Asset Quality (In thousands) June 30, 2023 March 31, 2023 June 30, 2022 Loans 90 days past due and accruing $ — $ 1,299 $ — Nonaccrual loans held for sale 1,546 5,653 4,841 Nonaccrual loans - Commercial 28,078 25,779 22,028 Nonaccrual loans - Retail 5,606 4,177 2,369 Other real estate owned — — 307 Nonaccrual securities 35 1,835 56 Total nonperforming assets $ 35,265 $ 38,743 $ 29,601 Nonaccrual loans: Commercial and industrial $ 7,575 $ 9,521 $ 9,550 Multifamily 2,376 2,710 3,494 Commercial real estate 4,660 4,745 3,931 Construction and land development 13,467 8,803 5,053 Total commercial portfolio 28,078 25,779 22,028 Residential real estate lending 2,470 2,016 898 Consumer solar 2,811 2,021 1,451 Consumer and other 325 140 20 Total retail portfolio 5,606 4,177 2,369 Total nonaccrual loans $ 33,684 $ 29,956 $ 24,397 Nonaccrual loans to total loans 0.79 % 0.71 % 0.67 % Nonperforming assets to total assets 0.45 % 0.49 % 0.82 % Allowance for credit losses on loans to nonaccrual loans 200.19 % 224.74 % 161.81 % Allowance for credit losses on loans to total loans 1.59 % 1.61 % 1.08 % Annualized net charge-offs (recoveries) to average loans 0.29 % 0.25 % 0.11 % 16
Credit Quality June 30, 2023 March 31, 2023 June 30, 2022 ($ in thousands) Criticized and classified loans Commercial and industrial $ 34,987 $ 35,823 $ 32,869 Multifamily 17,668 18,710 53,347 Commercial real estate 29,788 35,121 39,744 Construction and land development 15,891 16,426 7,476 Residential real estate lending 2,470 2,016 898 Consumer solar 2,811 2,021 1,451 Consumer and other 325 140 20 Total loans $ 103,940 $ 110,257 $ 135,805 Criticized and classified loans to total loans Commercial and industrial 0.82 % 0.85 % 0.90 % Multifamily 0.42 % 0.45 % 1.46 % Commercial real estate 0.70 % 0.84 % 1.09 % Construction and land development 0.37 % 0.39 % 0.20 % Residential real estate lending 0.06 % 0.05 % 0.02 % Consumer solar 0.07 % 0.05 % 0.04 % Consumer and other 0.01 % 0.00 % 0.00 % 2.45 % 2.63 % 3.71 % 17
Reconciliation of GAAP to Non-GAAP Financial Measures The information provided below presents a reconciliation of each of our non-GAAP financial measures to the most directly comparable GAAP financial measure. As of and for the As of and for the Three Months Ended Six Months Ended (in thousands) June 30, 2023 March 31, 2023 June 30, 2022 June 30, 2023 June 30, 2022 Core operating revenue Net Interest income (GAAP) $ 62,985 $ 67,280 $ 56,498 $ 130,264 $ 104,866 Non-interest income 7,944 5,208 7,246 13,150 14,668 Less: Securities (gain) loss 267 3,086 582 3,353 420 Less: Subdebt repurchase gain — (780) — (780) — Core operating revenue (non-GAAP) 71,196 74,794 64,326 145,987 119,954 Add: Tax (credits) depreciation on solar investments — — 862 — 798 Core operating revenue excluding solar tax impact (non-GAAP) 71,196 74,794 65,188 145,987 120,752 Core non-interest expense Non-interest expense (GAAP) $ 37,529 $ 38,627 $ 34,347 $ 76,156 $ 68,743 Less: Other one-time expenses(1) (285) — (316) (285) (739) Core non-interest expense (non-GAAP) 37,244 38,627 34,031 75,871 68,004 Core net income Net Income (GAAP) $ 21,642 $ 21,338 $ 19,613 $ 42,977 $ 33,778 Less: Securities (gain) loss 267 3,086 582 3,353 420 Less: Subdebt repurchase gain — (780) — (780) — Add: Other one-time expenses 285 — 316 285 739 Less: Tax on notable items (147) (604) (233) (753) (300) Core net income (non-GAAP) 22,047 23,040 20,278 45,082 34,637 Add: Tax (credits) depreciation on solar investments — — 862 — 798 Add: Tax effect of solar income — — (224) — (207) Core net income excluding solar tax impact (non-GAAP) 22,047 23,040 20,916 45,082 35,228 Tangible common equity Stockholders' equity (GAAP) $ 528,614 $ 519,158 $ 498,041 $ 528,614 $ 498,041 Less: Minority interest (133) (133) (133) (133) (133) Less: Goodwill (12,936) (12,936) (12,936) (12,936) (12,936) Less: Core deposit intangible (2,661) (2,883) (3,628) (2,661) (3,628) Tangible common equity (non-GAAP) 512,884 503,206 481,344 512,884 481,344 Average tangible common equity Average stockholders' equity (GAAP) $ 527,599 $ 502,485 $ 517,430 $ 515,111 $ 538,792 Less: Minority interest (133) (133) (133) (133) (133) Less: Goodwill (12,936) (12,936) (12,936) (12,936) (12,936) Less: Core deposit intangible (2,769) (2,991) (3,755) (2,879) (3,886) Average tangible common equity (non-GAAP) 511,761 486,425 500,606 499,163 521,837 Core return on average assets Denominator: Total average assets $ 7,796,266 $ 7,821,851 $ 7,760,294 $ 7,808,988 $ 7,577,547 Core return on average assets (non-GAAP) 1.13% 1.19% 1.05% 1.16% 0.92% Core return on average assets excluding solar tax impact (non-GAAP) 1.13% 1.19% 1.08% 1.16% 0.94% Core return on average tangible common equity Denominator: Average tangible common equity $ 511,761 $ 486,425 $ 500,606 $ 499,163 $ 521,837 Core return on average tangible common equity (non-GAAP) 17.28% 19.21% 16.25% 18.21% 13.38% Core return on average tangible common equity excluding solar tax impact (non-GAAP) 17.28% 19.21% 16.76% 18.21% 13.61% Core efficiency ratio Numerator: Core non-interest expense (non-GAAP) $ 37,244 $ 38,627 $ 34,031 $ 75,871 $ 68,004 Core efficiency ratio (non-GAAP) 52.31% 51.64% 52.90% 51.97% 56.69% Core efficiency ratio excluding solar tax impact (non-GAAP) 52.31% 51.64% 52.20% 51.97% 56.32% (1) Severance expense for positions eliminated plus, for 2022, expenses related to the termination of the merger agreement with Amalgamated Bank of Chicago. 18
amalgamatedbank.com Member FDIC Amalgamated Financial Corp. Second Quarter 2023 Earnings Presentation July 27, 2023
2 Safe Harbor Statements INTRODUCTION On March 1, 2021 (the “Effective Date”), Amalgamated Financial Corp. (the “Company”) completed its holding company reorganization and acquired all of the outstanding stock of Amalgamated Bank (the “Bank”). In this presentation, unless the context indicates otherwise, references to “we,” “us,” and “our” refer to the Company and the Bank. However, if the discussion relates to a period before the Effective Date, the terms refer only to the Bank. FORWARD-LOOKING STATEMENTS Statements included in this presentation that are not historical in nature are intended to be, and are hereby identified as, forward-looking statements within the meaning of the Private Securities Litigation Reform Act, Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements generally can be identified through the use of forward-looking terminology such as “may,” “will,” “anticipate,” “aspire,” “should,” “would,” “believe,” “contemplate,” “expect,” “estimate,” “continue,” “in the future,” “may” and “intend,” as well as other similar words and expressions of the future. Forward-looking statements are subject to known and unknown risks, uncertainties and other factors, any or all of which could cause actual results to differ materially from the results expressed or implied by such forward-looking statements. These forward- looking statements include, but are not limited to, our 2023 Guidance, and statements related to future loss/income (including projected non-interest income) of solar tax equity investments. These forward-looking statements are subject to known and unknown risks, uncertainties and other factors, many of which are beyond our control and 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: 1. uncertain conditions in the banking industry and in national, regional and local economies in our core markets, which may have an adverse impact on our business, operations and financial performance; 2. deterioration in the financial condition of borrowers resulting in significant increases in loan losses and provisions for those losses 3. deposit outflows and subsequent declines in liquidity caused by factors that could include lack of confidence in the banking system, a deterioration in market conditions or the financial condition of depositors; 4. changes in our deposits, including an increase in uninsured deposits; 5. unfavorable conditions in the capital markets, which may cause declines in our stock price and the value of our investments; 6. continued fluctuation of the interest rate environment including changes in net interest margin or changes that affect the yield curve on investments; 7. potential deterioration in real estate collateral values 8. changes in legislation, regulation, public policies, or administrative practices impacting the banking industry, including increased regulation and FDIC assessments in the aftermath of the recent bank failures; 9. the outcome of any legal or regulatory proceedings that may be instituted against us 10. our inability to maintain the historical growth rate of our loan portfolio; 11. changes in loan underwriting, credit review or loss reserve policies associated with economic conditions, examination conclusions, or regulatory developments; 12. the impact of competition with other financial institutions,including pricing pressures and the resulting impact on our results, including as a result of compression to net interest margin 13. any matter that would cause us to conclude that there was impairment of any asset, including intangible assets; 14. the risk that the preliminary financial information reported herein and our current preliminary analysis could be different when our review is finalized; 15. increased competition for experienced members of the workforce including executives in the banking industry; 16. a failure in or breach of our operational or security systems or infrastructure, or those of third party vendors or other service providers, including as a result of unauthorized access, computer viruses, phishing schemes, spam attacks, human error, natural disasters, power loss and other security breaches; 17. a downgrade in our credit rating; 18. increased political opposition to Environmental, Social and Governance (“ESG”) practices; 19. recessionary conditions; 20. the ongoing economic effects of the COVID-19 pandemic; 21. physical and transitional risks related to climate change as they impact our business and the businesses that we finance; 22. future repurchase of our shares through our common stock repurchase program. Additional factors which could affect the forward-looking statements can be found in our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K filed with the SEC and available on the SEC’s website at www.sec.gov/. We disclaim any obligation to update or revise any forward-looking statements contained in this presentation, which speak only as of the date hereof, or to update the reasons why actual results could differ from those contained in or implied by such statements, whether as a result of new information, future events or otherwise, except as required by law.
3 Safe Harbor Statements cont. NON-GAAP FINANCIAL MEASURES This presentation refers to certain non-GAAP financial measures including, without limitation, “Core operating revenue,” “Core non-interest expense,” “Core non-interest income,” “Core net income,” “Tangible common equity,” “Average tangible common equity,” “Core return on average assets,” “Core return on average tangible common equity,” and “Core efficiency ratio.” Our management utilizes this information to compare our operating performance for June 30, 2023 versus certain periods in 2023 and 2022 and to prepare internal projections. We believe these non-GAAP financial measures facilitate making period-to-period comparisons and are meaningful indications of our operating performance. In addition, because intangible assets such as goodwill and other discrete items unrelated to our core business, which are excluded, vary extensively from company to company, we believe that the presentation of this information allows investors to more easily compare our results to those of other companies. The presentation of non-GAAP financial information, however, is not intended to be considered in isolation or as a substitute for GAAP financial measures. We strongly encourage readers to review the GAAP financial measures included in this release and not to place undue reliance upon any single financial measure. In addition, because non-GAAP financial measures are not standardized, it may not be possible to compare the non-GAAP financial measures in this presentation 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 presentation and also may be viewed on our website, amalgamatedbank.com. You should assume that all numbers presented are unaudited unless otherwise noted.
2Q23 Highlights 4 (1) See non-GAAP disclosures on pages 26-27 INCOME STATEMENT BALANCE SHEET CAPITAL Net Income - GAAP $21.6MM Core Net Income(1) $22.0MM Net Interest Income $63.0MM Core Diluted EPS(1) $0.72 Net Interest Margin 3.33% Core Return on Assets(1) 1.13% Core Efficiency(1) 52.31% Deposits, ex Brokered CDs $-20.3MM | -0.3% Loans $53.5MM | +1.3% PACE growth $64.3MM | +6.4% Tier 1 Leverage 7.78% | +28 bps CET 1 12.51% | +20 bps Tangible Book value per share $16.78 | +2.2%
-$1.1 -$3.8 $0.8 $1.2 $0.2 $0.6 $0.6 $0.5 $1.8 $3.2 Tax credits (accelerated depreciation) on solar investments Steady state solar income FY21 FY22 1Q23 2Q23 3Q23 4Q23 FY23 FY24-25 Solar Tax-Equity Investments OVERVIEW OF SOLAR TAX EQUITY INVESTMENTS • Metrics excluding the impact of tax credits or accelerated depreciation is a meaningful way to evaluate our performance and are adjusted in accordance with the below chart ◦ Immediate realization of tax benefits and subsequent accelerated depreciation of the value of the investment creates volatility in the GAAP and core earnings presentations ◦ Steady state income is generally achieved within 4 quarters of initial investment and all investments are net profitable over their lives (generally 5 years) • We expect more solar tax-equity investments in the future (not shown in forecast below) 5 ACTUAL AND PROJECTED SOLAR INCOME(1)(2)(3) $ millions Actual Forecast (1) Actual 2022 results and projected solar income forecasts have been revised modestly since 4Q 2021 (2) Balances presented are not tax effected (3) Refer to Reconciliation of Non-GAAP Financial Measures on slides 26-27 for further details on impact to key ratios
Ending Deposits + Brokered CDs $69.4 $84.9 $73.3 $130.7 $70.1 2019 2020 2021 2022 June 2023 YTD Trends 6 KEY FINANCIAL TRENDS THROUGH 2Q23 ($ in millions) (1) Compounded Annual Growth Rate (“CAGR”) (2) See solar tax investment slide 5 for components of income exclusions (3) GAAP Pre-tax, pre-provision income was $67.3 million YTD through 2Q 2023, $123.2 million in 2022, $70.4 in 2021, and $86.7 in 2020, the only years impacted by our solar investments (4) Core Pre-Tax Pre-Provision Earnings CAGR is calculated from 2019 - 2022 10.3% CAGR(1) 12.0% CAGR(1) 23.5% CAGR(1)(4) NPA / Total Assets Loans + PACE $4,641 $5,339 $6,356 $6,595 $6,895 $4,641 $5,339 $6,356 $6,521 $6,427 $74 $468 2019 2020 2021 2022 2Q23 1.25% 1.38% 0.77% 0.44% 0.45% 2019 2020 2021 2022 2Q23 $3,703 $3,868 $3,904 $4,973 $5,245 $3,439 $3,447 $3,276 $4,061 $4,184 $264 $421 $627 $912 $1,061 2019 2020 2021 2022 2Q23 >> 5.8% CAGR(1) (Loans) Core Pre-Tax Pre-Provision Earnings(2)(3) excluding the impact of solar tax equity investments 9.7% CAGR(1) (excl. Brokered CD)
Deposit Portfolio 7 2Q23 HIGHLIGHTS • Total deposits decreased $146.7 million or 2.1% in 2Q23 All following metrics exclude Brokered CDs • Deposits decreased $20.3 million compared to 1Q23 primarily related to pension customer timing and client diversification for yield/insurance. ◦ Political deposit growth was $157.7 million, comprising 13.0% of the deposit portfolio ◦ Approximately $98mm of deposits transferred to the bank's treasury investment management • Cost of deposits of 87 basis points, compared to 61 basis points in Q1 as we proactively price to maintain and attract deposits. ◦ Interest bearing deposit cost was 166 basis points in Q2 2023 and 123 basis points in Q1 • Non-interest bearing deposits represented 46.0% of ending deposits in 2Q23, compared to 46.8% in 1Q23 ◦ Reciprocal deposits increased by $438.6 million, or 59.7% in the quarter • Loan/Deposit ratio of 66.16% as of 2Q23 TOTAL DEPOSITS ($ in billions) $7.3 $7.2 $6.6 $7.0 $6.9 $6.7 $6.0 $6.0 $5.9 $5.7 $5.6 $5.5 $0.1 $0.6 $0.5 $0.4 $1.3 $1.2 $0.6 $0.7 $0.8 $0.8 Political Brokered CDs All Other Deposits 2Q22 3Q22 4Q22 1Q23 2Q23 7/21/23 Through July 21, 2023, total deposits excluding Brokered CDs increased by approximately $46 million
Super-Core Deposits 8 SUPER-CORE DEPOSITS(2) BY IMPACT SEGMENT ($ in billions) 2Q23 HIGHLIGHTS (1) CML - Other contains but is not limited to: nursing homes, commercial real estate, and non-impact accounts (2) Super-core deposits are defined as all deposit accounts with a relationship length of over 5 years, excluding brokered certificates of deposit (3) Core deposits is defined as total deposits excluding all brokered deposits, deposits from deposit listing services, temporary transaction deposits, and certain escrow deposits. We believe the most directly comparable GAAP financial measure is total deposits. • Super-core deposits(2) make up $3.6 billion, or 54% of total core deposits(3) • ◦ Super-core deposits are minimum 5-years old & concentrated within mission-aligned segments ◦ Highly sticky • Weighted average account life of our super-core deposits is 17 years, compared to 2 years for our other core deposits • Cash and borrowing potential totals $2.6 billion, or 183% of uninsured non-super- core deposits, with a total borrowings utilization rate of 8% excluding subordinated debt • Total available liquidity, including cash, unpledged non-PACE securities and borrowing potential totals $3.3 billion or 111% of non-super-core deposits Impact Sector Total Balance ($M) % of Total Core Deposits Weighted Avg. Account Duration (Years) CML - Labor $1,577 24% 20 Consumer - Labor 662 10% 22 CML - Social/Philanthropy 497 8% 10 CML - Political 384 6% 7 CML - Climate/Sustainability 132 2% 7 CML - NFP 44 1% 9 CML - Other(1) 254 4% 16 Total $3,550 54% 17 Other Core Deposits $2,990 46% 2 Total Core Deposits(3) $6,540 10
Deposit Composition 9 TOTAL CORE DEPOSITS(2) BY IMPACT SEGMENT ($ in billions) $7.38 $7.28 $6.65 $6.55 $6.54 $2.35 $2.27 $2.08 $2.19 $2.00 $1.34 $1.30 $1.41 $1.18 $1.14 $0.95 $0.94 $0.90 $0.86 $0.84 $1.28 $1.15 $0.64 $0.68 $0.84 $0.50 $0.46 $0.60 $0.74 $0.77 $0.58 $0.67 $0.61 $0.52 $0.53 $0.38 $0.48 $0.41 $0.38 $0.42 CML - Labor CML - Social/Philanthropy Consumer - Labor CML - Political CML - NFP CML - Other(1) CML - Climate/Sustainability 2Q22 3Q22 4Q22 1Q23 2Q23 (1) CML - Other contains but is not limited to: nursing homes, commercial real estate, and non-impact accounts (2) Core Deposits is defined as total deposits excluding all brokered deposits, deposits from deposit listing services, temporary transaction deposits, and certain escrow deposits. We believe the most directly comparable GAAP financial measure is total deposits.
$0.2 $0.3 $0.4 $0.5 $0.6 $0.8 $1.1 $1.2 $0.6 $0.7 $0.8 $1.0 $1.0 $1.1 $1.3 $1.2 $0.6 $0.7 $0.8 $0.8 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 7/21/23 10 HISTORICAL TREND ($ in billions) Political Deposits • Although cyclical, political deposit balances overall have shown an upward trend YoY - highs and lows have both grown higher ◦ High deposit points are reflected in the quarter preceding a major election season - orange bars ◦ Low deposit points are reflected in the quarter during a major election - gray bars • Political deposit rebuild in 2023 has been consistent with past results • We expect political deposits to be more rate sensitive in 2023 as deposits build for 2024 presidential election in a protracted high rate environment +15% growth +49% growth +17% growth +11.2mm
Investment Securities $2.2B PACE $1.1B Cash and Other $0.1B Residential $1.4B Multifamily & Commercial Real Estate $1.5B C&I, Consumer and Other $1.4B Interest Earning Assets 11 INTEREST EARNING ASSETS OF $7.6B AS OF JUNE 30, 2023 We maintain a diverse, low risk profile of interest earning assets • No fossil fuel exposure • $227mm of government guaranteed loans • $363mm residential solar loans with strong credit scores • Predominantly NYC properties with low LTV: MF = 55%, CRE = 48% • 99% first lien mortgages • Low LTV = 62% • 82%/18% originated to purchased portfolio $7.6B as of 2Q23 • $794mm agency securities • $1,523mm of non-agency securities • All non-agency MBS/ABS securities are top of the capital structure • $262mm of Commercial PACE and $776mm securities with low LTV • $23mm of AFS PACE securities • Total Pace LTV of 12%
• HTM securities, excluding PACE assessments represent 27% of the total investment portfolio • HTM PACE securities saw $41.4 million of new growth during the quarter, due to: ◦ Residential PACE purchases of $56.6 million ◦ No Commercial PACE purchases this quarter ◦ $15.2 million in principal payments • 100% of PACE portfolio, and 42% of Non-PACE HTM securities are mission-aligned • Allowance for Credit Losses on HTM Securities is $0.7 million in 2Q23, or 0.04% of the total HTM securities portfolio Held-to-Maturity Securities 12 HELD-TO-MATURITY SECURITIES(1) ($ in millions) 2Q23 HIGHLIGHTS $1,376 $1,492 $1,541 $1,619 $1,655 $742 $857 $912 $996 $1,038 $634 $636 $629 $623 $617 4.28% 4.27% 4.43% 5.07% 5.11% 2.59% 3.07% 3.65% 4.08% 4.19% PACE (HTM) Non Pace HTM PACE (HTM) Yield Non-Pace HTM Yield 2Q22 3Q22 4Q22 1Q23 2Q23 (1) Non-PACE held-to-maturity securities shown at amortized cost
Investment Securities 13 SECURITIES – BOOK VALUE(1)(2) ($ millions) (1) Securities book value excludes unrealized Available for Sale (AFS) gain / loss on sale (2) Non-Agency includes corporate bonds (3) MBS/ABS does not include PACE assessments • Investment Securities totaled $3.4 billion book value for 2Q23 • Agency securities made up 23.5% of the total portfolio, down from 24.6% in 1Q23, reflecting PACE assessment growth • PACE assessments are considered non-agency securities, which are non-rated(3) • Total PACE LTV of 12% • 86.2% of all non-agency MBS/ABS securities are AAA rated and 99.9% are A rated or higher(3); 98.5% of CLO’s are AAA-rated ◦ Average subordination for the C&I CLOs was 43.9% • 31% of the total securities portfolio (or 46% of the securities portfolio excluding PACE) has a floating rate of interest 2Q23 HIGHLIGHTS $3,569 $3,579 $3,485 $3,390 $3,378 $1,779 $1,749 $1,686 $1,560 $1,523 $742 $857 $912 $996 $1,061 $1,048 $973 $887 $834 $794 4.28% 4.27% 4.43% 5.07% 5.20% 1.81% 2.40% 2.82% 3.25% 3.16% 2.47% 3.30% 4.19% 4.89% 5.09% Non-Agency PACE Agency PACE Yield Agency Yield Non-Agency Yield 2Q22 3Q22 4Q22 1Q23 2Q23
• Valuation Loss as % of relative portfolio balance ◦ Total $128.1 million | 7.5% ◦ ex-PACE $127.7 million | 7.6% ◦ PACE $0.4 million | 1.8% • Weighted Average Duration (in years) ◦ Total 1.9 ◦ ex-PACE 1.8 ◦ PACE 4.5 $555 $983 $147 Investment Securities Composition AFS Portfolio Composition(1)(2) ($ in millions) HTM Portfolio Composition(1)(2)(3) ($ in millions) $240 $374 $18 Agency Non-Agency Corporates & Other (1) Both AFS and HTM securities balances shown at book value (2) PACE assets not included in AFS or HTM portfolio composition chart (3) In May of 2022, $277.3 million AFS securities were transferred into our Non-Pace HTM securities portfolio to reduce potential mark to market volatility (4) Weighted average duration calculated using market values of securities 2Q23 HIGHLIGHTS • Weighted average duration(4) is 2.4 years for the total securities portfolio, excl. PACE $1,685mm $632mm AFS HTM • Valuation Loss as % of relative portfolio balance ◦ Total $193.2 million | 11.6% ◦ ex-PACE $69.3 million | 11.0% ◦ PACE $124.0 million | 11.9% • Weighted Average Duration (in years) ◦ Total 5.2 ◦ ex-PACE 4.1 ◦ PACE 5.9 14
Loans Held for Investment 15 TOTAL LOANS ($ in millions) $3,648 $3,871 $4,106 $4,198 $4,252 3.82% 4.06% 4.19% 4.40% 4.33% Total Loans, net of deferred costs Loan Yield 2Q22 3Q22 4Q22 1Q23 2Q23 MISSION ALIGNED COMMERCIAL LOANS ($ in millions) $1,095 $362 $954 $456$976 $146 $711 $412 $118 $215 $243 $45 Mission Aligned Loans Non-Impact Loans Multifamily CRE and Land C&I Consumer/Other 19.8% 9.3% 19.5%25.1% 7.6% 11.3% 7.4% Office Office - Owner Occupied Retail Industrial Mixed Use Education Other $1,236 $1,332 $1,372 $1,390 $1,389 $861 $885 $968 $1,063 $1,096 $743 $805 $926 $924 $949$426 $468 $464 $456 $457$334 $338 $335 $327 $333$43 $39 $38 $38 $29 Residential Multifamily C&I Consumer/other CRE Construction and land 2Q22 3Q22 4Q22 1Q23 2Q23 LOAN COMPOSITION ($ in millions) CRE COMPOSITION BY PROPERTY TYPE 37.3% 53.9% 50.6% 40.1% 42.7% 57.8% 40.5% Weighted Avg. LTV
Net Interest Income and Margin 16 NET INTEREST INCOME & MARGIN ($ millions) • Net interest income was $63.0 million, compared to $67.3 million in 1Q23 • 2Q23 NIM at 3.33%; a decrease of 26 basis points compared to 1Q23 • Loan prepayment penalties had no impact on NIM in 2Q23 or 1Q23 2Q23 HIGHLIGHTS $56.5 $67.6 $67.3 $67.3 $63.0 3.01% 3.48% 3.54% 3.59% 3.33% Net Interest Income Net Interest Margin 2Q22 3Q22 4Q22 1Q23 2Q23 (1) The calculated NIM figures here exclude Allowance for Credit Loss from total interest earning assets across all quarters (2) If Allowance for Credit Loss were included in the NIM calculations above (as it was until 1Q2023), net interest margin would be 3.03%, 3.50%, 3.56% and 3.62% for 2Q22, 3Q22, 4Q22, and 1Q23, respectively
Non-Interest Income 17 CORE NON-INTEREST INCOME ex-solar (1) ($ millions) • Our trust business held $40.3 billion in assets under custody and $14.5 billion in assets under management, compared to $39.7 billion and $13.9 billion, respectively, in the preceding quarter; growth was primarily driven by an increase in fair value, and new custody and asset management business. • Trust fee income increased $0.1 million quarter over quarter, primarily due to higher volume • Retail banking fees grew $0.2 million primarily related to higher income from our consumer and treasury investment businesses • Other income increased $0.4 million, primarily related to higher core steady- state income from our solar tax equity investments 2Q23 HIGHLIGHTS (1) Ex-solar is defined as excluding the impact of our non-core solar tax equity investments $8.7 $7.5 $7.3 $7.5 $8.2 $2.4 $0.9 $0.7 $1.1 $1.5 $3.5 $3.9 $3.6 $3.9 $4.0 $2.8 $2.7 $3.0 $2.5 $2.7 Retail banking Trust fee income Core other income ex-solar (1) 2Q22 3Q22 4Q22 1Q23 2Q23
Non-Interest Expense and Efficiency 18 NON-INTEREST EXPENSE ($ millions) • Efficiency ratio of 52.9% for 2Q23 • Core efficiency ratio excluding the impact of our solar tax equity investments of 52.3% for 2Q23(1) • Non-interest expense for 2Q23 was $37.5 million • Non-interest expense for 2Q23 was $1.1 million lower compared to 1Q23, mainly due to decreased compensation and employee benefits and reduced marketing and technology/data processing spend. Offset by increase in FDIC depository insurance and professional fees. 2Q23 HIGHLIGHTS (1) See non-GAAP disclosures on pages 26-27 (2) Ex-solar is defined as excluding the impact of our solar tax equity investments $34.0 $36.3 $35.6 $38.6 $37.2 $34.3 $36.3 $35.6 $38.6 $37.5 52.2% 48.2% 47.6% 51.6% 52.3% 53.9% 50.0% 49.7% 53.3% 52.9% Core NIX NIX Core Eff Ratio ex-solar(2) Eff Ratio 2Q22 3Q22 4Q22 1Q23 2Q23
Credit Quality 19 NPA / TOTAL ASSETS NCO / AVERAGE LOANS(1) (Quarter trend) 2Q23 HIGHLIGHTS • Nonperforming assets were $35.3 million as of 2Q23, compared to $38.7 million in 1Q23 • Net charge-offs of 0.29% in 2Q23 compared to net charge offs of 0.25% in 1Q23 due to a $1.7 million charge-off on a previously reserved for commercial & industrial loan • Criticized and classified loans decreased by $6.4 million, or 6%; Pass rated loans are 98% of loan portfolio (1) Annualized CRITICIZED AND CLASSIFIED LOANS ($ millions) 0.82% 0.69% 0.44% 0.49% 0.45% 2Q22 3Q22 4Q22 1Q23 2Q23 0.15% 0.11% 0.29% 0.25% 0.29% Solar Residential Commercial 2Q22 3Q22 4Q22 1Q23 2Q23 $136 $113 $107 $110 $104 2Q22 3Q22 4Q22 1Q23 2Q23
1.08% 1.09% 1.10% 1.61% 1.59% 2Q22 3Q22 4Q22 1Q23 2Q23 Allowance for Credit Losses on Loans 20 ALLOWANCE FOR CREDIT LOSSES ON LOANS / TOTAL LOANS ALLOWANCE WATERFALL ($ millions) $67.3 $0.5 $1.1 $(1.7) $0.3 $(0.01) $67.4 3/31/2023 Loan Balances Specific Reserves Charge Offs Quantitative Qualitative Factors 6/30/232 CECL Adoption • The allowance for credit losses on loans remained relatively flat, having increased by $0.1 million compared to prior quarter. 2Q23 HIGHLIGHTS
Returns 21 (1) Refer to Reconciliation of Non-GAAP Financial Measures on slides 26-27 for further details (2) ROAE was 15.2%, 17.8%, 19.9%, 17.2% and 16.5% for 2Q22, 3Q22, 4Q22, 1Q23 and 2Q23, respectively (3) ROATCE was 15.7%, 18.4%, 20.6%, 17.8% and 17.0% for 2Q22, 3Q22, 4Q22, 1Q23 and 2Q23, respectively (4) Ex-solar is defined as excluding the impact of our solar tax equity investments Core ROAE & Core ROATCE ex-solar (1)(2)(3)(4) 16.2% 19.2% 21.8% 18.6% 16.8%16.8% 19.9% 22.6% 19.2% 17.3% Core ROAE ex-solar Core ROATCE ex-solar 2Q22 3Q22 4Q22 1Q23 2Q23
Capital 22 TIER 1 LEVERAGE RATIO COMMON EQUITY TIER 1 RATIO • Regulatory capital ratios remained strong ◦ Tier 1 leverage ratio of 7.78% as of 2Q23 ◦ Bank tier 1 leverage ratio of 8.65% as of Q2 2023 ◦ Common Equity Tier 1 Capital of 12.51% • Tier 1 leverage ratio was 28 basis points higher than the prior quarter, primarily driven by retained earnings impact of day 1 CECL adoption in Q1, and current year earnings 2Q23 HIGHLIGHTS 7.08% 7.16% 7.52% 7.50% 7.78%7.28% 7.27% 7.52% 7.50% 7.80% Tier 1 Leverage Leverage Ratio ex-Excess Liquidity(1) 2Q22 3Q22 4Q22 1Q23 2Q23 11.75% 11.91% 12.31% 12.23% 12.51% 2Q22 3Q22 4Q22 1Q23 2Q23 (1) Excess liquidity is defined as cash in excess of $100.0 million
Tangible Book Value $503 $22 $(3) $(2) $1 $(8) $513 $16.42 $17.13 $17.03 $16.96 $17.04 $17.04 $16.78 $16.78 3/31/23 Earnings Dividends @ $.10/ share Buybacks - Equity impact Buybacks - Share count Other(1) AFS Mark 6/30/23 TANGIBLE COMMON EQUITY & TANGIBLE BOOK VALUE ($ millions) 2Q23 SUMMARY • TBV increase of 2.2% primarily driven by: ◦ $21.6 million in net income ◦ Offset by a $7.9 million decrease from the previous quarter in the tax-effected AFS mark-to-market adjustment • Share repurchase activity accretive to TBV by one cent in the quarter • Total Common Equity Ratio was 6.8% • Dividend Payout Ratio was 14.3% 23 (1) Other includes the effect of stock issuance
2023 Guidance 24 2023 FINANCIAL OUTLOOK - UNCHANGED FROM Q1 2023 • Core pre-tax, pre-provision earnings(1) of: ◦ $133 - $140 million - includes effect of forward rate curve and deposit migration to interest bearing through 2023 • Net Interest Income of: ◦ $248 - $255 million - includes effect of forward rate curve and deposit migration to interest bearing through 2023 • Neutral balance sheet ◦ Loan portfolio optimization and securities mix-shift to loans ◦ Paydown of borrowings via deposit inflows ◦ Focus on capital ratio 2023 INITIATIVES • Deposit gathering and retention • Digital modernization across commercial and consumer segments • Grow sustainability and mission-aligned commercial real-estate lending • Credit quality performance (1) Defined as core pre-tax pre-provision earnings excluding the tax credits and accelerated depreciation of our solar equity investments
Appendix
Reconciliation of Non-GAAP Financials 26 As of and for the As of and for the Three Months Ended Six Months Ended (in thousands) June 30, 2023 March 31, 2023 June 30, 2022 June 30, 2023 June 30, 2022 Core operating revenue Net Interest income (GAAP) $ 62,985 $ 67,280 $ 56,498 $ 130,264 $ 104,866 Non-interest income 7,944 5,208 7,246 13,150 14,668 Less: Securities (gain) loss 267 3,086 582 3,353 420 Less: Subdebt repurchase gain — (780) — (780) — Core operating revenue (non-GAAP) 71,196 74,794 64,326 145,987 119,954 Add: Tax (credits) depreciation on solar investments — — 862 — 798 Core operating revenue excluding solar tax impact (non-GAAP) $ 71,196 $ 74,794 $ 65,188 $ 145,987 $ 120,752 Core non-interest expense Non-interest expense (GAAP) $ 37,529 $ 38,627 $ 34,347 $ 76,156 $ 68,743 Less: Other one-time expenses (1) (285) — (316) (285) (739) Core non-interest expense (non-GAAP) $ 37,244 $ 38,627 $ 34,031 $ 75,871 $ 68,004 Core net income Net Income (GAAP) $ 21,642 $ 21,338 $ 19,613 $ 42,977 $ 33,778 Less: Securities (gain) loss 267 3,086 582 3,353 420 Less: Subdebt repurchase gain — (780) — (780) — Add: Other one-time expenses 285 — 316 285 739 Less: Tax on notable items (147) (604) (233) (753) (300) Core net income (non-GAAP) 22,047 23,040 20,278 45,082 34,637 Add: Tax (credits) depreciation on solar investments — — 862 — 798 Add: Tax effect of solar income — — (224) — (207) Core net income excluding solar tax impact (non-GAAP) $ 22,047 $ 23,040 $ 20,916 $ 45,082 $ 35,228 (1) Severance expense for positions eliminated plus, for 2022, expenses related to the termination of the merger agreement with Amalgamated Bank of Chicago
Reconciliation of Non-GAAP Financials 27 As of and for the As of and for the Three Months Ended Six Months Ended (in thousands) June 30, 2023 March 31, 2023 June 30, 2022 June 30, 2023 June 30, 2022 Tangible common equity Stockholders' equity (GAAP) $ 528,614 $ 519,158 $ 498,041 $ 528,614 $ 498,041 Less: Minority interest (133) (133) (133) (133) (133) Less: Goodwill (12,936) (12,936) (12,936) (12,936) (12,936) Less: Core deposit intangible (2,661) (2,883) (3,628) (2,661) (3,628) Tangible common equity (non-GAAP) $ 512,884 $ 503,206 $ 481,344 $ 512,884 $ 481,344 Average tangible common equity Average stockholders' equity (GAAP) $ 527,599 $ 502,485 $ 517,430 $ 515,111 $ 538,792 Less: Minority interest (133) (133) (133) (133) (133) Less: Goodwill (12,936) (12,936) (12,936) (12,936) (12,936) Less: Core deposit intangible (2,769) (2,991) (3,755) (2,879) (3,886) Average tangible common equity (non-GAAP) $ 511,761 $ 486,425 $ 500,606 $ 499,163 $ 521,837 Core return on average assets Core net income (non-GAAP) $ 22,047 $ 23,040 $ 20,278 $ 45,082 $ 34,637 Denominator: Total average assets 7,796,266 7,821,851 7,760,294 7,808,988 7,577,547 Core return on average assets (non-GAAP) 1.13% 1.19% 1.05% 1.16% 0.92% Core return on average assets excluding solar tax impact (non-GAAP)(1) 1.13% 1.19% 1.08% 1.16% 0.94% Core return on average tangible common equity Core net income (non-GAAP) $ 22,047 $ 23,040 $ 20,278 $ 45,082 $ 34,637 Denominator: Average tangible common equity 511,761 486,425 500,606 499,163 521,837 Core return on average tangible common equity (non-GAAP) 17.28% 19.21% 16.25% 18.21% 13.38% Core return on average tangible common equity excluding solar tax impact (non-GAAP)(1) 17.28% 19.21% 16.76% 18.21% 13.61% Core efficiency ratio Numerator: Core non-interest expense (non-GAAP) $ 37,244 $ 38,627 $ 34,031 $ 75,871 $ 68,004 Core operating revenue (non-GAAP) 71,196 74,794 64,326 145,987 119,954 Core efficiency ratio (non-GAAP) 52.31% 51.64% 52.90% 51.97% 56.69% Core efficiency ratio excluding solar tax impact (non-GAAP)(1) 52.31% 51.64% 52.20% 51.97% 56.32% (1) Calculated using core net income excluding solar tax impact (Non-GAAP) in the numerator, as detailed on page 26
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