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): October 26, 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 October 26, 2023, Amalgamated Financial Corp. (the Company") issued a press release announcing financial results for the third quarter ended September 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 October 26, 2023, the Company will hold an earnings conference call and webcast at 11:00 a.m. (Eastern Time) to discuss financial results for the third quarter ended September 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 Third Quarter 2023 Financial Results; Stable Net Interest Margin at 3.29%, Deposit growth excluding Brokered CDs of $172.8 million Common Equity Tier 1 Capital Ratio of 12.63% | Return on Average Assets of 1.12% NEW YORK, October 26, 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 third quarter ended September 30, 2023. Third Quarter 2023 Highlights (on a linked quarter basis) • Net income of $22.3 million, or $0.73 per diluted share, compared to $21.6 million, or $0.70 per diluted share. • Core net income1 of $23.3 million, or $0.76 per diluted share, compared to $22.0 million, or $0.72 per diluted share. Deposits and Liquidity • Total deposits increased $96.2 million, or 1.4%, to $7.0 billion including a $76.6 million decline in Brokered CDs. • Excluding Brokered CDs, deposits increased $172.8 million or 2.7% to $6.6 billion. • Political deposits increased $115.4 million, or 13.8%, to $951.2 million. • Average cost of deposits, excluding Brokered CDs, increased 24 basis points to 111 basis points for the quarter, where non-interest bearing deposits comprised 43% of total deposits. • Super-core deposits1 totaled approximately $3.4 billion, had a weighted average life of 17 years, and comprised 52% of total deposits, excluding Brokered CDs. • Total uninsured deposits were $3.8 billion, improving to 54% of total deposits. Excluding uninsured super-core deposits of approximately $2.6 billion, remaining uninsured deposits were approximately 17-20% of total deposits with immediate liquidity coverage of 224%. • Cash and borrowing capacity totaled $2.6 billion (immediately available) plus unpledged securities (two-day availability) of $576.0 million for total liquidity within two-days of $3.2 billion (85% of total uninsured deposits). Assets and Margin • Loans receivable, net of deferred loan origination costs, increased $113.0 million, or 2.7%, to $4.4 billion. • Total PACE assessments grew $48.3 million to $1.1 billion. • Net interest income was $63.7 million and net interest margin was 3.29%, with each better than the guidance range provided in the second quarter. Investments and Capital • Tangible common equity ratio of 6.72%, represents another consecutive quarter of improvement. • Traditional available-for-sale securities, which are 72% of the traditional securities portfolio, had unrealized losses of 8.1%, with an effective duration of 1.9 years. • Traditional held-to-maturity securities, which are 28% of the traditional securities portfolio, had unrecognized losses of 10.6%, with an effective duration of 3.9 years. • Regulatory capital remains above bank “well capitalized” standards. • Leverage ratio of 7.89%, increasing 11 basis points from the prior quarter and Common Equity Tier 1 ratio of 12.63% representing a conservative asset mix. Share Repurchase • Repurchased approximately 142,000 shares, or $2.6 million of common stock under the Company’s $40 million share repurchase program announced in the first quarter of 2022, with $20.9 million of remaining capacity. Priscilla Sims Brown, President and Chief Executive Officer, commented, “We are in the midst of turning over an older balance sheet as our lower yielding residential loans, multi-family loans and securities roll off over the next twelve to eighteen months and are replaced with higher yielding loans and PACE securities. When paired with our deposit franchise, I am excited about our prospects for margin expansion during 2024.” 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.
Third Quarter Earnings Net income for the third quarter of 2023 was $22.3 million, or $0.73 per diluted share, compared to $21.6 million, or $0.70 per diluted share, for the second quarter of 2023. The $0.7 million increase for the third quarter of 2023 compared to the preceding quarter was primarily driven by a $1.9 million decrease in the provision for credit losses, a $0.7 million increase in net interest income, and a $0.2 million decrease in non-interest expense, offset by an increase in net losses on sales of available for sale securities of $0.8 million, and a $1.0 million increase in income tax expense. Core net income excluding the impact of solar tax equity investments (non-GAAP)1 for the third quarter of 2023 was $23.3 million, or $0.76 per diluted share, compared to $22.0 million, or $0.72 per diluted share, for the second quarter of 2023. Excluded from core net income for the third quarter of 2023 were $1.7 million of pre-tax losses on sales of securities, $0.6 million of pre-tax gains on subordinated debt repurchases, and $0.3 million in severance costs. Excluded from the second quarter of 2023 were $0.3 million of pre-tax losses on the sale of securities and $0.3 million in severance costs. Net interest income was $63.7 million for the third quarter of 2023, compared to $63.0 million for the second quarter of 2023. Loan interest income increased $4.2 million driven by a $111.9 million increase in average loan balances coupled with a 23 basis point increase in loan yields. Interest income on securities increased $0.6 million driven by a 9 basis point increase in securities yield offset by a decrease in the average balance of securities of $51.5 million. The increase in interest income was offset by higher interest expense on total interest-bearing deposits of $4.3 million driven by a 30 basis point increase in cost and an increase in the average balance of total interest-bearing deposits of $219.3 million. The changes in deposit costs were primarily related to increased rates on select non-time deposit products and also a 99 basis point increase in the cost of time deposits. Net interest margin was 3.29% for the third quarter of 2023, a decrease of 4 basis points from 3.33% in the second quarter of 2023. The modest 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 second or third quarter of 2023. Provision for credit losses totaled $2.0 million for the third quarter of 2023 compared to $3.9 million in the second quarter of 2023. Provision expense is primarily driven by portfolio growth, certain individual reserves, and $2.0 million of solar charge-offs, offset by improvements in macro economic forecasts used in the CECL model and releases of reserves for lower unfunded exposures. Core non-interest income excluding the impact of solar tax equity investments (non-GAAP)1 was $7.8 million for the third quarter of 2023, compared to $8.2 million in the second quarter of 2023. The decrease was primarily related to a decrease in Trust Department fees and miscellaneous fee income. Core non-interest expense (non-GAAP)1 for the third quarter of 2023 was $37.0 million, a decrease of $0.2 million from the second quarter of 2023. This was mainly driven by a $0.6 million decrease in professional fees, offset by a $0.4 million increase in data processing expense primarily as a result of a sales tax credit recognized in the previous quarter. Our provision for income tax expense was $8.8 million for the third quarter of 2023, compared to $7.8 million for the second quarter of 2023. The increase is driven by higher pre-tax earnings in the quarter and also reflects a higher effective tax rate for the year. As a result, our effective tax rate for the third quarter of 2023 was 28.4%, compared to 26.5% for the second quarter of 2023. Our full year annual estimated tax rate is expected to approximate 27.4%. 2
Balance Sheet Quarterly Summary Total assets were $7.9 billion at September 30, 2023, compared to $7.8 billion at June 30, 2023, in keeping with our strategy to keep our balance sheet flat. Notable changes within individual balance sheet line items include a $113.0 million increase in loans receivable, net of deferred loan origination costs, funded mainly by a $88.7 million decrease in available- for-sale investment securities. Additionally, deposits excluding Brokered CDs increased by $172.8 million, while Brokered CDs decreased $76.6 million. The net increase in deposits is primarily reflected by a corresponding $74.5 million increase in cash. Total loans receivable, net of deferred loan origination costs at September 30, 2023 were $4.4 billion, an increase of $113.0 million, or 2.7%, compared to June 30, 2023. The increase in loans is primarily driven by a $101.0 million increase in commercial and industrial loans, and a $21.0 million increase in residential loans, offset by a $9.2 million decrease in the commercial real estate portfolio, and a $0.8 million decrease in multifamily loans. During the quarter we had $37.4 million of payoffs and net upgrades of criticized or classified loans, including $20.9 million of commercial real estate loan upgrades, $4.7 million in multifamily loan upgrades, and a full payoff of an $8.0 million multifamily loan, as we continue to focus on the improving the credit quality of the commercial portfolio. Deposits at September 30, 2023 were $7.0 billion, an increase of $96.2 million, or 1.4%, during the quarter. Deposits excluding Brokered CDs increased by $172.8 million to $6.6 billion, or a 2.7% increase. Deposits held by politically active customers, such as campaigns, PACs, advocacy-based organizations, and state and national party committees were $951.2 million, an increase of $115.4 million during the quarter. Non-interest-bearing deposits represented 42% of average total deposits and 40% of ending total deposits for the quarter, contributing to an average cost of total deposits of 133 basis points. Nonperforming assets totaled $36.5 million, or 0.46% of period-end total assets, an increase of $1.2 million, compared with $35.3 million, or 0.45% on a linked quarter basis. The increase in non-performing assets was primarily driven by a $2.4 million construction loan and $0.5 million in residential loans placed on nonaccrual status, offset by a $1.2 million partial charge-off on a multifamily loan moved to held for sale and subsequently sold in October, and the sale of $0.6 million of nonaccrual consumer loans held-for-sale. During the quarter, the allowance for credit losses on loans increased $0.4 million to $67.8 million. The ratio of allowance to total loans was 1.55%, a decrease of 4 basis points from 1.59% in the second quarter of 2023. Capital Quarterly Summary As of September 30, 2023, our Common Equity Tier 1 Capital Ratio was 12.63%, Total Risk-Based Capital Ratio was 15.28%, and Tier-1 Leverage Capital Ratio was 7.89%, compared to 12.51%, 15.26%, and 7.78%, respectively, as of June 30, 2023. Stockholders’ equity at September 30, 2023 was $546.3 million, an increase of $17.7 million during the quarter. The increase in stockholders’ equity was primarily driven by $22.3 million of net income for the quarter offset by $3.1 million in dividends paid at $0.10 per outstanding share, $2.6 million of common stock repurchases, and a $0.1 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 $17.43 as of September 30, 2023 compared to $16.78 as of June 30, 2023. Tangible common equity improved to 6.72% of tangible assets, compared to 6.59% as of June 30, 2023. 3
Conference Call As previously announced, Amalgamated Financial Corp. will host a conference call to discuss its third quarter 2023 results today, October 26, 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. Third 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 13740860. The telephonic replay will be available until November 2, 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 September 30, 2023, our total assets were $7.9 billion, total net loans were $4.3 billion, and total deposits were $7.0 billion. Additionally, as of September 30, 2023, our trust business held $39.6 billion in assets under custody and $13.9 billion in assets under management. Non-GAAP Financial Measures This release (and the accompanying financial information and tables) refer to certain non-GAAP financial measures including, without limitation, “Core operating revenue,” “Core non-interest expense,” “Core non-interest income,” “Core net income,” “Tangible common equity,” “Average tangible common equity,” “Core return on average assets,” “Core return on average tangible common equity,” and “Core efficiency ratio.” Our management utilizes this information to compare our operating performance for September 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. “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. 5
“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) September 30, June 30, September 30, September 30, ($ in thousands) 2023 2023 2022 2023 2022 INTEREST AND DIVIDEND INCOME Loans $ 49,578 $ 45,360 $ 38,264 $ 139,744 $ 103,157 Securities 39,971 39,506 31,580 118,989 75,087 Interest-bearing deposits in banks 1,687 1,056 971 3,360 1,701 Total interest and dividend income 91,236 85,922 70,815 262,093 179,945 INTEREST EXPENSE Deposits 23,158 18,816 2,491 55,809 5,374 Borrowed funds 4,350 4,121 696 12,292 2,077 Total interest expense 27,508 22,937 3,187 68,101 7,451 NET INTEREST INCOME 63,728 62,985 67,628 193,992 172,494 Provision for credit losses(1) 2,014 3,940 5,363 10,913 10,568 Net interest income after provision for credit losses 61,714 59,045 62,265 183,079 161,926 NON-INTEREST INCOME Trust Department fees 3,678 4,006 3,872 11,613 10,842 Service charges on deposit accounts 2,731 2,712 2,735 7,897 8,008 Bank-owned life insurance income 727 546 785 2,054 2,882 Losses on sale of securities (1,699) (267) (1,844) (5,052) (2,264) Gains (losses) on sale of loans, net 26 2 (367) 30 (32) Equity method investments income (loss) 550 556 (1,151) 1,261 (1,357) Other income 767 389 973 2,127 1,592 Total non-interest income 6,780 7,944 5,003 19,930 19,671 NON-INTEREST EXPENSE Compensation and employee benefits 21,345 21,165 19,527 64,525 55,242 Occupancy and depreciation 3,349 3,436 3,481 10,184 10,378 Professional fees 2,222 2,759 3,173 7,211 8,733 Data processing 4,545 4,082 4,149 13,176 13,660 Office maintenance and depreciation 685 718 807 2,130 2,316 Amortization of intangible assets 222 222 262 666 785 Advertising and promotion 816 1,028 795 3,431 2,410 Federal deposit insurance premiums 1,200 1,100 1,014 3,018 2,440 Other expense 2,955 3,019 3,050 9,154 9,037 Total non-interest expense 37,339 37,529 36,258 113,495 105,001 Income before income taxes 31,155 29,460 31,010 89,514 76,596 Income tax expense 8,847 7,818 8,066 24,230 19,874 Net income $ 22,308 $ 21,642 $ 22,944 $ 65,284 $ 56,722 Earnings per common share - basic $ 0.73 $ 0.71 $ 0.75 $ 2.13 $ 1.84 Earnings per common share - diluted $ 0.73 $ 0.70 $ 0.74 $ 2.12 $ 1.82 Three Months Ended Nine 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 September 30, 2023 and June 30, 2023 is calculated under the current expected credit losses model. For September 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) September 30, 2023 June 30, 2023 December 31, 2022 Assets (unaudited) (unaudited) Cash and due from banks $ 5,494 $ 4,419 $ 5,110 Interest-bearing deposits in banks 134,725 61,296 58,430 Total cash and cash equivalents 140,219 65,715 63,540 Securities: Available for sale, at fair value 1,491,450 1,580,248 1,812,476 Held-to-maturity, at amortized cost: Traditional securities, net of allowance for credit losses of $55 and $57 at September 30, 2023 and June 30, 2023, respectively 612,026 617,380 629,424 PACE assessments, net of allowance for credit losses of $670 and $650 at September 30, 2023 and June 30, 2023, respectively 1,069,834 1,037,151 911,877 1,681,860 1,654,531 1,541,301 Loans held for sale 2,189 2,458 7,943 Loans receivable, net of deferred loan origination costs 4,364,745 4,251,738 4,106,002 Allowance for credit losses(1) (67,815) (67,431) (45,031) Loans receivable, net 4,296,930 4,184,307 4,060,971 Resell agreements — — 25,754 Federal Home Loan Bank of New York ("FHLBNY") stock, at cost 4,389 4,192 29,607 Accrued interest and dividends receivable 47,745 44,104 41,441 Premises and equipment, net 8,428 8,933 9,856 Bank-owned life insurance 105,708 105,951 105,624 Right-of-use lease asset 22,907 24,721 28,236 Deferred tax asset, net 63,322 63,477 62,507 Goodwill 12,936 12,936 12,936 Intangible assets, net 2,439 2,661 3,105 Equity method investments 11,813 11,657 8,305 Other assets 17,397 26,921 29,522 Total assets $ 7,909,732 $ 7,792,812 $ 7,843,124 Liabilities Deposits $ 6,990,854 $ 6,894,651 $ 6,595,037 Subordinated debt, net 70,427 73,766 77,708 FHLBNY advances 4,381 — 580,000 Other borrowings 230,000 230,000 — Operating leases 33,242 35,801 40,779 Other liabilities 34,537 29,980 40,645 Total liabilities 7,363,441 7,264,198 7,334,169 Stockholders’ equity Common stock, par value $.01 per share 307 307 307 Additional paid-in capital 287,579 286,877 286,947 Retained earnings 368,420 349,204 330,275 Accumulated other comprehensive loss, net of income taxes (105,294) (105,214) (108,707) Treasury stock, at cost (4,854) (2,693) — Total Amalgamated Financial Corp. stockholders' equity 546,158 528,481 508,822 Noncontrolling interests 133 133 133 Total stockholders' equity 546,291 528,614 508,955 Total liabilities and stockholders’ equity $ 7,909,732 $ 7,792,812 $ 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 September 30, 2023 and June 30, 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 Nine Months Ended September 30, June 30, September 30, September 30, (Shares in thousands) 2023 2023 2022 2023 2022 Selected Financial Ratios and Other Data: Earnings per share Basic $ 0.73 $ 0.71 $ 0.75 $ 2.13 $ 1.84 Diluted 0.73 0.70 0.74 2.12 1.82 Core net income (non-GAAP) Basic $ 0.76 $ 0.72 $ 0.78 $ 2.23 $ 1.90 Diluted 0.76 0.72 0.77 2.22 1.87 Core net income excluding solar tax impact (non-GAAP) Basic $ 0.76 $ 0.72 $ 0.81 $ 2.23 $ 1.95 Diluted 0.76 0.72 0.80 2.22 1.92 Book value per common share (excluding minority interest) $ 17.93 $ 17.29 $ 15.90 $ 17.93 $ 15.90 Tangible book value per share (non-GAAP) $ 17.43 $ 16.78 $ 15.37 $ 17.43 $ 15.37 Common shares outstanding, par value $.01 per share(1) 30,459 30,573 30,672 30,459 30,672 Weighted average common shares outstanding, basic 30,481 30,619 30,673 30,601 30,864 Weighted average common shares outstanding, diluted 30,590 30,776 31,032 30,738 31,223 (1) 70,000,000 shares authorized; 30,736,141, 30,736,141, and 30,672.303 shares issued for the periods ended September 30, 2023, June 30, 2023, and September 30, 2022 respectively, and 30,458,781, 30,572,606, and 30,672.303 shares outstanding for the periods ended September 30, 2023, June 30, 2023, and September 30, 2022, respectively. 10
Select Financial Data As of and for the As of and for the Three Months Ended Nine Months Ended September 30, June 30, September 30, September 30, 2023 2023 2022 2023 2022 Selected Performance Metrics: Return on average assets 1.12 % 1.11 % 1.15 % 1.11 % 0.98 % Core return on average assets (non-GAAP) 1.17 % 1.13 % 1.19 % 1.17 % 1.02 % Core return on average assets excluding solar tax impact (non-GAAP) 1.17 % 1.13 % 1.24 % 1.17 % 1.04 % Return on average equity 16.43 % 16.45 % 17.79 % 16.69 % 14.32 % Core return on average tangible common equity (non- GAAP) 17.67 % 17.28 % 19.11 % 18.02 % 15.25 % Core return on average tangible common equity excluding solar tax impact (non-GAAP) 17.67 % 17.28 % 19.88 % 18.02 % 15.65 % Average equity to average assets 6.82 % 6.77 % 6.44 % 6.67 % 6.88 % Tangible common equity to tangible assets (non-GAAP) 6.72 % 6.59 % 6.00 % 6.72 % 6.00 % Loan yield 4.56 % 4.33 % 4.07 % 4.43 % 3.95 % Securities yield 4.94 % 4.85 % 3.35 % 4.84 % 2.82 % Deposit cost 1.33 % 1.10 % 0.14 % 1.08 % 0.10 % Net interest margin 3.29 % 3.33 % 3.48 % 3.40 % 3.11 % Efficiency ratio (1) 52.96 % 52.91 % 49.92 % 53.05 % 54.64 % Core efficiency ratio (non-GAAP) 51.71 % 52.31 % 49.09 % 51.88 % 53.80 % Core efficiency ratio excluding solar tax impact (non- GAAP) 51.71 % 52.31 % 48.24 % 51.88 % 53.22 % Asset Quality Ratios: Nonaccrual loans to total loans 0.79 % 0.79 % 0.51 % 0.79 % 0.51 % Nonperforming assets to total assets 0.46 % 0.45 % 0.33 % 0.46 % 0.69 % Allowance for credit losses on loans to nonaccrual loans(2) 197.58 % 200.19 % 212.51 % 197.58 % 212.51 % Allowance for credit losses on loans to total loans(2) 1.55 % 1.59 % 1.09 % 1.56 % 1.09 % Annualized net charge-offs (recoveries) to average loans 0.27 % 0.29 % 0.29 % 0.27 % 0.16 % Capital Ratios: Tier 1 leverage capital ratio 7.89 % 7.78 % 7.16 % 7.89 % 7.16 % Tier 1 risk-based capital ratio 12.63 % 12.51 % 11.91 % 12.63 % 11.91 % Total risk-based capital ratio 15.28 % 15.26 % 14.43 % 15.28 % 14.43 % Common equity tier 1 capital ratio 12.63 % 12.51 % 11.91 % 12.63 % 11.91 % (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 September 30, 2023 and June 30, 2023 are calculated under the current expected credit losses model. For September 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 September 30, 2023 At June 30, 2023 At September 30, 2022 Amount % of total loans Amount % of total loans Amount % of total loans Commercial portfolio: Commercial and industrial $ 1,050,355 24.1% $ 949,403 22.3% $ 805,087 20.8% Multifamily 1,094,955 25.1% 1,095,752 25.8% 884,790 22.9% Commercial real estate 324,139 7.4% 333,340 7.8% 338,002 8.7% Construction and land development 28,326 0.6% 28,664 0.7% 38,946 1.0% Total commercial portfolio 2,497,775 57.2% 2,407,159 56.6% 2,066,825 53.4% Retail portfolio: Residential real estate lending 1,409,530 32.3% 1,388,571 32.7% 1,332,010 34.5% Consumer solar(1) 415,324 9.5% 411,873 9.7% 420,896 10.9% Consumer and other(1) 42,116 1.0% 44,135 1.0% 46,897 1.2% Total retail portfolio 1,866,970 42.8% 1,844,579 43.4% 1,799,803 46.6% Total loans held for investment 4,364,745 100.0% 4,251,738 100.0% 3,866,628 100.0% Net deferred loan origination costs(2) — — 4,662 Allowance for credit losses(3) (67,815) (67,431) (42,122) Loans receivable, net $ 4,296,930 $ 4,184,307 $ 3,829,168 Held-to-maturity securities portfolio: PACE assessments $ 1,070,504 63.6% $ 1,037,800 62.7% $ 856,701 57.4% Traditional securities 612,081 36.4% 617,437 37.3% 635,722 42.6% Total held-to-maturity securities 1,682,585 100.0% 1,655,237 100.0% 1,492,423 100.0% Allowance for credit losses(3) (725) (707) — Total held-to-maturity securities, net $ 1,681,860 $ 1,654,530 $ 1,492,423 (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 September 30, 2023 and June 30, 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 September 30, 2023 and June 30, 2023 are calculated under the current expected credit losses model. For September 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 September 30, 2023 June 30, 2023 September 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 $ 170,830 $ 1,687 3.92 % $ 114,010 $ 1,056 3.72 % $ 222,071 $ 971 1.73 % Securities(1) 3,208,334 39,971 4.94 % 3,259,797 39,393 4.85 % 3,522,863 29,735 3.35 % Resell agreements — — 0.00 % 5,570 113 8.14 % 232,956 1,845 3.14 % Loans receivable, net (2)(3) 4,314,767 49,578 4.56 % 4,202,911 45,360 4.33 % 3,732,976 38,264 4.07 % Total interest-earning assets 7,693,931 91,236 4.70 % 7,582,288 85,922 4.55 % 7,710,866 70,815 3.64 % Non-interest-earning assets: Cash and due from banks 6,129 5,034 4,783 Other assets 204,506 208,944 226,448 Total assets $ 7,904,566 $ 7,796,266 $ 7,942,097 Interest-bearing liabilities: Savings, NOW and money market deposits $ 3,446,027 $ 17,157 1.98 % $ 3,203,681 $ 13,298 1.66 % $ 3,031,402 $ 2,329 0.30 % Time deposits 176,171 1,122 2.53 % 158,992 610 1.54 % 184,476 162 0.35 % Brokered CDs 371,329 4,879 5.21 % 411,510 4,908 4.78 % — — 0.00 % Total interest-bearing deposits 3,993,527 23,158 2.30 % 3,774,183 18,816 2.00 % 3,215,878 2,491 0.31 % Other borrowings 376,585 4,350 4.58 % 371,004 4,121 4.46 % 85,323 696 3.24 % Total interest-bearing liabilities 4,370,112 27,508 2.50 % 4,145,187 22,937 2.22 % 3,301,201 3,187 0.38 % Non-interest-bearing liabilities: Demand and transaction deposits 2,920,737 3,055,770 4,053,953 Other liabilities 74,964 67,710 75,143 Total liabilities 7,365,813 7,268,667 7,430,297 Stockholders' equity 538,753 527,599 511,800 Total liabilities and stockholders' equity $ 7,904,566 $ 7,796,266 $ 7,942,097 Net interest income / interest rate spread $ 63,728 2.20 % $ 62,985 2.33 % $ 67,628 3.26 % Net interest-earning assets / net interest margin $ 3,323,819 3.29 % $ 3,437,101 3.33 % $ 4,409,665 3.48 % Total deposits excluding Brokered CDs / total cost of deposits excluding Brokered CDs $ 6,542,935 1.11 % $ 6,418,443 0.87 % $ 7,269,831 0.14 % Total deposits / total cost of deposits $ 6,914,264 1.33 % $ 6,829,953 1.10 % $ 7,269,831 0.14 % Total funding / total cost of funds $ 7,290,849 1.50 % $ 7,200,957 1.28 % $ 7,355,154 0.17 % (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 3Q2023, 2Q2023, and 3Q2022 of $0, $0, and $800, respectively (in thousands). 13
Net Interest Income Analysis Nine Months Ended September 30, 2023 September 30, 2022 (In thousands) Average Balance Income / Expense Yield / Rate Average Balance Income / Expense Yield / Rate Interest-earning assets: Interest-bearing deposits in banks $ 125,560 $ 3,360 3.58 % $ 316,288 $ 1,701 0.72 % Securities(1) 3,276,065 118,557 4.84 % 3,387,707 71,477 2.82 % Resell agreements 8,003 432 7.22 % 227,932 3,610 2.12 % Loans receivable, net (2)(3) 4,216,391 139,744 4.43 % 3,493,405 103,157 3.95 % Total interest-earning assets 7,626,019 262,093 4.60 % 7,425,332 179,945 3.24 % Non-interest-earning assets: Cash and due from banks 5,067 7,752 Other assets 210,112 267,315 Total assets $ 7,841,198 $ 7,700,399 Interest-bearing liabilities: Savings, NOW and money market deposits $ 3,248,278 $ 40,010 1.65 % $ 2,986,588 $ 4,908 0.22 % Time deposits 161,756 2,030 1.68 % 191,944 466 0.32 % Brokered CDs 383,521 13,769 4.80 % — — 0.00 % Total interest-bearing deposits 3,793,555 55,809 1.97 % 3,178,532 5,374 0.23 % Other borrowings 365,262 12,292 4.50 % 84,604 2,077 3.28 % Total interest-bearing liabilities 4,158,817 68,101 2.19 % 3,263,136 7,451 0.31 % Non-interest-bearing liabilities: Demand and transaction deposits 3,086,482 3,821,571 Other liabilities 72,821 85,996 Total liabilities 7,318,120 7,170,703 Stockholders' equity 523,078 529,696 Total liabilities and stockholders' equity $ 7,841,198 $ 7,700,399 Net interest income / interest rate spread $ 193,992 2.41 % $ 172,494 2.93 % Net interest-earning assets / net interest margin $ 3,467,202 3.40 % $ 4,162,196 3.11 % Total deposits excluding Brokered CDs / total cost of deposits excluding Brokered CDs $ 6,496,516 0.87 % $ 7,000,103 0.10 % Total deposits / total cost of deposits $ 6,880,037 1.08 % $ 7,000,103 0.10 % Total funding / total cost of funds $ 7,245,299 1.26 % $ 7,084,707 0.14 % (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 September YTD 2023 and September YTD 2022 of $0 and $1.6 million, respectively 14
Deposit Portfolio Composition Three Months Ended (In thousands) September 30, 2023 June 30, 2023 September 30, 2022 Ending Balance Average Balance Ending Balance Average Balance Ending Balance Average Balance Non-interest-bearing demand deposit accounts $ 2,808,300 $ 2,920,737 $ 2,958,104 $ 3,055,770 $ 3,839,155 $ 4,053,953 NOW accounts 192,654 192,883 199,262 193,851 204,473 210,972 Money market deposit accounts 3,059,982 2,893,930 2,744,411 2,644,580 2,549,024 2,437,920 Savings accounts 357,470 359,214 363,058 365,250 384,644 382,510 Time deposits 180,529 176,171 161,335 158,992 183,011 184,476 Brokered CDs 391,919 371,329 468,481 411,510 — — Total deposits $ 6,990,854 $ 6,914,264 $ 6,894,651 $ 6,829,953 $ 7,160,307 $ 7,269,831 Total deposits excluding Brokered CDs $ 6,598,935 $ 6,542,935 $ 6,426,170 $ 6,418,443 $ 7,160,307 $ 7,269,831 Three Months Ended September 30, 2023 June 30, 2023 September 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 % 1.01 % 0.95 % 0.96 % 0.33 % 0.19 % Money market deposit accounts 2.31 % 2.14 % 2.02 % 1.81 % 0.37 % 0.33 % Savings accounts 1.16 % 1.14 % 1.04 % 1.00 % 0.32 % 0.19 % Time deposits 2.88 % 2.53 % 1.77 % 1.54 % 0.44 % 0.35 % Brokered CDs 5.14 % 5.21 % 5.02 % 4.78 % 0.00 % — Total deposits 1.46 % 1.33 % 1.27 % 1.10 % 0.17 % 0.14 % Interest-bearing deposits excluding Brokered CDs 2.16 % 2.00 % 1.84 % 1.66 % 0.37 % 0.31 % (1) Average rate paid is calculated as the weighted average of spot rates on deposit accounts as of September 30, 2023. 15
Asset Quality (In thousands) September 30, 2023 June 30, 2023 September 30, 2022 Loans 90 days past due and accruing $ — $ — $ — Nonaccrual loans held for sale 2,189 1,546 5,858 Nonaccrual loans - Commercial 28,041 28,078 17,764 Nonaccrual loans - Retail 6,282 5,606 2,057 Nonaccrual securities 31 35 37 Total nonperforming assets $ 36,543 $ 35,265 $ 25,716 Nonaccrual loans: Commercial and industrial $ 7,575 $ 7,575 $ 9,356 Multifamily — 2,376 3,494 Commercial real estate 4,575 4,660 4,914 Construction and land development 15,891 13,467 — Total commercial portfolio 28,041 28,078 17,764 Residential real estate lending 3,009 2,470 675 Consumer solar 2,817 2,811 1,382 Consumer and other 457 325 — Total retail portfolio 6,283 5,606 2,057 Total nonaccrual loans $ 34,324 $ 33,684 $ 19,821 Nonaccrual loans to total loans 0.79 % 0.79 % 0.51 % Nonperforming assets to total assets 0.46 % 0.45 % 0.33 % Allowance for credit losses on loans to nonaccrual loans 197.58 % 200.19 % 212.51 % Allowance for credit losses on loans to total loans 1.55 % 1.59 % 1.09 % Annualized net charge-offs (recoveries) to average loans 0.27 % 0.29 % 0.29 % 16
Credit Quality September 30, 2023 June 30, 2023 September 30, 2022 ($ in thousands) Criticized and classified loans Commercial and industrial $ 45,959 $ 34,987 $ 26,756 Multifamily 10,999 17,668 42,105 Commercial real estate 8,762 29,788 39,628 Construction and land development 15,891 15,891 2,424 Residential real estate lending 3,009 2,470 675 Consumer solar 2,817 2,811 1,382 Consumer and other 457 325 — Total loans $ 87,894 $ 103,940 $ 112,970 Criticized and classified loans to total loans Commercial and industrial 1.05 % 0.82 % 0.69 % Multifamily 0.25 % 0.42 % 1.09 % Commercial real estate 0.20 % 0.70 % 1.02 % Construction and land development 0.36 % 0.37 % 0.06 % Residential real estate lending 0.07 % 0.06 % 0.02 % Consumer solar 0.06 % 0.07 % 0.04 % Consumer and other 0.01 % 0.01 % 0.00 % 2.00 % 2.45 % 2.92 % 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 Nine Months Ended (in thousands) September 30, 2023 June 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022 Core operating revenue Net Interest income (GAAP) $ 63,728 $ 62,985 $ 67,628 $ 193,992 $ 172,494 Non-interest income 6,780 7,944 5,003 19,930 19,671 Less: Securities (gain) loss 1,699 267 1,844 5,052 2,264 Less: Subdebt repurchase gain (637) — (617) (1,417) (617) Core operating revenue (non-GAAP) 71,570 71,196 73,858 217,557 193,812 Add: Tax (credits) depreciation on solar investments — — 1,306 — 2,105 Core operating revenue excluding solar tax impact (non-GAAP) 71,570 71,196 75,164 217,557 195,917 Core non-interest expense Non-interest expense (GAAP) $ 37,339 $ 37,529 $ 36,258 $ 113,495 $ 105,001 Less: Other one-time expenses(1) (332) (285) — (617) (738) Core non-interest expense (non-GAAP) 37,007 37,244 36,258 112,878 104,263 Core net income Net Income (GAAP) $ 22,308 $ 21,642 $ 22,944 $ 65,284 $ 56,722 Less: Securities (gain) loss 1,699 267 1,844 5,052 2,264 Less: Subdebt repurchase gain (637) — (617) (1,417) (617) Add: Other one-time expenses 332 285 — 617 738 Less: Tax on notable items (396) (147) (319) (1,151) (619) Core net income (non-GAAP) 23,306 22,047 23,852 68,385 58,488 Add: Tax (credits) depreciation on solar investments — — 1,306 — 2,105 Add: Tax effect of solar income — — (340) — (546) Core net income excluding solar tax impact (non-GAAP) 23,306 22,047 24,818 68,385 60,047 Tangible common equity Stockholders' equity (GAAP) $ 546,291 $ 528,614 $ 487,738 $ 546,291 $ 487,738 Less: Minority interest (133) (133) (133) (133) (133) Less: Goodwill (12,936) (12,936) (12,936) (12,936) (12,936) Less: Core deposit intangible (2,439) (2,661) (3,366) (2,439) (3,366) Tangible common equity (non-GAAP) 530,783 512,884 471,303 530,783 471,303 Average tangible common equity Average stockholders' equity (GAAP) $ 538,753 $ 527,599 $ 511,800 $ 523,078 $ 529,696 Less: Minority interest (133) (133) (133) (133) (133) Less: Goodwill (12,936) (12,936) (12,936) (12,936) (12,936) Less: Core deposit intangible (2,547) (2,769) (3,494) (2,768) (3,754) Average tangible common equity (non-GAAP) 523,137 511,761 495,237 507,241 512,873 Core return on average assets Denominator: Total average assets (GAAP) $ 7,904,566 $ 7,796,266 $ 7,942,097 $ 7,841,198 $ 7,700,399 Core return on average assets (non-GAAP) 1.17% 1.13% 1.19% 1.17% 1.02% Core return on average assets excluding solar tax impact (non-GAAP) 1.17% 1.13% 1.24% 1.17% 1.04% Core return on average tangible common equity Denominator: Average tangible common equity $ 523,137 $ 511,761 $ 495,237 $ 507,241 $ 512,873 Core return on average tangible common equity (non-GAAP) 17.67% 17.28% 19.11% 18.02% 15.25% Core return on average tangible common equity excluding solar tax impact (non-GAAP) 17.67% 17.28% 19.88% 18.02% 15.65% Core efficiency ratio Numerator: Core non-interest expense (non-GAAP) $ 37,007 $ 37,244 $ 36,258 $ 112,878 $ 104,263 Core efficiency ratio (non-GAAP) 51.71% 52.31% 49.09% 51.88% 53.80% Core efficiency ratio excluding solar tax impact (non-GAAP) 51.71% 52.31% 48.24% 51.88% 53.22% (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. Third Quarter 2023 Earnings Presentation October 26, 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 September 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.
3Q23 Highlights 4 (1) See non-GAAP disclosures on pages 25-26 (2) Excludes Brokered CDs INCOME STATEMENT(1) BALANCE SHEET CAPITAL Net Income - GAAP $22.3MM Core Net Income $23.3MM Net Interest Income $63.7MM Core Diluted EPS $0.76 Net Interest Margin 3.29% Core Return on Assets 1.17% Core Efficiency 51.71% Deposit growth(2) $172.8MM | +2.7% Loans growth $113.0MM | +2.7% PACE growth $48.3MM | +4.6% Tier 1 Leverage 7.89% | +11 bps CET 1 12.63% | +12 bps Tangible Book value per share $17.43 | +3.9%
-$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 25-26 for further details on impact to key ratios
Ending Deposits + Brokered CDs $69.4 $84.9 $73.3 $130.7 $104.7 2019 2020 2021 2022 Sept 2023 YTD Trends 6 KEY FINANCIAL TRENDS THROUGH 3Q23 ($ 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 $100.4 million YTD through 3Q 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 10.4% CAGR(1) 11.5% CAGR(1) 23.5% CAGR(1)(4) NPA / Total Assets Loans + PACE $4,641 $5,339 $6,356 $6,595 $6,991 $4,641 $5,339 $6,356 $6,521 $6,599 $74 $392 2019 2020 2021 2022 3Q23 1.25% 1.38% 0.77% 0.44% 0.46% 2019 2020 2021 2022 3Q23 $3,703 $3,868 $3,904 $4,973 $5,406 $3,439 $3,447 $3,276 $4,061 $4,297 $264 $421 $627 $912 $1,109 2019 2020 2021 2022 3Q23 >> 6.1% CAGR(1) (Loans) Core Pre-Tax Pre-Provision Earnings(2)(3) excluding the impact of solar tax equity investments 9.8% CAGR(1) (excl. Brokered CD)
Deposit Portfolio 7 3Q23 HIGHLIGHTS • Total deposits increased $96.2 million or 1.4% in 3Q23 All following metrics exclude Brokered CDs • Deposits increased $172.8 million compared to 2Q23 primarily related to increases in political deposit balances and an additional $68mm in growth from other new core customers ◦ Political deposits grew $115.4 million and comprised 14.4% of the deposit portfolio ◦ Approximately $51mm of deposits transferred to the bank's treasury investment management • Cost of deposits of 111 basis points, compared to 87 basis points in Q2 as we proactively price to maintain and attract deposits. ◦ Interest bearing deposit cost was 200 basis points in Q3 2023 and 166 basis points in Q2 • Non-interest bearing deposits represented 42.6% of ending deposits in 3Q23, compared to 46.0% in 2Q23 ◦ Reciprocal deposits increased by $377.0 million, or 32.1% in the quarter • Loan/Deposit ratio of 62.4% as of 3Q23 TOTAL DEPOSITS ($ in billions) $7.2 $6.6 $7.0 $6.9 $7.0 $7.1 $6.0 $5.9 $5.7 $5.6 $5.6 $5.7 $0.1 $0.6 $0.5 $0.4 $0.4 $1.2 $0.6 $0.7 $0.8 $1.0 $1.0 Political Brokered CDs All Other Deposits 3Q22 4Q22 1Q23 2Q23 3Q23 10/20/23 $1.82 $1.15 $0.82 $0.95 $0.78 $0.59 $0.44 CML - Labor CML - Social/Philanthropy Consumer - Labor CML - Political CML - NFP CML - Other(1) CML - Climate/Sustainability TOTAL CORE DEPOSITS(2) BY IMPACT SEGMENT ($ in billions) (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, certain escrow deposits, and intercompany deposits. We believe the most directly comparable GAAP financial measure is total deposits. $6.6
Super-Core Deposits 8 SUPER-CORE DEPOSITS(2) BY IMPACT SEGMENT ($ in billions) 3Q23 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, certain escrow deposits, and intercompany deposits. We believe the most directly comparable GAAP financial measure is total deposits. • Super-core deposits(2) make up $3.4 billion, or 53% 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 224% 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 $3.2 billion or 102% of non-super-core deposits Impact Sector Total Balance ($M) % of Total Core Deposits Weighted Avg. Account Duration (Years) CML - Labor $1,454 22% 22 Consumer - Labor 640 10% 23 CML - Social/Philanthropy 510 8% 10 CML - Political 419 6% 8 CML - Climate/Sustainability 135 2% 7 CML - NFP 51 1% 8 CML - Other(1) 236 4% 15 Total $3,445 53% 17 Other Core Deposits $3,111 47% 2 Total Core Deposits(3) $6,556 10
$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 $1.0 $1.0 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 10/20/2023 9 HISTORICAL TREND ($ 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 +17.3mm
Traditional Investment Securities $2.1B PACE $1.1B Cash and Other $0.1B Residential $1.4B Multifamily & Commercial Real Estate $1.4B C&I, Consumer and Other $1.5B Interest Earning Assets 10 INTEREST EARNING ASSETS OF $7.7B AS OF SEPTEMBER 30, 2023 We maintain a diverse, low risk profile of interest earning assets • No fossil fuel exposure • $225mm of government guaranteed loans • $354mm residential solar loans with strong credit scores • Predominantly NYC properties with low LTV: MF = 55%, CRE = 47% • 99% first lien mortgages • Low LTV = 60% • 82%/18% originated to purchased portfolio $7.7B as of 3Q23 • $766mm agency securities • $1,428mm of non-agency securities • All non-agency MBS/ABS securities are top of the capital structure • $270mm of Commercial PACE and $800mm Residential PACE securities with low LTV • $39mm of AFS PACE securities • Total Pace LTV of 12%
• HTM securities, excluding PACE assessments represent 28% of the total investment portfolio • HTM PACE securities saw $32.7 million of new growth during the quarter, due to: ◦ Residential PACE purchases of $46.8 million ◦ Commercial PACE purchases of $8.9 million ◦ $23.0 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 $0.7 million in 3Q23, or 0.04% of the total HTM securities portfolio Held-to-Maturity Securities 11 HELD-TO-MATURITY SECURITIES(1) ($ in millions) 3Q23 HIGHLIGHTS $1,492 $1,541 $1,619 $1,655 $1,683 $857 $912 $996 $1,038 $1,071 $636 $629 $623 $617 $612 4.27% 4.43% 5.07% 5.11% 5.25% 3.07% 3.65% 4.08% 4.19% 4.20% PACE (HTM) Non Pace HTM PACE (HTM) Yield Non-Pace HTM Yield 3Q22 4Q22 1Q23 2Q23 3Q23 (1) Non-PACE held-to-maturity securities shown at amortized cost
Investment Securities 12 SECURITIES – BOOK VALUE(1)(2) ($ 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 $3.3 billion book value for 3Q23 • Agency securities made up 23.2% of the total portfolio, down from 23.5% in 2Q23, reflecting PACE assessment growth • PACE assessments are considered non-agency securities, which are non-rated(3) • Total PACE LTV of 12% • 84.4% of all non-agency MBS/ABS securities are AAA rated and 99.9% are A rated or higher(3); 98.3% of CLO’s are AAA-rated ◦ Average subordination for the C&I CLOs was 43.9% • 30% of the total securities portfolio (or 45% of the securities portfolio excluding PACE) has a floating rate of interest 3Q23 HIGHLIGHTS $3,579 $3,485 $3,390 $3,378 $3,303 $1,749 $1,686 $1,560 $1,523 $1,428 $857 $912 $996 $1,061 $1,109 $973 $887 $834 $794 $766 4.27% 4.43% 5.07% 5.20% 5.27% 2.40% 2.82% 3.25% 3.16% 3.23% 3.30% 4.19% 4.89% 5.09% 5.18% Non-Agency PACE Agency PACE Yield Agency Yield Non-Agency Yield 3Q22 4Q22 1Q23 2Q23 3Q23
• Valuation Loss as % of relative portfolio balance ◦ Total $128.7 million | 7.9% ◦ ex-PACE $128.3 million | 8.1% ◦ PACE $0.4 million | 1.1% • Weighted Average Duration (in years) ◦ Total 1.9 ◦ ex-PACE 1.9 ◦ PACE 4.1 $534 $903 $144 Investment Securities Composition AFS Portfolio Composition(1)(2) ($ in millions) HTM Portfolio Composition(1)(2)(3) ($ in millions) $232 $362 $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 3Q23 HIGHLIGHTS • Weighted average duration(4) is 2.4 years for the total securities portfolio, excl. PACE $1,581mm $612mm AFS HTM • Valuation Loss as % of relative portfolio balance ◦ Total $204.8 million | 12.2% ◦ ex-PACE $65.0 million | 10.6% ◦ PACE $139.8 million | 13.1% • Weighted Average Duration (in years) ◦ Total 5.1 ◦ ex-PACE 3.9 ◦ PACE 5.7 13
Loans Held for Investment 14 TOTAL LOANS ($ in millions) $3,871 $4,106 $4,198 $4,252 $4,365 4.06% 4.19% 4.40% 4.33% 4.56% Total Loans, net of deferred costs Loan Yield 3Q22 4Q22 1Q23 2Q23 3Q23 MISSION ALIGNED COMPOSITION ($ in millions) $1,095 $352 $1,050 $457$976 $158 $806 $415 $118 $195 $244 $42 Mission Aligned Loans Non-Impact Loans Multifamily CRE and Land C&I Consumer/Other 19.0% 9.6% 17.2% 26.0% 6.5% 14.2% 7.5% Office Office - Owner Occupied Retail Industrial Mixed Use Education Other $1,332 $1,372 $1,390 $1,389 $1,410 $885 $968 $1,063 $1,096 $1,095 $805 $926 $924 $949 $1,050$468 $464 $456 $457 $457$338 $335 $327 $333 $324$39 $38 $38 $29 $28 Residential Multifamily C&I Consumer/other CRE Construction and land 3Q22 4Q22 1Q23 2Q23 3Q23 LOAN COMPOSITION ($ in millions) CRE COMPOSITION BY PROPERTY TYPE 40.5% 54.0% 49.8% 41.9% 39.6% 58.1% 40.5% Weighted Avg. LTV
Net Interest Income and Margin 15 NET INTEREST INCOME & MARGIN ($ millions) • Net interest income was $63.7 million, compared to $63.0 million in 2Q23 • 3Q23 NIM at 3.29%; a decrease of 4 basis points compared to 2Q23 • Loan prepayment penalties had no impact on NIM in 3Q23 or 2Q23 3Q23 HIGHLIGHTS $67.6 $67.3 $67.3 $63.0 $63.7 3.48% 3.54% 3.59% 3.33% 3.29% Net Interest Income Net Interest Margin 3Q22 4Q22 1Q23 2Q23 3Q23 (1) The calculated NIM figures here exclude Allowance for Credit Loss from total interest earning assets across all quarters (2) If Allowance for Credit Loss were included in the NIM calculations above (as it was until 1Q2023), net interest margin would be 3.50%, 3.56% and 3.62% for 3Q22, 4Q22, and 1Q23, respectively
Non-Interest Income 16 CORE NON-INTEREST INCOME ex-solar (1) ($ millions) • Our trust business held $39.6 billion in assets under custody and $13.9 billion in assets under management, compared to $40.3 billion and $14.5 billion, respectively, in the preceding quarter; this decline was primarily driven by a decrease in fair value due to market volatility • Trust fee income fell $0.3 million quarter over quarter, primarily due to decreases in Trust Department fees as we strive for net revenue quality • Retail banking fees remained flat quarter over quarter, as slightly higher account service fees were offset by customer retention incentives • Other income remained flat in Q3 3Q23 HIGHLIGHTS (1) Ex-solar is defined as excluding the impact of our non-core solar tax equity investments $7.5 $7.3 $7.5 $8.2 $7.8 $0.9 $0.7 $1.1 $1.5 $1.4 $3.9 $3.6 $3.9 $4.0 $3.7 $2.7 $3.0 $2.5 $2.7 $2.7 Retail banking Trust fee income Core other income ex-solar 3Q22 4Q22 1Q23 2Q23 3Q23
Non-Interest Expense and Efficiency 17 NON-INTEREST EXPENSE ($ millions) • Efficiency ratio of 53.0% for 3Q23 • Core efficiency ratio excluding the impact of our solar tax equity investments of 51.7% for 3Q23(1) • Non-interest expense for 3Q23 was $37.3 million • Non-interest expense for 3Q23 was $0.2 million lower compared to 2Q23, mainly due to reduced marketing and professional fees expense, offset by an increase in data processing spend and FDIC insurance 3Q23 HIGHLIGHTS (1) See non-GAAP disclosures on pages 25-26 (2) Ex-solar is defined as excluding the impact of our solar tax equity investments $36.3 $35.6 $38.6 $37.2 $37.0$36.3 $35.6 $38.6 $37.5 $37.3 48.2% 47.6% 51.6% 52.3% 51.7% 50.0% 49.7% 53.3% 52.9% 53.0% Core NIX NIX Core Eff Ratio ex-solar(2) Eff Ratio 3Q22 4Q22 1Q23 2Q23 3Q23
Credit Quality 18 NPA / TOTAL ASSETS NCO / AVERAGE LOANS(1) (Quarter trend) 3Q23 HIGHLIGHTS • Nonperforming assets were $36.5 million as of 3Q23, compared to $35.3 million in 2Q23 • Net charge-offs of 0.27% in 3Q23 due to a $1.2 million charge-off on a multifamily loan subsequently sold at par early in 4Q23 • Criticized and classified loans decreased by $16.0 million, or 15%; Pass rated loans are 98% of loan portfolio (1) Annualized CRITICIZED AND CLASSIFIED LOANS ($ millions) 0.69% 0.44% 0.49% 0.45% 0.46% 3Q22 4Q22 1Q23 2Q23 3Q23 0.15% 0.29% 0.25% 0.29% 0.27% Solar Residential Commercial 3Q22 4Q22 1Q23 2Q23 3Q23 $113 $107 $110 $104 $88 3Q22 4Q22 1Q23 2Q23 3Q23
1.09% 1.10% 1.61% 1.59% 1.56% 3Q22 4Q22 1Q23 2Q23 3Q23 Allowance for Credit Losses on Loans 19 ALLOWANCE FOR CREDIT LOSSES ON LOANS / TOTAL LOANS ALLOWANCE WATERFALL ($ millions) $67.4 $(2.9) $2.0 $1.2 $2.4 $(2.2) $(0.01) $67.8 3/31/2023 Net Charge Offs Loan Balances Specific Reserves Charge Offs Provision Expense Quant Qual 6/30/23 CECL Adoption • The allowance for credit losses on loans grew slightly, having increased by $0.4 million compared to prior quarter. 3Q23 HIGHLIGHTS
Returns 20 (1) Refer to Reconciliation of Non-GAAP Financial Measures on slides 25-26 for further details (2) ROAE was 17.8%, 19.9%, 17.2%, 16.5% and 16.4% for 3Q22, 4Q22, 1Q23, 2Q23 and 3Q23, respectively (3) ROATCE was 18.4%, 20.6%, 17.8%, 17.0% and 16.9% for 3Q22, 4Q22, 1Q23, 2Q23 and 3Q23, 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) 19.2% 21.8% 18.6% 16.8% 17.2% 19.9% 22.6% 19.2% 17.3% 17.7% Core ROAE ex-solar Core ROATCE ex-solar 3Q22 4Q22 1Q23 2Q23 3Q23
Capital 21 TIER 1 LEVERAGE RATIO COMMON EQUITY TIER 1 RATIO • Regulatory capital ratios remained strong ◦ Tier 1 leverage ratio of 7.89% as of 3Q23 ◦ Bank tier 1 leverage ratio of 8.58% as of Q3 2023 ◦ Common Equity Tier 1 Capital of 12.63% • Tier 1 leverage ratio was 11 basis points higher than the prior quarter, primarily driven by current year earnings 3Q23 HIGHLIGHTS 7.16% 7.52% 7.50% 7.78% 7.89% 7.27% 7.52% 7.50% 7.80% 7.96% Tier 1 Leverage Leverage Ratio ex-Excess Liquidity(1) 3Q22 4Q22 1Q23 2Q23 3Q23 11.91% 12.31% 12.23% 12.51% 12.63% 3Q22 4Q22 1Q23 2Q23 3Q23 (1) Excess liquidity is defined as cash in excess of $100.0 million
Tangible Book Value $513 $22 $(3) $(3) $1 $— $531 $16.78 $17.51 $17.41 $17.32 $17.40 $17.43 $17.43 $17.43 6/30/23 Earnings Dividends @ $.10/ share Buybacks - Equity impact Buybacks - Share count Other(1) AFS Mark 6/30/23 TANGIBLE COMMON EQUITY & TANGIBLE BOOK VALUE ($ millions) 3Q23 SUMMARY • TBV increase of 3.9% primarily driven by: ◦ $22.3 million in net income ◦ Offset by regular retained earnings impact of dividend issuance and planned share buybacks ◦ No material impact from tax- effected AFS mark-to-market adjustment • Share repurchase activity decreased TBV by one cent in the quarter • Total Common Equity Ratio was 6.9% • Dividend Payout Ratio was 13.9% 22 (1) Other includes the effect of stock issuance
2023 Guidance 23 2023 FINANCIAL OUTLOOK - UPDATED • Core pre-tax, pre-provision earnings(1) from $133 - $140 million to: ◦ $136 - $139 million - includes effect of forward rate curve and deposit migration to interest bearing through 2023 • Net Interest Income from $248 - $255 million to: ◦ $256 - $258 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 25 As of and for the As of and for the Three Months Ended Nine Months Ended (in thousands) September 30, 2023 June 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022 Core operating revenue Net Interest income (GAAP) $ 63,728 $ 62,985 $ 67,628 $ 193,992 $ 172,494 Non-interest income 6,780 7,944 5,003 19,930 19,671 Less: Securities (gain) loss 1,699 267 1,844 5,052 2,264 Less: Subdebt repurchase gain (637) — (617) (1,417) (617) Core operating revenue (non-GAAP) 71,570 71,196 73,858 217,557 193,812 Add: Tax (credits) depreciation on solar investments — — 1,306 — 2,105 Core operating revenue excluding solar tax impact (non-GAAP) $ 71,570 $ 71,196 $ 75,164 $ 217,557 $ 195,917 Core non-interest expense Non-interest expense (GAAP) $ 37,339 $ 37,529 $ 36,258 $ 113,495 $ 105,001 Less: Other one-time expenses (1) (332) (285) — (617) (738) Core non-interest expense (non-GAAP) $ 37,007 $ 37,244 $ 36,258 $ 112,878 $ 104,263 Core net income Net Income (GAAP) $ 22,308 $ 21,642 $ 22,944 $ 65,284 $ 56,722 Less: Securities (gain) loss 1,699 267 1,844 5,052 2,264 Less: Subdebt repurchase gain (637) — (617) (1,417) (617) Add: Other one-time expenses 332 285 — 617 738 Less: Tax on notable items (396) (147) (319) (1,151) (619) Core net income (non-GAAP) 23,306 22,047 23,852 68,385 58,488 Add: Tax (credits) depreciation on solar investments — — 1,306 — 2,105 Add: Tax effect of solar income — — (340) — (546) Core net income excluding solar tax impact (non-GAAP) $ 23,306 $ 22,047 $ 24,818 $ 68,385 $ 60,047 (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 26 As of and for the As of and for the Three Months Ended Nine Months Ended (in thousands) September 30, 2023 June 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022 Tangible common equity Stockholders' equity (GAAP) $ 546,291 $ 528,614 $ 487,738 $ 546,291 $ 487,738 Less: Minority interest (133) (133) (133) (133) (133) Less: Goodwill (12,936) (12,936) (12,936) (12,936) (12,936) Less: Core deposit intangible (2,439) (2,661) (3,366) (2,439) (3,366) Tangible common equity (non-GAAP) $ 530,783 $ 512,884 $ 471,303 $ 530,783 $ 471,303 Average tangible common equity Average stockholders' equity (GAAP) $ 538,753 $ 527,599 $ 511,800 $ 523,078 $ 529,696 Less: Minority interest (133) (133) (133) (133) (133) Less: Goodwill (12,936) (12,936) (12,936) (12,936) (12,936) Less: Core deposit intangible (2,547) (2,769) (3,494) (2,768) (3,754) Average tangible common equity (non-GAAP) $ 523,137 $ 511,761 $ 495,237 $ 507,241 $ 512,873 Core return on average assets Core net income (non-GAAP) $ 23,306 $ 22,047 $ 23,852 $ 68,385 $ 58,488 Denominator: Total average assets (GAAP) 7,904,566 7,796,266 7,942,097 7,841,198 7,700,399 Core return on average assets (non-GAAP) 1.17% 1.13% 1.19% 1.17% 1.02% Core return on average assets excluding solar tax impact (non-GAAP)(1) 1.17% 1.13% 1.24% 1.17% 1.04% Core return on average tangible common equity Core net income (non-GAAP) $ 23,306 $ 22,047 $ 23,852 $ 68,385 $ 58,488 Denominator: Average tangible common equity 523,137 511,761 495,237 507,241 512,873 Core return on average tangible common equity (non-GAAP) 17.67% 17.28% 19.11% 18.02% 15.25% Core return on average tangible common equity excluding solar tax impact (non-GAAP)(1) 17.67% 17.28% 19.88% 18.02% 15.65% Core efficiency ratio Numerator: Core non-interest expense (non-GAAP) $ 37,007 $ 37,244 $ 36,258 $ 112,878 $ 104,263 Core operating revenue (non-GAAP) 71,570 71,196 73,858 217,557 193,812 Core efficiency ratio (non-GAAP) 51.71% 52.31% 49.09% 51.88% 53.80% Core efficiency ratio excluding solar tax impact (non-GAAP)(1) 51.71% 52.31% 48.24% 51.88% 53.22% (1) Calculated using core net income excluding solar tax impact (Non-GAAP) in the numerator, as detailed on page 26
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