NEW YORK, April 30, 2019 (GLOBE NEWSWIRE) -- Amalgamated Bank (Nasdaq: AMAL) (“Amalgamated”) today announced financial results for the first quarter ended March 31, 2019.
First Quarter 2019 Highlights
- Net income of $10.8 million, or $0.33 per diluted share, compared to $7.7 million, or $0.27 per diluted share, for the first quarter of 2018
- Core earnings (non-GAAP) of $10.7 million, or $0.33 per diluted share, compared to $7.9 million, or $0.28 per diluted share, for the first quarter of 2018
- Deposit growth of $1.8 million, or 0.2% annualized, compared to a balance of $4.1 billion on December 31, 2018
- Deposits at December 31, 2018 included $326.7 million of short term deposits that exited the bank on January 2, 2019, resulting in beginning year 2019 deposits of $3.8 billion
- On an adjusted basis, excluding these short-term deposits we had deposit growth of $328.5 million, or 34.8% annualized, compared to $3.8 billion on January 2, 2019
- Loan growth of $56.4 million, or 7.0% annualized, compared to a balance of $3.2 billion on December 31, 2018
- Cost of deposits was 0.31%, compared to 0.27% for the fourth quarter of 2018 and 0.26% for the first quarter of 2018
- Net interest margin was 3.65%, compared to 3.57% for the fourth quarter of 2018 and 3.43% for the first quarter of 2018
- Tier 1 Leverage, Common Equity Tier 1, and Total Risk-Based capital ratios were 8.90%, 13.31%, and 14.33%, respectively, at March 31, 2019
- Total nonperforming assets were $56.6 million or 1.15% of total assets as of March 31, 2019, compared to $59.3 million or 1.27% of total assets at December 31, 2018 and $56.0 million, or 1.35% of total assets at March 31, 2018
Keith Mestrich, President and Chief Executive Officer of Amalgamated Bank, commented, “I am quite pleased with our first quarter results as they clearly demonstrate the attractive position that Amalgamated Bank holds as we work to service the needs of values-based institutions and further our reputation as ‘America’s socially responsible bank.’ Signs of our continued success can be seen in our deposit franchise which experienced 34.8% adjusted annualized organic growth in the first quarter. This included an $89.0 million increase in political deposits as well as vibrant deposit growth across our customer categories of unions and their funds, non-profits and philanthropies. Importantly, our cost of funds remained relatively stable at 31 basis points and contributed to our strong profitability as our net interest margin increased to 3.65% in the first quarter of 2019 from 3.43% in the first quarter of 2018. Lastly, while our loan growth was modestly below our expectations, our acquisition of New Resource Bank (“NRB”) allowed us to continue to make very good progress expanding our loan origination capabilities into sustainable industries. We have seen a recovery in the purchased Commercial and Industrial (“C&I”) credit market and decided to sell a significant amount of that portfolio and have commitments to reduce that portfolio by approximately $127 million in the second quarter of 2019."
Results of Operations, Quarter Ended March 31, 2019
Net income for the first quarter of 2019 was $10.8 million, or $0.33 per diluted share, compared to $16.0 million, or $0.49 per diluted share, for the fourth quarter of 2018 and a net income of $7.7 million, or $0.27 per diluted share, for the first quarter of 2018. The $3.2 million increase in net income for the first quarter of 2019, compared to the first quarter of 2018, was primarily due to an $8.0 million increase in net interest income, partially offset by a $2.7 million increase in non-interest expense, a $1.3 million increase in our provision for loan losses, and a $1.2 million increase in our provision for income taxes.
Core earnings (non-GAAP) for the first quarter of 2019 were $10.7 million, or $0.33 per diluted share, compared to $9.7 million or $0.30 per diluted share, for the fourth quarter of 2018 and $7.9 million, or $0.28 per diluted share, for the first quarter of 2018. Core earnings for the fourth quarter of 2018 excluded $1.6 million of expense related to the NRB acquisition, a deferred tax asset realization of approximately $7.6 million, and other adjustments including the tax effect of such adjustments.
Net interest income was $40.8 million for the first quarter of 2019, compared to $40.2 million for the fourth quarter of 2018 and $32.8 million for the first quarter of 2018. The year-over-year increase was primarily attributable to an increase in average net loans of $375.3 million, an increase in the yield on average loans of 29 basis points, an increase in average securities of $275.6 million and an increase in the yield on average securities and FHLB stock of 54 basis points. These increases were partially offset by an increase in average interest bearing deposits of $441.8 million, an increase in the rate paid on interest bearing deposits of seven basis points, and an increase in the rate paid on FHLB borrowings of 101 basis points.
Net interest margin was 3.65% for the first quarter of 2019, an increase of eight basis points from 3.57% in the fourth quarter of 2018 and an increase of 22 basis points from 3.43% in the first quarter of 2018. The net interest margin in the fourth quarter of 2018 was also impacted by a one-time adjustment to write-off $0.8 million of accrued interest receivable from the fourth quarter of 2017. Without this adjustment, our net interest margin increased by one basis point from the fourth quarter of 2018.
Provisions for loan losses totaled an expense of $2.2 million in the first quarter of 2019 compared to $0.9 million in the fourth quarter of 2018 and $0.9 million for the first quarter of 2018. The provision expense in the first quarter of 2019 was primarily driven by an increase in our allowance for loan losses on two leveraged loans and increasing historical loss factors related to the charge-off activity. This increase in provision was partially offset by a release of an off-balance sheet provision of $0.6 million, which is reported through non-interest expense.
Non-interest income was $7.4 million in the first quarter of 2019 compared to $7.6 million in the fourth quarter of 2018, and $7.0 million in the first quarter of 2018. The $0.4 million, or 5.7%, increase in the first quarter of 2019, compared to the like period in 2018, was primarily due to higher gains on the sale of investment securities of $0.3 million in the first quarter of 2019 compared to a loss of $0.1 million in the first quarter of 2018 and modest increases in Trust Department fees, service charges on deposit accounts, and other income. These increases were partially offset by higher losses on other real estate owned resulting from the liquidation of residential real estate acquired as the result of foreclosure on delinquent residential mortgages.
Non-interest expense for the first quarter of 2019 was $31.4 million, a decrease of $3.6 million from $35.0 million in the fourth quarter of 2018, and an increase of $2.7 million from $28.8 million in the first quarter of 2018. The increase compared to the first quarter of 2018 was primarily due to a $2.1 million increase in compensation and employee benefits, a $0.4 million increase in data processing, a $0.4 million expense from the addition of amortization of the core deposit intangible from the NRB acquisition, partially offset by a $0.2 million reduction in other expenses driven primarily by the release of $0.6 million in off-balance sheet provision in the first quarter of 2019.
We had a provision for income tax expense of $3.7 million for the first quarter of 2019, compared to a credit of $4.1 million for fourth quarter of 2018 and provision of $2.5 million for the first quarter of 2018. Our effective tax rate for the first quarter of 2019 was 25.7%, compared to 24.7% for the first quarter of 2018.
Financial Condition
Total assets were $4.9 billion at March 31, 2019, compared to $4.7 billion at December 31, 2018. The increase of $229.0 million was driven primarily by a $72.7 million increase in investment securities, a $51.3 million increase in cash and cash equivalents, a $56.4 million increase in loans receivable, net and the addition of a $53.3 million “Right of use” asset as the result of adopting ASC 842 – Leases in the first quarter of 2019.
Total loans at March 31, 2019 were $3.3 billion, an increase of $56.4 million, or 7.0% annualized, compared to December 31, 2018, and an increase of $385.1 million, or 13.4%, as compared to $2.9 billion as of March 31, 2018. Loan growth in the first quarter of 2019 was primarily driven by a $93.3 million increase in residential first liens and property assessed clean energy (“PACE”) loans and offset by a strategic reduction in indirect C&I loans of $29.3 million, and a $12.2 million reduction in commercial real estate loans.
Deposits at March 31, 2019 were $4.1 billion, an increase of $1.8 million, or 0.2% annualized, as compared to $4.1 billion as of December 31, 2018, and an increase of $771.5 million, or 23.1%, compared to $3.3 billion as of March 31, 2018. December 31, 2018 deposits included $326.7 million of short term deposits that exited the bank on January 2, 2019, resulting in beginning year 2019 deposits of $3.8 billion. On an adjusted basis, excluding these short-term deposits, deposits increased $328.5 million or 34.8% annualized for the quarter. Deposits held by politically-active customers, such as campaigns, PACs and state and national party committees were $271.0 million as of March 31, 2019, an increase of $89.0 million compared to $181.9 million as of December 31, 2018, and a decrease of $50.4 million compared to $321.4 million as of March 31, 2018. Noninterest-bearing deposits represented 40.8% of average deposits and 41.6% of ending deposits for the three months ended March 31, 2019, contributing to an average cost of deposits of 0.31% in the first quarter of 2019, a four basis point increase from the linked quarter.
Nonperforming assets totaled $56.6 million, or 1.15% of period end total assets at March 31, 2019, a decrease of $2.7 million, compared with $59.3 million, or 1.27% of period end total assets at December 31, 2018. The decrease in nonperforming assets at March 31, 2019 compared to the year-ended December 31, 2018 was primarily driven by an $8.4 million charge-off related to one C&I loan partially offset by an increase of $7.2 million in loans 90 days past due and accruing related to delays in renewing loans from one borrower.
The allowance for loan losses decreased $5.8 million to $31.4 million at March 31, 2019 from $37.2 million at December 31, 2018, primarily due to the charge-off of one C&I loan that had a specific reserve of $8.1 million in the first quarter of 2019, partially offset by increases on the allowance for classified and criticized C&I loans. At March 31, 2019, we had $48.1 million of impaired loans for which a specific allowance of $1.5 million was made, compared to $58.3 million of impaired loans at December 31, 2018 for which a specific allowance of $9.6 million was made. The ratio of allowance to total loans was 0.95% at March 31, 2019 and 1.15% at December 31, 2018.
Capital
As of March 31, 2019, our Tier 1 Leverage Capital Ratio was 8.90%, Common Equity Tier 1 Capital Ratio was 13.31%, and Total Risk-Based Capital Ratio was 14.33%, compared to 8.88%, 13.22%, and 14.46%, respectively, as of December 31, 2018. As of March 31, 2018, our Tier 1 Leverage, Common Equity Tier 1, and Total Risk-Based capital ratios were 8.60%, 11.36%, and 12.83%, respectively. Stockholders’ equity at March 31, 2019 was $455.5 million, compared to $439.4 million at December 31, 2018.
Our tangible book value per share was $13.68 as of March 31, 2019 compared to $13.16 as of December 31, 2018 and $12.11 as of March 31, 2018.
Conference Call
As previously announced, Amalgamated Bank will host a conference call to discuss its first quarter 2019 results today, April 30, 2019 at 10:00am (Eastern Time). The conference call can be accessed by dialing 1-877-407-9716 (domestic) or 1-201-493-6779 (international) and asking for the Amalgamated Bank First Quarter 2019 Earnings Call. A telephonic replay will be available approximately three hours after the call and can be accessed by dialing 1-844-512-2921, or for international callers 1-412-317-6671 and providing the access code 13689479. The telephonic replay will be available until 11:59 pm (Eastern Time) on May 7, 2019.
Interested investors and other parties may also listen to a simultaneous webcast of the conference call by logging onto the investor relations section of our website at http://ir.amalgamatedbank.com/. The online replay will remain available for a limited time beginning immediately following the call.
The presentation materials for the call can be accessed on the investor relations section of our website at http://ir.amalgamatedbank.com/.
About Amalgamated Bank
Amalgamated Bank is a New York-based full-service commercial bank and a chartered trust company with a combined network of 14 branches in New York City, Washington D.C., and San Francisco, and a presence in Pasadena, CA and Boulder, CO. Amalgamated was formed in 1923 as Amalgamated Bank of New York by the Amalgamated Clothing Workers of America, one of the country's oldest labor unions. Amalgamated provides commercial banking and trust services nationally and offers a full range of products and services to both commercial and retail customers. Amalgamated is a proud member of the Global Alliance for Banking on Values and is a certified B Corporation®. As of March 31, 2019, our total assets were $4.9 billion, total net loans were $3.3 billion, and total deposits were $4.1 billion. Additionally, as of March 31, 2019, the trust business held $30.1 billion in assets under custody and $11.8 billion in assets under management.
Non-GAAP Financial Measures
This release contains certain non-GAAP financial measures including, without limitation, “Core operating revenue,” “Core non-interest expense,” “Core earnings,” “Tangible common equity,” “Tangible book value,” “Core return on average assets,” “Core return on average tangible common equity,” and “Core efficiency ratio.”
Our management utilizes this information to compare our operating performance for 2019 versus certain periods in 2018 and to internally prepared projections. We believe these non-GAAP financial measures facilitate making period-to-period comparisons and are meaningful indications of our operating performance. In addition, because intangible assets such as goodwill and other discrete items unrelated to our core business that are excluded vary extensively from company to company, we believe that the presentation of this information allows investors to more easily compare our results to those of other companies.
The presentation of non-GAAP financial information, however, is not intended to be considered in isolation or as a substitute for GAAP financial measures. We strongly encourage readers to review the GAAP financial measures included in this release and not to place undue reliance upon any single financial measure. In addition, because non-GAAP financial measures are not standardized, it may not be possible to compare the non-GAAP financial measures presented in this release with other companies’ non-GAAP financial measures having the same or similar names. Reconciliations of non-GAAP financial disclosures to comparable GAAP measures found in this release are set forth in the final pages of this release and also may be viewed on our website, amalgamatedbank.com.
Terminology
Certain terms used in this release are defined as follows:
“Core operating revenue” is defined as total net interest income plus non-interest income excluding gains and losses on sales of securities and excluding other than temporary impairment charges (“OTTI”). We believe the most directly comparable GAAP financial measure is the total of net interest income and non-interest income.
“Core non-interest expense” is defined as total non-interest expense excluding costs related to bank acquisitions, our initial public offering and follow on costs, or restructuring/severance costs. We believe the most directly comparable GAAP financial measure is total non-interest expense.
“Core earnings” is defined as net income after tax excluding gains and losses on sales of securities and excluding OTTI, costs related to bank acquisitions, initial public offering and follow on costs, restructuring/severance, taxes on notable pre-tax items, deferred tax asset realization, and changes in tax laws. We believe the most directly comparable GAAP financial measure is net income.
“Tangible common equity” and “Tangible book value” and are defined as stockholders’ equity excluding, as applicable, minority interests, preferred stock, goodwill and core deposit intangibles. We believe that the most directly comparable GAAP financial measure is total stockholders’ equity.
“Core return on average assets” is defined as “Core earnings” divided by average total assets. We believe the most directly comparable performance ratio derived from GAAP financial measures is return on average assets calculated by dividing net income by average total assets.
“Core return on average tangible common equity” is defined as “Core earnings” divided by “Average tangible common equity.” We believe the most directly comparable performance ratio derived from GAAP financial measures is return on average equity calculated by dividing net income by average total stockholders’ equity.
“Core efficiency ratio” is defined as “Core non-interest expense” divided by “Core operating revenue.” We believe the most directly comparable performance ratio derived from GAAP financial measures is an efficiency ratio calculated by dividing total non-interest expense by the sum of net interest income and total non-interest income.
Forward Looking Statements
This press release may contain statements that are not historical in nature that are intended to be, and are hereby identified as, forward-looking statements within the meaning of the Private Securities Litigation Reform Act, Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements generally can be identified by forward-looking language such as “may,” “will,” “anticipate,” “should,” “would,” “believe,” “contemplate,” “expect,” “estimate,” “continue” and “intend,” as well as other similar words and expressions of the future, and include, without limitation, our intentions to sell a portion of our indirect C&I portfolio. Forward-looking statements are subject to known and unknown risks, uncertainties and other factors, any or all of which could cause actual results to differ materially from the results expressed or implied by such forward-looking statements. These risks and uncertainties include, but are not limited to risk associated with the sale of our C&I portfolio that may result in that sale failing to close. Additional factors which could affect any forward looking statements can be found in Amalgamated’s Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K filed with the FDIC and available on the FDIC's website at https://efr.fdic.gov/fcxweb/efr/index.html. Amalgamated Bank disclaims any obligation to update or revise any forward-looking statements contained in this release, which speak only as of the date hereof, whether as a result of new information, future events or otherwise, except as required by law.
Media Contact:
Kaye Verville
The Levinson Group
kaye@mollylevinson.com
202-244-1785
Investor Contact:
Jamie Lillis
Solebury Trout
shareholderrelations@amalgamatedbank.com
800-895-4172
Consolidated Statements of Income (Unaudited)
(Dollars in thousands, except for per share amount)
| Three Months Ended | |||||||||||
| March 31, | December 31, | March 31, | |||||||||
| 2019 | 2018 | 2018 | |||||||||
| INTEREST AND DIVIDEND INCOME | |||||||||||
| Loans | $ | 35,296 | $ | 34,620 | $ | 29,173 | |||||
| Securities | 9,875 | 9,251 | 6,243 | ||||||||
| Federal Home Loan Bank of New York stock | 310 | 239 | 391 | ||||||||
| Interest-bearing deposits in banks | 293 | 350 | 436 | ||||||||
| Total interest and dividend income | 45,774 | 44,460 | 36,243 | ||||||||
| INTEREST EXPENSE | |||||||||||
| Deposits | 2,946 | 2,713 | 2,089 | ||||||||
| Borrowed funds | 2,055 | 1,542 | 1,353 | ||||||||
| Total interest expense | 5,001 | 4,255 | 3,442 | ||||||||
| NET INTEREST INCOME | 40,773 | 40,205 | 32,801 | ||||||||
| Provision for (recovery of) loan losses | 2,186 | 864 | 851 | ||||||||
| Net interest income after provision for loan losses | 38,587 | 39,341 | 31,950 | ||||||||
| NON-INTEREST INCOME | |||||||||||
| Trust Department fees | 4,721 | 4,807 | 4,649 | ||||||||
| Service charges on deposit accounts | 1,871 | 2,187 | 1,779 | ||||||||
| Bank-owned life insurance | 420 | 430 | 404 | ||||||||
| Gain (loss) on sale of investment securities available for sale, net | 292 | (139 | ) | (101 | ) | ||||||
| Gain (loss) on other real estate owned, net | (249 | ) | 19 | (27 | ) | ||||||
| Other | 362 | 251 | 311 | ||||||||
| Total non-interest income | 7,417 | 7,555 | 7,015 | ||||||||
| NON-INTEREST EXPENSE | |||||||||||
| Compensation and employee benefits, net | 17,430 | 18,166 | 15,376 | ||||||||
| Occupancy and depreciation | 4,271 | 4,247 | 4,002 | ||||||||
| Professional fees | 3,165 | 2,825 | 3,193 | ||||||||
| FDIC deposit insurance | 491 | 406 | 554 | ||||||||
| Data processing | 2,749 | 3,986 | 2,336 | ||||||||
| Office maintenance and depreciation | 887 | 974 | 947 | ||||||||
| Amortization of intangible assets | 389 | 389 | - | ||||||||
| Advertising and promotion | 622 | 819 | 646 | ||||||||
| Other | 1,444 | 3,213 | 1,734 | ||||||||
| Total non-interest expense | 31,448 | 35,025 | 28,788 | ||||||||
| Income before income taxes | 14,556 | 11,871 | 10,177 | ||||||||
| Income tax expense (benefit) | 3,743 | (4,113 | ) | 2,516 | |||||||
| Net income | 10,813 | 15,984 | 7,661 | ||||||||
| Net income attributable to noncontrolling interests | - | - | - | ||||||||
| Net income attributable to Amalgamated Bank and subsidiaries | $ | 10,813 | $ | 15,984 | $ | 7,661 | |||||
| Earnings per common share - basic (1) | $ | 0.34 | $ | 0.50 | $ | 0.27 | |||||
| Earnings per common share - diluted (1) | $ | 0.33 | $ | 0.49 | $ | 0.27 | |||||
| (1) effected for stock split that occurred on July 27, 2018 | |||||||||||
Consolidated Statements of Financial Condition (Unaudited)
(Dollars in thousands)
| March 31, | December 31, | ||||||
| 2019 | 2018 | ||||||
| Assets | (Unaudited) | ||||||
| Cash and due from banks | $ | 6,691 | $ | 10,510 | |||
| Interest-bearing deposits in banks | 125,463 | 70,335 | |||||
| Total cash and cash equivalents | 132,154 | 80,845 | |||||
| Securities: | |||||||
| Available for sale, at fair value (amortized cost of $1,246,843 and $1,188,710, respectively) | 1,242,721 | 1,175,170 | |||||
| Held-to-maturity (fair value of $9,481 and $4,105, respectively) | 9,317 | 4,081 | |||||
| Loans receivable, net of deferred loan origination costs (fees) | 3,298,407 | 3,247,831 | |||||
| Allowance for loan losses | (31,392 | ) | (37,195 | ) | |||
| Loans receivable, net | 3,267,015 | 3,210,636 | |||||
| Accrued interest and dividends receivable | 14,872 | 14,387 | |||||
| Premises and equipment, net | 20,743 | 21,654 | |||||
| Bank-owned life insurance | 79,485 | 79,149 | |||||
| Right-of-use lease asset | 53,306 | - | |||||
| Deferred tax asset | 35,017 | 39,697 | |||||
| Goodwill and other intangible assets | 20,650 | 21,039 | |||||
| Other assets | 39,199 | 38,831 | |||||
| Total assets | $ | 4,914,479 | $ | 4,685,489 | |||
| Liabilities | |||||||
| Deposits | $ | 4,107,075 | $ | 4,105,306 | |||
| Borrowed funds | 253,775 | 92,875 | |||||
| Operating leases | 68,404 | - | |||||
| Other liabilities | 29,746 | 47,937 | |||||
| Total liabilities | 4,459,000 | 4,246,118 | |||||
| Commitments and contingencies | - | - | |||||
| Stockholders’ equity | |||||||
| Common stock, par value $.01 per share (70,000,000 shares authorized; 31,771,585 | |||||||
| shares issued and outstanding) | 318 | 318 | |||||
| Additional paid-in capital | 309,033 | 308,678 | |||||
| Retained earnings | 151,138 | 142,231 | |||||
| Accumulated other comprehensive loss, net of income taxes | (5,144 | ) | (11,990 | ) | |||
| Total Amalgamated Bank stockholders' equity | 455,345 | 439,237 | |||||
| Noncontrolling interests | 134 | 134 | |||||
| Total stockholders' equity | 455,479 | 439,371 | |||||
| Total liabilities and stockholders’ equity | $ | 4,914,479 | $ | 4,685,489 | |||
Select Financial Data
| As of and for the Three | |||||||
| Months Ended | |||||||
| March 31, | December 31, | March 31, | |||||
| 2019 | 2018 | 2018 | |||||
| Selected Financial Ratios and Other Data (1) | |||||||
| Earnings per share | |||||||
| Basic | $ | 0.34 | $ | 0.50 | $ | 0.27 | |
| Diluted | 0.33 | 0.49 | 0.27 | ||||
| Core Earnings per share (non-GAAP) | |||||||
| Basic | $ | 0.34 | $ | 0.30 | $ | 0.28 | |
| Diluted | 0.33 | 0.30 | 0.28 | ||||
| Book value per common share | 14.33 | 13.82 | 12.35 | ||||
| (excluding minority interest) | |||||||
| Tangible book value per share (non-GAAP) | 13.68 | 13.16 | 12.11 | ||||
| Common shares outstanding | 31,771,585 | 31,771,585 | 28,060,984 | ||||
| Weighted average common shares | 31,771,585 | 31,771,585 | 28,060,984 | ||||
| outstanding, basic | |||||||
| Weighted average common shares | 32,321,585 | 32,460,024 | 28,060,984 | ||||
| outstanding, diluted | |||||||
| (1) Effected for stock split that occurred on July 27, 2018 | |||||||
Select Financial Data
| As of and for the Three | |||||||||
| Months Ended | |||||||||
| March 31, | December 31, | March 31, | |||||||
| 2019 | 2018 | 2018 | |||||||
| Selected Performance Metrics: | |||||||||
| Return on average assets | 0.92% | 1.35% | 0.77% | ||||||
| Core return on average assets (non-GAAP) | 0.90% | 0.82% | 0.79% | ||||||
| Return on average equity | 9.82% | 14.88% | 8.96% | ||||||
| Core return on average tangible common equity (non-GAAP) | 10.18% | 9.50% | 9.46% | ||||||
| Loan yield | 4.44% | 4.32% | 4.15% | ||||||
| Securities yield | 3.37% | 3.14% | 2.83% | ||||||
| Deposit cost | 0.31% | 0.27% | 0.26% | ||||||
| Net interest margin | 3.65% | 3.57% | 3.43% | ||||||
| Efficiency ratio | 65.26% | 73.33% | 71.67% | ||||||
| Core efficiency ratio (non-GAAP) | 65.41% | 69.44% | 71.48% | ||||||
| Asset Quality Ratios: | |||||||||
| Nonaccrual loans to total loans | 0.45% | 0.74% | 0.71% | ||||||
| Nonperforming assets to total assets | 1.15% | 1.27% | 1.35% | ||||||
| Allowance for loan losses to nonaccrual loans | 212% | 156% | 180% | ||||||
| Allowance for loan losses to total loans | 0.95% | 1.15% | 1.26% | ||||||
| Net charge-offs (recoveries) to average loans | 1.00% | 0.01% | (0.02%) | ||||||
| Capital Ratios: | |||||||||
| Tier 1 leverage capital ratio | 8.90% | 8.88% | 8.60% | ||||||
| Tier 1 risk-based capital ratio | 13.31% | 13.22% | 11.58% | ||||||
| Total risk-based capital ratio | 14.33% | 14.46% | 12.83% | ||||||
| Common equity tier 1 capital ratio | 13.31% | 13.22% | 11.36% | ||||||
Loan Portfolio Composition
| (In thousands) | At March 31, 2019 | At December 31, 2018 | At March 31, 2018 | |||||||||||||||||||
| Amount | % of total loans | Amount | % of total loans | Amount | % of total loans | |||||||||||||||||
| Commercial portfolio: | ||||||||||||||||||||||
| Commercial and industrial | $ | 527,200 | 16.0 | % | $ | 556,537 | 17.2 | % | $ | 666,827 | 22.9 | % | ||||||||||
| Multifamily mortgages | 921,588 | 28.0 | % | 916,337 | 28.3 | % | 892,773 | 30.6 | % | |||||||||||||
| Commercial real estate mortgages | 428,534 | 13.0 | % | 440,704 | 13.6 | % | 338,064 | 11.6 | % | |||||||||||||
| Construction and land development mortgages | 45,734 | 1.4 | % | 46,178 | 1.4 | % | 11,582 | 0.4 | % | |||||||||||||
| Total commercial portfolio | 1,923,056 | 58.4 | % | 1,959,756 | 60.5 | % | 1,909,246 | 65.5 | % | |||||||||||||
| Retail portfolio: | ||||||||||||||||||||||
| Residential 1-4 family (1st mortgage) | 1,176,551 | 35.8 | % | 1,083,204 | 33.4 | % | 890,027 | 30.5 | % | |||||||||||||
| Residential 1-4 family (2nd mortgage) | 26,906 | 0.8 | % | 27,206 | 0.8 | % | 30,360 | 1.0 | % | |||||||||||||
| Consumer and other | 164,412 | 5.0 | % | 171,184 | 5.3 | % | 88,040 | 3.0 | % | |||||||||||||
| Total retail | 1,367,869 | 41.6 | % | 1,281,594 | 39.5 | % | 1,008,427 | 34.5 | % | |||||||||||||
| Total loans | 3,290,925 | 100.0 | % | 3,241,350 | 100.0 | % | 2,917,673 | 100.0 | % | |||||||||||||
| Net deferred loan origination fees (costs) | 7,482 | 6,481 | 1,618 | |||||||||||||||||||
| Allowance for loan losses | (31,392 | ) | (37,195 | ) | (37,382 | ) | ||||||||||||||||
| Total loans, net | $ | 3,267,015 | $ | 3,210,636 | $ | 2,881,909 | ||||||||||||||||
Net Interest Income Analysis
| Three Months Ended | Three Months Ended | Three Months Ended | |||||||||||||||||||||||||
| March 31, 2019 | December 31, 2018 | March 31, 2018 | |||||||||||||||||||||||||
| (In thousands) | Average Balance | Income / Expense | Yield / Rate | Average Balance | Income / Expense | Yield / Rate | Average Balance | Income / Expense | Yield / Rate | ||||||||||||||||||
| Interest earning assets: | |||||||||||||||||||||||||||
| Interest-bearing deposits in banks | $ | 73,296 | $ | 293 | 1.62 | % | $ | 85,789 | $ | 350 | 1.62 | % | $ | 75,078 | $ | 436 | 2.35 | % | |||||||||
| Securities and FHLB stock | 1,225,700 | 10,185 | 3.37 | % | 1,198,477 | 9,490 | 3.14 | % | 950,143 | 6,633 | 2.83 | % | |||||||||||||||
| Loans held for sale | 2,818 | - | - | - | - | - | - | - | - | ||||||||||||||||||
| Total loans, net (1) | 3,224,604 | 35,296 | 4.44 | % | 3,180,168 | 34,620 | 4.32 | % | 2,849,310 | 29,174 | 4.15 | % | |||||||||||||||
| Total interest earning assets | 4,526,418 | 45,774 | 4.10 | % | 4,464,434 | 44,460 | 3.95 | % | 3,874,531 | 36,243 | 3.79 | % | |||||||||||||||
| Non-interest earning assets: | |||||||||||||||||||||||||||
| Cash and due from banks | 9,988 | 12,480 | 6,906 | ||||||||||||||||||||||||
| Other assets | 251,468 | 203,321 | 173,339 | ||||||||||||||||||||||||
| Total assets | $ | 4,787,874 | $ | 4,680,235 | $ | 4,054,776 | |||||||||||||||||||||
| Interest bearing liabilities: | |||||||||||||||||||||||||||
| Savings, NOW and money market deposits | 1,877,349 | $ | 1,867 | 0.40 | % | 1,839,662 | $ | 1,731 | 0.37 | % | 1,489,690 | $ | 1,301 | 0.35 | % | ||||||||||||
| Time deposits | 440,428 | 1,079 | 0.99 | % | 444,131 | 982 | 0.88 | % | 386,256 | 788 | 0.83 | % | |||||||||||||||
| Total deposits | 2,317,777 | 2,946 | 0.52 | % | 2,283,793 | 2,713 | 0.47 | % | 1,875,946 | 2,089 | 0.45 | % | |||||||||||||||
| Federal Home Loan Bank advances | 328,476 | 2,046 | 2.53 | % | 258,505 | 1,542 | 2.37 | % | 360,101 | 1,353 | 1.52 | % | |||||||||||||||
| Other Borrowings | 1,333 | 9 | 2.64 | % | - | - | 0.00 | % | - | - | 0.00 | % | |||||||||||||||
| Total interest bearing liabilities | 2,647,586 | 5,001 | 0.77 | % | 2,542,298 | 4,255 | 0.66 | % | 2,236,047 | 3,442 | 0.62 | % | |||||||||||||||
| Non interest bearing liabilities: | |||||||||||||||||||||||||||
| Demand and transaction deposits | 1,598,637 | 1,669,670 | 1,423,451 | ||||||||||||||||||||||||
| Other liabilities | 95,187 | 41,976 | 48,352 | ||||||||||||||||||||||||
| Total liabilities | 4,341,410 | 4,253,944 | 3,707,850 | ||||||||||||||||||||||||
| Stockholders' equity | 446,464 | 426,291 | 346,926 | ||||||||||||||||||||||||
| Total liabiliites and stockholders' equity | $ | 4,787,874 | $ | 4,680,235 | $ | 4,054,776 | |||||||||||||||||||||
| Net interest income / interest rate spread | 40,773 | 3.34 | % | 40,205 | 3.29 | % | 32,801 | 3.17 | % | ||||||||||||||||||
| Net interest earning assets / net interest margin | $ | 1,878,832 | 3.65 | % | $ | 1,922,136 | 3.57 | % | $ | 1,638,484 | 3.43 | % | |||||||||||||||
| (1) Amounts are net of deferred origination costs / (fees) and the allowance for loan losses | |||||||||||||||||||||||||||
Deposit Portfolio Composition
| Three Months Ended | |||||||||||
| (in thousands) | March 31, 2019 | December 31, 2018 | March 31, 2018 | ||||||||
| Non-interest bearing demand deposit accounts | $ | 1,709,921 | $ | 1,565,503 | $ | 1,455,428 | |||||
| NOW accounts | 223,195 | 230,859 | 204,936 | ||||||||
| Savings accounts | 342,713 | 335,254 | 309,751 | ||||||||
| Money market deposit accounts | 1,377,130 | 1,548,699 | 984,092 | ||||||||
| Time deposits | 439,135 | 424,991 | 381,358 | ||||||||
| Brokered CD | 14,981 | - | - | ||||||||
| $ | 4,107,075 | $ | 4,105,306 | $ | 3,335,565 | ||||||
| Three Months Ended | ||||||||||||||||||||
| (in thousands) | March 31, 2019 | December 31, 2018 | March 31, 2018 | |||||||||||||||||
| Average Amount | Weighted Average Rate | Average Amount | Weighted Average Rate | Average Amount | Weighted Average Rate | |||||||||||||||
| Non-interest bearing demand deposit accounts | $ | 1,598,637 | 0.00 | % | $ | 1,669,670 | 0.00 | % | $ | 1,423,451 | 0.00 | % | ||||||||
| NOW accounts | 224,686 | 0.45 | % | 206,107 | 0.45 | % | 206,625 | 0.29 | % | |||||||||||
| Savings accounts | 337,477 | 0.21 | % | 329,192 | 0.19 | % | 305,192 | 0.14 | % | |||||||||||
| Money market deposit accounts | 1,315,186 | 0.44 | % | 1,304,363 | 0.41 | % | 977,874 | 0.43 | % | |||||||||||
| Time deposits | 432,771 | 0.96 | % | 444,131 | 0.88 | % | 386,256 | 0.83 | % | |||||||||||
| Brokered CD | 7,657 | 2.93 | % | - | - | - | - | |||||||||||||
| $ | 3,916,414 | 0.31 | % | $ | 3,953,463 | 0.27 | % | $ | 3,299,398 | 0.26 | % | |||||||||
Asset Quality
| March 31, | December 31, | March 31, | |||||||||
| (In thousands) | 2019 | 2018 | 2018 | ||||||||
| Loans 90 days past due and accruing | $ | 7,157 | $ | - | $ | 488 | |||||
| Nonaccrual loans excluding held for sale loans and restructured loans | 9,351 | 8,379 | 4,785 | ||||||||
| Nonaccrual loans held for sale | - | - | 635 | ||||||||
| Restructured loans - nonaccrual | 5,455 | 15,482 | 15,962 | ||||||||
| Restructured loans - accruing | 33,441 | 34,457 | 32,891 | ||||||||
| Other real estate owned | 1,057 | 844 | 1,098 | ||||||||
| Impaired securities | 90 | 93 | 113 | ||||||||
| Total nonperforming assets | $ | 56,551 | $ | 59,255 | $ | 55,972 | |||||
| Nonaccrual loans: | |||||||||||
| Commercial and industrial | $ | 3,734 | $ | 12,153 | $ | 12,408 | |||||
| Multifamily | - | - | - | ||||||||
| Commercial real estate | 4,019 | 4,112 | - | ||||||||
| Construction and land development | - | - | - | ||||||||
| Total commercial portfolio | 7,753 | 16,265 | 12,408 | ||||||||
| Residential 1-4 family 1st mortgages | 5,769 | 6,287 | 7,684 | ||||||||
| Residential 1-4 family 2nd mortgages | 1,078 | 1,299 | 627 | ||||||||
| Consumer and other | 206 | 10 | 28 | ||||||||
| Total retail portfolio | 7,053 | 7,596 | 8,339 | ||||||||
| Total nonaccrual loans | $ | 14,806 | $ | 23,861 | $ | 20,747 | |||||
| Nonperforming assets to total assets | 1.15 | % | 1.27 | % | 1.35 | % | |||||
| Nonaccrual assets to total assets | 0.32 | % | 0.53 | % | 0.54 | % | |||||
| Nonaccrual loans to total loans | 0.45 | % | 0.74 | % | 0.71 | % | |||||
| Allowance for loan losses to nonaccrual loans | 212 | % | 156 | % | 180 | % | |||||
| Troubled debt restructurings: | |||||||||||
| TDRs included in nonaccrual loans | $ | 5,455 | $ | 15,482 | $ | 15,962 | |||||
| TDRs in compliance with modified terms | $ | 33,441 | $ | 34,457 | $ | 32,891 | |||||
Reconciliation of GAAP to Non-GAAP Financial Measures
The information provided below presents a reconciliation of each of our non-GAAP financial measures to the most directly comparable GAAP financial measure.
| For the Three | |||||||||||
| Months Ended | |||||||||||
| (in thousands) | March 31, | December 31, | March 31, | ||||||||
| 2019 | 2018 | 2018 | |||||||||
| Core operating revenue | |||||||||||
| Net interest income (GAAP) | $ | 40,773 | $ | 40,205 | $ | 32,801 | |||||
| Non interest income (GAAP) | 7,417 | 7,555 | 7,015 | ||||||||
| Less: Securities loss, net and OTTI | (293 | ) | 129 | 103 | |||||||
| Core operating revenue (non-GAAP) | $ | 47,897 | $ | 47,889 | $ | 39,919 | |||||
| Core non-interest expenses | |||||||||||
| Non-interest expense (GAAP) | $ | 31,448 | $ | 35,025 | $ | 28,788 | |||||
| Less: Acquisition cost(1) | - | (1,633 | ) | (275 | ) | ||||||
| Less: Initial public offering and follow on cost (2) | - | 120 | - | ||||||||
| Less: Severance (3) | (117 | ) | (257 | ) | 23 | ||||||
| Core non-interest expense (non-GAAP) | $ | 31,331 | $ | 33,255 | $ | 28,536 | |||||
| Core Earnings | |||||||||||
| Net Income (GAAP) | $ | 10,813 | $ | 15,984 | $ | 7,661 | |||||
| Add: Securities loss, net and OTTI | (293 | ) | 129 | 103 | |||||||
| Add: Acquisition cost(1) | - | 1,633 | 275 | ||||||||
| Add: Initial public offering and follow on cost (2) | - | (120 | ) | - | |||||||
| Add: Severance (3) | 117 | 257 | (23 | ) | |||||||
| Less: Tax on notable items | 45 | (563 | ) | (88 | ) | ||||||
| Less: Deferred tax asset realization | - | (7,632 | ) | - | |||||||
| Core earnings (non-GAAP) | $ | 10,682 | $ | 9,688 | $ | 7,929 | |||||
| Tangible common equity | |||||||||||
| Stockholders Equity (GAAP) | $ | 455,480 | $ | 439,371 | $ | 346,586 | |||||
| Less: Minority Interest (GAAP) | (134 | ) | (134 | ) | (134 | ) | |||||
| Less: Preferred Stock (GAAP) | - | - | (6,700 | ) | |||||||
| Less: Goodwill (GAAP) | (12,936 | ) | (12,936 | ) | - | ||||||
| Less: Core deposit intangible (GAAP) | (7,713 | ) | (8,102 | ) | - | ||||||
| Tangible common equity (non-GAAP) | $ | 434,697 | $ | 418,199 | $ | 339,752 | |||||
| Average tangible common equity | |||||||||||
| Average Stockholders Equity (GAAP) | $ | 446,464 | $ | 426,290 | $ | 346,927 | |||||
| Less: Minority Interest (GAAP) | (134 | ) | (134 | ) | (134 | ) | |||||
| Less: Preferred Stock (GAAP) | - | - | (6,700 | ) | |||||||
| Less: Goodwill (GAAP) | (12,936 | ) | (12,936 | ) | - | ||||||
| Less: Core deposit intangible (GAAP) | (7,903 | ) | (8,291 | ) | - | ||||||
| Average tangible common equity (non-GAAP) | $ | 425,491 | $ | 404,929 | $ | 340,093 | |||||
| Core return on average assets | |||||||||||
| Core earnings (numerator) (non-GAAP) | 10,682 | 9,688 | 7,929 | ||||||||
| Divided: Total average assets (denominator) (GAAP) | 4,787,874 | $ | 4,680,235 | 4,054,776 | |||||||
| Core return on average assets (non-GAAP) | 0.90 | % | 0.82 | % | 0.79 | % | |||||
| Core return on average tangible common equity | |||||||||||
| Core earnings (numerator) (non-GAAP) | 10,682 | 9,688 | 7,929 | ||||||||
| Divided: Total average tangible common equity (denominator) (non-GAAP) | 425,491 | 404,929 | 340,093 | ||||||||
| Core return on average tangible common equity (non-GAAP) | 10.18 | % | 9.50 | % | 9.46 | % | |||||
| Core efficiency ratio | |||||||||||
| Core non-interest expense (numerator) (non-GAAP) | 31,331 | 33,255 | 28,536 | ||||||||
| Core operating revenue (denominator) (non-GAAP) | 47,897 | 47,889 | 39,919 | ||||||||
| Core efficiency ratio (non-GAAP) | 65.41 | % | 69.44 | % | 71.48 | % | |||||
| (1) Expense related to New Resource Bank acquisition | |||||||||||
| (2) Costs related to first follow-on in November 2018 | |||||||||||
| (3) Salary and COBRA reimbursement expense for positions eliminated | |||||||||||