Amalgamated Financial Corp. (NASDAQ:AMAL) Q4 2021 Earnings Conference Call January 27, 2022 11:00 AM ET Company Participants Jason Darby - Senior Executive Vice President & Chief Financial Officer Priscilla Sims Brown - President and Chief Executive Officer Conference Call Participants Alex Twerdahl - Piper Sandler Janet Lee - JP Morgan Chris O’Connell - KBW Disclaimer*: This transcript is designed to be used alongside the freely available audio recording on this page. Timestamps within the transcript are d ...

Financial Performance - Net income for Q3 2021 was $14.4 million, or $0.46 per diluted share, compared to $12.5 million, or $0.40 per diluted share in Q3 2020[184]. - For the nine months ended September 30, 2021, net income was $37.0 million, or $1.17 per diluted share, compared to $32.4 million, or $1.04 per diluted share for the same period in 2020[184]. - Non-interest income was $6.7 million for the third quarter of 2021, a decrease of $6.1 million from $12.8 million in the same quarter of 2020[203]. - Total non-interest expense for the nine months ended September 30, 2021, was $97.2 million, a decrease of $4.0 million from $101.2 million for the same period in 2020[210]. - Non-interest expense for the third quarter of 2021 was $33.0 million, a decrease of $4.9 million from the third quarter of 2020[209]. Asset and Liability Overview - As of September 30, 2021, total assets were $6.9 billion, total loans were $3.1 billion, total deposits were $6.2 billion, and stockholders' equity was $556.4 million[166]. - Total assets were $6.9 billion at September 30, 2021, an increase of $0.9 billion from $6.0 billion at December 31, 2020[213]. - Total deposits increased to $6.2 billion as of September 30, 2021, up from $5.3 billion at December 31, 2020, reflecting a growth of approximately 17%[257]. - Cash and equivalents reached $690.2 million, or 10.1% of total assets, as of September 30, 2021, compared to $38.8 million, or 0.6% of total assets, at December 31, 2020[268]. - The deferred tax asset, net of deferred tax liabilities, was $24.7 million at September 30, 2021, down from $27.9 million at December 31, 2020[256]. Loan Portfolio - Total loans as of September 30, 2021, were $3.1 billion, a decrease from $3.4 billion as of December 31, 2020[224]. - The commercial loan portfolio comprised 58.9% of total loans as of September 30, 2021, down from 59.0% at December 31, 2020[227]. - C&I loans totaled $628.4 million, representing 20.2% of the total loan portfolio, a decrease of 7.2% from $677.2 million at December 31, 2020[227]. - Multifamily loans amounted to $826.1 million, accounting for 26.5% of total loans, down 12.8% from $947.2 million at December 31, 2020[229]. - Residential real estate lending loans were $1.0 billion, comprising 33.1% of total loans, down 16.6% from $1.2 billion at December 31, 2020[231]. Provision for Loan Losses - The company experienced a $3.9 million recovery of provision for loan loss in 2021 compared to a $20.2 million provision for loan loss in the same period of 2020[184]. - The provision for loan losses totaled a release of $3.9 million for the nine months ended September 30, 2021, compared to an expense of $20.2 million for the same period in 2020[199]. - The allowance for loan losses was $(35.9) million as of September 30, 2021, compared to $(41.6) million at December 31, 2020[226]. - The allowance for loan losses decreased by $5.7 million to $35.9 million as of September 30, 2021, from $41.6 million at December 31, 2020, primarily due to decreases in loan balances[243]. - Nonperforming assets totaled $67.8 million, or 0.99% of total assets, as of September 30, 2021, a decrease of $14.4 million from $82.2 million, or 1.38% of total assets, at December 31, 2020[251]. Investment Securities - As of September 30, 2021, the available for sale securities amounted to $2.0 billion, an increase of $415.6 million from $1.5 billion at December 31, 2020, primarily due to the purchase of asset-backed securities (ABS)[216]. - The total investment securities portfolio was $2.68 billion as of September 30, 2021, compared to $2.03 billion at December 31, 2020, reflecting an increase of approximately 31.7%[220]. - The ABS represented 35.4% of the available for sale securities portfolio as of September 30, 2021, up from 29.3% at December 31, 2020[220]. - The company does not intend to sell securities with unrealized losses and anticipates full recovery of amortized cost by maturity[217]. - The investment strategy focuses on minimizing credit risk through diversification and concentration limits, with significant investments in U.S. Government sponsored entity obligations[215]. Capital and Liquidity - The company is subject to Basel III capital requirements, which necessitate maintaining a capital conservation buffer of 2.5% on top of minimum risk-based capital requirements[271]. - As of September 30, 2021, the Company reported total capital to risk-weighted assets at $557,007 thousand, representing a ratio of 14.99%[274]. - The Tier I capital to risk-weighted assets was $519,645 thousand, with a ratio of 13.98% as of September 30, 2021[274]. - The liquidity position is supported by liquid assets and access to alternative funding sources, ensuring the ability to meet current and future liquidity needs[267]. - The simulation analysis indicated that a 400 basis points increase in interest rates could lead to a 14.0% increase in the economic value of equity, equating to $145.5 million[265].

Amalgamated Financial Corp. (OMC) Q3 2021 Earnings Conference Call October 28, 2021 11:00 AM ET Company Participants Jason Darby - Chief Financial Officer Priscilla Sims Brown - President and Chief Executive Officer Conference Call Participants Alex Twerdahl - Piper Sandler Janet Lee - JP Morgan Brian Morton - Barclays Chris O’Connell - KBW Disclaimer*: This transcript is designed to be used alongside the freely available audio recording on this page. Timestamps within the transcript are designed to help yo ...

[PART I – FINANCIAL INFORMATION](index=6&type=section&id=PART%20I%20%E2%80%93%20FINANCIAL%20INFORMATION) [Financial Statements](index=6&type=section&id=ITEM%201.%20Financial%20Statements) This section presents the unaudited consolidated financial statements for Amalgamated Financial Corp., highlighting total asset growth to $6.6 billion and net income of $22.6 million for the first six months of 2021 [Consolidated Statements of Financial Condition](index=6&type=section&id=Consolidated%20Statements%20of%20Financial%20Condition) Total assets increased to $6.6 billion by June 30, 2021, driven by higher cash and securities, while loans decreased and deposits significantly increased Consolidated Statements of Financial Condition (in thousands) | Account | June 30, 2021 (unaudited) | December 31, 2020 | | :--- | :--- | :--- | | **Assets** | | | | Total cash and cash equivalents | $547,445 | $38,769 | | Securities | $2,449,552 | $2,034,311 | | Loans receivable, net | $3,137,449 | $3,447,306 | | **Total assets** | **$6,556,272** | **$5,978,631** | | **Liabilities & Equity** | | | | Deposits | $5,909,992 | $5,338,711 | | **Total liabilities** | **$6,008,061** | **$5,442,810** | | **Total stockholders' equity** | **$548,211** | **$535,821** | | **Total liabilities and stockholders' equity** | **$6,556,272** | **$5,978,631** | [Consolidated Statements of Income](index=7&type=section&id=Consolidated%20Statements%20of%20Income) Net income for the six months ended June 30, 2021, increased to $22.6 million, primarily due to a significant reduction in the provision for loan losses Consolidated Statements of Income (in thousands, except per share amounts) | Metric | Three Months Ended June 30, 2021 | Three Months Ended June 30, 2020 | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | | :--- | :--- | :--- | :--- | :--- | | Net Interest Income | $41,991 | $44,439 | $83,836 | $89,127 | | Provision for (recovery of) loan losses | $1,682 | $8,221 | $(1,579) | $16,808 | | Non-interest Income | $5,327 | $8,671 | $9,326 | $17,789 | | Non-interest Expense | $31,395 | $31,068 | $64,189 | $63,339 | | **Net Income** | **$10,408** | **$10,374** | **$22,597** | **$19,919** | | **Earnings per common share - diluted** | **$0.33** | **$0.33** | **$0.72** | **$0.64** | [Consolidated Statements of Comprehensive Income](index=8&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) Total comprehensive income for the six months ended June 30, 2021, decreased to $21.1 million, primarily due to a net unrealized loss on securities Consolidated Statements of Comprehensive Income (in thousands) | Metric | Three Months Ended June 30, 2021 | Three Months Ended June 30, 2020 | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | | :--- | :--- | :--- | :--- | :--- | | Net Income | $10,408 | $10,374 | $22,597 | $19,919 | | Total other comprehensive income (loss), net of taxes | $2,904 | $21,937 | $(1,461) | $4,045 | | **Total comprehensive income (loss), net of taxes** | **$13,312** | **$32,311** | **$21,136** | **$23,964** | [Consolidated Statements of Changes in Stockholders' Equity](index=10&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Stockholders%27%20Equity) Stockholders' equity increased to $548.2 million by June 30, 2021, driven by net income, partially offset by dividends and share repurchases - Key activities affecting stockholders' equity in the first six months of 2021 include net income of **$22.6 million**, dividend payments of **$5.0 million** (**$0.16 per share**), and share repurchases totaling **$2.9 million**[24](index=24&type=chunk) [Consolidated Statements of Cash Flows](index=12&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Cash and cash equivalents increased by $508.7 million, primarily due to significant cash provided by financing activities from increased deposits Consolidated Statements of Cash Flows (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | | :--- | :--- | :--- | | Net cash provided by operating activities | $24,716 | $17,747 | | Net cash (used in) provided by investing activities | $(77,883) | $(694,524) | | Net cash provided by financing activities | $561,843 | $1,142,200 | | **Increase (decrease) in cash, cash equivalents** | **$508,676** | **$465,423** | | Cash, cash equivalents at beginning of year | $38,769 | $122,538 | | **Cash, cash equivalents at end of period** | **$547,445** | **$587,961** | [Notes to Consolidated Statements](index=15&type=section&id=Notes%20to%20Consolidated%20Statements) This section details accounting policies, financial data, and key notes on reorganization, CECL adoption, loan portfolio, and commitments - On **March 1, 2021**, Amalgamated Financial Corp. **completed its reorganization** to become the holding company for Amalgamated Bank[34](index=34&type=chunk) - The company will adopt the **Current Expected Credit Loss (CECL) standard** on **January 1, 2023**, which is expected to significantly change the credit loss estimation model[41](index=41&type=chunk) - The company has commitments to purchase up to **$375 million** of PACE assessment securities by **Q4 2021** and an additional **$100 million** for other PACE-related purchases, with **$262.6 million** of these obligations fulfilled as of June 30, 2021[141](index=141&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=43&type=section&id=ITEM%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial condition and operations, noting net income growth to $22.6 million, asset expansion to $6.6 billion, and net interest margin compression [Overview](index=43&type=section&id=Overview) The company, a full-service bank with $6.6 billion in assets, adapted to COVID-19 impacts, including branch closures and reduced loan deferrals - The company is a **certified B Corporation** and a member of the **Global Alliance for Banking on Values**, targeting clients like non-profits, unions, political organizations, and socially responsible businesses[169](index=169&type=chunk) - In response to the COVID-19 pandemic, the company permanently closed **six branches**, expecting annual non-interest expense savings of approximately **$4.0 million** once fully phased in[173](index=173&type=chunk) - As of **June 30, 2021**, loans on COVID-19 related payment deferral programs had decreased to **$4.0 million**, the majority of which were residential loans[176](index=176&type=chunk) [Results of Operations](index=47&type=section&id=Results%20of%20Operations) Net income increased to $22.6 million for the six months ended June 30, 2021, driven by a significant decrease in the provision for loan losses Key Performance Summary - Six Months Ended June 30 | Metric (in millions) | 2021 | 2020 | Change | | :--- | :--- | :--- | :--- | | Net Income | $22.6 | $19.9 | $2.7 | | Net Interest Income | $83.8 | $89.1 | $(5.3) | | Provision for Loan Losses | $(1.6) | $16.8 | $(18.4) | | Non-interest Income | $9.3 | $17.8 | $(8.5) | | Non-interest Expense | $64.2 | $63.3 | $0.9 | - Net interest margin (NIM) for Q2 2021 was **2.75%**, down **35 basis points** from **3.10%** in Q2 2020, primarily due to lower yields on assets in the low interest rate environment[186](index=186&type=chunk) - Non-interest income for Q2 2021 decreased by **$3.4 million** year-over-year, mainly due to a **$1.6 million loss** on equity method investments compared to a **$1.3 million gain** in Q2 2020[201](index=201&type=chunk) [Financial Condition](index=56&type=section&id=Financial%20Condition) Total assets grew to $6.6 billion by June 30, 2021, fueled by increased cash and securities, while deposits rose and nonperforming assets declined Loan Portfolio Composition (in thousands) | Loan Category | June 30, 2021 | Dec 31, 2020 | | :--- | :--- | :--- | | Commercial and industrial | $619,037 | $677,192 | | Multifamily mortgages | $848,651 | $947,177 | | Commercial real estate mortgages | $351,707 | $372,736 | | Residential real estate lending | $1,085,791 | $1,238,697 | | Consumer and other | $222,265 | $190,676 | | **Total loans** | **$3,169,754** | **$3,482,565** | Nonperforming Assets (in thousands) | Category | June 30, 2021 | Dec 31, 2020 | | :--- | :--- | :--- | | Nonaccrual loans | $51,931 | $60,924 | | Troubled debt restructured loans - accruing | $18,683 | $19,553 | | Other real estate owned | $307 | $306 | | **Total nonperforming assets** | **$70,980** | **$82,234** | - The allowance for loan losses decreased to **$38.0 million** at June 30, 2021, from **$41.6 million** at December 31, 2020, primarily due to lower loan balances, with the ratio of allowance to total loans at **1.20%**[240](index=240&type=chunk) - Political deposits, which are seasonal, increased to **$791.3 million** as of June 30, 2021, from **$602.8 million** at December 31, 2020[255](index=255&type=chunk) [Evaluation of Interest Rate Risk](index=66&type=section&id=Evaluation%20of%20Interest%20Rate%20Risk) Interest rate risk modeling indicates a 100 basis point rate increase would boost net interest income by 13.3% and equity by 10.2%, while a decrease would have inverse effects Interest Rate Sensitivity Analysis as of June 30, 2021 | Immediate Shift | Change in Economic Value of Equity (%) | Change in Year 1 Net Interest Income (%) | | :--- | :--- | :--- | | +400 basis points | 7.9% | 35.1% | | +300 basis points | 12.7% | 31.6% | | +200 basis points | 14.2% | 24.5% | | +100 basis points | 10.2% | 13.3% | | -100 basis points | -15.4% | -13.7% | [Liquidity and Capital Resources](index=67&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains strong liquidity and capital, with $547.4 million in cash and $1.8 billion in available-for-sale securities, remaining 'well capitalized' with a 13.63% Tier 1 capital ratio - As of June 30, 2021, the company had **no advances** from the FHLB and a remaining credit availability of **$1.4 billion**, plus an additional **$88.4 million** in borrowing capacity at the Federal Reserve's discount window[267](index=267&type=chunk) - Total stockholders' equity increased by **$12.4 million** to **$548.2 million** at June 30, 2021, from year-end 2020, driven by net income of **$22.6 million**, partially offset by dividends and share repurchases[268](index=268&type=chunk) Regulatory Capital Ratios as of June 30, 2021 (Consolidated) | Ratio | Actual | For Capital Adequacy | To Be Well Capitalized | | :--- | :--- | :--- | :--- | | Total capital to risk weighted assets | 14.68% | 8.00% | 10.00% | | Tier I capital to risk weighted assets | 13.63% | 6.00% | 8.00% | | Common equity tier 1 to risk weighted assets | 13.63% | 4.50% | 6.50% | | Tier I capital to average assets | 7.93% | 4.00% | 5.00% | [Quantitative and Qualitative Disclosures About Market Risk](index=71&type=section&id=ITEM%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) No material changes to the company's market risk profile were reported as of June 30, 2021, consistent with prior disclosures - There were **no material changes** in market risk from the end of the previous fiscal year[275](index=275&type=chunk) [Controls and Procedures](index=72&type=section&id=ITEM%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of June 30, 2021, with no material changes to internal control over financial reporting - The Principal Executive Officer and Principal Financial Officer concluded that the company's disclosure controls and procedures were **effective** as of June 30, 2021[277](index=277&type=chunk) - There were **no material changes** to the internal control over financial reporting during the quarter ended June 30, 2021[278](index=278&type=chunk) [PART II - OTHER INFORMATION](index=73&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) [Legal Proceedings](index=73&type=section&id=ITEM%201.%20Legal%20Proceedings) Management believes no pending or threatened legal matters will materially adversely affect the company's financial condition or operations - Management has concluded that there are **no pending or threatened legal matters** that would **materially and adversely affect** the company's financial condition or operations[280](index=280&type=chunk) [Risk Factors](index=73&type=section&id=ITEM%201A.%20Risk%20Factors) No material changes to risk factors have occurred since the 2020 Annual Report on Form 10-K - **No material changes** to risk factors have occurred since the 2020 Annual Report on Form 10-K[281](index=281&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=73&type=section&id=ITEM%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company repurchased 187,325 shares in Q2 2021, with $7.5 million remaining under its $10 million repurchase program Issuer Purchases of Equity Securities (Q2 2021) | Period (2021) | Total Shares Purchased | Average Price Paid per Share | Shares Purchased as Part of Program | Approx. Value Remaining under Program ($) | | :--- | :--- | :--- | :--- | :--- | | April | 16,989 | $16.73 | — | $10,000,000 | | May | 158,957 | $16.23 | 154,049 | $7,499,476 | | June | 11,379 | $16.35 | — | $7,499,476 | | **Total** | **187,325** | **$16.28** | **154,049** | | - A share repurchase program for up to **$10 million** was authorized on **April 13, 2021**, and during **Q2 2021**, **$2.5 million** of common stock was purchased under this authorization[284](index=284&type=chunk) [Exhibits](index=74&type=section&id=ITEM%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including corporate documents, employment agreements, and certifications

Financial Data and Key Metrics Changes - Net income for Q2 2021 was $10.4 million or $0.33 per diluted share, down from $12.2 million or $0.39 per diluted share in Q1 2021, and unchanged from Q2 2020 [18] - Total loans decreased to $3.1 billion, a decline of $85.4 million compared to Q1 2021, primarily due to a decrease in residential and commercial real estate loans [20] - Net interest margin was 2.75% for Q2 2021, down 10 basis points from Q1 2021 and 35 basis points from Q2 2020 [21] Business Line Data and Key Metrics Changes - Deposits grew to $5.9 billion, an increase of $190 million or 13.3% annualized compared to Q1 2021 [19] - Non-interest income was $5.3 million for Q2 2021, up from $4 million in Q1 2021 but down from $8.7 million in Q2 2020 [23] - The balance of PACE Assessments increased by $94.2 million to $545.8 million in Q2 2021 [20] Market Data and Key Metrics Changes - Deposits from politically active customers rose to $791.3 million, an increase of $99.6 million compared to Q1 2021 [19] - Non-performing assets totaled $71 million, or 1.08% of total assets, a decrease from $81 million or 1.27% in Q1 2021 [25] Company Strategy and Development Direction - The company aims to build on its strong brand and loyalty among socially responsible clients, focusing on organic growth and expanding its product offerings [10][12] - Plans include geographic expansion and potential M&A opportunities to enhance growth [15][51] - The company is committed to maintaining underwriting discipline while exploring new business opportunities [15] Management's Comments on Operating Environment and Future Outlook - Management expressed caution regarding loan growth due to low demand and a low interest rate environment, but remains optimistic about economic expansion in the second half of 2021 [9][26] - The company revised its full-year pre-tax pre-provision earnings guidance to $66 to $72 million, reflecting challenges in the loan portfolio [26] Other Important Information - The company repurchased approximately 154,000 shares for $2.5 million under its $10 million share repurchase authorization during Q2 2021 [16] - The company is focused on optimizing its brand and deepening high-value client relationships [17] Q&A Session Summary Question: Importance of profitability in Amalgamated's strategy - Management emphasized that profitability is crucial and that the socially responsible model can coexist with growth [29][30] Question: Guidance for net interest income (NII) growth - Management indicated that NII growth is expected to be modest, driven by a strong pipeline and renewed business momentum [31][32] Question: Clarification on core pre-tax pre-provision income guidance - The revised guidance is primarily due to a flat loan book and no change in expense outlook [43][44] Question: Update on De Novo Expansion in Boston and LA - Management is optimistic about the Boston expansion and is evaluating other markets, including LA [48][49] Question: M&A strategy and tangible book value dilution - Management is actively considering M&A opportunities that align with their strategy while being prudent about capital deployment [50][52] Question: Concerns regarding specific reserves in the C&I portfolio - Management noted that the reserve buildup is related to two legacy loans, with no additional concerns at this time [63][64] Question: Addressing legacy credit issues - Management is focused on cleaning up non-performing assets and is actively evaluating options to improve the loan portfolio [72][74]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For transition period from to Commission File Number: 001-40136 (Registrant's telephone number, including area code) Not Applicable (Former name, former address and former fiscal year, if changed sinc ...

Financial Performance - GAAP net income was $039 per diluted share, while core net income reached $041 per diluted share[7] - Pre-tax, pre-provision income stood at $131 million, compared to $230 million in the previous quarter[7] - The efficiency ratio was 7153%, with a core efficiency ratio of 6918%, compared to 5866% in 4Q20[7] Balance Sheet - Total deposits increased by $3814 million compared to 4Q20, driven by post-election rebound in political deposits and new relationships in core markets[7, 15] - Total loans decreased by $2245 million, primarily due to customer refinancing and a large loan payoff in C&I[7, 24] - Held-to-maturity securities increased by $368 million, reaching $5313 million[24] - Investment securities totaled $22 billion in book value, with a $1910 million increase in 1Q21 compared to 4Q20[26] Asset Quality - Loan deferrals decreased to $85 million, representing 03% of loans, compared to $413 million or 12% on 12/31/20[7] - Allowance for loan losses totaled $367 million in 1Q21, a decrease of $49 million compared to 4Q20[45] - Net interest income was $418 million, compared to $457 million in 4Q20[30]