Amalgamated Financial Corp. · NASDAQ:AMAL
Amalgamated Financial — IPO Roadshow (November 2021)
49 slides from Amalgamated Financial's IPO roadshow presentation, Nov 4, 2021
Slide 1: Amalgamated Financial Corp. Investor Presentation
Issuer Free Writing Prospectus Filed Pursuant to Rule 433 Dated November 4, 2021 Registration No. 333-260076 Amalgamated Financial Corp. Investor Presentation November 2021 amalgamatedbank.com Member FDIC
Slide 2: Safe Harbor Statements
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 otherwi
Slide 3: Safe Harbor Statements cont.
Safe Harbor Statements cont. FORWARD-LOOKING STATEMENTS (cont.) • the continuing impact of COVID-19 and its variants, on our business, including the impact of the actions taken by governmental authorities to try and contain the virus or address the impact of the virus on the United States economy an
Slide 4: Safe Harbor Statements cont.
Safe Harbor Statements cont. FORWARD-LOOKING STATEMENTS (cont.) 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 a
Slide 5: Management Presenters
Management Presenters PRISCILLA SIMS BROWN President & CEO 30 years of financial services experience, held various positions including Group Executive for Marketing and Corporate Affairs at Commonwealth Bank of Australia and senior positions at AXA Financial, Sun Life and Lincoln Financial. Join
Slide 6: Offering Term Sheet
Offering Term Sheet Issuer Amalgamated Financial Corp. (“AMAL”) Security Offered Subordinated Debt due 2031 Security Rating (1) BBB- by Kroll Structure Fixed-to-Floating Rate (fixed during first five years) Issuance Format SEC Registered Term 10 Years Non-Call Period 5 Years General corporate purpos
Slide 7: Overview of Amalgamated
Overview of Amalgamated
Slide 8: Amalgamated At a Glance
Amalgamated At a Glance NASDAQ: AMAL DISTINCT HERITAGE Market Cap(1): $563 million Founded by a union nearly 100 years ago, Commercial Bank and Chartered Trust Company Amalgamated supports financial equity by providing Total Assets: $6.9 billion access to banking products and services $55.
Slide 9: Investment Highlights
Investment Highlights America’s Largest ESG Focused Bank With Uniquely Positioned Business 1 Model Tailored to Values-Based Institutions 2 Stable, Low-Cost Core Deposit Franchise 3 Conservative Asset Allocation 4 4 Strong Risk-Based Capital Levels and High Liquidity Ratios A Management Team Committe
Slide 10: Uniquely Positioned Business Model
Uniquely Positioned Business Model NICHE TARGETED MISSION-BASED CUSTOMER SEGMENT LABOR UNIONS SUSTAINABILITY PHILANTHROPIES 30,000+ Labor Organizations Environmental action organizations $350bn in assets from progressive 14.6 million Americans Sustainable businesses philanthropies Intern
Slide 11: Diversified Geographic Focus
Diversified Geographic Focus Loans by Geography Boston De Novo Entry NY Metro California 44% 12% New York Chicago City Loan Washington, Entry via Portfolio: D.C. Pending Acquisition $3.1bn 6% San Francisco Entry via Acquisition (1) Washington, D.C. Other 38% Current Market Presence Deposits by Geogr
Slide 12: Pending Acquisition of Amalgamated Investments Company
Pending Acquisition of Amalgamated Investments Company Transaction Creates Significant Value CONSISTENT WITH GOAL OF CREATING A HIGH-PERFORMING BANK Strong Financial Metrics… • Acquisition of AIC / Amalgamated Bank of Chicago (“ABOC”) solidifies AMAL’s position as the Largest Socially Responsible ~1
Slide 13: Acquisition Strategy and Framework
Acquisition Strategy and Framework Recently Announced Acquisition of Amalgamated Framework and Strategy Investments Company (“AIC” or “ABOC”) • We will opportunistically evaluate transactions that have the • ABOC’s conservative credit culture fits AMAL’s credit appetite potential to increase earning
Slide 14: Delivering Improved Operating Performance
Delivering Improved Operating Performance Increased De-Risked Higher Disciplined Enhanced 2014 Low-Cost Balance Net Interest Expense Profitability 2021+ Deposits Sheet Margin Culture NON-INTEREST NONPERFORMING NET INTEREST CORE EFFICIENCY CORE ROATCE(1) BEARING DEPOSITS LOANS / TOTAL LOANS MARGIN RA
Slide 15: Experienced Management Team
Experienced Management Team Experience Executive Officers Industry AMAL Previous Experience Group Executive for Marketing and Corporate Affairs at Priscilla Sims Brown 30+ yrs 4 mo Commonwealth Bank of Australia President & CEO Senior positions at AXA Financial, Sun Life and Lincoln Financial
Slide 16: 3Q21 Financial Results
3Q21 Financial Results
Slide 17: 3Q21 Highlights
3Q21 Highlights INCOME STATEMENT • GAAP net income of $0.46 per diluted share; core net income of $0.46 per diluted share(1) • Pre-tax, pre-provision income(2) of $17.1 million compared to $15.9 million in 2Q21 • Core pre-tax, pre-provision income of $17.0 million compared to $15.6 million in 2Q21 •
Slide 18: Trends
Trends KEY FINANCIAL TRENDS THROUGH 3Q21 ($ in millions) Loans + PACE Ending Deposits 19.1% 8.0% CAGR(1) CAGR(1) Pre-tax Pre-Provision Earnings(2)(3) NPA / Total Assets 27.9% CAGR(1) 1. Compounded Annual Growth Rate (“CAGR”) 2. Sept YTD 2021 Pre-tax Pre-Provision earnings are annualized 3. Pre-tax P
Slide 19: Net Interest Income and Margin
Net Interest Income and Margin NET INTEREST INCOME & MARGIN 3Q21 HIGHLIGHTS ($ millions) • Net interest income was $43.4 million, compared to $42.0 million in 2Q21 • 3Q21 NIM at 2.70%; a decrease of 5 bps and 18 bps, compared to 2Q21 and 3Q20, respectively • NIM was negatively impacted by approximat
Slide 20: Non-Interest Expense and Efficiency
Non-Interest Expense and Efficiency NON-INTEREST EXPENSE 3Q21 HIGHLIGHTS ($ millions) • Efficiency ratio of 66.0% for 3Q21 • Core efficiency ratio of 65.7% for 3Q21(1) • Non-interest expense for 3Q21 was $33.0 million • Non-interest expense for 3Q21 was $1.6 million higher compared to 2Q21 primarily
Slide 21: Trust and Investment Management
Trust and Investment Management TRUST AND INVESTMENT MANAGEMENT BUSINESS PROVIDES STRATEGIC AND FINANCIAL BENEFITS Trust & Investment Management Overview • For nearly 50 years, Amalgamated has provided trust and investment management services to meet the investment needs of institutional clients • G
Slide 22: Deposit Portfolio
Deposit Portfolio TOTAL DEPOSITS 3Q21 HIGHLIGHTS ($ in millions) • Total ending deposits increased $314.5 million compared to 2Q21 due to post-election rebound in political deposits and new relationships in core markets ◦ Total average deposits increased $224.8 million • Average non-interest bearing
Slide 23: Loans and PACE Portfolio
Loans and PACE Portfolio TOTAL LOANS + PROPERTY ASSESSED CLEAN 3Q21 HIGHLIGHTS ENERGY ASSESSMENTS (“PACE”) ($ in millions) • Total loans decreased $50.0 $3,922 $3,868 $3,674 $3,683 $3,715 million, or 1.6%, compared to $367 $421 2Q21 due to continued $3,554 $452 $546 $627 $3,447 prepayment activity a
Slide 24: Investment Securities
Investment Securities SECURITIES – BOOK VALUE(1) ($ millions) 3Q21 HIGHLIGHTS • Investment Securities totaled $2.7 billion book value for 3Q21 • 85.3% of all non-agency MBS/ABS securities are AAA rated and 99.6% are A rated or higher(2); All CLO’s are AAA-rated • As of 3Q21 average subordination for
Slide 25: Returns
Returns ROAE & CORE ROATCE (1)(2) (1) See non-GAAP disclosures in appendix (2) ROATCE excluding equity method investments for solar initiatives was 10.9%, 9.7%, 12.3%, 8.6% and 10.7% for 3Q20, 4Q20, 1Q21, 2Q21 25 and 3Q21, respectively
Slide 26: 2021 Guidance
2021 Guidance 2021 FINANCIAL OUTLOOK • Core Pre-tax pre-provision earnings of $66 million to $72 million ◦ Excludes impact of solar tax equity income/(loss) and any future non-core items ◦ Net Interest Income of $168 million to $174 million ◦ No change in Fed rate targets 26
Slide 27: Interest Earning Assets and Asset Quality
Interest Earning Assets and Asset Quality
Slide 28: Highly Liquid, Low Risk, Interest Earning Assets
Highly Liquid, Low Risk, Interest Earning Assets INTEREST EARNING ASSETS OF $6.6B AS OF SEPTEMBER 30, 2021 We maintain a diverse, low risk profile of interest earning assets • No fossil fuel exposure • $266mm of government guaranteed loans • $224mm residential solar loans with strong credit profiles
Slide 29: Conservative Loan Portfolio
Conservative Loan Portfolio Loan Composition at September 30, 2021 Historical Loan Composition 2021 Q3 Yield on Loans: 3.84% ($ millions) Total Loans CAGR: 4.4% $3,473 $3,489 Commercial $3,248 62 56 Real Estate 46 171 197 $3,123 11.1% Consumer and $2,816 178 422 373 35 254 Other $2,545 11 62 441 347
Slide 30: High Quality, Liquid Securities Portfolio
High Quality, Liquid Securities Portfolio Securities Portfolio Composition at September 30, 2021 Highlights CRA & Other Trust Preferred Property Assessed Clean 0.3% 0.5% Energy ("PACE") • Highly liquid securities portfolio with attractive returns profile Corporate 23.6% 2.7% • Securities represent ~
Slide 31: Allowance for Loan Losses
Allowance for Loan Losses ALLOWANCE FOR LOAN LOSSES (ALLL) 3Q21 HIGHLIGHTS CHANGE FROM 4Q20 TO 3Q21 ($ millions) • Allowance for loan losses totals $35.9 million in 3Q21, or $2.1 million lower compared to 2Q21 primarily due to improved loss and qualitative 4Q20 Allowance $ 41.6 factors, improved cre
Slide 32: Credit Quality Portfolio
Credit Quality Portfolio NPA / TOTAL ASSETS 3Q21 HIGHLIGHTS • Nonperforming assets were $67.8 million as of 3Q21, compared to $71.0 million in 2Q21 • Net charge-offs of -0.02% in 3Q21 was 6 bps lower than 2Q21 due to a shift from a net charge-off position in Q2 to a net recovery position in Q3 • Pas
Slide 33: Strong Asset Quality and Reserve Coverage
Strong Asset Quality and Reserve Coverage NCOs / Avg. Loans (%) NPAs / Assets (%) 0.48% 2.20% 2.03% 1.27% 1.38% 0.23% 0.24% 1.25% 0.22% 0.99% 0.08% (0.05%) (1) 2016 2017 2018 2019 2020 3Q21 2016 2017 2018 2019 2020 3Q21 Reserves / NPAs (%) NPLs / Loans (%) 62.8% 3.10% 52.9% 2.41% 2.30% 51.1% 51.5% 1
Slide 34: Deposit Funding
Deposit Funding
Slide 35: Low-Cost Core Deposit Franchise
Low-Cost Core Deposit Franchise Deposit Composition at September 30, 2021 Deposit Growth ($ millions) $6,225 146 2021 Q3 Cost of Deposits: 0.09% 76 Total Loans CAGR: 16.5% $5,339 183 $4,641 89 Retail Time $4,105 278 2,606 MMDA & Other Deposits 280 116 Savings 2,258 1.2% Jumbo Time $3,233 145 41.9% $
Slide 36: Political Deposits
Political Deposits HISTORICAL TREND ($ in millions) 36
Slide 37: Capital
Capital
Slide 38: Strong Risk-Based Capital Metrics
Strong Risk-Based Capital Metrics RISK-BASED CAPITAL RATIOS 3Q21 HIGHLIGHTS • Regulatory capital ratios remained 14.74% 14.68% 14.99% strong 14.01% 14.25% ◦ Tier 1 leverage ratio of 7.85% 13.98% as of 3Q21 13.70% 13.63% 12.76% 13.11% ◦ Excluding the excess liquidity, tier 1 leverage ratio would be 3
Slide 39: Robust Pro Forma Capital Ratios
Robust Pro Forma Capital Ratios • Pro forma capital ratios are strong and well in excess of regulatory minimums ‒ ~435bps risk-based capital buffer pro forma for acquisition of AIC and subordinated debt offering (1) Pro Forma Consolidated Capital Ratios 16.9% 15.0% 14.8% 14.0% 13.9% 14.0% 13.9% 12.0
Slide 40: Interest Expense Coverage
Interest Expense Coverage Fiscal Year Ended, Nine Months Ended, (dollars shown in thousands) 2016 2017 2018 2019 2020 9/30/21 Sub Debt PF (2) AMAL+AIC+Sub Debt PF (2,4) Double Leverage (1) Bank-Level Equity $554,578 $628,296 -- Parent Equity 556,257 556,257 -- Double Leverage Ratio 100% 113% (3) --
Slide 41: Appendix
Appendix
Slide 42: Interest Rate Sensitivity
Interest Rate Sensitivity • Structurally asset sensitive balance sheet well positioned for rising rates Estimated Change in Net Interest Income +26.1% +13.9% (-13.6%) Parallel Shock: -100 bps +100bps +200 bps Change in: Net Interest (-13.6%) +13.9% +26.1% Income Economic Value of Equity (-17.5%) +12
Slide 43: Kroll Bond Rating Agency Summary
Kroll Bond Rating Agency Summary Kroll Bond Rating Agency Ratings Summary Outlook Stable Amalgamated Financial Corp. Rating Senior Unsecured Debt BBB Subordinated Debt BBB- Short-Term Debt K3 Amalgamated Bank Rating Deposits BBB+ Senior Unsecured Debt BBB+ Subordinated Debt BBB Short-Term Deposit K2
Slide 44: Solar Tax-Equity Investments
Solar Tax-Equity Investments OVERVIEW OF SOLAR TAX EQUITY INVESTMENTS • Realization of tax benefits in the project life and subsequent change in the fair value of the investment creates volatility in the earnings stream • Current projects are expected to generate a slight loss in the next two quarte
Slide 45: Transaction Terms and Assumptions
Transaction Terms and Assumptions Transaction Acquisition of Amalgamated Investments Company (BHC of Amalgamated Bank of Chicago) Structure Consideration 100% Cash Base Purchase Price: $97 million(1) plus Value to ABOC Contingent Additional Purchase Price of up to $1.1 million assuming specific perf
Slide 46: Snapshot
Snapshot BRANCH LOCATIONS: CHICAGO & WARRENVILLE, IL FRANCHISE OVERVIEW Founded in 1922 by Amalgamated Clothing Workers of America, the same union that founded AMAL Holding Company: Amalgamated Investments Company Provides a wide variety of products and services including lending, checking, sa
Slide 47: Reconciliation of Non-GAAP Financials
Reconciliation of Non-GAAP Financials As of and for the As of and for the Three Months Ended Nine Months Ended September 30, September 30, September 30, September 30, June 30, 2021 (in thousands) 2021 2020 2021 2020 Core operating revenue Net Interest income $ 43,387 $ 41,991 $ 45,234 $ 127,223 $ 13
Slide 48: Reconciliation of Non-GAAP Financials
Reconciliation of Non-GAAP Financials As of and for the As of and for the Three Months Ended Nine Months Ended September June 30, September September September (in thousands) 30, 2021 2021 30, 2020 30, 2021 30, 2020 Tangible common equity Stockholders' Equity (GAAP) $ 556,390 $ 548,211 $ 522,497 $ 5
Slide 49: Thank You
Thank You amalgamatedbank.com Member FDIC