AMAL - Earnings call transcript Q2 2019 | Amalgamated Financial Corp.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Greetings. Welcome to the Amalgamated Bank’s Second Quarter 2019 Earnings Call. [Operator instructions] Please note this conference is being recorded. I will now turn the conference over to Drew LaBenne, Chief Financial Officer. Thank you, you may begin.

Drew LaBenne

good and operator, you, morning, everyone. Thank your earnings call. appreciate participation today XXXX quarter second our in We With is me Executive Chief today Keith Mestrich, and President Officer.

be extended period a this time. section reminder, replay of our available will of an a Investors on for As website the telephonic call of

Investor slide a the complement of website. is available today's Additionally, section discussion to on deck Resources

Private on Act March XXXX, periodic statements Before our or to certain those file refer time statements contain XXXX. could we that indicated or of call other of within from meaning differ XX, investors results we by slide this results the reports may that statements. that factors from begin, two list Reform time cause for forward-looking or should let well the may that a me earnings by Securities actual FDIC of caution filed We to differ such information with the constitute as any Investors risk the such to as of and expectations slide remind forward-looking XX-K Litigation implied everyone deck, our actual statements. implied that XXXX indicated from materially

found measures on A be U.S. as for GAAP of these our reconciliation as call, in this not substitute can which non-GAAP discuss measures will with non-GAAP the prepared believe are in GAAP. isolation in presentation website. we considered be useful today's comparable certain additional results to most earnings a during evaluating our Additionally, accordance The we performance. well should our in measures, of information as or release,

the Keith. turn I'll to point, this over At call

Keith Mestrich

time and good morning, your and today. attention Drew, Thank everyone. We you, appreciate

strategy. of I'll XXXX today's review an progress update portfolio you high made to discuss we The again excited a of our allocation our have on the call, second be providing results. quarter through to unique our and our franchise. before capital details level We deposit growing the quarter with On run loan are

Drew a out then detail. themes discuss There are quarter to will in a pull for results from positive key more of want couple very our financial I Amalgamated.

our are First, with pleased we quarter second results.

a our margin Second, interest basis. steady quarter-over-quarter held net on

overall non the Third, leverage executed Fourth, minimal with decreased relationship posting in by vibrant significantly one growth still the C&I to deposits pressure. and we our remained of It initiative repricing deposit significant continuing in non-interest a we loans, unprofitable with an lending successfully in increase running saw of net recent fifth, the risk bearing strategy loans. branch. improve our franchise upon off expenses closure our portfolio quarter-over-quarter

vendor We work also reduction to on in continue expenses.

And finally our in capital providing position or return capital shareholders ways. us to with capital acquisition an to remains strong, ample complete other

million $XX.X quarter, the $X.XX second delivered in or $XX.X income $X.XX or XXXX. $X.XX million per to per quarter, linked net diluted compares million of or which we share share share, income second of the quarter net of for net the diluted per and For $XX.X of diluted income

million compared of second or Core diluted earnings $X.XX in diluted or or $XX.X quarter, million share to XXXX. per in as $XX.X linked $X.XX $X.XX the share were $XX.X per diluted quarter and the million per share

Core excludes sale and quarter adjustments. on securities, the effective tax loss earnings the this of such severance,

as we best of bank. the are core rate believe representation our the performance reminder, a earnings run As power the financial as earnings well

to advantage deposit our what four, in for of we bank, slide industry. the from lowest cost to is one to competitive franchise benefit continues funds of continue Turning as be the the a

or million quarter, grew by For annualized. deposits X.X% the $XX.X second

period discussed are have calls, we short deposits has to that term on our ending volatility earnings cause As often potential previous the there balances. in

the and better in a for representing linked for average deposits $XXX.X our an of are were view billion franchise of deposits increase quarter, million average $X.X the quarter. result, a As second

now our quarter. which balances, the This deposit XX% growth the up from base XX.X% first of average at was of an DDA represent end largely

across forward, deposit expand our work our as political markets commercial to remains relationships, to bankers strong our business core pipeline strong. continues Looking be our while our

and York of verticals. all experiencing deposit markets in our customer our Washington are Both growth New

office regional Additionally, growth new franchise we help director deposit have in in hired our a confident western are who California. region our in we'll accelerate

customers, Lastly responsible lines interested with the particularly in space the socially partnering grow nonprofit across and their financial more business impact expanding us in business they with those relationships are institution. as

$XXX.X deposit second quarter quarter’s As balance first political to to strong remains on first as quarter as growth to million slide $XXX anticipated, by XXXX of million million five. shown $XXX.X having deposit the the -- through increased compared the

The ticket for the a and the marked debate several seen have ago. activities fundraising Democratic weeks since swing, race is full in acceleration

we've seen fact, vast It deposit a of office. candidates growth is critical playing see July. a million running a to encouraging through political with further array the for In Amalgamated such $XX of role

We As that we the been balances after the candidates pay deposits election the their the in Overall, look reduction to expenses. exist a of we fall XXXX. then to through we've anticipate pleased with deposits XXXX sticky off the election, accounts to expect in very as grow date.

to funds Our XX to comparison year XX slightly points basis basis in points XXXX, ago quarter up for period. basis points first to XX increased cost and the of compared the of

XX funds deposits was points. of excluding cost Our basis brokered

low stable source deposit of Our remains cost base funds. a

for expect deposits of deposit the to $XXX growth end the XX% short year year at XX% adjusting XXXX, of of we million XXXX. For term full

second with linked X.X% loans, basis for quarter, quarter. year an on compared and Moving the to to ago compared quarter, were increased which up X.X% as million annualized on as $XX.X the to the

sheet, an aggressively leave further in to while discuss we derisk portfolio momentarily. balance achieved reduce which to our This Drew more in growth detail our to I effort indirect C&I to continue was

about corporate news few Earlier in Money a North XXXX received. America their some best that accolades month, share responsibility. Amalgamated for to excited have named Magazine I'm we recent social Euro this bank

as the client. that our largest have Corp awarded measurement our initiative done the and impact carbon policies, in was aimed at the bank on work the that Bank bank based B our balance sheets on status The the honor space, we lending assessing the work in impact have internal this on the U.S.

honor to of been and much even we have this strategy third is banks against that this party validation awarded thrilled great larger greater that the resources our given are competing global are We especially for and with recognition mission a award. believe this

addition by In of banks was award, California one to the the also bank in named EuroMoney the best Forbes.

acquisition last second The state in our year's recent award New Bank. highlights Resource the growth with of

in and socially expanding and opportunity provides the California bank EuroMoney our footprint to recognized significant honored Forbes efforts way. runway by and growth we are continued be for for growing and our a responsible in both a

our where to our our an will review capital M&A culture for I socially as values based like to strategy, we well as Turning would as priorities entered capital resonate. provide responsible markets Amalgamated’s pipeline allocation work attractive to update on

with have Along continue and discussion those first for remains active remain attractive lines, our priority in to an where M&A pipeline candidates. capital we several strategic

be will continue stakeholders. as our We all strive we to to disciplined maximize for value of

capital second provide steady shareholders is quarterly of return Our consistent dividend. through to to priority a a

the is goal bank. as grow time, Our power increase steadily to the earnings over we the of dividend successfully

$XX decision capital that shares flexibility continuously given return by our hold not plan, priority decision. Our approved was to capital in We through repurchase is to our repurchase to optionality, evaluates shareholders. and maintain did our recently million second but share third the which quarter will

strategy. capital remain follows: on continue focused remain steady and our To commit allocation a To to finally acquisitions, and capital attractive recap, our priorities as return to capital We opportunistic share to of repurchases. shareholders diligently creative

lie brand the XXXX aforementioned shareholders continues the reach thus is grow, directly and election more We Our is America's a responsible as is this for our expanding we the strive to execution as growth upcoming on with had our ultimate and value even of excited good pleased our conclude, during our with goal with the term second places opportunities and to socially mission. achieved that our To create am bank. long we aligned quarter daily to ahead. reputation build awareness really our I

for I turn second over results. would Drew, review our call more of to detailed financial quarter like a now to the

Drew LaBenne

Thank you, Keith.

will detailed on deposit already has start Keith slide success growing our growth loan six. achieved with have As we franchise, that I the

the For $X.X billion XXXX, loans. growth the the quarter ended quarter million delivered as and compared of X.X% to loan second of total $XX.X with annualized we quarter, first or of

driven offset by largely by Property increase growth Assessed $XXX an Energy in residential strategic payoffs. slide and been in growth seven lien C&I continued PACE sales This second primarily portfolio, which quarter and or first and of as reduced has year-to-date by was currently on was now loans the estate. the Clean million our growth in through Loan reduction commercial $XXX real outlined declined $XX stands million of million by The combination a portfolio at indirect and

majority seen already $X and a at In this the approximate down third credits we portfolio to its million pace. an expect to have of in substandard one expect quarter, portfolio off we related the outstanding forward, of of balance, Looking pay the quarter. this release more credit the from third allowance measured our run we

on growth C&I of indirect includes the which pace runoff. the updated impacts faster is year Our full loan to XX% the entire for guidance portfolio X% of for the

Skipping ahead to Slide XX.

ago linked and interest in in for year Our decrease was quarter. quarter X.XX% basis X.XX% the The on margin for quarter assets second compared was three X.XX% points of the the first yield a earning net X.XX% to average as of the XXXX, quarter, the to compared quarter.

The to decreased yield than quarter. compared X.XX% loan X.XX% loans or the loan had the the basis previous current points The quarter. for mark X accretion points yield points on to two basis quarter first three basis the from of higher during

previous basis from loan costs borrowings. federal Funding three the also home primarily to decreased points due quarter bank lower

the base. de-risking impact to to year the balance in includes assumes implies point this NIM XX of cut full the them the guidance the expect X.XX% a quarter the reduction X.XX% the to the This from this due from Reserve and and year decline growing the also week. the of estimate C&I previously indirect factors. portfolio, basis that rate Our mentioned is sheet deposit benefit This now fourth Federal of all of we third of obviously which

million, to for $X.X of the quarter the was first million second interest second quarter XXXX. income, nine non-interest in income decrease compared Now from and of with the XXXX $XXX,XXX XXXX on quarter $X.X increase a of

decrease on in current gain quarter, the The securities to loss the due the quarter. to the compared quarter in previous the sale from previous primarily a was

was of XXXX million the $XX.X to of and $XX.X the second for the quarter million, Turning second XX, non-interest in to compares in $XX.X which million first Slide XXXX. quarter expense quarter

and the pleased quarter costs reducing reduce with the near-term. successes to are achieved in we have in the see further opportunities We over expenses

will be branch some announce to in progress key our approximate annually. We'll rate August, vendor near future. savings on in underway in we Negotiations are there of an hope closing $XXX,XXX some result also which and Chelsea run contracts, the

time. over opportunities continue to to cost structure expect and additional We our manage find

for $XX previous and was and is that Our expenses $XX per guidance unchanged. million quarter million

ahead increase XX which million accruing in totaled due in $XX.X troubled total assets change Slide debt XXth, primarily at XX, days linked period was and occurring was million $X.X loans $X.X and The the assets a of of restructured to million caused an quarter. from Skipping million non-performing $XX.X or past into by XXXX, increase X.XX% increase loans. June

loan sponsor. since was has and restructured which indirect The committed C&I as being quarter view in is rated that equity to by loan substandard this more positive the credit, we been development an due for modified, a the previous

second loan that all are clear for million linked which occurring, stages next the for provision losses up to of are the over in of quarter. of due various and $X.X $X.X documentation The should renewal, loans quarter. in and compares the days XXXX provision was million, The past quarter XX in

the second and an C&I The increase driven provision in provision factors was indirect an due related in increase expense our the in quarter a primarily to New multi-family City regulations. due given portfolio portfolio, qualitative change to in York downgrade by the to

quality necessarily the the downgraded not quarter. in As and has deteriorated, in any loan our of reminder, multi-family do factors portfolio were second no a qualitative loans imply that

loan the substandard upgraded In million mention. the and C&I special for another was indirect during portfolio, downgraded to was $X quarter one to $X.X million of loan

in losses to year from XXXX, loan quarter, $XX.X for the $XX.X a to million had off first million $X.X XX, at indirect an a Slide Turning charge on against XXXX, allowance which it. driven due June specific XXth dollars loan decreased the C&I reserves to primarily in

XXXX. and quarter was impaired which in million the $XX.X million loans million a specific At linked specific of of million for allowance made. $XX.X a $X.X of of XX, bank to impaired $X.X March loans XXXX XXXX, was at June XXth allowance total for made at was XXth which compared X.XX% loans The X.XX% of ratio the June to had allowance

slide XX.XX% to compares and comparable quarter first XX.XX% The return core tangible core the average common XX.XX% XXXX. XXXX to in of our and XX, were respectively. Turning and return on for return on equity the equity X.XX% period for return

to future capitalized well remain growth. we support Lastly,

the on slide turn for our the Before like operator, summarize full expectations -- were I the call results, are over included year would which to XX. I which to

We million to deposit quarter. X.XX% $XX are XX%, loan of X.XX% $XX of cut to net XX% basis to rate to of a margin expecting pre-tax, $XX pre-provision growth to earnings which million of growth per and million of points this week, X% expenses XX%, of XX assumes interest $XXmillion

environment. To the take of our quarter, performance during account the outlook anticipated optimistic with year rate about and we into are we are in as for extremely second conclude, pleased the cautiously the the fluctuations remainder the

on We October. open up the any quarter questions. your time the for again Operator? like our everyone line that, you to Thank With third to I'd updating look ask forward in to results operator for today.

Operator

Instructions] you. from first Our Alexopoulos with Please [Operator Steven Thank is question proceed. JPMorgan.

Steven Alexopoulos

morning good Hey everybody.

Keith Mestrich

Hi Steve.

Drew LaBenne

Morning Good Steve. Hey

Steven Alexopoulos

So margin, just to the point the help start NIM cut? on maybe that? parse do XX from on the out Fed. how about impact What's Drew, the think basis us we of can impact you

Drew LaBenne

point of we anticipate decrease. basis each $X.X terms for in about NII, million impact Well XX

So assumptions estimate, into obviously that there's but now. that's that a right it where lot stands go of that

Steven Alexopoulos

And only a then the July on helpful. know actually the That's Okay. I rate Fed cuts, into path if continues guidance. of baking you're

goes pursue on something some of to you about pressure longer? it of you levers the talked if have You some offset the might available,

Drew LaBenne

absolutely. Yes

rate growth think So are deposit impacts NIM some bearing deposits. which to there the that non-interest expect continued deposits growth well in particular the on as with we positive cut, in regards is I and deposit DDA

the thing we're now largely is The should banking sitting And which now we our of below loan the in set have other indirect drag less now. peer think right most that forward. I to loan going groups of at a runoff, XX% finished ratio the right on is C&I we've deposit

have that's think on I replace a positive So securities an as hopefully which loans, to well opportunity impact with them.

Steven Alexopoulos

just the so that in Okay, these look I at should say heard that's and increase clear quarter-on-quarter? mostly XX I up in credit, the these days past million helpful. if think, terms is then so all increase maybe due, And you right we on or of were $X timing,

Drew LaBenne

is past days due past accruing, and Yes. they're paying what's all all it. causing They are XX and due they're maturity basically

but so loans all paying delays are it's accruing. And re documentation, and in

Steven Alexopoulos

Is But these. any it's related to you're that not credit stress on what of It's just really timing. saying?

Drew LaBenne

in as and substandard there already Yes, paying and one accruing [Indiscernible] on very some I that is but one substandard, in that in the think credit, else loan do it's one that to still also I think but good and is bucket has anywhere work has it's there a our LTV the it's not well.

one So, at we on think that fine be should least now. right know what I it from

Keith Mestrich

on is Steve Yes, Keith this that.

my in got quality every about. worry credit is to problems mortgage up day Our residential not head office I've of thing.

of think very in book, to think conservative and think very fashion a fact, solid. it’s I it’s of proud quality and the that credit that I very continuing continues he In to underwrite

Steven Alexopoulos

Okay. seen reserve And City finally peers increase your then of the New many multifamily. on we the haven't York

You talk the drove to that what this quarter? do about decision

Keith Mestrich

Yes.

the of the of So one there go into is those factors the are underlying of number reserve a value qualitative and that collateral.

value can specific certainly event, event specific had passed, we on think think we multifamily the And value in market's but taken and factor property. was City not area LTV so of has we action, hit the like therefore a City related on qualitative where it we believe the York was is mode is felt our And with a New the and that on that. multi-family had properties that any quantify discovery specific York where still increase it prudent I New regulation properties, in to to a the that I that

Steven Alexopoulos

all Thanks color. the for Terrific.

Keith Mestrich

Steve. Thanks

Operator

Please O'Neill. with Goldfarb Alex from is question next Our Sandler proceed.

AlexGoldfarb

Hey good morning guys.

Keith Mestrich

Alex. Hi,

AlexGoldfarb

off, I wanted XX. expense which and unchanged is guidance at just to about ask Hey expense first XX to

bit quarter You talked a that came a expenses here. other things expenses, branch you in kind few that in and you which reduce help from about be little just below Chelsea should this a closing of should of the further have to

can bit than why So shouldn't expense tell be a to the maybe you us even guidance little the XX XX? lower

Keith Mestrich

Yes.

contemplate of more first do we all right. hires we some So, the for bank,

I bank way want we add think on I make some you So our the but mean, salary to initiatives which anything to Keith, feel a always to at about will good I benefits upside that will guidance increase think, sure put are we that that want the change our expense under room enough Yes, is. where that. to and things other bit. have are

Drew LaBenne

No. on the vendor at where continue we opportunities. in centering think Alex, hard are right we expenses, I things, think expense, look all you're occupancy to places those right, have

unfilled year, the think it's little expense might have And I recruitment out second think as little we the bank we fair do a second money too do we initiatives been – of see while those a that. off save half little some to in in bit I have a and the so to through and some some spend say of a sort a at in little money that are phase well. going openings sort in employment for lift little themselves have the to themselves –

AlexGoldfarb

the maybe authorized you Is repurchase? bit helpful. repurchase level? share said, not was the of there conversations? some had That's little the uses of better saw quarter. anticipated you more price than certain below a from advancements the the because that then you just getting is Or in what Or maybe in And M&A that terms in didn't any great. necessarily you just shares secondly you Okay, function second at

Keith Mestrich

over themselves of -- in uptick the rebuy constantly case and what's think capital little any we those banks the this at of price things. I looking some a capital M&A space. an uptick strategic appropriate in long-term on conversations for acquisition go go wisely to conversations places that we the did to Bank assumptions combination, opportunities of in in those number using see a to all but at, but I'm in presented think Really our to continuation to that is thing on deal, the want will the have a do. the to that best of smart economic makes We year. make We've prudent buy to the in to the we that the very selective economic been we hang we quarter and are very kind had itself want that related sense in

AlexGoldfarb

is more in obstacle those And can't right the price getting of yet, the to come it is kind yet? obstacle something of actually really the conversations selling the to but what's Or near whoever then more announced to is quite ready in not sell biggest we of term?

Keith Mestrich

sort to but are of the for the – agreement. conversations to getting two that, on barrier you two reasons Different a have hit are exactly that to the to different some --

AlexGoldfarb

Very taking my good. Thanks for questions.

Keith Mestrich

Alex. Thanks

Operator

Morton Our Brian Barclays. next proceed. with from Please is question

Brian Morton

morning. Hi. Good

Keith Mestrich

Hi, Brian.

Brian Morton

anything there loan classified specific and maybe risk drove the What to criticized to Thanks. Hi. the the the migration indirect C&I that rating?

Keith Mestrich

going specific in if -- one if I credit loan that -- that call performance would it needed downgraded. isolated question was the went our is But nothing terms not portfolio. the is [Indiscernible] thresholds revenue below loan got so therefore and else that's anything to our what just -- and your it Yes, in of be downgraded. weaker maybe the Anything

Brian Morton

see C&I you do favorable these for markets to continue in conditions the loans? indirect And Okay.

Keith Mestrich

of You mean disposing for them?

Brian Morton

correct, That's yes?

Keith Mestrich

to in in that million with we we're now credits the well, keep have left – say, are we portfolio would I million XX started this and [ph]. down mind $XXX over No.

left selling worked club if credits the are is, that we taking bring to And you of on size tight in on as need couple club the that's a -- The to it's going deal out. new down portfolio and what remainder very person it just have be rapidly left. a you have So, restrictions part a that into with you're new words will. and they some a the to of there

lenders existing loan. unless of nowhere So, sell club looking are to a for position larger -- in the the unless the there's that

portfolio So that's what's now left the in we're that working through.

Brian Morton

Thanks. great. Okay,

Keith Mestrich

Thanks, Brian.

Operator

proceed. with next [Operator is Chris Instructions] O'Connell question Please from KBW. Our

Chris O'Connell

Good morning, guys.

Keith Mestrich

morning. Chris. Hey, Good

Chris O'Connell

Good morning.

outlook, kind on to of wanted Just drill the just guess down I provision near-term.

the million $X.X with reserve expected next that on $X So, quarter paydown. million release

is coming Just the portfolio thinking origination, about kind of where on core level on kind reserve coming the that's for or the blended what core at? of

Keith Mestrich

Yes.

So there were on provision the this factors quarter. really major three

So, they were -- which we've talked about.

C&I loan the migration. first The is,

The second a factors on qualitative is multifamily.

I of but on one also accretion pick coming loans amount is, know is from replacing understand influences off on the for clarity it loans call that through ALLL mark up, and all loans The from the because the that running the them acquired loan third I'll which to you those leaving, the say and build we new -- that as that mark have comes loans. allowance are

we this have So $XXX,XXX. a did which accretion impacted also quarter about higher by of level the ALLL

basis next books putting PACE XX an point XX in resi, into to ALLL on over kind are little I from think what Going relationship the X%, loans to The to going coverage space, the perspective. C&I a are X.X%. be the quarter, those of we're

in. the on is to the blended where So probably it depending comes in XXs mix what that to XXs be rate is going

payoff so already nice of have the as credits. see to million QX loan So, those it's $X we'll look have quarter, and to rest ahead now the we're happens with that one we going into what obviously into of kind

of So we're the rest portfolio. point not ready on to this at specific the give guidance any

Chris O'Connell

it. Got

guess of reserve longer slower time, be equal, that comes it to you'd So, going thinking off term sounds indirect kind forward C&I drop into all like expect portfolio it the I down as XXs? over might else

Keith Mestrich

right. That's Yes.

Chris O'Connell

million of XX% or $XXX a multifamily in $XXX I that below is LTVs New XXX And service or had then the of just most at restrictive most I rating. that risk and the guys XX. about the policies But coverage noticed York you million holding over believe

that I'm more XXX XX% of service given just seems Just pretty wondering loan your the value level? isn't held that at risk-weighted strong of guide, XX% overall? of coverage average why which

Drew LaBenne

a to of it's I I'll it’s meeting of a that criteria one, more I the you but but there's that, not not I on have mean, get its think couple of criteria, Chris. other. top back obviously one combination the think meeting of to – probably on

back bucket, at head. don't I of risk-weighting of So, of top that I my look breakdown out off go and that. have reasons they're the to why the falling

Chris O'Connell

it. then, multifamily Keith, are here the Got you the a going there's And the more now? year growth New changes. given City forward, law about growth kind in of York that first How down slow portfolio from loan multifamily rent for the been obviously guys thinking about of

Keith Mestrich

Well, we opportunities We looking New is that new York see have pipeline into origination in are still work and for deals team continuing we're on to the pipeline. to York still works an in coming New obviously. continuing and

So a what's I'm will to cycle. it credit quite not into definitely space hasn't like as move up to but a It good conservative the the like tighten, be sense we'll of the dried be anticipated complete. it. space feels part We different as we sure have market a of multifamily

San think we trying third the markets New there make more asked and as fierce the well possibility estate of of do our of trying like for with space. lenders space teams that our at in in spending quarter in I asset two our CRA portion the commercial York, to both particularly it those to our that look in bucket, knowing honing Remember, making deepen to to relationships we'll teams look we are loans space, that CDFI at have opportunities competition we do the where strategies. time Washington origination other are terms spending continuing real ad who and be the cities looking Francisco in we've in have think about for opportunities other there multifamily some

Drew LaBenne

coming factor the not loans over five-year – of we just because to seven years years on is have of think you you origination back at why be books and seven included heavy lot Chris, other a biggest have the on life multifamily. have it over a in question; I to the to has way your by they're

the So part. that's biggest out kick

Chris O'Connell

growth this quarter? breakdown growth sense. Make this loan you And this of Okay. how the of Coast just the origination breakdown coming what's Coast going kind where think here driver purchased And And the loan you. East finally quarter growth then in then to loan majority Thank quarter? is then of from? franchise, of of out, the of terms for versus guess the was West on and be much the future I

Drew LaBenne

the had as – did purchased PACE and million guaranteed So smaller purchase. and commercial we had we we another $XX on category there's purchases resi, loan another loans that we million of solar We and million had -- long $XX of government $XX then well PACE.

So, amount that fair categories we've of but sane in historically. going the purchase there, on doing is been

credit and when As geography not that type, primary its the the focus lending especially far or type as into collateral either alignment doing going our in. happening probably more the by real the mission originations by not it's originations is estate, so the it’s industries we're that

Keith Mestrich

those happen verticals balance what that. was reasons of really a the with country happy Region you bought is a of the from use national the of Yes. the know ability Chris Bank of San know of exposure to you do as key we and about sheet amount larger much lending to to some those we drivers, for to In to deals one exactly is opportunity one think that. and energy Those are "Western those key renewable with happen. couple space of -- of being and a while are the what we particular our conversations out sort that wanted are are across the originations starting very done Office" come that we're happen in our seeing Francisco

continue other have having and banks, in of will I of those a to damage emphasis. attractive people been particular think renewable as through reputation emphasis to them, of spaces. bit, lot will that more us continue sectoral loan a hopefully structure than and multiple yields attractive some in doing yields of not are see scores being can seeking there. of really and space people bank in shrinks what multifamily with increasingly sophisticated areas we We at a are a lenders who really very look bank solar size. with emphasis, becoming of for That's we other we of being a a brain space that in and given new some the nice for those to I should little a geographic opportunities do multifamily put those us. partners to And loans We're space go for and kind present to think those that that out loans a expansion team some getting a loans and for a parties able withstand if That's the

Chris O'Connell

helpful. Thanks guys. Great. really That's

Keith Mestrich

Thanks, Chris.

Operator

next question is Please with from Piper Matthew Our Jaffray. Breese proceed.

Matthew Breese

morning. Good

Keith Mestrich

Matt. Hey,

Drew LaBenne

Hey, good morning.

Matthew Breese

wanted I of the that exposed on in hone Hey. rate just to changes. to multifamily run the bucket the

So is that the I your then New exposed to sure, City these correct? XX% changes, your XXX $XXX want of some to that that's therefore York of multifamily, regulated are of just total, make million, that's like rent so

Drew LaBenne

regulated going have XXX but Yes. I think won't directly, it It's properties because some the no all that still as units that XXX XX% there's of unit regulated I way, rent million, at so be read that shouldn't of are it – regulated say and that units not XX% units of there's well. the had to of the I XXX the the million,

Matthew Breese

Understood.

Okay.

some the just not so have all – XXX% we're be it Okay, of sure? XXX this, might might to exposure

Keith Mestrich

– rate market There's have will there no going exposure. be to deals that some property pure

Matthew Breese

Right.

Keith Mestrich

of have some XX% exposure. them But

Matthew Breese

qual the and on to so quarter in allowance it to what was honing then multifamily directly then this prior now. changes, is And the what ties Okay.

So what was change? that

Drew LaBenne

approximately fact the was the to due approximately. qualitative change Call there $X.X it related the $XXX,XXX Well, million changes.

Matthew Breese

take estimate what could that was? the to us could valuation changes into be? or with qualitative share what factor some apartment in you And Okay. the consideration make so, rent-regulated And range if you that did as change

Drew LaBenne

not the – did We have available do do require go we would to out that. of don't appraisals. information That to whole new and set a us

of the I market sort color. market estimates been think that over what been reading reading probably we've report time you've wide get change could we'll same the have Obviously be. of

Matthew Breese

unusually your in this I was that comments, was how Okay. yield you yield Could mentioned a what was you'd this And accreditable about thinking quarter us – you that the you maybe deem NIM bit know accreditable noticed much just high? this remind elevated. quarter and then

Drew LaBenne

Yes.

five basis quarter last So it points. was

This eight it rounding difference, points. off. quarter a That's about it basis was $XXX,XXX

I better will decreasing basis over probably and is that the near five assuming to time. the think be level obviously points term

Matthew Breese

in And front the but given much. the cut then potentially in and if Fed Fed your move having kind that soon, of so how would you cut move margin, LIBOR, of ran already been know into have some here say the we I Okay. the has given LIBOR

be the considered, much -- what's get want LIBOR? better plus Just mid-quarter for the just down? happened XQ thinking could all considered about really things a I NIM, sense to it how with cut

Keith Mestrich

Yes.

months. things reset every think happening many a for portfolio. some of lot portfolio for some in of they LIBOR. what's Matt, on I so But investment investment factors, example, in the but There obviously months are of price dime. reacted three-month three also there, in off there. it.s don't LIBOR's the example They in the Three reset anticipation

through gone have have not. some reset, So some

self over in So of blended quarter. the the of it course sort

And but down you've it came the stabilize on long is obviously loans, seems think of it [audio some while that gap] compression levels, seen I obviously end lower a rate then already curve loans, at loans the like of is back, what fixed sort non-floating and

Operator

proceed. question is James. next with William from Our Raymond Wallace Please

William Wallace

Thanks. Good morning, guys.

Keith Mestrich

Wally. morning Good

William Wallace

some what an for you kind that have indirect perspective. guys of portion like I'm into and also -- loans. portfolio Are think total that runoff do maybe have be side you optimal retail looks versus loans you and other you'd your of look from like industrial retail the all of if as trying commercial to to mix seen shrinking you the their just the commercial loan commercial and It a portfolios strategically a it gone kind portfolios of your portfolio? strategically about think target have commercial of guys the have about percentage are see it versus retail in

Drew LaBenne

Yes.

here in actually changes So your normally commercial you're a out of into sort which the some would levels classes. of we find we risk as going lending your credit additional unacceptable order, real right to I and where given estate think taking like market in are out cycle, figure more trying to of the without Wally, environment [ph] lot us to yield other entry of banks

well York think come we the we Overall, – on direct would think are we where coming they want renewable estate that it obviously to now I keep I that look but of late, some get increasingly with we very are comfortable going right we're loans to, that and spaces real that really they're and to but relationship our to of We that a better and the buckets thinking that not overall bucket necessarily we a verticals relationship with to real with commercial other the New in. banks. proportion kind really that assets direct ahead yields residential they've strategy our have C&I are is the increase taking where prices largely our general in as in both we with in are of bucket estate number seen have advantageous the market, classes the been to space struggling his that the continue market, roughly fulsome as of energy getting bring C&I in a the about underwritten

that direct how So thinking increase of the portfolio. the the of pie, and of factors it think will, the that yields are bucket, for securities about expense expansion of bucket we're where the at really at way at what reevaluating securities I looking you best at overall But in about the to to that is that loans. the if expense that constantly is risk coming I But look think piece asset are. think C&I

William Wallace

you're portfolio projects. of versus the have loans West originated your comments that that maybe market back market? solar the the some in lending then Okay. out you of fingertips specialized around your the of ones out Coast that Do originated at in going of are about some That's And purchased amount some the region doing or to helpful. are of

Drew LaBenne

For C&I portfolio.

William Wallace

PACE probably resi, as much market of solar is concentration I'm assume out of not that that were of other And purchasing? from how a I'm market? the Well, ones the lot of of C&I, portfolio I if well. the just regions loans in curious you're lot loans there's and the ultimately just kind of curious

Drew LaBenne

concentrated solar and be So the Florida. more and in PACE California going to are resi, loans

say, So strong of relationships there think top of there's loans, commercial constrained concentration is I head, New But C&I any geographically legacy the would we on portion portfolio. also real Resource. less concentration definitely not geographic of do there. The my I – we're

William Wallace

Okay.

the projects growing of you Francisco San unit? originated exclusive of Coast to If out you – the office those specialty lending market exclude for that's being were those that solar and West are

Drew LaBenne

On lending the side?

William Wallace

Yes.

Drew LaBenne

We're going in in California. the commercials

William Wallace

of And Okay. NIM five the correctly, basis half the I year? accounting points purchase then, if heard in back guide the of includes accretion

Drew LaBenne

Correct.

William Wallace

Thanks had. I guys. all That's Okay.

Drew LaBenne

Thanks Wally.

Operator

would We call the closing our answer the have and end remarks. management of to like over I reached session. back turn for question to

Keith Mestrich

just again. thanks everybody for the a with we We're came Thanks bit say time. been and nice that remainder pretty We a the the of telling taking I the to happy to going quarters of the has last to it’s continuation a I year want think out. quarter, how story for And forward. that little summer. of everybody we do hope in what continue it hope

Operator

Thank This concludes you. today's conference.

time. your this lines thank for disconnect And at you participation. may your You

Amalgamated Financial (AMAL) 29 Jul 192019 Q2 Earnings call transcript