AMAL - Earnings call transcript Q3 2019 | Amalgamated Financial Corp.

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Operator

Good morning, ladies and gentlemen, and welcome to the Amalgamated Bank Third Quarter 2019 Earnings Conference Call.

During today’s presentation, all parties will be in a listen-only mode.

Following the presentation, the conference will be opened for questions with instructions to follow at that time.

As a reminder, this conference call is being recorded.

I would now like to turn the call over to Mr. Officer. Financial Chief LaBenne, Drew Please go sir. ahead,

Drew LaBenne

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

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

our today's on the Additionally, available Web a also site. slide discussion deck is to section of complement Investors

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

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

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

Keith Mestrich

good and everyone. Drew, you, Thank morning,

and be the detail. value This I financial quarter will We here Bank. our of provide then with discuss our strategy the forward discuss in results and quarter franchise an of our you. grow discussing to more the on will the morning, third details then third update today are look high-level to to excited Drew results

few a very solid like there’s emphasize start, Bank. I’d from a to To highlights quarter the for what was

in First, an milestone speak and of which assets hard our $X we for surpassed employees. work Amalgamated dedication the billion important to and is

franchise non-profits, many strong but broad-based growth we run-up business Second, to that to only including benefit XXXX robust Election, continues social from deposit philanthropies. sectors and not our growth unions we enterprises experience the the across as focus their Presidential also funds, and on, the

City, Francisco. growth Importantly, all three York our DC and we New of deposit San markets saw Washington in of major

growth loan continued expansion from and strong quarter the our headwind C&I indirect very traction decision portfolio our abates. in our Third, run was as into to to lending strategic off the sustainable gain

business mortgage had excellent an residential our quarter. Additionally,

and the for to next profitability Fourth, we the future expenses will reducing progress headwinds made strong Bank lower which year. a rate help interest improved to from mitigate positions our environment looking

endorse joining we as this are the to the of reputation Principles commitment lastly, Banking build United work socially to every number to proud on the quarter, And have a ESG-related day first U.S. bank, Responsible we as our commitments becoming collective for climate announced responsible including Nations’ action. America's and bank to

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

franchise. I performance of be our quite deposit with continue pleased the to

X, by Slide see can $XXX.X annualized XX.X% million you As deposits from from quarter. the or grew second

better average view ending deposit period deposits a noted volatility have the we balances, provide franchise. previously, given believe As our our into in we

accounts quarter. This second the which $XXX.X end XX.X% now base, annualized in For XX% DDA the our at from represent grew rise a was representing quarter. the deposits linked million of of XX% third quarter, the up of largely deposit average from growth

remains our robust bankers its forward, our deposit to upward continue look while we business and trajectory. As relationships expand our political continues pipeline across our verticals commercial

As as seen deposits Slide the million $XX.X balance experienced compared shown the to increase approaches, we $XXX.X quarter during experience second continue in to X. quarter election $XXX.X an XXXX million growth the in to political million of the as as third of on deposit

to quarter, remains franchise one the what is In for continued the of growth competitive and deposit industry. Our experience in funds we Bank. costs of advantage lowest continued the healthy benefit to the a from

higher second XX quarter. modestly for During than the basis the was third deposits points of which basis we points our XX was reported that XXXX quarter, cost the

our of increase cost the of balances. increase ticked an deposit year, the over up has was overall funds cost DDA Although the by in mitigated course

although and end pressure this Additionally, accounts, of the pricing forward. MMA stable in programs a some cycle expect designed see increases we implemented going have cost of we funds to mitigate did more

we already of deposits range upper the end are guided million growth have of deposit short-term and XXXX, previously our For to growth expecting now year-end XXXX. XX% for for the of $XXX the reached full at XX% year adjusting

first portfolio from the did quarter Moving in run-off that detail, increased will experience million our loans on in growth quarter. indirect we I we XX.X% the $XXX.X quarters as quarter saw very the mentioned onto this experienced first not or loans, annualized but touch earlier, from C&I linked more this in Drew headwind strong the the year. third two growth we of was in which the as the of

our will priority. franchise, As we a grow to remain organic continue growth

like-minded will culture driver Another growth where regions strategic resonate of and is expansion into values institutions. to our our with and people country the

the performed the move did pass strict and strategic Unfortunately, quarter, on three economic opportunities. due diligence During forward criteria the not we targets decided M&A we to our opportunities. to meet potential extensive and third on

need team will our but of customer find additional markets be look growth We we organic understands in formation banking to office base. a will growth continue right the explore start This focus de XXXX. novo we as are banking also to an offices for seriously our opportunities, core looking acquisition through to to commercial the at target successfully who

Bank recent initiatives a commitment in highlighting sustainable ESG which I’d and like expand more future. advance number promote a a to the continues to spend few to of its minutes

was U.S.-based three of the only Principles Banking. banks Amalgamated Responsible sign to one UN for First,

last of launch Banking position ongoing leadership responsibility sustainability, in Nations social part I UN in the announcement pleasure the at company's or United New and Amalgamated global the As had for representing Principles of the the of UNPRB York month. Responsible for

necessary with is climate the the neutrality. achieve facilitate united conjunction the in order UNPRB, announcement endorse to action to transition partners climate help to the also In commitment with the to collective of Bank economic

and technologies is implementing of metrics low committed and support models Amalgamated societies. reporting targets a the climate to resilient will science-based accelerate set including targets carbon, and business towards such, and shift setting As that

PCAF also the the Partnership the Committee. led International launch loans Steering to Accounting Chair disclose investments. the financial proud for of assess Financials Carbon serve and as Amalgamated and emissions greenhouse and of or institutions of PCAF to enables I'm gas

The across to that carbon partnership institutions global representing which measure than in impact. XX classes currently allows initiative institutions ever to financial assets, emissions reduce trillion their more their in all order $X asset created these is of plus consists climate the first

at in Board reach and and the to Cap efforts This addition the of Diversity Association Bank inclusion Board Small Award organization. of throughout received In support our National neutrality, Directors. greater climate award our also by diversity the level efforts to Corporate Amalgamated recognized

achieving other are in to example role sustainability clients important will commitments partner operations, aforementioned balance The more a environmental future an with our and advancing partners of through hope and industry has The this us follow another goal. the that play to our join in lead carbon, meeting sustainable yet our industry sheet. we we our and commitment banking low

a we novo geographic sustainability strategy organic recognition reach to extend through enhance growth As pursuing over to our de brand believe continues will gain time. our our leadership, our

focus area income of for in management our have business. the fee and we under billion growth Currently, a nearly enhancement our $XX under trust custody. on assets Another is assets with

as those of of their funds custody ideal can many but we to commercial handle package an as to funds also investment clients, the clients, is commercial advantage significant For competitive seen clients. a of disbursement our the our aspects their wholesome this

this we this us this business we in increase business initiatives to designed detailed is for profitability past area. largely quarter major but in As two calls, have past launched a breakeven

initiated a major with have custody can if our to outsourcing determine partnering we deliver study in by We partner. a business cost-effective manner more a

the Additionally, on currently ESG we deliver exploring in ways are our space. platform the our offerings are effectively expand more bonds to value-based investment desire clients’ that to that are and management

hard those on efforts have calls. work you update months and on of several ahead will we us We future of

for through the also of to a through shareholder value We maximize top remains consistent return a steady Bank. priority capital quarterly dividend, which continue

opportunistic repurchase We our with share be $XX plan. million will also

of price of have the XXX,XXX million quarter end million third date, $XX.XX. of $X.X shares we or an average To stock an at repurchased We have stock a price $XX.XX. the of $X.X through average of shares total at of or XXX,XXX repurchased

of I runway conclude, that long we for with see the growth I'm third that am with To achieved during excited the have growth us. pleased quarter and we our ahead

customers and building America's communities to serves, to to better part do bank. which Our continues brand the our Amalgamated as as both resonate socially and with reputation upon while our current delivering our future continue we responsible

more turn third to like of now a results. review Drew for financial call detailed to over our I'd the quarter

Drew LaBenne

Keith. you, Thank

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

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

PACE and SBA/USDA driven by and the was growth primarily increase Loan multifamily category. in first loans loans, residential lien in an C&I

the six the by the of portfolio growth by our year-to-date loan million. reduction For which declined been C&I has has indirect our first year, $XXX of strategic hindered months

third in been in is quarter have now the we which portfolio experience The runoff and that we the did not loan substantial visible. growth quarter experiencing that was first

Looking forward, be rate with left portfolio. only at to runoff measured million $XX we a more the the in expect

above guidance growth XX% year, and of We end given at loan the indirect range runoff. X% includes guidance. the updated our portfolio year now was high the X% the loan be C&I to for for full Our the growth which to of our the growth have for loan expect or impact to year expectation the we XX%

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

basis and second our on rates The the of loans portfolio. loans impact as the XX in C&I the loan to result compared of indirect yield decreased X.XX% quarter second X.XX% market quarter the lower on during the points the of to runoff

X.XX% for year of to full first X.XX%, recent most we Our nine currently updated at months the was X.XX% to NIM running but are XXXX. guidance

We range be and anticipating X.XX% expect that be range for NIM near low full in the the our end of our to full the X.XX%. range of to tightened to year have year

income due on from Non-interest $X.X and income. with quarter compared was non-interest the XXXX million, and growth fees primarily for fees The the that the and onto million quarter to quarter management XXXX. properties of XXXX third from losses and previous and increase Now on second in in increase quarter. trust OREO asset the security the third increase deposits of was quarter $XXX,XXX previous of sales an occurred lack in $X.X a

million non-interest due XX, of the $XX.X an to such expense to in $XX.X slight in XXXX quarter quarter increase quarter was projects, our expense pool higher as was the third implementation in bonus employees. in The the second increase the non-interest which $XX.X SOX from compares XXXX. Slide and third the for Turning million million and of expense for

Chelsea annual an call, our second closed our will run which generate savings. quarter on late $XXX,XXX mentioned branch rate As we August in approximate

in of the In to or to re-determined. branch Chelsea positions reduction was headcount no closure. were branch, terms this related relocated There attributed headcount

in will previously successfully annual we to our annually. this generate realized vendor quarter contract finalized turn Those one will have disclosed, savings year. fourth the be As start negotiations an savings in of of which of million $X.X

cost We in savings anticipate opportunities future. further the

as far structure. thus made progress manage our the cost with we pleased quite are We

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

XXXX, ahead decrease million million primarily XX accruing which over in This addition that C&I accruing. past million or was restructuring Skipping non-performing by loans to linked the the totaled have $X.X of $XX.X the quarter. period $X.X of was partially one loan by offset loan indirect in that a quarter. of result Slide substandard expected X.XX% end a from to total decrease the of The XX, days in of due removal previous assets caused TDR September XX, was the moved a assets was million $XX.X at

substandard acquisition required third has and During will the loan reserves one to hope this no quarter, have a the as for be which million workout specific from we a LTV the did non-accrual fast loan moved NRB construction low $X.X loan. we were

from classified to compared $XX third overall improvements criticized million the CRE the C&I million quarter. $XX.X and to The The quarter were mainly Bank loans in by the in and decreased previous loans.

small million $X.X a charged C&I off charge-offs quarter, portfolio. offset loan our release of million $XXX,XXX a of in the release for $XXX,XXX XXXX, to related couple in in indirect been from quarter. losses due to the by net one the that $X.X previously totaled to in The C&I NRB the was During in provision had the quarter primarily the by loans driven recovery provision loan linked compared

flat million the had $XX.X to XXXX, loans TDRs loans points which allowance compared $XX.X XX, which XX, Slide impaired allowance loans a made performing basis XX, quarter million to XX and includes for approximately At at September of million quarter specific June points to ratio at linked Bank specific million Turning million XXXX allowance which $X.X $X.X The XXX previous $XX.X September end. basis total was XX, of loan to loss of made. of of in was compared allowance the the a was for for was XXXX. at impaired the

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

growth. we future remain Lastly, capitalized to support well

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

pre-provision expect pre-tax, million per $XX We of $XX $XX million $XX million continue of million and to to earnings to quarter. expenses

expectation $XXX and flows our XX% we year growth the between XX% updated X.XX%. to adjusted XX% XXXX. million to have to of year-end margin interest X% full of mentioned, for the deposit Loan expectations As to for deposit in for growth X.XX% of net

questions, To of for are for as into regarding we and we our conservative pleased conclude remain and current the account before outlook rate we with remainder up the the take quarter environment. results open year our third

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

Operator

Thank you. [Operator Instructions].

Steven proceed. is from Alexopoulos Our Please first question with JPMorgan.

Steven Alexopoulos

Hi. Good morning, everybody.

Keith Mestrich

morning. Good

Drew LaBenne

Steve. Hi,

Steven Alexopoulos

start I wanted deposit on the side. to

notable XQ in on rising, this why drove below So still deposit interest-bearing again increase far you to peers? Give you’re cost quarter. deposit particularly pretty saw and we cost some what color the continue given in expect increase so wouldn’t

Keith Mestrich

Yes.

good handful increases would adjustments rate see did of we some end was rising cycle a that rate of We what interest looking still their what for customers I a environment. end a question. that little of a So were at of of call the perception made for bit

looked done terms ameliorate of some kind I should across the anticipate we have any see the and think number board that that and one-offs somewhat increases is obviously additional have adjustments I and our customer deposits any additional the interest-bearing our the of but what predictive, increase seeing pricing would future commercial a in anything and you’ll has of this were in definitely of in we continued at current not base. slowed

Steven Alexopoulos

potential what some several market are in this as gears, offices that? at about in that’s presence on are presence thinking for markets? switch this to a up markets follow point, terms you thought I And of to to a Okay, or helpful. more in want then XXXX. larger in maybe target Maybe start, thinking one How novo de and you

Keith Mestrich

Yes.

the think I latter. more

talked markets a look have of we’ve concentration that for to markets that LA, about the customers sectors. continue kind of the core our significant we and union at that Chicago. think and that Boston non-profit clear in political, are We’ve pretty We best the been

to de loans would working that for those it expanding would in been As the these looking classic the in to to would in in be we really opportunities at finding are opportunities gathering, really office markets. production not not operations on in markets. staff I think folks want those XXXX is us think deposit be not satisfactory we have drive successful non-interest that putting we going and do in lead because kind of markets, you M&A loan income. novo This cost

to So a I look are projections. us build XXXX for budget do to markets. plans as sort couple really and Those our that beginning were of hatching speak we of into

Steven Alexopoulos

Okay.

Keith, branches, actual be would this point? these at So

Keith Mestrich

Well, offices. they cashless focused acquisition. a don’t It on with be the operations. deposit commercial would in Steve, terms of commercial cash branch, think full commercial would taking we’ll I actually in them offices staff

Steven Alexopoulos

And was Got final looking a delayed, hoping CECL not okay. I then but Drew. one get it’s you, for likely. would

day that Assuming impact? place are it what on here the shortly, your thoughts takes one

Drew LaBenne

adopter, we conclusion that for actually vote their or their eligible the are to So CECL, took Steve, revised XXXX to FASB which not come be guidance. after a on released the we’ve

will still implement. talking about we’re when we So actually

as later. plan, longer there’s don’t I XXXX, option Our going first us year go valuate advantage now an CECL. implementing we’re to has in and know, and current a to that – option an you a project think certainly in advantage it’s mover have We

So as think will look a what’s us to happening its adopt and with the waiting banks least being to us year being industry allow implemented. at I at in

Steven Alexopoulos

Got you.

Keith Mestrich

as a have if already company so longer reminder, growth as And and have delay year longer we we emerging to a – delay had believe just now opportunity we it. take a the choose Steve, an may we we

Steven Alexopoulos

take sounds Okay. Drew would saying? it you from it what was like But

Drew LaBenne

I yet, Steve. that say wouldn’t No,

as like come things to not and It’s a as to CECL. adopter. But counsel conclusion straightforward last think, I we’re think us the with XXXX conclusion. might did literally advised most week legal our they came the you

obviously, hasn’t year to an future. to trade-offs – we place if it’s what the need in become really out or our At and happens. to bank here think we the figure are be wait advantage and I that want the one though watch some not adopted a size a that’s you

Steven Alexopoulos

taking Thanks terrific. for Okay, my questions.

Keith Mestrich

Thanks.

Drew LaBenne

Steve. Thanks,

Operator

Twerdahl O’Neil. Our with Please Sandler next question from is Alex proceed.

Alex Twerdahl

Hi. Good guys. morning,

Keith Mestrich

Good morning, Alex.

Drew LaBenne

Hi, Alex.

Alex Twerdahl

quick have, third in FDIC the the credit quarter? Just got one Drew, that amount the you first housekeeping item. Do you of

Drew LaBenne

just was Yes. That over XXX,XXX.

Alex Twerdahl

remarks, the as you some expenses things of you XXXX. Okay. to quarter opportunities think the lower into talked about and then your about that we third costs in and your saving did the prepared during some And further cost of

against opportunities think and that de about savings As are we other or considerations the each just ago, cost push next novo weigh and expenses you you going be should you how do to that those initiatives? two minute these opportunities going of Do flat, even about branch expenses some into will year? talked a that expenses de with novo able remain these offset to think higher

Keith Mestrich

you’re there’s Yes, that we’re the between offset direct I if don’t a guidance, XXXX And think asking. some be to I a what increases two, think to the go give I expense think progress ready not is know that it which will will those the of offices. from offsetting that on de certainly long some novo side can made I be but way

Alex Twerdahl

C&I year. margin And cut kind that how then margin timing rate a to the part that a second of that impacting cuts? then of you rate lower, gears have switch mostly second, assume an the Okay. the ongoing I the to basis? portfolio the the for think kind for margin now baked the being of a an in more to guidance revised cuts And rearview just guidance of you into indirect mirror, October on that just is full about anticipated do just function here margin the question, is

Keith Mestrich

Yes.

in almost the going immediate the in floaters more C&I which were the except investment loan of on be rate runoff cut impact indirect those on is the curve short really to that term the So one because maybe the than the there’s loan. portfolio felt side, happened, entirely

added the of a loan more duration lot So the side taking that to balance has sheet. out

NIM of investment on the term. the to middle the the So obviously of go how The to is And think the I long where be when next premium over of finally going longer actually to here, end is the variables originating. one then you number already has effect immediate be as think get you is reacts And we will on decision. the to the see impacts well curve, Alex, cuts. just curve Fed it going that giving portfolio. risk interesting baked It know, loans the all sorry. the the I’m shape I we’re a in the last

And in modeling classes. rate so our it parallel spread assumes shifts income, different on the asset risk impacting risk also example, while, assumes for shifts interest parallel

the so indicate. as haven’t And otherwise come in might much risk we seen curve premiums those as

that’s helpful well. So been as

a of there. variables lot So

of the think cut If parallel we’ve in assuming you risk previously, given a the million the basis disclosures X.X curve we’ve every said shift premium. and for XX in

is of So probably and the before. that up of as guidance to DDA the was to X closer mortgage. gone the on largely with bit that because number’s convexity all same portion the curve, little where especially a But residential at it the we’re on million we’ve added

Alex Twerdahl

Okay. from me a final just And clarify. question to just then

until pre-tax, growth the you these actually have flat little margin income. yet together given would end So expenses guidance things of unchanged, increased maybe the bit range would low pre-provision all of I guidance, tick loan for the the but the year, range thought end increased deposits a higher. basically put

to kind just it million bit be million is statement? So end to bold a that of just that range of upper or increased $XX suggesting there’s that little $XX a confidence would maybe the of of too hit

Keith Mestrich

Maybe a bold. little bit

Fed we where the QX. things adjust. didn’t come range in, does and in the what But see Let’s

obviously NIM gone lower, We up. balance have has sheet gone has

the by staying same. environment, positive that’s So NIM the NII, maybe cost while impacted little I think rate a for is

in were we up. added range kind before same We’re all we the of

Alex Twerdahl

my for taking Thanks Okay. questions.

Operator

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

Brian Morton

Thanks Good questions. taking for morning. Hi. my

products? side. seeing the we’ll where talk loan start on maybe you’re I you about the different think across like your Can yield origination

Keith Mestrich

Yes.

some we away will residential shorter that move is picked end for anticipated XXX, on now from has where than and we the been steps refi to on But originations to boom we’ve into have but I higher probably yields residential, think where XX-year little than impacting the example, QX, will carryover I our part are recent happening of we and coming is though up QX certainly than XXX XX-year the certainly there more a away portfolio. So, lower say taken loan anything from right securities that. moved

that’s deals So And securities the X% in multifamily the originations, from commercial other trade XXX pricing depending and positive higher are the XXX loans, the coming you’re at duration a still portfolio. where from PACE of versus market’s The on anywhere to on anywhere yields. doing; LTV. we’re then DTI deals those and and

still of focused So to that try part in analysis our putting higher particular. market. we’re differentiated relatively focus your us that’s yields very, our in what is space together little shift attractive Brian, higher getting just we that I in efficiency loan a yields lending kind that and there deposit question from conservative rest yielding to place really very of in portfolio of more would make for space then, energy and the more the a yields ratio some the moves add as and on remains And where bit the that our portfolio margin

Brian Morton

between on And great. maybe mix these and then fixed the Okay, what’s loans? floating

Drew LaBenne

fixed is we’re what of putting Most now. on

going to I’m in a example, residential is a X/X ARM floating. a say not fixed, For

our originations. is on you’re where rate that’s But been what’s fixed think about targeting certainly the we’ve I talking peer and part loan for coming most floaters.

Brian Morton

a is about could the is coming a And SBA/USDA loans there Okay, talk that minute you maybe that program started? on, new you guys then great. are

Keith Mestrich

over been quarters. the several past We’ve it doing

So quarter came or this are on least we put XX a this those and XXX. on coming and out they about at quarter million

have past couple with pretty the the in spreads from attractive the class. we obviously of quarters, exception very a good come again portfolio, some had loan I think credit addition a much on amount fair the alternatives a so They’re the portfolio. attractive. And standpoint. put to over asset And of very but as in protection good it like looks prepayment well, compare in when the we to securities beginning it an riskless

Brian Morton

fees SOX-related one moving legal of in expenses. expect some continue? long item? expenses. professional there’s How Is this on saw and you type by one-time a like tick-up the Maybe Okay, great. on, quick a this kind driven of I to a that’s do

Drew LaBenne

there I don’t of the cost SOX be happen call I that needs is will I’d finished know a if time. one-time big work this and think There’s end pretty SOX at it one year. certainly to the – mostly implementation

So that will away. go

I think those decrease in there will be some costs.

and where think be think services asset were the spend still some will next on some the management trust spend the going of some in six alluded will and I there professional to months over there that projects Keith is I there department be probably. project

Keith Mestrich

months, Six yes. to nine

Drew LaBenne

near cost elevated, term. Six I will in we increase little bit happen keep to a the justify that benefits think projects the nine months if number but the of those will that than more

Brian Morton

Okay, Thanks. for me. great. it That’s

Keith Mestrich

Brian. Thanks,

Operator

is from Chris Our O’Connell Please KBW. question next with proceed.

Chris O’Connell

everyone. morning, Good

Keith Mestrich

Chris. Hi,

Drew LaBenne

Chris. Hi,

Chris O’Connell

And to you said was loan remaining of on C&I? think give Just for is yield what I million the the wanted purchase maybe purchases? can on indirect is quarter what this on yield the you the and also then guys if the breakdown see XX what those

Keith Mestrich

Sure.

which work that to – increase purchases on we’re sorry, purchases in in partnerships will did solar, So million as the X% of I’m up our those doing sort our originations XX flow we million residential, a I finishing and was in PACE, space place did that space. on that about XX some increase add of is we yield agreement there in which loans. the with and companies had We a where one

are we the where mentioned. well not in And of at be the think right to terms the but of in X.X%. have negotiations within going the we’re So pricing I maybe is I future. then portfolio we’ll indirect And going existing the because that guarantees give it’s then have our the to those XX more XXX in XX about to million there, million in yields. portfolio, are some the Those talk government range I’m LIBOR+ previously were those now.

Drew LaBenne

we like us, why than just is origination retained originate the lower all directly in were the then, options is cost of I of so anything to just all-in of And reminder service loans. would very, these and we the purchase assets us these significantly a for Chris, ourselves, space way for here efficient add acquisition source servicing as very

Chris O’Connell

what breakdown Coast the see up the kind West into was have coming up East in wanted build originated and in for to Got see Coast it. the West guys loans like the of the ramp if in Coast your seeing I and guess franchise of resource been the kind year? you the I that And you

Keith Mestrich

very as Yes. the handled our It we C&I they’re look individual the comes really from. California, those significantly resource may package of balance side where coming in sheet know really happening team we happened geographically very, using of bankers that Whether what’s really commercial it’s acquisition what do team be but I team. efficiency we what’s not put in new or that exactly we’re with in majority space from transaction. located. result loans, at renewable in really to space energy bigger That’s and activity larger and – of happy to sometimes it very, vast is pleased where loan our from our would that production seeing size the generated by spaces. a the then by purchase that the that on that by and loan say energy facilities a of that I that very in in country the on brought don’t it across originations terms with wanted that, particularly on sourced the in

Drew LaBenne

but QX, mention efficiency of And that one related. or energy that of we was Yes. make entirely didn’t million thing I XX the in I clear, purchased all didn’t the

solar, farm talked all government then PACE well. obviously solar USDA guaranteed residential, but as loan So the before, about we as were

loans, purchase energy long are renewable they while a towards mission So our they’re on going way the standpoint.

Chris O’Connell

of kind in more provisioning quarter Got just or and of the have if thoughts it. charge-offs in if see the fallen the reserved has of the paid the in or whether off guys you already year? any normalized a credit I thoughts forward, fourth normalization And of net outlook to you don’t about thinking kind this of going as we this been to C&Is kind or a if quarter fourth can indirect down in speak can recoveries any know quarter charge-off

Keith Mestrich

credit to So actually I million concern trends million going are another any fast in and watch seeing C&I I us every out really good part see XX not pretty would and million three. think concern what – But only that criticized from well. reduction that I had that where we’ll quarter those Obviously, we loans rundown. as here had loans; classified reduction And those classifieds pay QX, $XX of in a so we say that X cause generally happens standpoint. down to The three loans criticized them that it are there. and had out a that is there continue pretty we’re to feeling indirect are the any on portfolio think

out, I we surprised think it’s be probably on just from going or here get payoff dribble here to might there. but and a

Chris O’Connell

a level or progress that want good wheelhouse you purchases one at like you ratios here, keep level in the announced there you share on the ratio terms capital for if any at? us Can already TC maybe to you’d that certain of last comfortable it. fourth a pretty buffer with some the And quarter. remind to M&A margin operate there’s some or keep in or to Got capital in just of safety

Drew LaBenne

ratio have that X.XX X.X% past we this in is range the operating at to in about we’re X.X% The which quarter. Tier X the talked capital

room have like we we the where week So capital to we’re and buybacks with feel Board this deploy discuss our at meet one way dividend. the share higher end to we the and some

remain mean see see that raise a same. and do an conversation later to I week. opportunity what may it. the we and and to decides do what I use think to metrics on we’re there where to our continuing to by about thoughtfully out – do the we’ll with don’t there. the the and We’ll comes Board our that buyback capital dividend every on think Board on be this best capital. have quarter want And how we But So But that

M&A, and main potential come the we through yield. run with really I as we’ve think up far As the then targets had

our met they said, economic Keith As criteria.

be a we for. three-year at ourselves. think to But of that think in then be payback that pipeline a still that really on. And right staring acquire would sort were, to deal or we’re there’s share opportunity the it looking buyback now of we do So if more less nothing as an I we’d

higher metric certainly than be we where do wouldn’t of that So three in years terms buyback well. a as

Keith Mestrich

every reserve there. a see obviously solely from to to like we’ll and bank, perspective have watch we then figure just And may what

Chris O’Connell

I you. all it. Thank had. Great. That’s Got

Keith Mestrich

Thanks, Chris.

Drew LaBenne

Thanks.

Operator

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

William Wallace

morning, Thanks. guys. Good

Keith Mestrich

Hi, Wally.

William Wallace

can with lot a just it talked when we if of happens just this items interest a put as wondering our about the and moving maybe margin parts bow line cut. you We net Hi. lot on what models. of to think help us a all comes about the the I’m

deposits, the shifting continue the your do if and there but shifting think passed week up moving also pressure mix on stable deposits would Fed deposit this drive actually to mix bringing once build the cut get would we with could impact expansion? on your you’re Fed think as the cuts political or would of you that pauses, be you or be that margin So loan do potentially anticipate you then the you

Drew LaBenne

point talked your coming expansion yield loans. bleed we’ve think right is unless long on loan are the kind And I those on things think growth commercial most offset. books we is at into the in loan the more exception pipeline where XX-year have end can lower now good help pretty to have levers deposit now the to curve than which definitely past rates to going dramatic of then pretty the X lower our term, and a to to still the the curve about with curve offset a those longer the of And But have I But over there to deposit I low lot to the over the think stays not margin. a we ratio, the not so term of at, we’re that the going so if I it’s tough can be immune be gravity be help get it’s tough the pressure. of because going in from think near going like this. it’s time NIM where to move makes we

William Wallace

was your down these in helpful. us three on, Thank Keith, find transactions you criteria. your did talked culturally, you missed that prepared started remarks about on in or ultimately didn’t the Can dig out? transactions you that was and sat That’s work you potential pricing you to you. tell that Okay. it criteria didn’t meet diligence when all around

Keith Mestrich

head. difficulty own the but some your of call felt we work and at say an were actually the for the degree stared of we’re deals really, would the have strategic said, transaction possibility, composition when possibility an a than when an things I the then failure not capital us. sense using the back just perspective. and right strategic composition economic of operational didn’t relatively standpoint, at But that and the that’s just just really probably the strategically right, from company, looking made in it from at to for from from what buy quality we make could Yes. this integration standpoint you cultural, small transactions deposit of the quality maybe thing that especially us staring transactions, from rather doing same of standpoint same these we’re getting our for actually end at it and asset and were And we getting for for we I value day.

William Wallace

commentary de months mean or some looking then perhaps that X ago? take And thought attractive a that enter we less to like novo opportunities M&A we initiation take you basis, should new That’s feel markets to fair. you type of should around your on maybe XX than are

Keith Mestrich

choosy. also I wait. said we’re always to still we’re come would we’re not say M&A We’ve looking our say to take it They for I’d markets. going be opportunities. in But going to

just for We’re not an without have we to runway to market, in it to think those we able to do and acquisition into in year do Washington we have growth go think get – acquisition. can while those build other achieve other start, M&A advantages we we to i.e. an a markets. being a yourself certain markets actually working We able significant off give think markets. to going wait opportunity a been there’s should We having next and our through we’ve in it markets to tails And business. an our think begin into is to year head

William Wallace

of invest about you presence Francisco what to San worth, for market? very markets in And where size looking more have like a what real the to it’s and relative small DC the

Keith Mestrich

some well. do either/or how franchise grow inorganic in but both actually as our organic and and both an really in Not decision we of add opportunities minds, markets really the

William Wallace

last Okay, fair housekeeping. enough. just one then And

in said in as third accruing quarter. fourth the going You to are you or quarter that well $XXX,XXX you FDIC anticipate in there fourth did is credit the credit quarter? it take Do or all you

Drew LaBenne

our we credit assessment what a QX. directly as So took what was just offset in

as and the So stays QX. available I credit should QX that where believe funds probably continuing FDIC into into if it’s well at, be

William Wallace

That’s you. all Thank I appreciate have. I Okay. it.

Keith Mestrich

Wally. Thanks,

Drew LaBenne

Thanks.

Operator

turn gentlemen, the like conference Ladies session. have of to remarks. question-and-answer reached we would management closing I and end back the our over for to

Keith Mestrich

taking the Again, with again joining time want very this happy are thank to just morning I us. we quarter. a for everybody Thanks. little very,

lot and the who to it you of great talking from had morning. you. look questions We this clarifying forward I folks to in think Thank future. appreciate the a came all questions

Operator

Thank you. conference. This today’s concludes

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

Amalgamated Financial (AMAL) 28 Oct 192019 Q3 Earnings call transcript