Exhibit 99.4

FEDERAL DEPOSIT INSURANCE CORPORATION

WASHINGTON, DC 20006

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2020

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For transition period from                to                

FDIC Certificate Number: 622

(Exact name of Registrant as specified in its charter)

New York	13-4920330
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)

275 Seventh Avenue, New York, NY    10001

(Address of principal executive offices) (Zip Code)

(212) 255-6200

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A common stock, par value $0.01 per share	AMAL	Nasdaq Stock Market, LLC

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b–2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Indicate by check mark whether the registrant is a shell company (as defined in Exchange Act Rule 12b-2).    Yes  ☐    No  ☒

As of August 7, 2020, the Registrant had 31,049,525 shares of Class A common stock outstanding at $0.01 par value per share.

TABLE OF CONTENTS

		Page
Cautionary Note Regarding Forward-Looking Statements			ii
PART I – FINANCIAL INFORMATION
ITEM 1.	Financial Statements
	Consolidated Statements of Financial Condition as of June 30, 2020 and December 31, 2019		1
	Consolidated Statements of Income for the Three and Six Months Ended June 30, 2020 and 2019		2
	Consolidated Statements of Comprehensive Income for the Three and Six Months Ended June 30, 2020 and 2019		3
	Consolidated Statements of Changes in Stockholders’ Equity for the Three and Six Months Ended June 30, 2020 and 2019		4
	Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2020 and 2019		6
	Notes to Consolidated Statements		8
ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		40
ITEM 3	Quantitative and Qualitative Disclosures About Market Risk		66
ITEM 4	Controls and Procedures		67
PART II—OTHER INFORMATION
ITEM 1.	Legal Proceedings		68
ITEM 1A	Risk Factors		69
ITEM 2	Unregistered Sales of Equity Securities and Use of Proceeds		70
ITEM 6	Exhibits		71
Signatures			72

i

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements are not statements of historical fact and generally can be identified by the use of forward-looking terminology, such as “may,” “will,” “anticipate,” “intend,” “could,” “should,” “would,” “believe,” “project,” “plan,” “goal,” “target,” “potential,” “pro-forma,” “seek,” “contemplate,” “expect,” “estimate,” “continue,” “anticipate” and “intend,” or the negative thereof as well as other similar words and expressions of the future. These forward-looking statements include statements related to our plans, objectives, strategies, projected growth, anticipated future financial performance (including underlying assumptions), and management’s long-term performance goals, as well as statements relating to the anticipated effects or consequences of various transactions or events on our results of operations and financial condition and statements about the future performance, operations, products and services of Amalgamated Bank (“Amalgamated”).

Forward-looking statements are subject to risks, uncertainties and assumptions that are difficult to predict as to timing, extent, likelihood and degree of occurrence, which could cause our actual results to differ materially from those anticipated in or by such statements. Potential risks and uncertainties include, but are not limited to, the following:

• our ability to maintain our reputation;

• our ability to carry out our business strategy prudently, effectively and profitably;

• our ability to attract customers based on shared values or mission alignment;

• the impact of the recent outbreak of the novel coronavirus, or COVID-19, 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 (including, without limitation, the Coronavirus Aid, Relief and Economic Security Act, or the CARES Act), and the resulting effect of these items on our operations, liquidity and capital position, and on the financial condition of our borrowers and other customers;

• impairment of investment securities, goodwill, other intangible assets or deferred tax assets;

• projections on loans, assets, deposits, liabilities, revenues, expenses, net income, capital expenditures, liquidity, dividends, capital structure or other financial items;

• inaccuracy of the assumptions and estimates we make in establishing our allowance for loan losses and other estimates, including future changes in the allowance for loan losses resulting from the future adoption and implementation of new Current Expected Credit Loss (“CECL”) methodology;

• our policies with respect to asset quality and loan charge-offs, including future changes in the allowance for loan losses resulting from the anticipated adoption and implementation of CECL;

• the composition of our loan portfolio and the potential deterioration in the financial condition of borrowers resulting in significant increases in loan losses, provisions for those losses that exceed our current allowance for loan losses and higher loan charge-offs;

• the availability of and access to capital, and our ability to allocate capital prudently, effectively and profitably;

• our ability to pay dividends;

• our ability to achieve organic loan and deposit growth and the composition of such growth;

• our ability to identify and effectively acquire potential acquisition or merger targets, including our ability to be seen as an acquirer of choice and our ability to obtain regulatory approval for any acquisition or merger and thereafter to successfully integrate any acquisition or merger target;

• time and effort necessary to resolve nonperforming assets;

• fluctuations in the values of our assets and liabilities and off-balance sheet exposures;

• general economic conditions (both generally and in our markets) may be less favorable than expected, which could result in, among other things, a deterioration in credit quality, a reduction in demand for credit and a decline in real estate values;

ii

• the general decline in the real estate and lending markets, particularly in our market areas, including the effects of the enactment of or changes to rent-control and other similar regulations on multi-family housing;

• changes in the demand for our products and services;

• other financial institutions having greater financial resources and being able to develop or acquire products that enable them to compete more successfully than we can;

• restrictions or conditions imposed by our regulators on our operations or the operations of banks we acquire may make it more difficult for us to achieve our goals;

• legislative or regulatory changes, including changes in tax issues, accounting standards and compliance requirements, whether of general applicability or specific to us and our subsidiaries;

• the costs, effects and outcomes of litigation, regulatory proceedings, examinations, investigations, or similar matters, or adverse facts and developments related thereto;

• possible changes in trade, monetary and fiscal policies of, and other activities undertaken by, governments, agencies, central banks and similar organizations;

• competitive pressures among depository and other financial institutions may increase significantly;

• adverse effects of failures by our vendors to provide agreed upon services in the manner and at the cost agreed, particularly our information technology vendors and those vendors performing a service on our behalf;

• changes in the interest rate environment may reduce margins or the volumes or values of the loans we make or have acquired;

• adverse changes in the bond and equity markets;

• cybersecurity risks, and the vulnerability of our network and online banking portals, and the systems of parties with whom we contract, to unauthorized access, computer viruses, phishing schemes, spam attacks, human error, natural disasters, power loss and other security breaches that could adversely affect or disrupt our business and financial performance or reputation;

• our ability to attract and retain key personnel can be affected by the increased competition for experienced employees in the banking industry;

• the possibility of earthquakes and other natural disasters affecting the markets in which we operate;

• war or terrorist activities causing further deterioration in the economy or causing instability in credit markets;

• economic, governmental or other factors may affect the projected population, residential and commercial growth in the markets in which we operate; and

• descriptions of assumptions underlying or relating to any of the foregoing.

Amalgamated cautions readers that the foregoing list of factors is not exclusive, is not necessarily in order of importance and not to place undue reliance on forward-looking statements. All forward-looking statements are necessarily only estimates of future results, and there can be no assurance that actual results will not differ materially from expectations. Additional factors that may cause actual results to differ materially from those contemplated by any forward-looking statements also may 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 FDIC and available at the FDIC’s website at https://efr.fdic.gov/fcxweb/efr/index.html. Further, any forward-looking statement speaks only as of the date on which it is made and we undertake no obligation to update or revise any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events, unless required to do so under the federal securities laws.

iii

Part I

Item 1. – Financial Statements

Consolidated Statements of Financial Condition

(Dollars in thousands)

	June 30, 2020			December 31, 2019
Assets		(unaudited)
Cash and due from banks	$	9,209		$	7,596
Interest-bearing deposits in banks		578,752			114,942
Total cash and cash equivalents		587,961			122,538
Securities:
Available for sale, at fair value (amortized cost of $1,562,033 and $1,217,087, respectively)		1,575,175			1,224,770
Held-to-maturity (fair value of $382,830 and $292,837, respectively)		370,498			292,704
Loans receivable, net of deferred loan origination costs (fees)		3,687,992			3,472,614
Allowance for loan losses		(50,010	)		(33,847	)
Loans receivable, net		3,637,982			3,438,767
Resell agreements		45,653			—
Accrued interest and dividends receivable		21,836			19,088
Premises and equipment, net		16,180			17,778
Bank-owned life insurance		80,694			80,714
Right-of-use lease asset		42,758			47,299
Deferred tax asset		34,251			31,441
Goodwill and other intangible assets		18,980			19,665
Other assets		38,376			30,574
Total assets	$	6,470,344		$	5,325,338
Liabilities
Deposits	$	5,870,319		$	4,640,982
Borrowed funds		—			75,000
Operating leases		56,842			62,404
Other liabilities		39,481			56,408
Total liabilities		5,966,642			4,834,794
Commitments and contingencies		—			—
Stockholders’ equity
Common stock, par value $.01 per share (70,000,000 shares authorized; 31,049,525 and 31,523,442 shares issued and outstanding, respectively)		310			315
Additional paid-in capital		299,997			305,738
Retained earnings		195,991			181,132
Accumulated other comprehensive income (loss), net of income taxes		7,270			3,225
Total Amalgamated Bank stockholders’ equity		503,568			490,410
Noncontrolling interests		134			134
Total stockholders’ equity		503,702			490,544
Total liabilities and stockholders’ equity	$	6,470,344		$	5,325,338

See accompanying notes to consolidated financial statements (unaudited)

1

Consolidated Statements of Income (unaudited)

(Dollars in thousands, except for per share amounts)

	Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020			2019
INTEREST AND DIVIDEND INCOME
Loans	$	35,225		$	35,559		$	70,837		$	70,855
Securities		11,746			10,524			24,299			20,398
Federal Home Loan Bank of New York stock		66			191			135			501
Interest-bearing deposits in banks		83			254			479			548
Total interest and dividend income		47,120			46,528			95,750			92,302
INTEREST EXPENSE
Deposits		2,681			3,499			6,596			6,444
Borrowed funds		—			1,173			27			3,229
Total interest expense		2,681			4,672			6,623			9,673
NET INTEREST INCOME		44,439			41,856			89,127			82,629
Provision for (recovery of) loan losses		8,221			2,127			16,808			4,312
Net interest income after provision for loan losses		36,218			39,729			72,319			78,317
NON-INTEREST INCOME
Trust Department fees		3,980			4,508			8,066			9,229
Service charges on deposit accounts		1,850			2,068			4,261			3,939
Bank-owned life insurance		1,111			408			1,495			828
Gain (loss) on sale of investment securities available for sale, net		486			(377	)		985			(85	)
Gain (loss) on other real estate owned, net		(283	)		(315	)		(306	)		(564	)
Equity method investments		1,289			—			1,289			—
Other		238			57			1,999			419
Total non-interest income		8,671			6,349			17,789			13,766
NON-INTEREST EXPENSE
Compensation and employee benefits		17,334			16,992			34,792			34,422
Occupancy and depreciation		4,241			4,145			9,747			8,417
Professional fees		1,988			2,401			4,971			5,566
Data processing		2,977			2,729			5,241			5,478
Office maintenance and depreciation		818			830			1,675			1,716
Amortization of intangible assets		342			298			685			687
Advertising and promotion		672			692			1,339			1,313
Other		2,696			2,915			4,889			4,851
Total non-interest expense		31,068			31,002			63,339			62,450
Income before income taxes		13,821			15,076			26,769			29,633
Income tax expense		3,447			3,891			6,850			7,634
Net income		10,374			11,185			19,919			21,999
Net income attributable to noncontrolling interests		—			—			—			—
Net income attributable to Amalgamated Bank and subsidiaries	$	10,374		$	11,185		$	19,919		$	21,999
Earnings per common share - basic	$	0.33		$	0.35		$	0.64		$	0.69
Earnings per common share - diluted	$	0.33		$	0.35		$	0.64		$	0.68

See accompanying notes to consolidated financial statements (unaudited)

2

Consolidated Statements of Comprehensive Income (unaudited)

(Dollars in thousands)

	Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020			2019
Net income	$	10,374		$	11,185		$	19,919		$	21,999
Other comprehensive income, net of taxes:
Change in total obligation for postretirement benefits, prior service credit, and other benefits		74			48			147			95
Net unrealized gains (losses) on securities available for sale		30,326			12,473			5,459			21,890
Other comprehensive income (loss), before tax		30,400			12,521			5,606			21,985
Income tax benefit (expense)		(8,463	)		(3,483	)		(1,561	)		(6,101	)
Total other comprehensive income (loss), net of taxes		21,937			9,038			4,045			15,884
Total comprehensive income (loss), net of taxes	$	32,311		$	20,223		$	23,964		$	37,883

See accompanying notes to consolidated financial statements (unaudited)

3

Consolidated Statements of Changes in Stockholders’ Equity (unaudited)

(Dollars in thousands)

	Three Months Ended June 30, 2020
	Common Stock Class A			Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Total Stockholders’ Equity			Noncontrolling Interest		Total Equity
Balance as of March 31, 2020	$	310		$	299,332		$	188,160		$	(14,667	)	$	473,135		$	134	$	473,269
Net income		—			—			10,374			—			10,374			—		10,374
Cash dividend, $0.08 per share		—			—			(2,543	)		—			(2,543	)		—		(2,543	)
Shares issued under stock-based incentive plan		—			16			—			—			16			—		16
Exercise of stock options		—			(132	)		—			—			(132	)		—		(132	)
Stock-based compensation expense		—			781			—			—			781			—		781
Other comprehensive income (loss), net of taxes		—			—			—			21,937			21,937			—		21,937
Balance at June 30, 2020	$	310		$	299,997		$	195,991		$	7,270		$	503,568		$	134	$	503,702
	Six Months Ended June 30, 2020
	Common Stock Class A			Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Total Stockholders’ Equity			Noncontrolling Interest		Total Equity
Balance at December 31, 2019	$	315		$	305,738		$	181,132		$	3,225		$	490,410		$	134	$	490,544
Net income		—			—			19,919			—			19,919			—		19,919
Cash dividend, $0.16 per share		—			—			(5,060	)		—			(5,060	)		—		(5,060	)
Shares issued under stock-based incentive plan		—			16			—			—			16			—		16
Repurchase of shares		(5	)		(6,996	)		—			—			(7,001	)		—		(7,001	)
Exercise of stock options		—			(155	)		—			—			(155	)		—		(155	)
Stock-based compensation expense		—			1,394			—			—			1,394			—		1,394
Other comprehensive income (loss), net of taxes		—			—			—			4,045			4,045			—		4,045
Balance at June 30, 2020	$	310		$	299,997		$	195,991		$	7,270		$	503,568		$	134	$	503,702

See accompanying notes to consolidated financial statements (unaudited)

4

Consolidated Statements of Changes in Stockholders’ Equity (unaudited)

(Dollars in thousands)

	Three months ended June 30, 2019
	Common Stock Class A		Additional Paid-in Capital		Retained Earnings			Accumulated Other Comprehensive Loss			Total Stockholders’ Equity			Noncontrolling Interest		Total Equity
Balance at March 31, 2019	$	318	$	309,033	$	151,138		$	(5,144	)	$	455,345		$	134	$	455,479
Net income		—		—		11,185			—			11,185			—		11,185
Cash dividend, $0.06 per share		—		—		(1,911	)		—			(1,911	)		—		(1,911	)
Stock-based compensation expense		—		1,153		—			—			1,153			—		1,153
Other comprehensive income, net of taxes		—		—		—			9,038			9,038			—		9,038
Balance at June 30, 2019	$	318	$	310,186	$	160,412		$	3,894		$	474,810		$	134	$	474,944

	Six months ended June 30, 2019
	Common Stock Class A		Additional Paid-in Capital		Retained Earnings			Accumulated Other Comprehensive Loss			Total Stockholders’ Equity			Noncontrolling Interest		Total Equity
Balance at December 31, 2018	$	318	$	308,678	$	142,231		$	(11,990	)	$	439,237		$	134	$	439,371
Net income		—		—		21,999			—			21,999			—		21,999
Cash dividend, $0.12 per share		—		—		(3,818	)		—			(3,818	)		—		(3,818	)
Stock-based compensation expense		—		1,508		—			—			1,508			—		1,508
Other comprehensive income, net of taxes		—		—		—			15,884			15,884			—		15,884
Balance at June 30, 2019	$	318	$	310,186	$	160,412		$	3,894		$	474,810		$	134	$	474,944

See accompanying notes to consolidated financial statements (unaudited)

5

Consolidated Statements of Cash Flows (unaudited)

(Dollars in thousands)

	Six Months Ended June 30,
	2020			2019
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	19,919		$	21,999
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		2,505			2,190
Amortization of intangible assets		685			687
Deferred income tax expense (benefit)		(2,415	)		2,862
Provision for (recovery of) loan losses		16,808			4,312
Stock-based compensation expense		1,394			1,508
Net amortization (accretion) on loan fees, costs, premiums, and discounts		299			382
Net amortization on securities		617			94
OTTI recognized in earnings		1			(1	)
Net loss (income) from equity method investments		(1,289	)		—
Net loss (gain) on sale of securities available for sale		(985	)		85
Net loss (gain) on sale of loans		(297	)		121
Net loss (gain) on sale of other real estate owned		306			564
Net loss (gain) on owned property held for sale		(1,394	)		—
Net (gain) on redemption of bank-owned life insurance		(741	)		—
Proceeds from sales of loans held for sale		19,924			11,395
Decrease (increase) in cash surrender value of bank-owned life insurance		(754	)		(745	)
Decrease (increase) in accrued interest and dividends receivable		(2,748	)		(1,862	)
Decrease (increase) in other assets (1)		(24,497	)		25,726
Increase (decrease) in accrued expenses and other liabilities (2)		(9,591	)		(7,343	)
Net cash provided by operating activities		17,747			61,974

6

CASH FLOWS FROM INVESTING ACTIVITIES
Originations and purchases of loans, net of principal repayments		(216,322	)		(201,549	)
Proceeds from sales of loans		—			115,856
Purchase of securities available for sale		(529,880	)		(326,216	)
Purchase of securities held to maturity		(97,395	)		(15,301	)
Proceeds from sales of securities available for sale		52,420			138,423
Maturities, principal payments and redemptions of securities available for sale		120,829			96,603
Maturities, principal payments and redemptions of securities held to maturity		19,102			36
Decrease (Increase) in resell agreements		(45,653	)		—
Purchase of equity method investments		(2,732	)		—
Decrease (increase) of FHLBNY stock, net		3,105			(6,723	)
Purchases of premises and equipment		(1,126	)		(406	)
Proceeds from redemption of bank-owned life insurance		1,515			—
Proceeds from sale of owned assets		1,613			—
Proceeds from sale of other real estate owned		—			208
Net cash used in investing activities		(694,524	)		(199,069	)
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase (decrease) in deposits		1,229,337			31,156
Net increase (decrease) in FHLB advances		(75,000	)		134,800
Consolidated Statements of Cash Flows (unaudited) (Dollars in thousands)
Issuance of class A common stock		16			—
Repurchase of shares		(7,001	)		—
Cash dividend paid		(4,997	)		(3,818	)
Exercise of stock options		(155	)		—
Net cash provided by financing activities		1,142,200			162,138
Increase (decrease) in cash, cash equivalents, and restricted cash		465,423			25,043
Cash, cash equivalents, and restricted cash at beginning of year		122,538			80,845
Cash, cash equivalents, and restricted cash at end of year	$	587,961		$	105,888
Supplemental disclosures of cash flow information:
Interest paid during the year	$	6,936		$	9,287
Income taxes paid during the year		9,355			415
Supplemental non-cash investing activities:
Initial recognition of Right-of-use lease asset	$	—		$	55,813
Initial recognition of Operating leases liability		—			71,122
Loans transferred to other real estate owned		—			455
Purchase of securities available for sale, net not settled		(12,551	)		—
Fair value of assets acquired		—			—
Fair value of liabilities assumed		—			—
(1) Includes $4.5 million and $3.9 million of right of use asset amortization for the respective periods
(2) Includes $1.0 million and $1.1 million accretion of operating lease liabilities for the respective periods

See accompanying notes to consolidated financial statements (unaudited)

7

Notes to Consolidated Financial Statements (unaudited)

June 30, 2020 and December 31, 2019

1. BASIS OF PRESENTATION

The accounting and reporting policies of Amalgamated Bank (the “Bank”) conform to accounting principles generally accepted in the United States of America, or GAAP and predominant practices within the banking industry. The Bank uses the accrual basis of accounting for financial statement purposes.

The accompanying unaudited consolidated financial statements include the accounts of the Bank and its majority-owned and wholly-owned subsidiaries and have been prepared in accordance with instructions to Form 10-Q and therefore do not include all information and footnotes necessary for a fair presentation of financial position, results of operations, and cash flows in conformity with GAAP. All significant inter-company transactions and balances are eliminated in consolidation. In the opinion of the Bank’s management, all adjustments necessary for a fair presentation of the consolidated financial position and the results of operations for the interim periods presented have been included. A more detailed description of the Bank’s accounting policies is included in its Annual Report on Form 10-K for the year ended December 31, 2019 (the “2019 Annual Report”). During the second quarter, we adopted accounting policies for variable interest entities, for recognition of investment tax credits, and for resell agreements. Otherwise, there have been no significant changes to our accounting policies, or the estimates made pursuant to those policies as described in our 2019 Annual Report. These unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes appearing in the 2019 Annual Report.

Risks and Uncertainties

On March 11, 2020, the World Health Organization declared the outbreak of COVID-19 a global pandemic, which continues to spread throughout the United States and around the world. The COVID-19 pandemic has severely restricted the level of economic activity in the Bank’s markets. In response to the COVID-19 pandemic, many states took preventative or protective actions, such as imposing restrictions on travel and business operations, advising or requiring individuals to limit or forego their time outside of their homes, and ordering temporary closures of businesses that were deemed to be non-essential. Although many businesses have begun to reopen, some markets have since experienced a resurgence of COVID-19 cases, which may further slow overall economic activity and recovery. Uncertainty also remains regarding if, how and when schools will reopen and the impact of such reopening decisions on the economy.

The impact of the COVID-19 pandemic is fluid and continues to evolve. The unprecedented and rapid spread of COVID-19 and its associated impacts on trade (including supply chains and export levels), travel, employee productivity, unemployment, consumer spending, and other economic activities has resulted in less economic activity, lower equity market valuations and significant volatility and disruption in financial markets. In addition, due to the COVID-19 pandemic, market interest rates have declined significantly. These reductions in interest rates and the other effects of the COVID-19 pandemic have had, and are expected to continue to have, possibly materially, an adverse effect on the Bank’s business, financial condition and results of operations. The ultimate extent of the impact of the COVID-19 pandemic on the Bank’s business, financial condition and results of operations is currently uncertain and will depend on various developments and other factors, including, among others, the duration and scope of the pandemic, as well as governmental, regulatory and private sector responses to the pandemic, and the associated impacts on the economy, financial markets and our customers, employees and vendors. In addition, it is reasonably possible that certain significant estimates made in the Bank’s financial statements could be materially and adversely impacted in the near term as a result of these conditions.

The following are the signficant accounting policies adopted during the quarter:

Variable Interest Entities

The consolidated financial statements include the accounts of certain variable interest entities (VIEs). The Bank considers a voting rights entity to be a subsidiary and consolidates if the Bank has a controlling financial interest in the entity. VIEs are consolidated if the Bank has the power to direct the activities of the VIE that significantly impact financial performance and has the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE (i.e, the Bank is the primary beneficiary).

Investments in VIEs, where the Bank is not the primary beneficiary of a VIE, are accounted for using the equity method of accounting. The determination of whether the Bank is the primary beneficiary of a VIE is reassessed on an ongoing basis. The consolidation status may change as a result of these reassessments.

8

Notes to Consolidated Financial Statements (unaudited)

June 30, 2020 and December 31, 2019

These investments are included in Other Assets in the Consolidated Statements of Financial Condition. The maximum potential exposure to losses relative to investments in VIEs is generally limited to the sum of the outstanding balance, future funding commitments and any related loans to the entity, both funded and unfunded. Loans to these entities are underwritten in substantially the same manner as other loans and are generally secured. Additional disclosures regarding VIEs are further described in Note 14, Variable Interest Entities.

Investment Tax Credits

The deferral method of accounting is used for investments that generate investment tax credits. Under this method, the investment tax credits are recognized as a reduction of the related asset.

Resell Agreements

The Bank enters into short-term agreements for the purchase of government guaranteed loans with simultaneous agreements to resell (resell agreements). The Bank obtains possession of collateral with a market value equal to or in excess of the principal amount loaned under resell agreements.

9

Notes to Consolidated Financial Statements (unaudited)

June 30, 2020 and December 31, 2019

2. RECENT ACCOUNTING PRONOUNCEMENTS

Accounting Standards Adopted in 2019

In February 2016, the FASB issued ASU 2016-02 “Leases (Topic 842)”. The new lease accounting standard requires the recognition of a right of use asset and related lease liability by lessees for leases classified as operating leases under current GAAP. Topic 842, which replaces the current guidance under Topic 840, retains a distinction between finance leases and operating leases. The recognition, measurement, and presentation of expenses and cash flows arising from a lease by lessee does not significantly change from current GAAP. For leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize right of use assets and lease liabilities. The standard became effective for annual reporting periods beginning after December 15, 2018. A modified retrospective transition approach must be applied for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the consolidated financial statements. Transition accounting for leases that expired before the earliest comparative period presented is not required. The Bank elected the effective date transition method of applying the new leases standard at the beginning of the period of adoption on January 1, 2019. The standard provides several optional practical expedients in transition. The Bank elected the “package of practical expedients”, which permits the Bank not to reassess prior conclusions about lease identification, lease classification and initial direct costs and allows it to continue to account for leases that commenced prior to the adoption date as operating leases. The Bank analyzed all its significant leases to determine if a lease was in scope of the ASU and determined 15 facilities leases were in scope. Based on leases outstanding at December 31, 2018, the Bank recorded a $71.1 million Operating leases liability and a $55.8 million related Right-of-use asset upon commencement on January 1, 2019. The measurement of the Right-of-use asset included a $15.3 million reduction to account for accrued rent previously established under Topic 840. The Bank has presented its Right-of-use asset and related Operating leases liability on the Consolidated Statements of Financial Condition. Refer to Note 12 - Leases for further details.

Accounting Standards Adopted in 2020

In June 2016, the FASB amended existing guidance for ASU 2017-04, “Intangibles – Goodwill and Other (Topic 350)”, to simplify the subsequent measurement of goodwill. The amendment requires an entity to perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount and recognizing an impairment charge for the amount by which the carrying amount of the reporting unit exceeds its fair value, not to exceed the total amount of goodwill allocated to that reporting unit. The amendments also eliminate the requirement for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative test, to perform Step 2 of the goodwill impairment test. The amendments became effective for public business entities for annual or interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The amendments should be applied prospectively. An entity is required to disclose the nature of and reason for the change in accounting principle upon transition in the first annual period and in the interim period within the first annual period when the entity initially adopts the amendments. As a result of the Bank’s acquisition of New Resource Bank (“NRB”) in the latter half of the second quarter of 2018, the Bank elected June 30, 2019 as the beginning date for annual impairment testing. The Bank adopted ASU 2017-04 during the second quarter and performed its annual impairment test. The estimated fair value of the Bank was in excess of the carrying value and the Bank, as a sole reporting unit, was not at risk of failing the quantitative analysis. Adoption did not have an effect on the Bank’s operating results or financial condition. Refer to Note 13 - Goodwill and Intangible Assets for further details.

Accounting Standards Effective in 2020 and onward

In August 2018, the FASB issued ASU 2018-13, “Fair Value Measurement (Topic 820)—Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement”, which improves the effectiveness of fair value measurement disclosures. The amendments modify the disclosure requirements on fair value measurements in Topic 820, Fair Value Measurement as follows: removes disclosure requirements for the amount and reasons for transfer between Level 1 and Level 2 assets and liabilities in the fair value hierarchy; modifies disclosure requirements for transfers into and out of Level 3 assets and liabilities in the fair value hierarchy; adds disclosure requirements for the changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements and the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. The amendments in this update became effective for all entities for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years, with early adoption, including adoption in an interim period, is permitted. Adoption of ASU 2018-13 did not have a material effect on the Bank’s operating results or financial condition.

10

Notes to Consolidated Financial Statements (unaudited)

June 30, 2020 and December 31, 2019

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments – Credit Losses (Topic 326) – Measurement of Credit Losses on Financial Instruments.” ASU 2016-13 significantly changes the impairment model for most financial assets that are measured at amortized cost and certain other instruments from an incurred loss model to an expected loss model and provides for recording credit losses on available for sale debt securities through an allowance account. ASU 2016-13 also requires certain incremental disclosures. In October 2019, the FASB voted to extend the adoption date for entities eligible to be smaller reporting companies, public business entities (PBEs) that are not SEC filers, and entities that are not PBEs from January 1, 2020 to January 1, 2023. Based on the Bank’s election as an Emerging Growth Company under the Jumpstart Our Business Startups Act to use the extended transition period for complying with any new or revised financial accounting standards, the Bank currently anticipates a January 1, 2023 adoption date. In preparation, the Bank has performed work in assessing and enhancing its technology environment and related data needs and availability. Additionally, a Management Committee comprised of members from multiple departments has been established to monitor the Bank’s progress towards adoption. As adoption will require the implementation of significant changes to the existing credit loss estimation model and is dependent on the economic forecast, and given the length of time before our adoption date, evaluating the overall impact of the ASU on the Bank’s Consolidated Financial Statements is not yet determinable.

11

Notes to Consolidated Financial Statements (unaudited)

June 30, 2020 and December 31, 2019

3. OTHER COMPREHENSIVE INCOME (LOSS)

The Bank records unrealized gains and losses, net of taxes, on securities available for sale in other comprehensive income (loss) in the Consolidated Statements of Changes in Stockholders’ Equity. Gains and losses on securities available for sale are reclassified to operations as the gains or losses are recognized. Other-than-temporary impairment (“OTTI”) losses on debt securities are reflected in earnings as realized losses to the extent the impairment is related to credit losses. The amount of the impairment related to other factors is recognized in other comprehensive income (loss). The Bank also recognizes as a component of other comprehensive income (loss) the actuarial gains or losses as well as the prior service costs or credits that arise during the period from post-retirement benefit plans.

Other comprehensive income (loss) components and related income tax effects were as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020			2019
(In thousands)
Change in obligation for postretirement benefits and for prior service credit	$	55		$	56		$	110		$	111
Change in obligation for other benefits		19			(8	)		37			(16	)
Change in total obligation for postretirement benefits and for prior service credit and for other benefits	$	74		$	48		$	147		$	95
Income tax effect		(20	)		—			(41	)		(14	)
Net change in total obligation for postretirement benefits and prior service credit and for other benefits		54			48			106			81
Unrealized holding gains (losses) on available for sale securities	$	30,811		$	12,096		$	6,443		$	21,806
Reclassification adjustment for losses (gains) realized in income		(485	)		377			(984	)		84
Change in unrealized gains (losses) on available for sale securities		30,326			12,473			5,459			21,890
Income tax effect		(8,443	)		(3,483	)		(1,520	)		(6,087	)
Net change in unrealized gains (losses) on available for sale securities		21,883			8,990			3,939			15,803
Total	$	21,937		$	9,038		$	4,045		$	15,884

The following is a summary of the accumulated other comprehensive income (loss) balances, net of income taxes:

	Balance as of January 1, 2020			Current Period Change		Income Tax Effect			Balance as of June 30, 2020
(In thousands)
Unrealized gains (losses) on benefits plans	$	(2,319	)	$	147	$	(41	)	$	(2,213	)
Unrealized gains (losses) on available for sale securities	$	5,544		$	5,459	$	(1,520	)	$	9,483
Total	$	3,225		$	5,606	$	(1,561	)	$	7,270

12

Notes to Consolidated Financial Statements (unaudited)

June 30, 2020 and December 31, 2019

The following represents the reclassifications out of accumulated other comprehensive income (loss):

	Three Months Ended June 30,						Six Months Ended June 30,						Affected Line Item in the Consolidated Statements of Income
	2020			2019			2020			2019
(In thousands)
Realized gains (losses) on sale of available for sale securities	$	486		$	(377	)	$	985		$	(85	)	Gain (loss) on sale of investment securities available for sale, net
Recognized gains (losses) on OTTI securities		(1	)		—			(1	)		1		Non-Interest Income - other
Income tax expense (benefit)		135			(104	)		274			(24	)	Income tax expense
Total reclassifications, net of income tax	$	350		$	(273	)	$	710		$	(60	)
Prior service credit on pension plans and other postretirement benefits	$	7		$	7		$	14		$	14		Compensation and employee benefits
Income tax expense (benefit)		(2	)		(2	)		(4	)		(4	)	Income tax expense (benefit)
Total reclassifications, net of income tax	$	5		$	5		$	10		$	10
Total reclassifications, net of income tax	$	355		$	(268	)	$	720		$	(50	)

13

Notes to Consolidated Financial Statements (unaudited)

June 30, 2020 and December 31, 2019

4. INVESTMENT SECURITIES

The amortized cost and fair value of investment securities available for sale and held to maturity as of June 30, 2020 are as follows:

	June 30, 2020
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
(In thousands)
Available for sale:
Mortgage-related:
GSE residential certificates	$	17,693	$	378	$	—		$	18,071
GSE CMOs		399,935		14,887		(121	)		414,701
GSE commercial certificates & CMO		445,595		12,198		(573	)		457,220
Non-GSE residential certificates		66,988		713		(4	)		67,697
Non-GSE commercial certificates		45,253		1		(1,855	)		43,399
		975,464		28,177		(2,553	)		1,001,088
Other debt:
U.S. Treasury		200		5		—			205
ABS		563,784		1,948		(12,782	)		552,950
Trust preferred		14,625		—		(1,920	)		12,705
Corporate		7,960		267		—			8,227
Other		—		—		—			—
		586,569		2,220		(14,702	)		574,087
Total available for sale	$	1,562,033	$	30,397	$	(17,255	)	$	1,575,175
Held to maturity:
Mortgage-related:
GSE residential certificates	$	623	$	31	$	—		$	654
Non GSE commercial certificates		233		—		—			233
		856		31		—			887
Other debt:
PACE Assessments		323,392		9,361		—			332,753
Municipal		41,150		2,921		—			44,071
Other		5,100		20		(1	)		5,119
		369,642		12,302		(1	)		381,943
Total held to maturity	$	370,498	$	12,333	$	(1	)	$	382,830

As of June 30, 2020, available for sale and held to maturity securities with a fair value of $980.7 million and $0.6 million, respectively, were pledged. The majority of the securities were pledged to the Federal Home Loan Bank of New York (“FHLB”) to secure outstanding advances, letters of credit and to provide additional borrowing potential. In addition, securities were pledged to provide capacity to borrow from the Federal Reserve Bank and to collateralize municipal deposits.

14

Notes to Consolidated Financial Statements (unaudited)

June 30, 2020 and December 31, 2019

The amortized cost and fair value of investment securities available for sale and held to maturity as of December 31, 2019 are as follows:

	December 31, 2019
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
(In thousands)
Available for sale:
Mortgage-related:
GSE residential certificates	$	36,639	$	97	$	(351	)	$	36,385
GSE CMOs		277,512		5,350		(428	)		282,434
GSE commercial certificates & CMO		250,357		4,003		(447	)		253,913
Non-GSE residential certificates		58,643		459		(94	)		59,008
Non-GSE commercial certificates		46,868		49		(43	)		46,874
		670,019		9,958		(1,363	)		678,614
Other debt:
U.S. Treasury		199		—		—			199
ABS		524,289		1,634		(2,146	)		523,777
Trust preferred		14,623		—		(726	)		13,897
Corporate		7,957		326		—			8,283
Other		—		—		—			—
		547,068		1,960		(2,872	)		546,156
Total available for sale	$	1,217,087	$	11,918	$	(4,235	)	$	1,224,770
Held to maturity:
Mortgage-related:
GSE residential certificates	$	635	$	23	$	—		$	658
Non GSE commercial certificates		270		19		—			289
		905		42		—			947
Other debt:
PACE Assessments		263,805		810		—			264,615
Municipal		22,894		598		(1,307	)		22,185
Other		5,100		—		(10	)		5,090
		291,799		1,408		(1,317	)		291,890
Total held to maturity	$	292,704	$	1,450	$	(1,317	)	$	292,837

15

Notes to Consolidated Financial Statements (unaudited)

June 30, 2020 and December 31, 2019

The following summarizes the amortized cost and fair value of debt securities available for sale and held to maturity, exclusive of mortgage-backed securities, by their contractual maturity as of June 30, 2020. Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without penalty:

	Available for Sale				Held to Maturity
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
(In thousands)
Due within one year	$	—	$	—	$	2,000	$	2,020
Due after one year through five years		17,901		18,127		3,100		3,099
Due after five years through ten years		203,096		197,688		—		—
Due after ten years		365,572		358,272		364,542		376,824
	$	586,569	$	574,087	$	369,642	$	381,943

Proceeds received and gains and losses realized on sales of securities are summarized below:

	Three Months Ended,						Six Months Ended,
	June 30, 2020			June 30, 2019			June 30, 2020			June 30, 2019
(In thousands)
Proceeds	$	24,657		$	88,502		$	52,420		$	138,423
Realized gains	$	731		$	571		$	1,254		$	1,048
Realized losses		(245	)		(948	)		(269	)		(1,133	)
Net realized gains (losses)	$	486		$	(377	)	$	985		$	(85	)

The Bank controls and monitors inherent credit risk in its securities portfolio through diversification, concentration limits, periodic securities reviews, and by investing a significant portion of the securities portfolio in U.S. Government sponsored entity (“GSE”) obligations. GSEs include the Federal Home Loan Mortgage Corporation (“FHLMC”), the Federal National Mortgage Association (“FNMA”), the Government National Mortgage Association (“GNMA”) and the Small Business Administration (“SBA”). GNMA is a wholly-owned U.S. Government corporation whereas FHLMC and FNMA are private. Mortgage-related securities may include mortgage pass-through certificates, participation certificates and collateralized mortgage obligations (“CMOs”).

16

Notes to Consolidated Financial Statements (unaudited)

June 30, 2020 and December 31, 2019

The following summarizes the fair value and unrealized losses for those available for sale securities as of June 30, 2020 and December 31, 2019, respectively, segregated between securities that have been in an unrealized loss position for less than twelve months and those that have been in a continuous unrealized loss position for twelve months or longer at the respective dates:

	June 30, 2020
	Less Than Twelve Months					Twelve Months or Longer					Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
(In thousands)
Mortgage-related:
GSE residential certificates	$	—	$	—		$	—	$	—		$	—	$	—
GSE CMOs		23,073		(36	)		13,576		(85	)		36,649		(121	)
GSE commercial certificates		177,772		(390	)		26,764		(183	)		204,536		(573	)
Non-GSE residential certificates		—		—			5,948		(4	)		5,948		(4	)
Non-GSE commercial certificates		34,984		(1,417	)		6,628		(438	)		41,612		(1,855	)
Other debt:
ABS		267,017		(6,217	)		190,848		(6,565	)		457,865		(12,782	)
Trust preferred		—		—			12,705		(1,920	)		12,705		(1,920	)
US Treasury		—		—			—		—			—		—
Other		—		—			—		—			—		—
	$	502,846	$	(8,060	)	$	256,469	$	(9,195	)	$	759,315	$	(17,255	)

	December 31, 2019
	Less Than Twelve Months					Twelve Months or Longer					Total
(In thousands)	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
Mortgage-related:
GSE residential certificates	$	4,849	$	(11	)	$	18,620	$	(340	)	$	23,469	$	(351	)
GSE CMOs		43,794		(118	)		23,995		(310	)		67,789		(428	)
GSE commercial certificates		59,615		(428	)		14,001		(19	)		73,616		(447	)
Non-GSE residential certificates		2,836		(11	)		13,537		(83	)		16,373		(94	)
Non-GSE commercial certificates		19,276		(25	)		7,048		(18	)		26,324		(43	)
Other debt:
ABS		95,095		(218	)		191,650		(1,928	)		286,745		(2,146	)
Trust preferred		—		—			13,897		(726	)		13,897		(726	)
	$	225,465	$	(811	)	$	282,748	$	(3,424	)	$	508,213	$	(4,235	)

The temporary impairment of fixed income securities (mortgage-related securities, asset backed securities, U.S. Treasury and GSE securities, trust preferred securities and corporate debt) is primarily attributable to changes in overall market interest rates and/or changes in credit spreads since the investments were acquired. In general, as market interest rates rise and/or credit spreads widen, the fair value of fixed rate securities will decrease, as market interest rates fall and/or credit spreads tighten, the fair value of fixed rate securities will increase.

As of June 30, 2020, excluding GSE and U.S. Treasury securities, temporarily impaired securities totaled $521.2 million with an unrealized loss of $16.6 million. With the exception of $0.2 million which were not rated, the remaining securities were rated investment grade by at least one nationally recognized statistical rating organization with no ratings below investment grade. All issues were current as to their interest payments. Management considers that the temporary impairment of these investments as of June 30, 2020 is primarily due to an increase in market spreads since the time these investments were acquired.

17

Notes to Consolidated Financial Statements (unaudited)

June 30, 2020 and December 31, 2019

With respect to the Bank’s security investments that are temporarily impaired as of June 30, 2020, management does not intend to sell these investments and does not believe it will be necessary to do so before anticipated recovery. The Bank expects to collect all amounts due according to the contractual terms of these investments. Therefore the Bank does not consider these securities to be other-than-temporarily impaired at June 30, 2020. None of these positions or other securities held in the portfolio or sold during the year were purchased with the intent of selling them or would otherwise be classified as trading securities under ASC No. 320, Investments – Debt and Equity Securities.

During the three months ended June 30, 2020, the Bank recorded an OTTI loss of $1,100, compared to no OTTI loss for the same period in 2019. For the six months ended June 30, 2020, the Bank recorded an OTTI loss of $1,100, compared to an OTTI recovery of $1,200 for the same period in 2019.

Events which may cause material declines in the fair value of debt investments may include, but are not limited to, deterioration of credit metrics, higher incidences of default, worsening liquidity, worsening global or domestic economic conditions or adverse regulatory action. Management does not believe that there are any cases of unrecorded OTTI as of June 30, 2020; however, it is possible that the Bank may recognize OTTI in future periods.

18

Notes to Consolidated Financial Statements (unaudited)

June 30, 2020 and December 31, 2019

5. LOANS RECEIVABLE, NET

Loans receivable are summarized as follows:

	June 30, 2020			December 31, 2019
(In thousands)
Commercial and industrial	$	617,579		$	474,342
Multifamily		972,129			976,380
Commercial real estate		404,064			421,947
Construction and land development		65,259			62,271
Total commercial portfolio		2,059,031			1,934,940
Residential real estate lending		1,432,645			1,366,473
Consumer and other		187,980			163,077
Total retail portfolio		1,620,625			1,529,550
		3,679,656			3,464,490
Net deferred loan origination costs (fees)		8,336			8,124
		3,687,992			3,472,614
Allowance for loan losses		(50,010	)		(33,847	)
	$	3,637,982		$	3,438,767

The Bank had $8.4 million and $2.3 million in residential 1-4 family mortgages held for sale at June 30, 2020 and December 31, 2019, respectively. Both were recorded in Other Assets in the Consolidated Statements of Financial Condition.

The following table presents information regarding the quality of the Bank’s loans as of June 30, 2020:

	30-89 Days Past Due (1)		Non- Accrual		90 Days or More Delinquent and Still Accruing Interest		Total Past Due		Current and Not Accruing Interest		Current		Total Loans Receivable
(In thousands)
Commercial and industrial	$	5,568	$	538	$	—	$	6,106	$	15,204	$	596,269	$	617,579
Multifamily		13,008		—		—		13,008		—		959,121		972,129
Commercial real estate		7,501		13,768		—		21,269		—		382,795		404,064
Construction and land development		12,892		3,652		—		16,544		—		48,715		65,259
Total commercial portfolio		38,969		17,958		—		56,927		15,204		1,986,900		2,059,031
Residential real estate lending		9,320		10,860		—		20,180		975		1,411,490		1,432,645
Consumer and other		1,508		680		—		2,188		—		185,792		187,980
Total retail portfolio		10,828		11,540		—		22,368		975		1,597,282		1,620,625
	$	49,797	$	29,498	$	—	$	79,295	$	16,179	$	3,584,182	$	3,679,656

(1) There were $13.6 million of commercial portfolio loans in the process of obtaining a COVID-19 related deferral as of June 30, 2020.

19

Notes to Consolidated Financial Statements (unaudited)

June 30, 2020 and December 31, 2019

The following table presents information regarding the quality of the Bank’s loans as of December 31, 2019:

(In thousands)	30-89 Days Past Due		Non- Accrual		90 Days or More Delinquent and Still Accruing Interest		Total Past Due		Current and Not Accruing Interest		Current		Total Loans Receivable
Commercial and industrial	$	3,970	$	781	$	22	$	4,773	$	14,783	$	454,786	$	474,342
Multifamily		—		—		—		—		—		976,380		976,380
Commercial real estate		1,020		3,693		—		4,713		—		417,234		421,947
Construction and land development		2,635		3,652		—		6,287		—		55,984		62,271
Total commercial portfolio		7,625		8,126		22		15,773		14,783		1,904,384		1,934,940
Residential real estate lending		17,817		7,384		424		25,625		390		1,340,458		1,366,473
Consumer and other		1,782		328		—		2,110		—		160,967		163,077
Total retail portfolio		19,599		7,712		424		27,735		390		1,501,425		1,529,550
	$	27,224	$	15,838	$	446	$	43,508	$	15,173	$	3,405,809	$	3,464,490

In general, a modification or restructuring of a loan constitutes a troubled debt restructuring (“TDR”) if the Bank grants a concession to a borrower experiencing financial difficulty. Loans modified as TDRs are placed on non-accrual status until the Bank determines that future collection of principal and interest is reasonably assured, which generally requires that the borrower demonstrate performance according to the restructured terms for a period of at least six months. The Bank’s TDRs primarily involve rate reductions, forbearance of arrears or extension of maturity. TDRs are included in total impaired loans as of the respective date.

On March 22, 2020, federal banking regulators issued an interagency statement that included guidance on their approach for the accounting of loan modifications in light of the economic impact of the COVID-19 pandemic. The guidance interprets current accounting standards and indicates that a lender can conclude that a borrower is not experiencing financial difficulty if short-term modifications are made in response to COVID-19, such as payment deferrals, fee waivers, extensions of repayment terms, or other delays in payment that are insignificant related to the loans in which the borrower is less than 30 days past due on its contractual payments at the time a modification program is implemented. The agencies confirmed in working with the staff of the FASB that short-term modifications made on a good faith basis in response to COVID-19 to borrowers who were current prior to any relief are not TDRs. In addition, the CARES Act provides financial institutions the option to temporarily suspend certain requirements under GAAP related to TDRs for a limited period of time to account for the effects of COVID-19.

20

Notes to Consolidated Financial Statements (unaudited)

June 30, 2020 and December 31, 2019

As of June 30, 2020, the Bank had $464.6 million of loan balances that were either on a COVID-19 related payment deferral or in the process of receiving a payment deferral. Generally, these loans were not reported as delinquent and the credit was not downgraded solely due to the payment deferral. Loan balances of $18.3 million had a payment deferral or were in the process of receiving a payment deferral and are reported as special mention or substandard at June 30, 2020.

All loans on payment deferral are receiving a 90-day deferral of principal and interest with the exception of $56.3 million in commercial loans that are receiving a deferral of principal only. As of June 30, 2020, loan balances of $9.9 million have received 180 days of principal and interest payment deferral and loan balances of $20.0 million have received 180 days of principal payment deferral.

The following table presents information regarding the Bank’s COVID-19 related loan deferrals as of June 30, 2020:

	Portfolio Balance Outstanding		Balance in Deferral		Balance in Process of Deferral		Total Deferred Loans		Total Deferrals as % of Portfolio
(In thousands, rounded)
Commercial and industrial	$	618,000	$	29,000	$	7,000	$	36,000	6%
Multifamily		972,000		163,000		29,000		192,000	20%
Commercial real estate, construction and land development		469,000		88,000		36,000		124,000	26%
Total commercial portfolio		2,059,000		280,000		72,000		352,000	17%
Residential real estate lending		1,433,000		99,000		4,000		103,000	7%
Consumer and other		188,000		10,000		—		10,000	5%
Total retail portfolio		1,621,000		109,000		4,000		113,000	7%
Totals	$	3,680,000	$	389,000	$	76,000	$	465,000	13%

The following table presents information regarding the Bank’s TDRs as of June 30, 2020 and December 31, 2019:

	June 30, 2020						December 31, 2019
(In thousands)	Accruing		Non-Accrual		Total		Accruing		Non-Accrual		Total
Commercial and industrial	$	10,686	$	15,204	$	25,890	$	8,984	$	14,783	$	23,767
Commercial real estate		—		3,567		3,567		5,114		3,693		8,807
Construction and land development		—		3,652		3,652		—		3,652		3,652
Residential real estate lending		17,345		4,353		21,698		20,269		2,891		23,160
	$	28,031	$	26,776	$	54,807	$	34,367	$	25,019	$	59,386

21

Notes to Consolidated Financial Statements (unaudited)

June 30, 2020 and December 31, 2019

The following tables summarize the Bank’s loan portfolio by credit quality indicator as of June 30, 2020:

(In thousands)	Pass		Special Mention		Substandard		Doubtful		Total
Commercial and industrial	$	567,174	$	15,493	$	34,445	$	467	$	617,579
Multifamily		966,067		6,062		—		—		972,129
Commercial real estate		388,170		1,439		14,455		—		404,064
Construction and land development		35,578		26,029		3,652		—		65,259
Residential real estate lending		1,421,785		—		10,860		—		1,432,645
Consumer and other		187,300		—		680		—		187,980
Total loans	$	3,566,074	$	49,023	$	64,092	$	467	$	3,679,656

As of June 30, 2020, no COVID-19 related loan deferrals were graded as criticized solely on the basis of the deferral request.

The following tables summarize the Bank’s loan portfolio by credit quality indicator as of December 31, 2019:

(In thousands)	Pass		Special Mention		Substandard		Doubtful		Total
Commercial and industrial	$	427,279	$	14,445	$	32,151	$	467	$	474,342
Multifamily		976,380		—		—		—		976,380
Commercial real estate		418,254		—		3,693		—		421,947
Construction and land development		58,619		—		3,652		—		62,271
Residential real estate lending		1,359,089		—		7,384		—		1,366,473
Consumer and other		162,749		—		328		—		163,077
Total loans	$	3,402,370	$	14,445	$	47,208	$	467	$	3,464,490

The above classifications follow regulatory guidelines and can be generally described as follows:

• pass loans are of satisfactory quality;

• special mention loans have a potential weakness or risk that may result in the deterioration of future repayment;

• substandard loans are inadequately protected by the current net worth and paying capacity of the borrower or of the collateral pledged (these loans have a well-defined weakness, and there is a distinct possibility that the Bank will sustain some loss); and

• doubtful loans, based on existing circumstances, have weaknesses that make collection or liquidation in full highly questionable and improbable.

In addition, residential loans are classified utilizing an inter-agency methodology that incorporates the extent of delinquency. Assigned risk rating grades are continuously updated as new information is obtained.

22

Notes to Consolidated Financial Statements (unaudited)

June 30, 2020 and December 31, 2019

The following table provides information regarding the methods used to evaluate the Bank’s loans for impairment by portfolio, and the Bank’s allowance by portfolio based upon the method of evaluating loan impairment as of June 30, 2020:

(In thousands)	Commercial and Industrial		Multifamily		Commercial Real Estate		Construction and Land Development		Residential Real Estate Lending		Consumer and Other		Total
Loans:
Individually evaluated for impairment	$	27,053	$	—	$	13,768	$	3,652	$	28,795	$	—	$	73,268
Collectively evaluated for impairment		590,526		972,129		390,296		61,607		1,403,850		187,980		3,606,388
Total loans	$	617,579	$	972,129	$	404,064	$	65,259	$	1,432,645	$	187,980	$	3,679,656
Allowance for loan losses:
Individually evaluated for impairment	$	10,473	$	—	$	2,801	$	—	$	1,180	$	—	$	14,454
Collectively evaluated for impairment		4,971		7,063		3,176		3,276		15,260		1,810		35,556
Total allowance for loan losses	$	15,444	$	7,063	$	5,977	$	3,276	$	16,440	$	1,810	$	50,010

The following table provides information regarding the methods used to evaluate the Bank’s loans for impairment by portfolio, and the Bank’s allowance by portfolio based upon the method of evaluating loan impairment as of December 31, 2019:

(In thousands)	Commercial and Industrial		Multifamily		Commercial Real Estate		Construction and Land Development		Residential Real Estate Lending		Consumer and Other		Total
Loans:
Individually evaluated for impairment	$	24,870	$	—	$	8,807	$	3,652	$	28,043	$	—	$	65,372
Collectively evaluated for impairment		449,472		976,380		413,140		58,619		1,338,430		163,077		3,399,118
Total loans	$	474,342	$	976,380	$	421,947	$	62,271	$	1,366,473	$	163,077	$	3,464,490
Allowance for loan losses:
Individually evaluated for impairment	$	6,144	$	—	$	—	$	—	$	1,325	$	—	$	7,469
Collectively evaluated for impairment		4,982		5,210		2,492		808		12,824		62		26,378
Total allowance for loan losses	$	11,126	$	5,210	$	2,492	$	808	$	14,149	$	62	$	33,847

23

Notes to Consolidated Financial Statements (unaudited)

June 30, 2020 and December 31, 2019

The activities in the allowance by portfolio for the three months ended June 30, 2020 are as follows:

(In thousands)	Commercial and Industrial			Multifamily		Commercial Real Estate		Construction and Land Development		Residential Real Estate Lending			Consumer and Other			Total
Allowance for loan losses:
Beginning balance	$	14,930		$	5,886	$	2,736	$	1,740	$	15,430		$	1,626		$	42,348
Provision for (recovery of) loan losses		514			1,177		3,241		1,536		1,099			654			8,221
Charge-offs		(2	)		—		—		—		(240	)		(487	)		(729	)
Recoveries		2			—		—		—		151			17			170
Ending Balance	$	15,444		$	7,063	$	5,977	$	3,276	$	16,440		$	1,810		$	50,010

The activities in the allowance by portfolio for the three months ended June 30, 2019 are as follows:

(In thousands)	Commercial and Industrial			Multifamily		Commercial Real Estate		Construction and Land Development		Residential Real Estate Lending			Consumer and Other			Total
Allowance for loan losses:
Beginning balance	$	10,402		$	4,610	$	2,404	$	524	$	12,727		$	725		$	31,392
Provision for (recovery of) loan losses		(155	)		499		538		564		449			232			2,127
Charge-offs		(9	)		—		—		—		(30	)		(128	)		(167	)
Recoveries		—			—		—		—		245			33			278
Ending Balance	$	10,238		$	5,109	$	2,942	$	1,088	$	13,391		$	862		$	33,630

The activities in the allowance by portfolio for the six months ended June 30, 2020 are as follows:

(In thousands)	Commercial and Industrial			Multifamily		Commercial Real Estate		Construction and Land Development		Residential Real Estate Lending			Consumer and Other			Total
Allowance for loan losses:
Beginning balance	$	11,126		$	5,210	$	2,492	$	808	$	14,149		$	62		$	33,847
Provision for (recovery of) loan losses		4,316			1,853		3,485		2,468		2,192			2,494			16,808
Charge-offs		(1	)		—		—		—		(264	)		(791	)		(1,056	)
Recoveries		3			—		—		—		363			45			411
Ending Balance	$	15,444		$	7,063	$	5,977	$	3,276	$	16,440		$	1,810		$	50,010

24

Notes to Consolidated Financial Statements (unaudited)

June 30, 2020 and December 31, 2019

The activities in the allowance by portfolio for the six months ended June 30, 2019 are as follows:

(In thousands)	Commercial and Industrial			Multifamily		Commercial Real Estate		Construction and Land Development			Residential Real Estate Lending			Consumer and Other			Total
Allowance for loan losses:
Beginning balance	$	16,046		$	4,736	$	2,573	$	1,089		$	11,987		$	764		$	37,195
Provision for (recovery of) loan losses		2,578			373		369		(1	)		791			202			4,312
Charge-offs		(8,392	)		—		—		—			(139	)		(185	)		(8,716	)
Recoveries		6			—		—		—			752			81			839
Ending Balance	$	10,238		$	5,109	$	2,942	$	1,088		$	13,391		$	862		$	33,630

The following is additional information regarding the Bank’s individually impaired loans and the allowance related to such loans as of June 30, 2020 and December 31, 2019:

	June 30, 2020
	Recorded Investment		Average Recorded Investment		Unpaid Principal Balance		Related Allowance
(In thousands)
Loans without a related allowance:
Residential real estate lending	$	6,702	$	5,599	$	7,205	$	—
Construction and land development		3,652		3,652		3,702		—
Commercial real estate		—		4,404		—		—
		10,354		13,655		10,907		—
Loans with a related allowance:
Residential real estate lending		22,093		22,820		25,960		1,180
Commercial real estate mortgages		13,768		6,884		14,098		2,801
Commercial and industrial		27,053		25,962		32,115		10,473
		62,914		55,666		72,173		14.454
Total individually impaired loans:
Residential real estate lending		28,795		28,419		33,165		1,180
Construction and land development		3,652		3,652		3,702		—
Commercial real estate		13,768		11,288		14,098		2,801
Commercial and industrial		27,053		25,962		32,115		10,473
	$	73,268	$	69,321	$	83,080	$	14,454

25

Notes to Consolidated Financial Statements (unaudited)

June 30, 2020 and December 31, 2019

	December 31, 2019
(In thousands)	Recorded Investment		Average Recorded Investment		Unpaid Principal Balance		Related Allowance
Loans without a related allowance:
Residential real estate lending	$	4,496	$	4,397	$	4,558	$	—
Construction and land development		3,652		3,652		3,702		—
Commercial real estate		8,807		11,921		9,137		—
		16,955		19,970		17,397		—
Loans with a related allowance:
Residential real estate lending		23,547		25,206		27,288		1,325
Commercial and industrial		24,870		18,512		29,534		6,144
		48,417		43,718		56,822		7,469
Total individually impaired loans:
Residential real estate lending		28,043		29,603		31,846		1,325
Construction and land development		3,652		3,652		3,702		—
Commercial real estate		8,807		11,921		9,137		—
Commercial and industrial		24,870		18,512		29,534		6,144
	$	65,372	$	63,688	$	74,219	$	7,469

As of June 30, 2020 and December 31, 2019, mortgage loans with an unpaid principal balance of $1.4 billion and $1.1 billion, respectively, were pledged to the FHLB to secure outstanding advances, letters of credit and borrowing capacity.

There were no related party loans outstanding as of June 30, 2020 and one related party loan outstanding as of December 31, 2019, with a total principal balance of $0.6 million.

26

Notes to Consolidated Financial Statements (unaudited)

June 30, 2020 and December 31, 2019

6. DEPOSITS

Deposits are summarized as follows:

	June 30, 2020					December 31, 2019
	Amount		Average Rate			Amount		Average Rate
(In thousands)
Non-interest bearing demand deposit accounts	$	3,089,004		0.00	%	$	2,179,247		0.00	%
NOW accounts		198,653		0.06	%		230,919		0.38	%
Money market deposit accounts		1,876,540		0.13	%		1,508,674		0.37	%
Savings accounts		342,477		0.12	%		328,587		0.19	%
Time deposits		363,645		0.86	%		393,555		1.29	%
	$	5,870,319		0.10	%	$	4,640,982		0.26	%

Note: Average rate reflects the weighted average interest rate by deposit category at the related period end date. Average rate for total deposits includes non-interest bearing demand deposit accounts.

The scheduled maturities of time deposits are as follows:

	June 30, 2020
(In thousands)
2020	$	266,872
2021		82,522
2022		6,983
2023		3,906
2024		2,746
Thereafter		616
	$	363,645

Time deposits of $250,000 or more totaled $59.0 million as of June 30, 2020 and $63.1 million as of December 31, 2019.

From time to time the Bank will issue time deposits through the Certificate of Deposit Account Registry Service (“CDARS”) for the purpose of providing FDIC insurance to bank customers with balances in excess of FDIC insurance limits. CDARS deposits totaled approximately $178.4 million and $192.0 million as of June 30, 2020 and December 31, 2019, respectively, and are included in Time deposits above. The average balance of such deposits was approximately $182.6 million for the quarter ended June 30, 2020 and $190.1 million for the year ended December 31, 2019.

Our total deposits included deposits from Workers United and its related entities in the amounts of $143.3 million as of June 30, 2020 and $86.9 million as of December 31, 2019.

Included in total deposits are state and municipal deposits totaling $50.7 million and $100.4 million as of June 30, 2020 and December 31, 2019, respectively. Such deposits are secured by letters of credit issued by the FHLB or by securities pledged with the FHLB.

27

Notes to Consolidated Financial Statements (unaudited)

June 30, 2020 and December 31, 2019

7. BORROWED FUNDS

Borrowed funds are summarized as follows:

	June 30, 2020					December 31, 2019
	Amount		Weighted Average Rate			Amount		Weighted Average Rate
(In thousands)
FHLB advances	$	—		—	%	$	75,000		1.84	%

FHLB advances are collateralized by the FHLB stock owned by the Bank plus a pledge of other eligible assets comprised of securities and mortgage loans. As of June 30, 2020, the value of the other eligible assets had an estimated market value net of haircut totaling $1.8 billion (comprised of securities of $708.3 million and mortgage loans of $1.1 billion). The pledged securities and mortgage loans have been delivered to the FHLB. The fair value of assets pledged to the FHLB is required to be not less than 110% of the outstanding advances.

The Bank has no significant categories of borrowed funds as of June 30, 2020.

28

Notes to Consolidated Financial Statements (unaudited)

June 30, 2020 and December 31, 2019

8. EARNINGS PER SHARE

The two-class method is used in the calculation of basic and diluted earnings per share. Under the two-class method, earnings available to common stockholders for the period are allocated between common stockholders and participating securities according to participation rights in undistributed earnings. Our options and restricted stock units are not considered participating securities as they do not receive dividend distributions and the Bank has no other participating securities. The factors used in the earnings per share computation follow:

	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
(In thousands, except per share amounts)
Net income attributable to Amalgamated Bank	$	10,374	$	11,185	$	19,919	$	21,999
Dividends paid on preferred stock		—		—		—		—
Income attributable to common stock	$	10,374	$	11,185	$	19,919	$	21,999
Weighted average common shares outstanding, basic		31,023		31,825		31,217		31,798
Basic earnings per common share	$	0.33	$	0.35	$	0.64	$	0.69
Net income attributable to Amalgamated Bank	$	10,374	$	11,185	$	19,919	$	21,999
Weighted average common shares outstanding, basic		31,023		31,825		31,217		31,798
Incremental shares from assumed conversion of options and RSUs		12		412		128		481
Weighted average common shares outstanding, diluted		31,035		32,237		31,345		32,279
Diluted earnings per common share	$	0.33	$	0.35	$	0.64	$	0.68

29

Notes to Consolidated Financial Statements (unaudited)

June 30, 2020 and December 31, 2019

9. EMPLOYEE BENEFIT PLANS

Long Term Incentive Plans

Stock Options:

The Bank does not currently maintain an active stock option plan that is available for issuing new options.

A summary of the status of the Bank’s options as of June 30, 2020 follows:

	Number of Options			Weighted Avg. Exercise Price		Weighted Avg. Remaining Life			Intrinsic Value
Outstanding, December 31, 2019		2,051,020		$	13.06		6.6	years
Granted		—			—		—
Forfeited/ Expired		—			—		—
Exercised		(11,220	)		13.75		—
Outstanding, June 30, 2020		2,039,800			13.06		6.2	years	$	915,635
Vested and Exercisable, June 30, 2020		1,862,404		$	12.91		6.0	years	$	915,635

The range of exercise prices is $11.00 to $14.65 per share.

Compensation costs attributable to the options were $0.2 million and $0.3 million for the three months ended June 30, 2020 and 2019, respectively. Compensation costs attributable to the options were $0.3 million and $0.7 million for the six months ended June 30, 2020 and 2019, respectively. All amounts are recorded within the Consolidated Statements of Income. Of the unvested portion of the options, the remaining expense of $0.3 million will be recognized in the remaining six months of 2020.

Restricted Stock Units:

The Amalgamated Bank 2019 Equity Incentive Plan (the “Equity Plan”) provides for the grant of stock-based incentive awards to officers, employees and directors of the Bank. The number of shares of common stock of Amalgamated Bank available for stock-based awards in the Equity Plan is 1,250,000 of which 782,365 shares are available for issuance as of June 30, 2020.

During the six months ended June 30, 2020, in accordance with the Equity Plan for employees, the Bank granted 160,331 restricted stock units (RSUs) and reserved 197,672 shares for issuance upon vesting based upon the possibility of the Bank’s employees achieving the maximum share payout.

Of the 160,331 RSUs granted to employees, 85,649 RSUs time-vest ratably over three years and were granted at a fair value of $14.17 and 74,682 RSUs were performance-based and are more fully described below:

The Bank granted 38,321 performance-based RSUs at a fair value of $14.45 which vest subject to the achievement of the Bank’s corporate goals for the three-year period from December 31, 2019 to December 31, 2022. The corporate goal is based on the Bank achieving a target increase in Tangible Book Value, adjusted for certain factors. The minimum and maximum awards that are achievable are 0 and 57,482 shares, respectively.

The Bank granted 36,361 market-based RSUs at a fair value of $15.23 which vest subject to the Bank’s performance on relative total shareholder return compared to a group of peer banks over a three-year period from March 9, 2020 to March 8, 2023.    The minimum and maximum awards that are achievable are 0 and 54,542 shares, respectively.

30

Notes to Consolidated Financial Statements (unaudited)

June 30, 2020 and December 31, 2019

A summary of the status of the Bank’s employee RSUs as of June 30, 2020 follows:

	Shares			Grant Date Fair Value
Unvested, December 31, 2019		189,999		$	17.81
Awarded		160,331			14.48
Forfeited		(2,834	)		17.67
Vested		(39,542	)		17.67
Unvested, June 30, 2020		307,954		$	16.10

Compensation expense attributable to the employee RSUs was $0.5 million and $0.2 million for the three months ended June 30, 2020 and 2019, respectively. Compensation expense attributable to the employee RSUs was $0.8 million and $0.2 million for the six months ended June 30, 2020 and 2019, respectively. As of June 30, 2020, there was $4.2 million of total unrecognized compensation cost related to the non-vested RSUs granted to employees. This expense may increase or decrease depending on the expected number of performance-based shares to be issued. This expense is expected to be recognized over 2.3 years.

During the six months ended June 30, 2020, in accordance with the Equity Plan for directors, the Bank granted 26,642 RSUs that vest after one year. The Bank recorded expense of $0.1 million and $46,000 for the three months ended June 30, 2020 and 2019, respectively. The Bank recorded expense of $0.3 million and $46,000 for the six months ended June 30, 2020 and 2019, respectively. As of June 30, 2020, there was $0.3 million of total unrecognized cost related to the non-vested RSUs granted to directors.

31

Notes to Consolidated Financial Statements (unaudited)

June 30, 2020 and December 31, 2019

10. FAIR VALUE OF FINANCIAL INSTRUMENTS

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Assumptions are developed based on prioritizing information within a fair value hierarchy that gives the highest priority to quoted prices in active markets and the lowest priority to unobservable data. A description of the disclosure hierarchy and the types of financial instruments recorded at fair value that management believes would generally qualify for each category are as follows:

Level 1 - Valuations are based on quoted prices in active markets for identical assets or liabilities. Accordingly, valuation of these assets and liabilities does not entail a significant degree of judgment. Examples include most U.S. Government securities and exchange-traded equity securities.

Level 2 - Valuations are based on either quoted prices in markets that are not considered to be active or significant inputs to the methodology that are observable, either directly or indirectly. Financial instruments in this level would generally include mortgage-related securities and other debt issued by GSEs, non-GSE mortgage-related securities, corporate debt, certain redeemable fund investments and certain trust preferred securities.

Level 3 - Valuations are based on inputs to the methodology that are unobservable and significant to the fair value measurement. These inputs reflect management’s own judgments about the assumptions that market participants would use in pricing the assets and liabilities.

The following summarizes those financial instruments measured at fair value in the Consolidated Statements of Financial Condition categorized by the relevant class of investment and level of the fair value hierarchy:

	June 30, 2020
(In thousands)	Level 1		Level 2		Level 3		Total
Available for sale securities:
Mortgage-related:
GSE residential certificates	$	—	$	18,071	$	—	$	18,071
GSE CMOs		—		414,701		—		414,701
GSE commercial certificates & CMO		—		457,220		—		457,220
Non-GSE residential certificates		—		67,697		—		67,697
Non-GSE commercial certificates		—		43,399		—		43,399
Other debt:
U.S. Treasury		205		—		—		205
ABS		—		552,950		—		552,950
Trust preferred		—		12,705		—		12,705
Corporate		—		8,227		—		8,227
Other		—		—		—		—
Total assets carried at fair value	$	205	$	1,574,970	$	—	$	1,575,175

	December 31, 2019
(In thousands)	Level 1		Level 2		Level 3		Total
Available for sale securities:
Mortgage-related:
GSE residential certificates	$	—	$	36,385	$	—	$	36,385
GSE CMOs		—		282,434		—		282,434
GSE commercial certificates		—		253,913		—		253,913
Non-GSE residential certificates		—		59,008		—		59,008
Non-GSE commercial certificates		—		46,874		—		46,874
Other debt:
U.S. Treasury		199		—		—		199
ABS		—		523,777		—		523,777
Trust preferred		—		13,897		—		13,897
Corporate		—		8,283		—		8,283
Total assets carried at fair value	$	199	$	1,224,571	$	—	$	1,224,770

32

Notes to Consolidated Financial Statements (unaudited)

June 30, 2020 and December 31, 2019

During the periods ended June 30, 2020 and December 31, 2019, there were no transfers of financial instruments between Level 1 and Level 2 and there were no financial instruments measured at fair value and categorized as Level 3 in the consolidated statement of financial condition.

The following tables summarize assets measured at fair value on a non-recurring basis:

	June 30, 2020
	Carrying Value		Level 1		Level 2		Level 3		Estimated Fair Value
(In thousands)
Fair Value Measurements:
Impaired loans	$	58,814	$	—	$	—	$	58,814	$	58,814
Other real estate owned		503		—		—		656		656
	$	59,317	$	—	$	—	$	59,470	$	59,470
	December 31, 2019
	Carrying Value		Level 1		Level 2		Level 3		Estimated Fair Value
(In thousands)
Fair Value Measurements:
Impaired loans	$	57,903	$	—	$	—	$	57,903	$	57,903
Other real estate owned		809		—		—		977		977
	$	58,712	$	—	$	—	$	58,880	$	58,880

33

Notes to Consolidated Financial Statements (unaudited)

June 30, 2020 and December 31, 2019

The following table summarizes the financial statement basis and estimated fair values for significant categories of financial instruments:

	June 30, 2020
	Carrying Value		Level 1		Level 2		Level 3		Estimated Fair Value
(In thousands)
Financial assets:
Cash and cash equivalents	$	587,961	$	587,961	$	—	$	—	$	587,961
Available for sale securities		1,575,175		205		1,574,970		—		1,575,175
Held to maturity securities		370,498		—		382,830		—		382,830
Loans receivable, net		3,637,982		—		—		3,811,403		3,811,403
FHLBNY stock (1)		3,934		—		3,934		—		3,934
Resell agreements		45,653		—		—		45,653		45,653
Accrued interest and dividends receivable		21,836		—		21,836		—		21,836
Other assets (2)		8,355		—		—		8,355		8,355
Financial liabilities:
Deposits payable on demand	$	5,506,674	$	—	$	5,506,674	$	—	$	5,506,674
Time deposits		363,645		—		364,565		—		364,565
Borrowed funds		—		—		—		—		—
Accrued interest payable		1,070		—		1,070		—		1,070

(1) Prices not quoted in active markets but redeemable at par.

(2) Loans held for sale recorded in other assets.

	December 31, 2019
(In thousands)	Carrying Value		Level 1		Level 2		Level 3		Estimated Fair Value
Financial assets:
Cash and cash equivalents	$	122,538	$	122,538	$	—	$	—	$	122,538
Available for sale securities		1,224,770		199		1,224,571		—		1,224,770
Held to maturity securities		292,704		—		23,132		269,705		292,837
Loans receivable, net		3,438,767		—		—		3,474,296		3,474,296
FHLBNY stock (1)		7,039		—		7,039				7,039
Accrued interest and dividends receivable		19,088		—		19,088		—		19,088
Other assets (2)		2,328		—		—		2,328		2,328
Financial liabilities:
Deposits payable on demand		4,247,427		—		4,247,427		—		4,247,427
Time deposits		393,555		—		394,385		—		394,385
Borrowed funds		75,000		—		75,000		—		75,000
Accrued interest payable		1,383		—		1,383		—		1,383

(1) Prices not quoted in active markets but redeemable at par.

(2) Loans held for sale recorded in other assets.

34

Notes to Consolidated Financial Statements (unaudited)

June 30, 2020 and December 31, 2019

11. COMMITMENTS, CONTINGENCIES AND OFF BALANCE SHEET RISK

Credit Commitments

The Bank is party to various credit related financial instruments with off balance sheet risk. The Bank, in the normal course of business, issues such financial instruments in order to meet the financing needs of its customers. These financial instruments include commitments to extend credit and standby letters of credit. Such commitments involve, to varying degrees, elements of credit and interest rate risk in excess of the amounts recognized in the consolidated statements of financial condition.

The following financial instruments were outstanding whose contract amounts represent credit risk as of the related periods:

	June 30, 2020		December 31, 2019
(In thousands)
Commitments to extend credit	$	530,337	$	567,117
Standby letters of credit		21,031		15,169
Total	$	551,368	$	582,286

Commitments to extend credit are contracts to lend to a customer as long as there is no violation of any condition established in the contract. These commitments have fixed expiration dates and other termination clauses and generally require the payment of nonrefundable fees. Since a portion of the commitments are expected to expire without being drawn upon, the contractual principal amounts do not necessarily represent future cash requirements. The Bank’s maximum exposure to credit risk is represented by the contractual amount of these instruments. These instruments represent ultimate exposure to credit risk only to the extent they are subsequently drawn upon by customers.

Standby letters of credit are conditional lending commitments issued by the Bank to guarantee the financial performance of a customer to a third party. The credit risk involved in issuing standby letters of credit is essentially the same as that involved in extending loan facilities to customers. The balance sheet carrying value of standby letters of credit approximates any nonrefundable fees received but not yet recorded as income. The Bank considers this carrying value, which is not material, to approximate the estimated fair value of these financial instruments.

The Bank reserves for the credit risk inherent in off balance sheet credit commitments. This reserve, which is included in other liabilities, amounted to approximately $1.3 million as of both June 30, 2020 and December 31, 2019.

Investment Commitments

The Bank is party to an agreement with Pace Funding Group (PFG) for the purchase of up to $150 million of PACE assessment securities by September 2021, to be held in our held-to-maturity investment portfolio. As of June 30, 2020, the Bank had fulfilled $40.8 million of its obligation. As of December 31, 2019, the Bank was not party to such an agreement or related purchase obligation. The PACE assessments have equal-lien priority with property taxes and rank senior to first lien mortgages.

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Notes to Consolidated Financial Statements (unaudited)

June 30, 2020 and December 31, 2019

12. LEASES

The Bank as a lessee has operating leases primarily consisting of real estate arrangements where the Bank operates its headquarters, branches and business production offices. All leases identified as in scope are accounted for as operating leases as of June 30, 2020. These leases are typically long-term leases and generally are not complicated arrangements or structures. Several of the leases contain renewal options at a rate comparable to the fair market value based on comparable analysis to similar properties in the Bank’s geographies.

Real estate operating leases are presented as a Right-of-use (“ROU”) asset and a related Operating lease liability on the Consolidated Statements of Financial Condition. The ROU asset represents the Bank’s right to use the underlying asset for the lease term and the lease liabilities represent the obligation to make lease payments arising from the lease. The ROU asset and related lease liability were recognized at commencement on the adoption date of ASU 2016-02 on January 1, 2019 and are primarily based on the present value of lease payments over the lease term. The Bank applied its incremental borrowing rate (“IBR”) as the discount rate to the remaining lease payments to derive a present value calculation for initial measurement of the lease liability. The IBR reflects the interest rate the Bank would have to pay to borrow on a collateralized basis over a similar term for an amount equal to the lease payments. Lease expense is recognized on a straight-line basis over the lease term.

The following table summarizes our lease cost and other operating lease information:

	Three Months Ended June 30, 2020			Six Months Ended June 30, 2020
(In thousands)
Operating lease cost	$	2,766		$	6,254
Cash paid for amounts included in the measurement of Operating leases liability	$	4,423		$	7,103
Weighted average remaining lease term on operating leases (in years)		6.2			6.2
Weighted average discount rate used for operating leases liability		3.26	%		3.26	%
Note: Sublease income and variable income or expense considered immaterial

	At Three Months Ended June 30, 2019			At Six Months Ended June 30, 2019
(In thousands)
Operating lease cost	$	2,516		$	5,039
Cash paid for amounts included in the measurement of Operating leases liability	$	2,732		$	5,464
Weighted average remaining lease term on operating leases (in years)		6.9			6.9
Weighted average discount rate used for operating leases liability		3.24	%		3.24	%
Note: Sublease income and variable income or expense considered immaterial

36

Notes to Consolidated Financial Statements (unaudited)

June 30, 2020 and December 31, 2019

The following table presents the remaining commitments for operating lease payments for the next five years and thereafter, as well as a reconciliation to the discounted Operating leases liability recorded in the Consolidated Statements of Financial Condition as of June 30, 2020:

(In thousands)
As of June 30, 2020
2020 remaining	$	5,053
2021		9,910
2022		9,990
2023		9,725
2024		9,734
Thereafter		18,661
Total undiscounted operating lease payments		63,073
Less: present value adjustment		6,231
Total Operating leases liability	$	56,842

37

Notes to Consolidated Financial Statements (unaudited)

June 30, 2020 and December 31, 2019

13. GOODWILL AND INTANGIBLE ASSETS

Goodwill

In accordance with GAAP, the Bank performs an annual test as of June 30 to identify potential impairment of goodwill, or more frequently if events or circumstances indicate a potential impairment may exist. If the carrying amount of the Bank, as a sole reporting unit, including goodwill, exceeds its fair value, an impairment loss is recognized in an amount equal to that excess up to the amount of the recorded goodwill.

The fair value of the Bank was determined by using a combination of a market approach and an income approach under the framework established for measuring fair value under ASC 820. Under both approaches the estimated fair value of the Bank was in excess of the carrying value and the Bank, as a sole reporting unit, was not at risk of failing the quantitative analysis. The fair value is based upon market data as of June 30, 2020 and estimates and assumptions that the Bank believes are most appropriate for the analysis. However, changes in certain assumptions used in the Bank’s calculations could result in significant differences in the results of the impairment test. Should market conditions or management’s assumptions change significantly in the future, an impairment to goodwill is possible.

At June 30, 2020 and December 31, 2019, the carrying amount of goodwill was $12.9 million.

Intangible Assets

The following table reflects the estimated amortization expense, comprised entirely by the Bank’s core deposit intangible asset, for the next five years and thereafter:

(In thousands)
2020 remaining	$	685
2021		1,207
2022		1,047
2023		888
2024		730
Thereafter		1,487
Total	$	6,044

Accumulated amortization of the core deposit intangible was $3.0 million as of June 30, 2020.

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Notes to Consolidated Financial Statements (unaudited)

June 30, 2020 and December 31, 2019

14. VARIABLE INTEREST ENTITIES

Tax Credit Investments

The Bank makes investments in unconsolidated entities that construct, own and operate solar generation facilities. An unrelated third party is the managing member and has control over the significant activities of the VIE. The Bank generates a return through the receipt of tax credits allocated to the projects, as well as operational distributions. The primary risk of loss is generally mitigated by policies requiring that the project qualify for the expected tax credits prior to making its investment. Any loans to the VIE are secured.

(In thousands)	June 30, 2020		December 31, 2019
Unconsolidated Variable Interest Entities
Tax credit investments included in other assets	$	1,802	$	—
Unfunded tax credit commitments included in other liabilities		—		—
Loans and letters of credit commitments		28,000		—
Funded portion of loans and letters of credit commitments		—		—

	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
(In thousands)
Tax credits and other tax benefits recognized	$	2	$	—	$	2	$	—

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following is a discussion of our consolidated financial condition as of June 30, 2020, as compared to December 31, 2019, and our results of operations for the three and six month periods ended June 30, 2020 and June 30, 2019. The purpose of this discussion is to focus on information about our financial condition and results of operations which is not otherwise apparent from our consolidated financial statements and is intended to provide insight into our results of operations and financial condition. This discussion and analysis is best read in conjunction with our unaudited consolidated financial statements and related notes as well as the financial and statistical data appearing elsewhere in this report and our Annual Report on Form 10-K for the year ended December 31, 2019 (the “2019 Annual Report”). Historical results of operations and the percentage relationships among any amounts included, and any trends that may appear, may not indicate results of operations for any future periods.

In addition to historical information, this discussion includes certain forward-looking statements regarding business matters and events and trends that may affect our future results. Comments regarding our business that are not historical facts are considered forward-looking statements that involve inherent risks and uncertainties. Actual results may differ materially from those contained in these forward-looking statements. For additional information regarding our cautionary disclosures, see the “Cautionary Note Regarding Forward-Looking Statements” beginning on page ii of this report.

Overview

Our business

Amalgamated Bank is a commercial bank and chartered trust company headquartered in New York, New York with approximately $6.5 billion in total assets, $3.6 billion in total loans, net and $5.9 billion in total deposits as of June 30, 2020.

We were formed in 1923 as Amalgamated Bank of New York by the Amalgamated Clothing Workers of America, one of the country’s oldest labor unions. Although we are no longer majority union-owned, the Amalgamated Clothing Workers of America’s successor, Workers United, an affiliate of the Service Employees International Union that represents workers in the textile, distribution and food service and gaming industries, remains a significant stockholder, holding approximately 41% of our equity as of June 30, 2020.

We offer a complete suite of commercial and retail banking, investment management and trust and custody services. Our commercial banking and trust businesses are national in scope and we also offer a full range of products and services to both commercial and retail customers through our nine branch offices across four boroughs of New York City, one branch office in Washington, D.C., one branch in San Francisco and our digital banking platform. Our corporate divisions include Commercial Banking, Trust and Investment Management and Consumer Banking. Our product line includes residential mortgage loans, commercial and industrial (“C&I”) loans, commercial real estate (“CRE”) loans, multifamily mortgages, and a variety of commercial and consumer deposit products, including non-interest bearing accounts, interest-bearing demand products, savings accounts, money market accounts and certificates of deposit. We also offer online banking and bill payment services, online cash management, safe deposit box rentals, debit card and ATM card services and the availability of a nationwide network of ATMs for our customers.

We currently offer a wide range of trust, custody and investment management services, including asset safekeeping, corporate actions, income collections, proxy services, account transition, asset transfers, and conversion management. We also offer a broad range of investment products, including both index and actively-managed funds spanning equity, fixed-income, real estate and alternative investment strategies to meet the needs of our clients. As of June 30, 2020, we oversaw $32.0 billion in assets under custody and $13.3 billion in assets under management.

Our products and services are tailored to our target customer base that prefers a financial partner that is socially responsible, values-oriented and committed to creating positive change in the world. These customers include advocacy-based non-profits, social welfare organizations, national labor unions, political organizations, foundations, socially responsible businesses, and other for-profit companies that seek to balance their profit-making activities with activities that benefit their other stakeholders, as well as the members and stakeholders of these commercial customers. Our goal is to be the go-to financial partner for people and organizations who strive to make a meaningful impact in our society and who care about their communities, the environment, and social justice. We have obtained B Corporation ^TM certification, a distinction we earned after being evaluated under rigorous standards of social and environmental performance, accountability, and transparency. We are also the largest of ten commercial financial institutions in the United States that are members of the Global Alliance for Banking on Values, a network of banking leaders from around the world committed to advancing positive change in the banking sector.

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Impact of the COVID-19 Pandemic on our Business

The ongoing COVID-19 pandemic has caused and will continue to cause significant disruption in the international and United States economies and financial markets and has severely restricted the level of economic activity in our markets. The spread of COVID-19 has caused illness, quarantines, cancellation of events and travel, business and school shutdowns, reduction in business activity and financial transactions, supply chain interruptions and overall economic and financial market instability. In response to the COVID-19 pandemic, the governments of all of the states in which we have branch offices and of most other states took preventative or protective actions, such as imposing restrictions on travel and business operations, advising or requiring individuals to limit or forgo their time outside of their homes, restricting evictions of tenants, and ordering temporary closures of businesses that were deemed to be non-essential. These restrictions and other consequences of the pandemic have resulted in significant adverse effects for many different types of businesses, including, among others, those in the travel, hospitality and food and beverage industries, and in multi-family real estate, and have resulted in a significant number of layoffs and furloughs of employees nationwide and in the regions in which we operate. In addition, state governments where we operate have taken actions that specifically affect how banks conduct their businesses, such as requiring loan forbearances and limitations on charging ATM and overdraft fees. Although many businesses have begun to reopen, some markets have since experienced a resurgence of COVID-19 cases, which may further slow overall economic activity and recovery. Uncertainty also remains regarding if, how and when schools will reopen and the impact of such reopening decisions on the economy.

The impact of the COVID-19 pandemic is fluid and continues to evolve. The unprecedented and rapid spread of COVID-19 and its associated impacts on trade (including supply chains and export levels), travel, employee productivity, unemployment, consumer spending, and other economic activities has resulted in less economic activity, lower equity market valuations and significant volatility and disruption in financial markets. In addition, due to the COVID-19 pandemic, market interest rates have declined significantly, with the 10-year Treasury bond falling below 1.00% on March 3, 2020, for the first time, and declining further to 0.65% as of June 30, 2020. On March 3, 2020, the Federal Open Market Committee reduced the targeted federal funds interest rate range by 50 basis points to 1.00% to 1.25%. This range was further reduced to 0% to 0.25% percent on March 16, 2020. These reductions in interest rates and the other effects of the COVID-19 pandemic have had, and are expected to continue to have, possibly materially, an adverse effect on our business, financial condition and results of operations. The ultimate extent of the impact of the COVID-19 pandemic on our business, financial condition and results of operations is currently uncertain and will depend on various developments and other factors, including, among others, the duration and scope of the pandemic, as well as governmental, regulatory and private sector responses to the pandemic, and the associated impacts on the economy, financial markets and our customers, employees and vendors.

As a result of these events, we have seen the following impacts to our business since the start of the pandemic:

Impacts on our operations

We took a wide range of actions to help protect our employees and customers and to ensure the operational continuity of the Bank, while continuing to provide core banking services to our consumer and commercial clients. The majority of our employees are now working remotely with the exception of essential branch and facility staff. Our primary geographic markets include the New York City metropolitan area, the Washington, D.C. metropolitan area, and the San Francisco metropolitan area. New York City was one of the areas in the United States initially hardest-hit by the COVID-19 pandemic. Accordingly, we had to close or reduce hours at our branches in several locations due to risk of transmission of COVID-19.

Following these COVID-19 related closures, executive management reassessed our branch network and reccomended permanently closing six branches due to low traffic, which the board approved. We expect to fully serve these affected customers through our remaining branch network and through our digital platform. We took a charge of $0.7 million related to these branch closures in the second quarter of 2020, and we expect to take additional charges of approximately $6 million in the third quarter of 2020 related to these closures. We expect all six branches to be closed near the end of the third quarter of 2020. However, beginning in 2021, we expect these closures to benefit non-interest expenses by approximately $4 million annually.

Impacts on our loan portfolio

The disruption in economic activity across the United States, and particularly in New York, has caused stress in the financial condition of both our consumer and commercial clients. As a result, we have established programs offering payment deferrals for customers that need assistance. In accordance with interagency guidance, short term deferrals granted due to the COVID-19 pandemic are not considered TDRs unless the borrower was experiencing financial difficulty prior to the pandemic. In addition, under the terms of these deferral agreements, the loans will not be reported as past due or as non-accrual for the agreed upon term of the deferral, unless additional information becomes available that indicates the loan will not perform as expected when the deferral is complete. Additionally, we do not expect to downgrade these loans or build an allowance directly attributable to these loans solely as the result of the deferral granted, though our qualitative allowance factors may be negatively affected and cause an increase in our provision expense and allowance for loan losses. Interest will continue to accrue during the deferral period. In general, the interest and principal originally due during the deferral period will be due at the contractual end of the loan. If the loan does not exit deferral and does not continue to pay according to contractual terms, the loan will then be considered as any other loan that is past due or not in agreement with contractual terms, and additional allowance and reversal of related accrued interest will likely be required for these loans.

41

The following table presents information regarding the Bank’s COVID-19 related loan deferrals as of June 30, 2020:

	Portfolio Balance Outstanding		Balance in Deferral		Balance in Process of Deferral		Total Deferred Loans		Total Deferrals as % of Portfolio
(In thousands, rounded)
Commercial and industrial	$	618,000	$	29,000	$	7,000	$	36,000		6	%
Multifamily		972,000		163,000		29,000		192,000		20	%
Commercial real estate, construction and land development		469,000		88,000		36,000		124,000		26	%
Total commercial portfolio		2,059,000		280,000		72,000		352,000		17	%
Residential real estate lending		1,433,000		99,000		4,000		103,000		7	%
Consumer and other		188,000		10,000		—		10,000		5	%
Total retail portfolio		1,621,000		109,000		4,000		113,000		7	%
Totals	$	3,680,000	$	389,000	$	76,000	$	465,000		13%

No COVID-19 related loan deferrals were graded as criticized solely on the basis of the deferral request, nor was any related additional allowance recorded and we continue to accrue interest on all COVID-19 related loan deferrals. As of June 30, 2020 the interest accrued during the quarter for COVID-19 related loans where balances were in deferral and not in process was $1.2 million.

Impacts on our investment portfolio

We are also monitoring the impact of the COVID-19 pandemic on the value of our investments. We mark to market our publicly traded investments and we review our investment portfolio for impairment at each period end. While the value of our portfolio has substantially recovered since the pandemic began, market conditions could continue to be volatile and we may be required to recognize further impairments on the securities we hold as well as reductions in other comprehensive income. We cannot currently determine the ultimate impact of the pandemic on the long-term value of our portfolio.

Impacts on our capital

As of June 30, 2020, all of our capital ratios are in excess of all regulatory requirements. While we believe that we have sufficient capital to withstand an extended economic recession brought about by the COVID-19 pandemic, our reported and regulatory capital ratios could be adversely impacted by further credit losses.

Other impacts on our results of operation and financial condition

In addition to the factors above, we believe the following factors may impact our earnings, though we are unable to quantify the impacts at this time:

• Increased allowance related to loans that continue to be impacted by the economy after the payment deferral periods end

• Lower Trust Department fees due to lower equity values in our clients’ assets under management and/or custody

• Lower net interest margin due to the Federal Reserves’ decision to lower rates to “near zero” at the end of March

• Lower loan originations as the credit worthiness of borrowers may be impacted by the current economic environment

• Lower fees for services that we are temporarily waiving, including overdraft fees, insufficient fund fees, ATM fees, CD breakage fees and other miscellaneous fees

As of June 30, 2020, we had $12.9 million of goodwill. During the second quarter of 2020, we performed our annual impairment analysis and determined no goodwill impairment was required. However, we will continue to monitor the COVID-19 pandemic and the related economic fallout, including changes in our stock price, the Federal Reserve’s significant reduction in interest rates and other business and market considerations, which may require us to reevaluate our goodwill impairment analysis. Any goodwill impairment charges we incur could have a material adverse effect on our earnings.

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The negative financial impacts may be partially offset by actions taken by management to lower interest expense and operating expense.

These factors, together or in combination with other events or occurrences that may not yet be known or anticipated, may materially and adversely affect our business, financial condition and results of operations.

Critical and Significant Accounting Policies and Estimates

Our consolidated financial statements are prepared based on the application of accounting policies generally accepted in the United States, or GAAP, and conform to general practices within the banking industry. Our significant accounting policies are more fully described in Note 1 of our audited consolidated financial statements included in our Annual Report and our critical accounting policies are more fully described under “Critical Accounting Policies and Estimates” included in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2019 Annual Report. During the second quarter, we adopted significant accounting policies for variable interest entities, for recognition of investment tax credits, and for resell agreements. Otherwise, there have been no significant changes to our critical and significant accounting policies, or the estimates made pursuant to those policies as described in our 2019 Annual Report.

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SELECTED FINANCIAL DATA

The following table sets forth our unaudited selected historical consolidated financial data for the periods and as of the dates indicated. This data should be read in conjunction with the unaudited consolidated financial statements and the notes thereto contained elsewhere in this report and the information contained in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

	Three Months Ended June 30,				Six Months Ended June 30,
(In thousands, except per share data)	2020		2019		2020		2019
Selected Operating Data:
Interest income	$	47,120	$	46,528	$	95,750	$	92,302
Interest expense		2,681		4,672		6,623		9,673
Net interest income		44,439		41,856		89,127		82,629
Provision for (recovery of) loan losses		8,221		2,127		16,808		4,312
Net interest income after provision for loan losses		36,218		39,729		72,319		78,317
Non-interest income		8,671		6,349		17,789		13,766
Non-interest expense		31,068		31,002		63,339		62,450
Income before income taxes		13,821		15,076		26,769		29,633
Provision (benefit) for income taxes		3,447		3,891		6,850		7,634
Net income	$	10,374	$	11,185	$	19,919	$	21,999
Selected Financial Data:
Total assets	$	6,470,344	$	4,937,826	$	6,470,344	$	4,937,826
Total cash and cash equivalents		587,961		105,888		587,961		105,888
Investment securities		1,945,673		1,307,408		1,945,673		1,307,408
Total net loans		3,637,982		3,290,950		3,637,982		3,290,950
Bank-owned life insurance		80,694		79,894		80,694		79,894
Total deposits		5,870,319		4,136,462		5,870,319		4,136,462
Borrowed funds		—		227,675		—		227,675
Total common stockholders’ equity		503,568		474,810		503,568		474,810
Total stockholders’ equity		503,702		474,944		503,702		474,944
Selected Financial Ratios and Other Data:
Earnings
Basic	$	0.33	$	0.35	$	0.64	$	0.69
Diluted		0.33		0.35		0.64		0.68
Book value per common share (excluding minority interest)		16.22		14.89		16.22		14.89
Common shares outstanding		31,049,525		31,886,669		31,049,525		31,886,669
Weighted average common shares outstanding, basic		31,022,517		31,824,930		31,216,683		31,798,405
Weighted average common shares outstanding, diluted		31,034,666		32,237,116		31,345,192		32,279,342

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	Three Months Ended June 30,							Six Months Ended June 30,
	2020			2019				2020			2019
Selected Performance Metrics:
Return on average assets		0.69	%		0.92	%			0.70	%		0.92	%
Return on average equity		8.56	%		9.65	%			8.10	%		9.73	%
Loan yield		3.97	%		4.42	%			4.05	%		4.43	%
Securities yield		2.59	%		3.34	%			2.91	%		3.35	%
Deposit cost		0.20	%		0.34	%			0.26	%		0.32	%
Net interest margin		3.10	%		3.66	%			3.27	%		3.66	%
Efficiency ratio		58.50	%		64.31	%			59.24	%		64.79	%
Asset Quality Ratios:
Nonaccrual loans to total loans		1.24	%		0.49	%			1.24	%		0.49	%
Nonperforming assets to total assets		1.15	%		1.50	%			1.15	%		1.50	%
Allowance for loan losses to nonaccrual loans		109	%		209	%			109	%		209	%
Allowance for loan losses to total loans		1.36	%		1.01	%			1.36	%		1.01	%
Annualized net charge-offs (recoveries) to average loans		0.06	%		(0.01	)	%		0.04	%		0.49	%
Capital Ratios:
Tier 1 leverage capital ratio		7.69	%		9.04	%			7.69	%		9.04	%
Tier 1 risk-based capital ratio		12.32	%		13.57	%			12.32	%		13.57	%
Total risk-based capital ratio		13.57	%		14.67	%			13.57	%		14.67	%
Common equity tier 1 capital ratio		12.32	%		13.57	%			12.32	%		13.57	%

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Results of Operations

General

Our results of operations depend substantially on net interest income, which is the difference between interest income on interest-earning assets, consisting primarily of interest income on loans, investment securities and other short-term investments and interest expense on interest-bearing liabilities, consisting primarily of interest expense on deposits and borrowings. Our results of operations are also dependent on non-interest income, consisting primarily of income from Trust Department fees, service charges on deposit accounts, net gains on sales of investment securities and income from bank-owned life insurance (“BOLI”). Other factors contributing to our results of operations include our provisions for loan losses, income taxes, and non-interest expenses, such as salaries and employee benefits, occupancy and depreciation expenses, professional fees, data processing fees and other miscellaneous operating costs.

Net income for the second quarter of 2020 was $10.4 million, or $0.33 per diluted share, compared to $11.2 million, or $0.35 per diluted share, for the second quarter of 2019. The $0.8 million decrease in net income for the second quarter of 2020, compared to the second quarter of 2019, is primarily due to a $6.1 million increase in provision for loan losses, partially offset by a $2.6 million increase in net interest income and a $2.3 million increase in non-interest income.

Net income for the six months ended June 30, 2020 was $19.9 million, or $0.64 per average diluted share, compared to $22.0 million, or $0.68 per average diluted share, for same period in 2019. The $2.1 million decrease was primarily due to a $12.5 million increase in the provision for loan losses and a $0.9 million increase in non-interest expense, partially offset by a $6.5 million increase in net interest income and a $4.0 million increase in non-interest income.

Net Interest Income

Net interest income, representing interest income less interest expense, is a significant contributor to our revenues and earnings. We generate interest income from interest, dividends and prepayment fees on interest-earning assets, including loans, investment securities and other short-term investments. We incur interest expense from interest paid on interest-bearing liabilities, including interest-bearing deposits, FHLB advances and other borrowings. To evaluate net interest income, we measure and monitor (i) yields on our loans and other interest-earning assets, (ii) the costs of our deposits and other funding sources, (iii) our net interest spread and (iv) our net interest margin. Net interest spread is equal to the difference between rates earned on interest-earning assets and rates paid on interest-bearing liabilities. Net interest margin is equal to the annualized net interest income divided by average interest-earning assets. Because non-interest-bearing sources of funds, such as non-interest-bearing deposits and stockholders’ equity, also fund interest-earning assets, net interest margin includes the benefit of these non-interest-bearing sources.

Changes in the market interest rates and interest rates we earn on interest-earning assets or pay on interest-bearing liabilities, as well as the volume and types of interest-earning assets, interest-bearing and non-interest-bearing liabilities, are usually the largest drivers of periodic changes in net interest spread, net interest margin and net interest income.

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Three Months Ended June 30, 2020 and 2019

The following table sets forth information related to our average balance sheet, average yields on assets, and average costs of liabilities for the periods indicated:

	Three Months Ended June 30, 2020							Three Months Ended June 30, 2019
(In thousands)	Average Balance		Income / Expense		Yield / Rate			Average Balance		Income / Expense		Yield / Rate
Interest earning assets:
Interest-bearing deposits in banks	$	364,932	$	83		0.09	%	$	70,442	$	254		1.45	%
Securities and FHLB stock		1,834,892		11,812		2.59	%		1,287,520		10,715		3.34	%
Total loans, net (1)		3,571,160		35,225		3.97	%		3,225,129		35,559		4.42	%
Total interest earning assets		5,770,984		47,120		3.28	%		4,583,091		46,528		4.07	%
Non-interest earning assets:
Cash and due from banks		74,877							6,838
Other assets		224,531							264,046
Total assets	$	6,070,392						$	4,853,975
Interest bearing liabilities:
Savings, NOW and money market deposits		2,313,772	$	1,755		0.31	%		1,857,715	$	1,962		0.42	%
Time deposits		370,969		926		1.00	%		486,652		1,537		1.27	%
Total deposits		2,684,741		2,681		0.40	%		2,344,367		3,499		0.60	%
Federal Home Loan Bank advances		—		—		0.00	%		190,501		1,166		2.46	%
Other Borrowings		—		—		0.00	%		1,099		7		2.56	%
Total interest bearing liabilities		2,684,741		2,681		0.40	%		2,535,967		4,672		0.74	%
Non-interest bearing liabilities:
Demand and transaction deposits		2,746,529							1,762,426
Other liabilities		151,591							90,680
Total liabilities		5,582,861							4,389,073
Stockholders’ equity		487,531							464,902
Total liabilities and stockholders’ equity	$	6,070,392						$	4,853,975
Net interest income / interest rate spread			$	44,439		2.88	%			$	41,856		3.33	%
Net interest earning assets / net interest margin	$	3,086,243				3.10	%	$	2,047,124				3.66	%

⁽¹⁾ Amounts are net of deferred origination costs / (fees) and the allowance for loan losses and includes loans held for sale

Our net interest income was $44.4 million for the second quarter of 2020, compared to $41.9 million for the second quarter of 2019. The year-over-year increase of $2.6 million, or 6.2%, was primarily attributable to a decrease in interest expense due to a decrease in FHLB advances and other borrowings and deposit rates paid, and an increase in average securities of $509.5 million and average loans of $383.9 million, with such growth more than offsetting the lower yields earned on such assets. These impacts were partially offset by an increase in average interest-bearing deposits of $340.4 million, and a $294.5 million increase in interest-bearing deposits in banks.

Our net interest spread was 2.88% for the three months ended June 30, 2020, compared to 3.33% for the same period in 2019, a decrease of 45 basis points. Our net interest margin was 3.10% for the second quarter of 2020, a decrease of 56 basis points from 3.66% in the second quarter of 2019. The accretion of the loan mark from the loans we acquired in our New Resource Bank

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acquisition contributed three basis points to our net interest margin in the second quarter of 2020, compared to six basis points in the second quarter of 2019. Prepayment penalties earned through loan income contributed $0.2 million, or two basis points, to our net interest margin in the second quarter of 2020, compared to $0.3 million, or three basis points in the second quarter of 2019.

The yield on average earning assets was 3.28% for the three months ended June 30, 2020, compared to 4.07% for the same period in 2019, a decrease of 79 basis points. This decrease was driven primarily by a decrease in yields on loans and securities due to a decrease in the Federal Funds rate.

The average rate on interest-bearing liabilities was 0.40% for the three months ended June 30, 2020, a decrease of 34 basis points from the same period in 2019, which was primarily due to a decrease in average borrowings as a result of an increase in average deposits. The average rate paid on interest-bearing deposits was 0.40% for the three months ended June 30, 2020, a decrease of 20 basis points from the same period in 2019, which was primarily due to a decrease in the pricing on deposits to new and existing customers. Noninterest-bearing deposits represented 51% of average deposits for the three months ended June 30, 2020, contributing to a total cost of deposits of 20 basis points in the second quarter of 2020.

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Six Months Ended June 30, 2020 and 2019

The following table sets forth information related to our average balance sheet, average yields on assets, and average costs of liabilities for the periods indicated:

	Six Months Ended June 30, 2020							Six Months Ended June 30, 2019
(In thousands)	Average Balance		Income / Expense		Yield / Rate			Average Balance		Income / Expense		Yield / Rate
Interest earning assets:
Interest-bearing deposits in banks	$	275,107	$	479		0.35	%	$	71,861	$	548		1.54	%
Securities and FHLB stock		1,689,870		24,434		2.91	%		1,256,781		20,899		3.35	%
Total loans, net (1)		3,517,799		70,837		4.05	%		3,224,868		70,855		4.43	%
Total interest earning assets		5,482,776		95,750		3.51	%		4,553,510		92,302		4.09	%
Non-interest earning assets:
Cash and due from banks		42,208							8,404
Other assets		223,643							259,194
Total assets	$	5,748,627						$	4,821,108
Interest bearing liabilities:
Savings, NOW and money market deposits		2,228,509	$	4,492		0.41	%		1,867,478	$	3,829		0.41	%
Time deposits		376,011		2,104		1.13	%		463,668		2,615		1.14	%
Total deposits		2,604,520		6,596		0.51	%		2,331,146		6,444		0.56	%
Federal Home Loan Bank advances		3,187		27		1.70	%		259,108		3,213		2.50	%
Other Borrowings		—		—		0.00	%		1,215		16		2.66	%
Total interest bearing liabilities		2,607,707		6,623		0.51	%		2,591,469		9,673		0.75	%
Non-interest bearing liabilities:
Demand and transaction deposits		2,523,764							1,680,984
Other liabilities		122,450							92,921
Total liabilities		5,253,921							4,365,374
Stockholders’ equity		494,706							455,734
Total liabilities and stockholders’ equity	$	5,748,627						$	4,821,108
Net interest income / interest rate spread			$	89,127		3.00	%			$	82,629		3.33	%
Net interest earning assets / net interest margin	$	2,875,069				3.27	%	$	1,962,041				3.66	%

⁽¹⁾ Amounts are net of deferred origination costs / (fees) and the allowance for loan losses and includes loans held for sale

Our net interest income was $89.1 million for the six months ended June 30, 2020, compared to $82.6 million for the same period in 2019. The year-over-year increase of $6.5 million, or 7.9%, was primarily attributable to a decrease in interest expense due to a decrease in borrowings and deposit rate paid, and an increase in average securities of $433.1 million and average loans of $292.9 million, with such growth more than offsetting the lower yields earned on such assets. These impacts are partially offset by an increase in average interest-bearing deposits of $273.4 million, and a $203.2 million increase in interest-bearing deposits in banks.

Our net interest spread was 3.00% for the six months ended June 30, 2020, compared to 3.33% for the same period in 2019, a decrease of 33 basis points. Our net interest margin was 3.27% for the six months ended June 30, 2020, a decrease of 39 basis points from 3.66% in the same period in 2019.

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The yield on average earning assets was 3.51% for the six months ended June 30, 2020, compared to 4.09% for the same period in 2019, a decrease of 58 basis points. This decrease was driven primarily by a decrease in yields on loans and securities due to a decrease in the Federal Funds rate.

The average rate on interest-bearing liabilities was 0.51% for the six months ended June 30, 2020, a decrease of 24 basis points from the same period in 2019. The average rate paid on interest-bearing deposits was 0.51% for the six months ended June 30, 2020, a decrease of five basis points from the same period in 2019, which was primarily due to the mix of deposits shifting from higher cost CDs to lower cost money market deposits. Noninterest-bearing deposits represented 49% of average deposits for the six months ended June 30, 2020, contributing to a total cost of deposits of 26 basis points in the first six months of 2020.

Rate-Volume Analysis

Increases and decreases in interest income and interest expense result from changes in average balances (volume) of interest-earning assets and interest-bearing liabilities, as well as changes in weighted average interest rates. The table below presents the effect of volume and rate changes on interest income and expense. Changes in volume are changes in the average balance multiplied by the previous period’s average rate. Changes in rate are changes in the average rate multiplied by the average balance from the previous period. The net changes attributable to the combined impact of both rate and volume have been allocated proportionately to the changes due to volume and the changes due to rate:

	Three Months Ended June 30, 2020 over June 30, 2019									Six Months Ended June 30, 2020 over June 30, 2019
(In thousands)	Volume			Changes Due To Rate			Net Change			Volume			Changes Due To Rate			Net Change
Interest earning assets:
Interest-bearing deposits in banks	$	66		$	(237	)	$	(171	)	$	355		$	(424	)	$	(69	)
Securities and FHLB stock		3,509			(2,412	)		1,097			6,288			(2,753	)		3,535
Total loans, net		3,347			(3,681	)		(334	)		5,990			(6,008	)		(18	)
Total interest income		6,922			(6,330	)		592			12,633			(9,185	)		3,448
Interest bearing liabilities:
Savings, NOW and money market deposits		331			(538	)		(207	)		737			(74	)		663
Time deposits		(286	)		(325	)		(611	)		(483	)		(28	)		(511	)
Total deposits		45			(863	)		(818	)		254			(102	)		152
Federal Home Loan Bank advances		(1,166	)		—			(1,166	)		(2,162	)		(1,024	)		(3,186	)
Other Borrowings		(7	)		—			(7	)		(16	)		—			(16	)
Total borrowings		(1,173	)		—			(1,173	)		(2,178	)		(1,024	)		(3,202	)
Total interest expense		(1,128	)		(863	)		(1,991	)		(1,924	)		(1,126	)		(3,050	)
Change in net interest income	$	8,050		$	(5,467	)	$	2,583		$	14,557		$	(8,059	)	$	6,498

Provision for Loan Losses

We establish an allowance for loan losses through a provision for loan losses charged as an expense in our Consolidated Statements of Income. The provision for loan losses is the amount of expense that, based on our judgment, is required to maintain the allowance at an adequate level to absorb probable losses inherent in the loan portfolio at the balance sheet date and that, in management’s judgment, is appropriate under GAAP. Our determination of the amount of the allowance and corresponding provision for loan losses considers ongoing evaluations of the credit quality and level of credit risk inherent in our loan portfolio, levels of nonperforming loans and charge-offs, statistical trends and economic and other relevant factors. The allowance is increased by provisions charged to expense and decreased by provisions released from expense or by actual charge-offs, net of recoveries on prior loan charge-offs. In accordance with accounting guidance for business combinations, we recorded all loans acquired in the NRB acquisition at their estimated fair value at the date of acquisition with no carryover of the related allowance.

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Three Months Ended June 30, 2020 and 2019

Our provisions for loan losses totaled an expense of $8.2 million for the second quarter of 2020 compared to an expense of $2.1 million for the same period in 2019. The provision expense in the second quarter of 2020 is primarily driven by a $3.2 million increase in allowance related to the payment deferrals in our loan portfolio, a $2.7 million increase in specific reserves related to one hotel which was downgraded to non-accrual, and $1.5 million related to downgrades to the risk rating of loans, primarily construction loans.

Six Months Ended June 30, 2020 and 2019

Our provisions for loan losses totaled an expense of $16.8 million for the six months ended June 30, 2020, compared to an expense of $4.3 million for the same period in 2019. The provision expense for the six months ended June 30, 2020 was primarily driven a $6.2 million increase in allowance related to negative economic factors and payment deferrals in our loan portfolio, a $6.1 million increase in specific reserves related to indirect C&I and hotel loans, and other factors.

For a further discussion of the allowance, see “Allowance for Loan Losses” below.

Non-Interest Income

Our non-interest income included Trust Department fees, which consist of fees received in connection with investment advisory and custodial management services of investment accounts, service fees charged on deposit accounts, income on BOLI, gain or loss on other real estate owned, income from equity method investments, and other income.

The following table presents our non-interest income for the periods indicated:

	Three Months Ended June 30,						Six Months Ended June 30,
(In thousands)	2020			2019			2020			2019
Trust Department fees	$	3,980		$	4,508		$	8,066		$	9,229
Service charges on deposit accounts		1,850			2,068			4,261			3,939
Bank-owned life insurance		1,111			408			1,495			828
Gain (loss) on sale of investment securities available for sale, net		486			(377	)		985			(85	)
Gain (loss) on other real estate owned, net		(283	)		(315	)		(306	)		(564	)
Equity method investments		1,289			—			1,289			—
Other income		238			57			1,999			419
Total non-interest income	$	8,671		$	6,349		$	17,789		$	13,766

Three Months Ended June 30, 2020 and 2019

Our non-interest income was $8.7 million for the second quarter of 2020, compared to $6.3 million for the same period in 2019, an increase of $2.3 million, or 36.6%. This increase is primarily due to a $1.3 million tax credit on an equity investment in a solar project, a $0.5 million gain on the sale of securities compared to a loss of $0.4 million in the comparable quarter of 2019, and a $0.7 million increase in Bank-owned life insurance income due to the receipt of a death benefit payout. These increases were partially offset by a $0.5 million decrease in Trust Department fees primarily related to the decrease in revenue from a real estate fund that is liquidating assets. Our investment management business earns fees from a real estate fund that will wind down over the next few years. This fund generated $0.5 million in fees, included within Trust Department fees, during the three months ended June 30, 2020, and $0.8 million in fees during the same period in 2019. We expect that management fees from this real estate fund will continue to decline as properties are liquidated

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Six Months Ended June 30, 2020 and 2019

Our non-interest income was $17.8 million for the six months ended June 30, 2020, compared to $13.8 million for the same period in 2019, an increase of $4.0 million, or 29.2%. This increase is primarily due to a $1.4 million gain on the sale of a branch, a $1.3 million tax credit on an equity investment in a solar project, a $1.1 million change in gain on the sale of securities, and a $0.7 million increase in Bank-owned life insurance income due to the receipt of a death benefit payout. These increases were partially offset by a $1.2 million decrease in Trust Department fees primarily related to the decrease in revenue from the real estate fund that is liquidating its assets noted above. This fund generated $1.0 million in fees, included within Trust Department fees, during the six months ended June 30, 2020, and $1.8 million in fees during the same period in 2019.

For the second half of 2020, we expect to record $1.4 million in income related to equity method investment in solar projects.

Non-Interest Expense

Non-interest expense includes compensation and employee benefits, occupancy and depreciation expense, professional fees (including legal, accounting and other professional services), data processing, office maintenance and depreciation, amortization of intangible assets, advertising and promotion, and other expenses. The following table presents non-interest expense for the periods indicated:

	Three Months Ended June 30,				Six Months Ended June 30,
(In thousands)	2020		2019		2020		2019
Compensation and employee benefits, net	$	17,334	$	16,992	$	34,792	$	34,422
Occupancy and depreciation		4,241		4,145		9,747		8,417
Professional fees		1,988		2,401		4,971		5,566
Data processing		2,977		2,729		5,241		5,478
Office maintenance and depreciation		818		830		1,675		1,716
Amortization of intangible assets		342		298		685		687
Advertising and promotion		672		692		1,339		1,313
Other		2,696		2,915		4,889		4,851
Total non-interest expense	$	31,068	$	31,002	$	63,339	$	62,450

Three Months Ended June 30, 2020 and 2019

Our non-interest expense for the second quarter of 2020 was $31.1 million, an increase of $0.1 million, or 0.2%, from $31.0 million in the second quarter of 2019. Expenses in the second quarter of 2020 were relatively unchanged compared to the same period in 2019.

Six Months Ended June 30, 2020 and 2019

Our non-interest expense for the six months ended June 30, 2020 was $63.3 million, an increase of $0.9 million, or 1.4%, from $62.5 million for the six months ended June 30, 2019. The increase was primarily due to the $1.3 million increase in branch closure expense, partially offset by a $0.6 million decrease in professional fees.

For the third quarter of 2020, we expect to incur a charge of approximately $6 million related to the closure of six branches in the New York City area. These closures are expected to result in approximately $4 million in annual expense savings starting in 2021.

Income Taxes

Three Months Ended June 30, 2020 and 2019

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We had a provision for income tax expense of $3.4 million for the second quarter of 2020, compared to $3.9 million for the second quarter of 2019. Our effective tax rate was 24.9% for the second quarter of 2020, compared to 25.8% for the same period in 2019.

Six Months Ended June 30, 2020 and 2019

We had a provision for income tax expense of $6.9 million for the six months ended June 30, 2020, compared to $7.6 million for the same period in 2019. The $0.8 million decrease in income tax expense was primarily due to a decrease in pre-tax earnings of $2.1 million in the six months ended June 30, 2020, compared to the same period in 2019. Our effective tax rate was 25.6% for the six months ended June 30, 2020, compared to 25.8% for the same period in 2019.

Financial Condition

Balance Sheet

Our total assets were $6.5 billion at June 30, 2020, compared to $5.3 billion at December 31, 2019. The increase of $1.1 billion was driven primarily by a $465.4 million increase in cash and cash equivalents, a $428.2 million increase in investment securities, and a $199.9 million increase in loans receivable, net.

Investment Securities

The primary goal of our securities portfolio is to maintain an available source of liquidity and an efficient investment return on excess capital, while maintaining a low-risk profile. We also use our securities portfolio to manage interest rate risk, meet Community Reinvestment Act (“CRA”) goals and to provide collateral for certain types of deposits or borrowings. An Investment Committee chaired by our Chief Financial Officer manages our investment securities portfolio according to written investment policies approved by our Board of Directors. Investments in our securities portfolio may change over time based on management’s objectives and market conditions.

We seek to minimize credit risk in our securities portfolio through diversification, concentration limits, restrictions on high risk investments (such as subordinated positions), comprehensive pre-purchase analysis and stress testing, ongoing monitoring and by investing a significant portion of our securities portfolio in U.S. Government sponsored entity (“GSE”) obligations. GSEs include the Federal Home Loan Mortgage Corporation (“FHLMC”), the Federal National Mortgage Association (“FNMA”), the Government National Mortgage Association (“GNMA”) and the Small Business Administration (“SBA”). GNMA is a wholly-owned U.S. Government corporation whereas FHLMC and FNMA are private. Mortgage-related securities may include mortgage pass-through certificates, participation certificates and collateralized mortgage obligations (“CMOs”). We invest in non-GSE securities in order to generate higher returns, improve portfolio diversification and or reduced interest rate and prepayment risk. With the exception of small legacy CRA investments comprising less than 0.1% of the portfolio or Trust Preferred securities, all of our non-GSE securities are senior positions that are the top of the capital structure.

Our investment securities portfolio consists of securities classified as available for sale and held to maturity. There were no trading securities in our investment portfolio at June 30, 2020 or at December 31, 2019. All available for sale securities are carried at fair value and may be used for liquidity purposes should management consider it to be in our best interest.

At June 30, 2020 and December 31, 2019, we had available for sale securities of $1.6 billion and $1.2 billion, respectively. The $350.4 million increase was primarily from the purchase of agency mortgage-backed securities (“MBS”) and commercial-backed securities (“CMBS”).

At June 30, 2020, our held to maturity securities portfolio primarily consisted of property assessed clean energy, or PACE bonds, tax-exempt municipal securities, GSE residential certificates and other debt. We carry these securities at amortized cost. We had held to maturity securities of $370.5 million at June 30, 2020, and $292.7 million at December 31, 2019.

Certain securities have fair values less than amortized cost and, therefore, contain unrealized losses. At June 30, 2020, we evaluated those securities which had an unrealized loss for other than temporary impairment (“OTTI”), and determined substantially all of the decline in value to be temporary. There were $764.2 million of investment securities with unrealized losses at June 30, 2020 of which $6.1 million had a continuous unrealized loss position for 12 consecutive months or longer that was greater than 5% of amortized cost. We anticipate full recovery of amortized cost with respect to these securities by the time that

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these securities mature, or sooner in the case that a more favorable market interest rate environment causes their fair value to increase. We do not intend to sell these securities and we believe it is more likely than not that we will be required to sell them before full recovery of their amortized cost basis, which may be at the time of their maturity.

The following table is a summary of our investment portfolio, using market value for available for sale securities and amortized cost for held to maturity securities, as of the dates indicated.

	June 30, 2020					December 31, 2019
(In thousands)	Amount		% of Portfolio			Amount		% of Portfolio
Available for sale:
Mortgage-related:
GSE residential certificates	$	18,071		0.9	%	$	36,385		2.4	%
GSE CMOs		414,701		21.3	%		282,434		18.6	%
GSE commercial certificates & CMO		457,220		23.5	%		253,913		16.7	%
Non-GSE residential certificates		67,697		3.5	%		59,008		3.9	%
Non-GSE commercial certificates		43,399		2.2	%		46,874		3.1	%
Other debt:
U.S. Treasury		205		0.0	%		199		0.0	%
ABS		552,950		28.5	%		523,777		34.5	%
Trust preferred		12,705		0.7	%		13,897		0.9	%
Corporate		8,227		0.4	%		8,283		0.6	%
Other		—		0.0	%		—		0.0	%
Total available for sale		1,575,175		81.0	%		1,224,770		80.7	%
Held to maturity:
Mortgage-related:
GSE residential certificates		623		0.0	%		635		0.0	%
Non GSE commercial certificates		233		0.0	%		270		0.0	%
Other debt:
PACE		323,392		16.6	%		263,805		17.4	%
Municipal		41,150		2.1	%		22,894		1.5	%
Other		5,100		0.3	%		5,100		0.3	%
Total held to maturity		370,498		19.0	%		292,704		19.3	%
Total securities	$	1,945,673		100.0	%	$	1,517,474		100.0	%

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The following table show contractual maturities and yields for the securities-available-for sale and held-to-maturity portfolios:

Contractual Maturity as of June 30, 2020
	One Year or Less					One to Five Years					Five to Ten Years					Due after Ten Years
(In thousands)	Amortized Cost		Weighted Average Yield (1)			Amortized Cost		Weighted Average ¨Yield (1)			Amortized Cost		Weighted Average ¨Yield (1)			Amortized Cost		Weighted Average ¨Yield (1)
Available for sale:
Mortgage-related:
GSE residential certificates	$	—		0.0	%	$	—		0.0	%	$	—		—	%	$	17,693		2.0	%
GSE residential CMOs		—		0.0	%		—		0.0	%		27,567		2.2	%		372,368		2.0	%
GSE commercial certificates & CMO		16,465		0.5	%		26,352		2.2	%		266,374		1.2	%		136,404		2.3	%
Non-GSE residential certificates		—		0.0	%		16,500		2.1	%		—		0.0	%		50,488		2.7	%
Non-GSE commercial certificates		—		0.0	%		—		0.0	%		—		0.0	%		45,253		1.3	%
Other debt:
U.S. Treasury		—		0.0	%		200		1.7	%		—		0.0	%		—		0.0	%
ABS		—		0.0	%		14,702		3.8	%		183,511		1.8	%		365,571		2.0	%
Trust preferred		—		0.0	%		—		0.0	%		14,625		0.9	%		—		0.0	%
Corporate		—		0.0	%		3,000		6.5	%		4,960		6.7	%		—		0.0	%
Other		—		0.0	%		—		0.0	%		—		0.0	%		—		0.0	%
Held to maturity:
Mortgage-related:
GSE residential certificates		—		0.0	%		—		0.0	%		8		6.2	%		615		3.6	%
Non GSE commercial certificates		—		0.0	%		—		0.0	%		—		0.0	%		233		5.6	%
Other debt:
PACE		—		—	%		—		—	%		—		—	%		323,392		4.3	%
Municipal		—		0.0	%		—		0.0	%		—		0.0	%		41,150		2.7	%
Other		2,000		1.5	%		3,100		3.3	%		—		0.0	%		—		0.0	%
Total securities	$	18,465		0.6	%	$	63,854		2.8	%	$	497,045		1.5	%	$	1,353,167		2.6	%

⁽¹⁾  Estimated yield based on book price (amortized cost divided by par) using estimated prepayments and no change in interest rates.

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The following table shows a breakdown of our asset backed securities by sector and ratings:

June 30, 2020

ABS Securities:

											Credit Ratings Highest Rating if split rated
(In thousands)	Amount		%			Expected Avg. Life in Years		% Floating			% AAA			% AA			% A			%Not Rated			Total
CLO Commercial & Industrial	$	283,188		51	%		3.2		100	%		100	%		0	%		0	%		0	%		100	%
Consumer		109,732		20	%		3.9		0	%		33	%		2	%		65	%		0	%		100	%
Mortgage		110,450		20	%		2.9		100	%		100	%		0	%		0	%		0	%		100	%
Student		49,580		9	%		5.1		97	%		85	%		15	%		0	%		0	%		100	%
Total Securities:	$	552,950		100	%		3.5		80	%		85	%		2	%		13	%		0	%		100	%

Loans

Lending-related income is the most important component of our net interest income and is the main driver of our results of operations. Total loans, net of deferred origination fees, were $3.6 billion as of June 30, 2020 compared to $3.4 billion as of December 31, 2019. Within our commercial loan portfolio, our primary focus has been on C&I, multifamily and CRE lending. Within our retail loan portfolio, our primary focus has been on residential 1-4 family (1st lien) mortgages. We intend to focus any organic growth in our loan portfolio on these lending areas as part of our strategic plan.

In the second quarter of 2020, we purchased $51.3 million of United States guaranteed Paycheck Protection Program (“PPP”) loans, $16.9 million of solar loans and $5.8 million of commercial loans that are unconditionally guaranteed by the United States government.

The following table sets forth the composition of our loan portfolio, as of June 30, 2020 and December 31, 2019:

	June 30, 2020						December 31, 2019
(In thousands)	Amount			% of total loans			Amount			% of total loans
Commercial portfolio:
Commercial and industrial	$	617,579			16.8	%		474,342			13.7	%
Multifamily mortgages		972,129			26.4	%		976,380			28.2	%
Commercial real estate mortgages		404,064			11.0	%		421,947			12.2	%
Construction and land development mortgages		65,259			1.8	%		62,271			1.8	%
Total commercial portfolio		2,059,031			56.0	%		1,934,940			55.9	%
Retail portfolio:
Residential real estate lending		1,432,645			38.9	%		1,366,473			39.4	%
Consumer and other		187,980			5.1	%		163,077			4.7	%
Total retail portfolio		1,620,625			44.0	%		1,529,550			44.1	%
Total loans		3,679,656			100.0	%		3,464,490			100.0	%
Net deferred loan origination costs (fees)		8,336						8,124
Allowance for loan losses		(50,010	)					(33,847	)
Total loans, net	$	3,637,982					$	3,438,767

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Commercial loan portfolio

Our commercial loan portfolio comprised 56.0% of our total loan portfolio at June 30, 2020 and 55.9% of our total loan portfolio at December 31, 2019. The major categories of our commercial loan portfolio are discussed below:

C&I. Our C&I loans are generally made to small and medium-sized manufacturers and wholesale, retail and service-based businesses to provide either working capital or to finance major capital expenditures. The primary source of repayment for C&I loans is generally operating cash flows of the business. We also seek to minimize risks related to these loans by requiring such loans to be collateralized by various business assets (including inventory, equipment and accounts receivable). The average size of our C&I loans at June 30, 2020 by exposure was $3.1 million with a median size of $1.0 million. We have shifted our lending strategy to focus on developing full customer relationships including deposits, cash management, and lending. The businesses that we focus on are generally mission aligned with our core values, including organic and natural products, sustainable companies, clean energy, nonprofits, and B Corporations ^TM.

Our C&I loans totaled $617.6 million at June 30, 2020, which comprised 16.8% of our total loan portfolio. During the six months ended June 30, 2020, the C&I loan portfolio increased by 30.2% from $474.3 million at December 31, 2019, of which $33 million of the growth was due to increased usage of existing lines of credit.

Multifamily. Our multifamily loans are generally used to purchase or refinance apartment buildings of five units or more, which collateralize the loan, in major metropolitan areas within our markets. Multifamily loans have 81% of their exposure in NYC—our largest geographic concentration. Our multifamily loans have been underwritten under stringent guidelines on loan-to-value and debt service coverage ratios that are designed to mitigate credit and concentration risk in this loan category.

Our multifamily loans totaled $972.1 million at June 30, 2020, which comprised 26.4% of our total loan portfolio. During the six months ended June 30, 2020, the multifamily loan portfolio decreased by 0.4% from $976.4 million at December 31, 2019.

CRE. Our CRE loans are used to purchase or refinance office buildings, retail centers, industrial facilities, medical facilities and mixed-used buildings. Included in this total are 31 borrowers financing owner-occupied buildings which account for an aggregate total of $50.8 million in loans as of June 30, 2020.

Our CRE loans totaled $404.1 million at June 30, 2020, which comprised 11.0% of our total loan portfolio. During the six months ended June 30, 2020, the CRE loan portfolio decreased by 4.2% from $421.9 million at December 31, 2019, primarily due to payoffs.

Retail loan portfolio

Our retail loan portfolio comprised 44.0% of our loan portfolio at June 30, 2020 and 44.1% of our loan portfolio at December 31, 2019. The major categories of our retail loan portfolio are discussed below.

Residential real estate lending. Our residential 1-4 family mortgage loans are residential mortgages that are primarily secured by single-family homes, which can be owner occupied or investor owned. These loans are either originated by our loan officers or purchased from other originators with the servicing retained by such originators. Our residential real estate lending portfolio is 99% first mortgage loans and 1% second mortgage loans. As of June 30, 2020, 81% of our residential 1-4 family mortgage loans were either originated by our loan officers since 2012 or were acquired in our acquisition of NRB, 14% were purchased from two third parties on or after July 2014, and 5% were purchased by us from other originators before 2010. Our residential real estate lending loans totaled $1.4 billion at June 30, 2020, which comprised 88.4% of our retail loan portfolio and 38.9% of our total loan portfolio. In June 30, 2020, our residential real estate lending loans increased by 4.8% from $1.4 billion at December 31, 2019, primarily from loans originated by us.

Consumer and other. Our consumer and other portfolio is comprised of purchased student loans, residential solar loans, unsecured consumer loans and overdraft lines. Our consumer and other loans totaled $188.0 million at June 30, 2020, which comprised 5.1% of our total loan portfolio, compared to $163.1 million, or 4.7% of our total loan portfolio, at December 31, 2019.

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Maturities and Sensitivity of Loans to Changes in Interest Rates

The information in the following table is based on the contractual maturities of individual loans, including loans that may be subject to renewal at their contractual maturity. Renewal of these loans is subject to review and credit approval, as well as modification of terms upon maturity. Actual repayments of loans may differ from the maturities reflected below because borrowers have the right to prepay obligations with or without prepayment penalties. The following tables summarize the loan maturity distribution by type and related interest rate characteristics at June 30, 2020 and December 31, 2019:

(In thousands)	One year or less		After one but within five years		After 5 years		Total
June 30, 2020:
Commercial Portfolio:
Commercial and industrial	$	106,256	$	280,677	$	230,646	$	617,579
Multifamily		104,940		541,845		325,344		972,129
Commercial real estate		51,126		278,674		74,264		404,064
Construction and land development		50,782		1,388		13,089		65,259
Retail Portfolio:
Residential real estate lending		466		572		1,431,607		1,432,645
Consumer and other		537		3,782		183,661		187,980
Total Loans	$	314,107	$	1,106,938	$	2,258,611	$	3,679,656
(In thousands)			After one but within five years		After 5 years		Total
Gross loan maturing after one year with:
Fixed interest rates			$	907,133	$	1,450,682	$	2,357,815
Floating or adjustable interest rates				199,805		807,929		1,007,734
Total Loans			$	1,106,938	$	2,258,611	$	3,365,549

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(In thousands)	One year or less		After one but within five years		After 5 years		Total
December 31, 2019:
Commercial Portfolio:
Commercial and industrial	$	88,036	$	183,387	$	202,919	$	474,342
Multifamily		96,845		608,647		270,888		976,380
Commercial real estate		53,669		251,729		116,549		421,947
Construction and land development		35,121		14,124		13,026		62,271
Retail Portfolio:
Residential real estate lending		436		634		1,365,403		1,366,473
Consumer and other		714		4,042		158,321		163,077
Total retail	$	274,821	$	1,062,563	$	2,127,106	$	3,464,490
(In thousands)			After one but within five years		After 5 years		Total
Gross loan maturing after one year with:
Fixed interest rates			$	902,981	$	1,366,370	$	2,269,351
Floating or adjustable interest rates				159,582		760,736		920,318
Total Loans			$	1,062,563	$	2,127,106	$	3,189,669

Allowance for Loan Losses

We maintain the allowance at a level we believe is sufficient to absorb probable incurred losses in our loan portfolio given the conditions at the time. Management determines the adequacy of the allowance based on periodic evaluations of the loan portfolio and other factors, including end-of-period loan levels and portfolio composition, observable trends in nonperforming loans, our historical loan losses, known and inherent risks in the portfolio, underwriting practices, adverse situations that may impact a borrower’s ability to repay, the estimated value and sufficiency of any underlying collateral, credit risk grade assessments, loan impairment and economic conditions. These evaluations are inherently subjective as they require management to make material estimates, all of which may be susceptible to significant change. The allowance is increased by provisions for loan losses charged to expense and decreased by actual charge-offs, net of recoveries of previous amounts charged-off.

The allowance consists of specific allowances for loans that are individually classified as impaired and general components. Impaired loans include loans placed on nonaccrual status and TDRs. Loans are considered impaired when, based on current information and events, it is probable that we will be unable to collect all amounts due in accordance with the original contractual terms of the loan agreements. When determining if we will be unable to collect all principal and interest payments due in accordance with the original contractual terms of the loan agreement, we consider the borrower’s overall financial condition, resources and payment record, support from guarantors, and the realized value of any collateral. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record, and the amount of the shortfall in relation to the principal and interest owed.

Impaired loans are individually identified and evaluated for impairment based on a combination of internally assigned risk ratings and a defined dollar threshold. If a loan is impaired, a specific reserve is applied to the loan so that the loan is reported, net, at the discounted expected future cash flows or at the fair value of collateral if repayment is collateral dependent. Impaired loans which do not meet the criteria for individual evaluation are evaluated in homogeneous pools of loans with similar risk characteristics.

In accordance with the accounting guidance for business combinations, there was no allowance brought forward on any of the loans we acquired in our acquisition of NRB. For purchased non-credit impaired loans, credit discounts representing the principal losses expected over the life of the loan are a component of the initial fair value and the discount is accreted to interest income over the life of the loan. Subsequent to the acquisition date, the method used to evaluate the sufficiency of the credit discount is similar to organic loans, and if necessary, additional reserves are recognized in the allowance.

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The following tables presents, by loan type, the changes in the allowance for the periods indicated:

	Three Months Ended June 30,					Six Months Ended June 30,
(In thousands)	2020		2019			2020		2019
Balance at beginning of period	$	42,348	$	31,392		$	33,847	$	37,195
Loan charge-offs:
Commercial portfolio:
Commercial and industrial		2		9			2		8,392
Multifamily		—		—			—		—
Commercial real estate		—		—			—		—
Construction and land development		—		—			—		—
Retail portfolio:
Residential real estate lending		240		30			263		139
Consumer and other		487		128			791		185
Total loan charge-offs		729		167			1,056		8,716
Recoveries of loans previously charged-off:
Commercial portfolio:
Commercial and industrial		2		—			3		6
Multifamily		—		—			—		—
Commercial real estate		—		—			—		—
Construction and land development		—		—			—		—
Retail portfolio:
Residential real estate lending		151		245			363		752
Consumer and other		17		33			45		81
Total loan recoveries		170		278			411		839
Net (recoveries) charge-offs		559		(111	)		645		7,877
Provision for (recovery of) loan losses		8,221		2,127			16,808		4,312
Balance at end of period	$	50,010	$	33,630		$	50,010	$	33,630

The allowance increased $16.2 million to $50.0 million at June 30, 2020 from $33.8 million at December 31, 2019. The increase was primarily due to increases in the specific reserves for indirect C&I and hotel loans and an increase in allowance related to the COVID-19 pandemic, which has resulted in deteriorated economic conditions and uncertainty. At June 30, 2020, we had $73.3 million of impaired loans for which a specific allowance of $14.5 million was made, compared to $65.5 million of impaired loans at December 31, 2019 for which a specific allowance of $7.5 million was made. The ratio of allowance to total loans was 1.36% for June 30, 2020 and 0.98% for December 31, 2019. The increase is primarily attributable to the increase in specific reserves on C&I loans and the increase in qualitative factors mentioned above. We believe the COVID-19 pandemic may have an adverse effect on the credit quality of our loan portfolio during the remainder of 2020. The impact of the virus on the economy and on the financial condition of our borrowers could result in increased loan delinquencies and defaults. Impaired loans have increased as a result of the COVID-19 pandemic and may continue to increase in future periods.

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Allocation of Allowance for Loan Losses

The following table presents the allocation of the allowance and the percentage of the total amount of loans in each loan category listed as of the dates indicated:

	At June 30, 2020					At December 31, 2019
(In thousands)	Amount		% of total loans			Amount		% of total loans
Commercial Portfolio:
Commercial and industrial	$	15,444		16.8	%	$	11,126		14.2	%
Multifamily		7,063		26.4	%		5,210		28.4	%
Commercial real estate		5,977		11.0	%		2,492		12.6	%
Construction and land development		3,276		1.8	%		808		1.8	%
Total commercial portfolio		31,760		56.0	%		19,636		57.0	%
Retail Portfolio:
Residential real estate lending		16,440		38.9	%		14,149		38.2	%
Consumer and other		1,810		5.1	%		62		4.8	%
Total retail portfolio		18,250		44.0	%		14,211		43.0	%
Total allowance for loan losses	$	50,010				$	33,847

Nonperforming Assets

Nonperforming assets include all loans categorized as nonaccrual or restructured, other real estate owned and other repossessed assets. The accrual of interest on loans is discontinued, or the loan is placed on nonaccrual, when the full collection of principal and interest is in doubt. We generally do not accrue interest on loans that are 90 days or more past due (unless we are in the process of collection or an extension and determine that the customer is not in financial difficulty). When a loan is placed on nonaccrual, previously accrued but unpaid interest is reversed and charged against interest income and future accruals of interest are discontinued. Payments by borrowers for loans on nonaccrual are applied to loan principal. Loans are returned to accrual status when, in our judgment, the borrower’s ability to satisfy principal and interest obligations under the loan agreement has improved sufficiently to reasonably assure recovery of principal and the borrower has demonstrated a sustained period of repayment performance.

A loan is identified as a TDR when we, for economic or legal reasons related to the borrower’s financial difficulties, grant a concession to the borrower. The concessions may be granted in various forms, including interest rate reductions, principal forgiveness, extension of maturity date, waiver or deferral of payments and other actions intended to minimize potential losses. A loan that has been restructured as a TDR may not be disclosed as a TDR in years subsequent to the restructuring if certain conditions are met. Generally, a nonaccrual loan that is restructured remains on nonaccrual status for a period no less than six months to demonstrate that the borrower can meet the restructured terms. However, the borrower’s performance prior to the restructuring or other significant events at the time of restructuring may be considered in assessing whether the borrower can meet the new terms and may result in the loan being returned to accrual status after a shorter performance period. If the borrower’s performance under the new terms is not reasonably assured, the loan remains classified as a nonaccrual loan.

As a result of the COVID-19 pandemic, we have experienced a significant increase in the number of requests for temporary loan modifications. As of June 30, 2020, the Bank had COVID-19 related loan payment deferrals or deferral requests in process totaling $465 million, of which 76% were in our commercial portfolio. We have granted these borrowers short-term concessions of three to six months, in the form of payment deferrals. According to accounting and regulatory guidance loans modified during the COVID-19 pandemic are not considered TDRs as long as the borrower was not experiencing financial difficulty before the pandemic and the reason for the deferral is temporary in nature and the loans are expected to continue performing after the pandemic.

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The following table sets forth our nonperforming assets as of June 30, 2020 and December 31, 2019:

(In thousands)	June 30, 2020			December 31, 2019
Loans 90 days past due and accruing	$	—		$	446
Nonaccrual loans excluding held for sale loans and restructured loans		18,901			5,992
Nonaccrual loans held for sale		—			—
Troubled debt restructured loans—nonaccrual		26,776			25,019
Troubled debt restructured loans—accruing		28,031			34,367
Other real estate owned		503			809
Impaired securities		46			65
Total nonperforming assets	$	74,257		$	66,698
Nonaccrual loans:
Commercial and industrial	$	15,742		$	15,564
Multifamily		—			—
Commercial real estate		13,768			3,693
Construction and land development		3,652			3,652
Total commercial portfolio		33,162			22,909
Residential real estate lending		11,835			7,774
Consumer and other		680			328
Total retail portfolio		12,515			8,102
Total nonaccrual loans	$	45,677		$	31,011
Nonperforming assets to total assets		1.15	%		1.25	%
Nonaccrual assets to total assets		0.71	%		0.60	%
Nonaccrual loans to total loans		1.24	%		0.90	%
Allowance for loan losses to nonaccrual loans		109	%		109	%

Total nonperforming assets totaled $74.3 million at June 30, 2020 compared to $66.7 million at December 31, 2019. The increase in nonperforming assets at June 30, 2020 compared to the year-ended December 31, 2019 is primarily driven by a $14.7 million increase in non-accruing loans, including a $10.2 million hotel loan.

Potential problem loans are loans which management has doubts as to the ability of the borrowers to comply with the present loan repayment terms. Covid-19 related deferrals are not considered problem loans as of June 30, 2020. Potential problem loans are performing loans and include our substandard-accruing commercial loans and/or loans 30-89 days past due. These loans are not included in the nonperforming assets table above and totaled $63.3 million, or 1.0% of total assets, at June 30, 2020. $47.5 million of these loans are commercial loans currently in workout, with the expectation that all will be rehabilitated. $13.3 million are residential 1-4 family loans, with $9.7 million at 30 days delinquent, and $3.7 million at 60 days delinquent.

Deferred Tax Asset

We had a deferred tax asset, net of deferred tax liabilities, of $29.6 million at June 30, 2020 and $28.4 million at December 31, 2019. A valuation allowance is required for deferred tax assets if, based on available evidence, it is more likely than not that all or some portion of the asset will not be realized due to the inability to generate sufficient taxable income in the period and/or of the character necessary to utilize the benefit of the deferred tax asset. The more-likely-than-not criterion means the likelihood of realization is greater than 50%. When evaluating whether it is more likely than not that all or some portion of the deferred tax asset will not be realized, all available evidence, both positive and negative, that may affect the ability to realize deferred tax assets should be identified and considered in determining the appropriate amount of the valuation allowance. Management assesses all the available positive and negative evidence to estimate if sufficient future taxable income will be generated to utilize the existing deferred tax assets. As of June 30, 2020, our deferred tax assets were fully realizable with no valuation allowance held against the balance. Our management concluded that it was more likely than not that the entire amount will be realized.

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We will evaluate the recoverability of our net deferred tax asset on a periodic basis and record decreases (increases) as a deferred tax provision (benefit) in the Consolidated Statements of Income as appropriate.

Deposits

Deposits represent our primary source of funds. We are focused on growing our core deposits through relationship-based banking with our business and consumer clients. Total deposits were $5.9 billion at June 30, 2020, compared to $4.6 billion at December 31, 2019. We believe that our strong deposit franchise is attributable to our mission-based strategy of developing and maintaining relationships with our clients who share similar values and through maintaining a high level of service.

We gather deposits through each of our nine branch locations across four boroughs of New York City, our one branch in Washington, D.C., our one branch in San Francisco that was acquired in our acquisition of NRB and through the efforts of our commercial banking team which focuses nationally on business growth. Through our branch network, online, mobile and direct banking channels, we offer a variety of deposit products including demand deposit accounts, money market deposits, NOW accounts, savings and certificates of deposit. We bank politically active customers, such as campaigns, PACs, and state and national party committees, which we refer to as political deposits. These deposits exhibit seasonality based on election cycles. As of June 30, 2020 and December 31, 2019, we had approximately $1.1 billion and $578.6 million, respectively, in political deposits which are primarily in demand deposits. We expect these deposits will begin to decline as we head into the 2020 presidential election cycle.

Maturities of time certificates of deposit and other time deposits of $100,000 or more outstanding at June 30, 2020 are summarized as follows:

Maturities as of June 30, 2020
(In thousands)
Within three months	$	157,651
After three but within six months		47,496
After six months but within twelve months		49,919
After twelve months		4,275
	$	259,341

Liquidity

Liquidity refers to our ability to maintain cash flow that is adequate to fund our operations, support asset growth, maintain reserve requirements and meet present and future obligations of deposit withdrawals, lending obligations and other contractual obligations through either the sale or maturity of existing assets or by obtaining additional funding through liability management. Our liquidity risk management policy provides the framework that we use to maintain adequate liquidity and sources of available liquidity at levels that enable us to meet all reasonably foreseeable short-term, long-term and strategic liquidity demands. The Asset and Liability Management Committee, is responsible for oversight of liquidity risk management activities in accordance with the provisions of our liquidity risk policy and applicable bank regulatory capital and liquidity laws and regulations. Our liquidity risk management process includes (i) ongoing analysis and monitoring of our funding requirements under various balance sheet and economic scenarios, (ii) review and monitoring of lenders, depositors, brokers and other liability holders to ensure appropriate diversification of funding sources and (iii) liquidity contingency planning to address liquidity needs in the event of unforeseen market disruption impacting a wide range of variables. We continuously monitor our liquidity position in order for our assets and liabilities to be managed in a manner that will meet our immediate and long-term funding requirements. We manage our liquidity position to meet the daily cash flow needs of customers, while maintaining an appropriate balance between assets and liabilities to meet the return on investment objectives of our stockholders. We also monitor our liquidity requirements in light of interest rate trends, changes in the economy, and the scheduled maturity and interest rate sensitivity of our securities and loan portfolios and deposits. Liquidity management is made more complicated because different balance sheet components are subject to varying degrees of management control. For example, the timing of maturities of our investment portfolio is fairly predictable and subject to a high degree of control when we make investment decisions. Net deposit inflows and outflows, however, are far less predictable and are not subject to the same degree of certainty.

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Our liquidity position is supported by management of our liquid assets and liabilities and access to alternative sources of funds. Our short-term and long-term liquidity requirements are primarily to fund on-going operations, including payment of interest on deposits and debt, extensions of credit to borrowers and capital expenditures. These liquidity requirements are met primarily through our deposits, FHLB advances and the principal and interest payments we receive on loans and investment securities. Cash, interest-bearing deposits in third-party banks, securities available for sale and maturing or prepaying balances in our investment and loan portfolios are our most liquid assets. Other sources of liquidity that are available to us include the sale of loans we hold for investment, the ability to acquire additional national market non-core deposits, borrowings through the Federal Reserve’s discount window and the issuance of debt or equity securities. We believe that the sources of available liquidity are adequate to meet our current and reasonably foreseeable future liquidity needs.

At June 30, 2020, our cash and equivalents, which consist of cash and amounts due from banks and interest-bearing deposits in other financial institutions, amounted to $588.0 million, or 9.1% of total assets, compared to $122.5 million, or 2.3% of total assets at December 31, 2019. Our available for sale securities at June 30, 2020 were $1.6 billion, or 24.3% of total assets, compared to $1.2 billion, or 23.0% of total assets at December 31, 2019. Investment securities with an aggregate fair value of $110.9 million at June 30, 2020 were pledged to secure public deposits and repurchase agreements.

The liability portion of the balance sheet serves as our primary source of liquidity. We plan to meet our future cash needs through the generation of deposits. Customer deposits have historically provided a sizeable source of relatively stable and low-cost funds. We are also a member of the FHLB, from which we can borrow for leverage or liquidity purposes. The FHLB requires that securities and qualifying loans be pledged to secure any advances. At June 30, 2020, we had no advances from the FHLB and a remaining credit availability of $1.8 billion. In addition, we maintain borrowing capacity of approximately $135.4 million with the Federal Reserve’s discount window that is secured by certain securities from our portfolio which are not pledged for other purposes.

Capital Resources

Total stockholders’ equity at June 30, 2020 was $503.7 million, compared to $490.5 million at December 31, 2019, an increase of $13.2 million, or 2.7%. The increase was primarily driven by $19.9 million of net income and a $4.0 million increase in accumulated other comprehensive income due to the mark to market on our securities portfolio, offset by a $7.0 million decrease due to share repurchases in the first quarter of 2020 under our share repurchase program and a $5.0 million decrease due to dividends to shareholders.

We are subject to various regulatory capital requirements administered by federal banking regulators. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by federal banking regulators that, if undertaken, could have a direct material effect on our financial statements.

Regulatory capital rules adopted in July 2013 and fully-phased in as of January 1, 2019, which we refer to as the Basel III rules, impose minimum capital requirements for bank holding companies and banks. The Basel III rules apply to all national and state banks and savings associations regardless of size and bank holding companies and savings and loan holding companies with consolidated assets of more than $3 billion. In order to avoid restrictions on capital distributions or discretionary bonus payments to executives, a covered banking organization must maintain the fully-phased in “capital conservation buffer” of 2.5% on top of its minimum risk-based capital requirements. This buffer must consist solely of common equity Tier 1 risk-based capital, but the buffer applies to all three measurements (common equity Tier 1 risk-based capital, Tier 1 capital and total capital). The capital conservation is equal to 2.5% of risk-weighted assets.

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As of June 30, 2020, we were categorized as “well capitalized” under the prompt corrective action measures and met the now fully phased-in capital conservation buffer requirements. The following table shows the regulatory capital ratios for us at the dates indicated:

	Actual					For Capital Adequacy Purposes(1)					To Be Considered Well Capitalized
	Amount		Ratio			Amount		Ratio			Amount		Ratio
(In thousands)
June 30, 2020
Total capital to risk weighted assets	$	515,066		13.57	%	$	303,511		8.00	%	$	379,389		10.00	%
Tier I capital to risk weighted assets		467,479		12.32	%		227,634		6.00	%		303,511		8.00	%
Tier I capital to average assets		467,479		7.69	%		244,449		4.00	%		305,561		5.00	%
Common equity tier 1 to risk weighted assets		467,479		12.32	%		170,725		4.50	%		246,603		6.50	%
December 31, 2019
Total capital to risk weighted assets	$	490,831		14.01	%	$	280,265		8.00	%	$	350,331		10.00	%
Tier I capital to risk weighted assets		455,668		13.01	%		210,199		6.00	%		280,265		8.00	%
Tier I capital to average assets		455,668		8.90	%		204,852		4.00	%		256,065		5.00	%
Common equity tier 1 to risk weighted assets		455,668		13.01	%		157,649		4.50	%		227,715		6.50	%

(1) Amounts are shown exclusive of the capital conservation buffer of 2.50%.

Contractual Obligations

We have entered into contractual obligations in the normal course of business that involve elements of credit risk, interest rate risk and liquidity risk. The following table summarizes these relations as of June 30, 2020 and December 31, 2019:

June 30, 2020

(In thousands)	Total		Less than 1 year		1-3 years		3-5 years		More than 5 years
Operating Leases		63,073		5,053		19,900		19,459		18,661
Purchase Obligations		13,413		2,012		4,024		4,024		3,353
	$	76,486	$	7,065	$	23,924	$	23,483	$	22,014
December 31, 2019
(In thousands)	Total		Less than 1 year		1-3 years		3-5 years		More than 5 years
Long Term Debt	$	75,000	$	75,000	$	—	$	—	$	—
Operating Leases		69,679		10,743		20,816		19,459		18,661
Purchase Obligations		13,413		2,012		4,024		4,024		3,353
	$	158,092	$	87,755	$	24,840	$	23,483	$	22,014

Investment Obligations

The Bank is party to an agreement with Pace Funding Group (PFG) for the purchase of up to $150 million of PACE assessment securities by September 2021, to be held in our held-to-maturity investment portfolio. As of June 30, 2020, the Bank had fulfilled $40.8 million of its obligation. As of December 31, 2019, the Bank was not party to such an agreement or related purchase obligation. The PACE assessments have equal-lien priority with property taxes and rank senior to first lien mortgages.

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Item 3. Quantitative and Qualitative Disclosures about Market Risk.

There have been no material changes in the Bank’s market risk as of June 30, 2020 from that presented in the 2019 Annual Report. The interest rate sensitivity position at June 30, 2020 is discussed below.

Evaluation of Interest Rate Risk

Our simulation models incorporate various assumptions, which we believe are reasonable but which may have a significant impact on results such as: (1) the timing of changes in interest rates, (2) shifts or rotations in the yield curve, (3) loan and securities prepayment speeds for different interest rate scenarios, (4) interest rates and balances of indeterminate-maturity deposits for different scenarios, and (5) new volume and yield assumptions for loans, securities and deposits. Because of limitations inherent in any approach used to measure interest rate risk, simulation results are not intended as a forecast of the actual effect of a change in market interest rates on our results but rather to better plan and execute appropriate asset-liability management strategies and manage our interest rate risk.

Potential changes to our net interest income and economic value of equity in hypothetical rising and declining rate scenarios calculated as of June 30, 2020 are presented in the following table. The projections assume immediate, parallel shifts downward of the yield curve of 100 basis points and immediate, parallel shifts upward of the yield curve of 100, 200, 300 and 400 basis points. In the current interest rate environment, a downward shift of the yield curve of 200, 300 and 400 basis points does not provide us with meaningful results.

The results of this simulation analysis are hypothetical and should not be relied on as indicative of expected operating results. A variety of factors might cause actual results to differ substantially from what is depicted. For example, if the timing and magnitude of interest rate changes differ from those projected, our net interest income might vary significantly. Non-parallel yield curve shifts such as a flattening or steepening of the yield curve or changes in interest rate spreads, would also cause our net interest income to be different from that depicted. An increasing interest rate environment could reduce projected net interest income if deposits and other short-term liabilities re-price faster than expected or faster than our assets re-price. Actual results could differ from those projected if we grow assets and liabilities faster or slower than estimated, if we experience a net outflow of deposit liabilities or if our mix of assets and liabilities otherwise changes. Actual results could also differ from those projected if we experience substantially different repayment speeds in our loan portfolio than those assumed in the simulation model. Finally, these simulation results do not contemplate all the actions that we may undertake in response to potential or actual changes in interest rates, such as changes to our loan, investment, deposit, funding or hedging strategies.

Change in Market Interest Rates as of June 30, 2020	Estimated Increase (Decrease) in:
Immediate Shift	Economic Value of Equity			Economic Value of Equity ($)			Year 1 Net Interest Income			Year 1 Net Interest Income ($)
+400 basis points		1.0	%		8,636			21.0	%		36,441
+300 basis points		7.4	%		63,418			21.1	%		36,587
+200 basis points		11.2	%		95,039			17.8	%		30,956
+100 basis points		9.3	%		79,120			11.1	%		19,296
-100 basis points		-18.6	%		(158,739	)		-10.1	%		(17,522	)

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Item 4. Controls and Procedures.

Under the supervision and with the participation of our management, including the participation of our Chief Executive Officer and our Chief Financial Officer, we conducted an evaluation of our disclosure controls and procedures, as such term is defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Exchange Act as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on that evaluation, the Bank’s Chief Executive Officer and Chief Financial Officer concluded that the Bank’s disclosure controls and procedures were effective as of the end of the period covered by this quarterly report.

Changes in Internal Controls

There was no change in our internal control over financial reporting that occurred during the quarter ended June 30, 2020 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

The design of any system of controls and procedures is based in part upon certain assumptions about the likelihood of future events. There can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote.

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PART II

Item 1. Legal Proceedings.

We are subject to certain pending and threatened legal actions that arise out of the normal course of business. Additionally, we, like all banking organizations, are subject to heightened legal and regulatory compliance and litigation risk. Based upon management’s current knowledge, following consultation with legal counsel, in the opinion of management, there is no pending or threatened legal matter that would result in a material adverse effect on our consolidated financial condition or results of operation.

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Item 1A. Risk Factors.

Investing in shares of our common stock involves certain risks, including those identified and described in Item 1A. of our Annual Report on Form 10-K for the fiscal year ended December 31, 2019, as well as cautionary statements contained in this Quarterly Report on Form 10-Q, including those under the caption “Cautionary Note Regarding Forward-Looking Statements” and set forth in Part II, Item 1A. of our Quarterly Report on Form 10-Q for the quarter ended March 31, 2020.

Except as set forth in Part II, Item 1A. of our Quarterly Report on Form 10-Q for the quarter ended March 31, 2020 filed with the FDIC on April 30, 2020, which is incorporated herein by this reference, there have been no material changes to the risk factors previously disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019 filed with the FDIC on March 13, 2020.

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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

The following schedule summarizes our total monthly share repurchase activity for the three months ended June 30, 2020:

	Issuer Purchases of Equity Securities
Period (Settlement Date)	Total number of shares purchased (1)		Average price paid per share		Total number of shares purchased as part of publicly announced plans or programs		Approximate dollar value that may yet be purchased under plans or programs (2)
April 1 through April 30, 2020		—	$	—		—	$	12,212,492
May 1 through May 31, 2020		—		—		—		12,212,492
June 1 through June 30, 2020		—		—		—		12,212,492
Total		—	$	—		—

(1) Includes shares withheld by the Bank to pay the taxes associated with the vesting of stock options. There were 0 shares withheld for taxes during the quarter.

(2) On May 29, 2019, the Bank’s Board of Directors authorized a share repurchase program authorizing the repurchase of up to $25 million of its outstanding common stock. No time limit was set for the completion of the share repurchase program. The authorization does not require the Bank to acquire any specified number of common shares and may be commenced, suspended or discontinued without prior notice. Under this authorization, $0 were purchased during the quarter.

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Item 6. Exhibits.

Exhibit No.	Description of Exhibit
3.1	Organization Certificate of Amalgamated Bank, as amended and restated through July 22, 2020 (incorporated by reference to Exhibit 3.1 to Amalgamated Bank’s Current Report on Form 8-K filed with the FDIC on July 22, 2020)
3.2	Bylaws of Amalgamated Bank, as amended and restated through April 6, 2020 (incorporated by reference to Exhibit 3.1 to Amalgamated Bank’s Current Report on Form 8-K filed with the FDIC on April 7, 2020)
31.1	Rule 13a-14(a) Certification of the Chief Executive Officer
31.2	Rule 13a-14(a) Certification of the Chief Financial Officer
32.1	Section 1350 Certifications

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

AMALGAMATED BANK
August 7, 2020	By:	/s/ Keith Mestrich
		Keith Mestrich
		President and Chief Executive Officer
		(Principal Executive Officer)
August 7, 2020	By:	/s/ Andrew LaBenne
		Andrew LaBenne
		Chief Financial Officer
		(Principal Financial Officer)
August 7, 2020	By:	/s/ Jason Darby
		Jason Darby
		Chief Accounting Officer
		(Principal Accounting Officer)

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Exhibit 31.1

Rule 13a-14(a) Certification of the Chief Executive Officer

I, Keith Mestrich, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Amalgamated Bank

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 7, 2020

/s/ Keith Mestrich

Keith Mestrich, President and Chief Executive Officer

Exhibit 31.2

Rule 13a-14(a) Certification of the Chief Financial Officer

I, Andrew LaBenne, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Amalgamated Bank.

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 7, 2020

/s/ Andrew LaBenne

Andrew LaBenne, Chief Financial Officer

Exhibit 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Amalgamated Bank (the “Bank”) on Form 10-Q for the period ended June 30, 2020 as filed with the Federal Deposit Insurance Corporation on the date hereof (the “Report”), the undersigned, the Chief Executive Officer and the Chief Financial Officer of the Bank, each certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 that, to his knowledge:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Bank.

/s/ Keith Mestrich

Keith Mestrich

President and Chief Executive Officer

August 7, 2020

/s/ Andrew LaBenne

Andrew LaBenne

Chief Financial Officer

August 7, 2020