Amalgamated Bank (AMAL) acquires Amalgamated Bank of Chicago for $98.1 million


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Amalgamated Financial Corp. (Nasdaq: AMALE), the holding company of Amalgamated Bank (“AMAL”), the U.S. socially responsible bank, today announced that it has entered into a definitive agreement to acquire Amalgamated Investments Company, the holding company of Amalgamated Bank of Chicago (“ABOC”) ), for approximately $98.1 million, which includes an earn-out of up to $1.1 million, in an all-cash transaction. Although the two entities merged in name, AMAL and ABOC are currently unaffiliated.

ABOC has been dedicated to serving American workers since its founding in Chicago in 1922 by the Amalgamated Clothing Workers of America, the same union that founded AMAL. Building on its union heritage, ABOC will now have access to a broader network to align with the niche segments that AMAL serves, including nonprofits, political organizations, philanthropies, sustainability and corporate. social. ABOC has an attractive customer base consistent with its mission, comprising more than 900 syndicates, total assets of $950 million, loans of $519 million and an industry-leading deposit franchise with a total cost of deposits of 9 points basis on deposits of $836 million as of June 30, 2021 In addition, as of June 30, 2021, ABOC’s fiduciary business held approximately $13 billion in assets under custody, approximately $2.4 billion in assets under management, and also has an established corporate trust business with over $40 billion in assets under administration. At closing, the combined company will have approximately $7.6 billion in assets, $6.8 billion in deposits, $3.7 billion in loans, $19.0 billion in trust assets under management and $52.2 billion in trust assets in custody.

AMAL was the first publicly listed bank focused on ESG and this transaction expands its market footprint and builds on its position as the largest such bank in the country. ABOC and AMAL are committed to supporting similar causes, and the combined company will be a powerful platform for growth and innovation. This decision also comes at a time when responsible personal banking and financial services are more important than ever to advancing economic, social, racial and environmental justice.

The combination will allow AMAL to expand its geographical presence, further strengthen its financial position and better serve socially responsible individuals and organizations. As a larger platform with an established base in Chicago, the combined company can better serve customers with increased capacity. The company will also further diversify its risks and capitalize on operational and administrative cost synergies, providing the opportunity to invest in talent, products and technology to benefit the valued customers and communities it serves.

Lynne Fox, Chair of AMAL’s Board of Directors, said, “Both institutions have been community staples for nearly 100 years. Our new organization will allow us to build on that legacy, expand socially responsible American banking, and advance positive social change.

“We are thrilled to join forces with Amalgamated Bank of Chicago and bring our shared commitment to socially responsible banking to serve customers in Chicago and the U.S. Midwest,” said Priscilla Sims Brown, President and Chief Executive Officer. from AMAL. “This acquisition is part of our disciplined strategy of seeking accretive opportunities that allow us to expand geographically, strengthen our financial resources and increase our customer base while leveraging our unique expertise as a bank focused on the ‘ESG. We’ve long admired Amalgamated Bank of Chicago and are excited about this reunion of our formerly related banks. Together, we have identified key areas of growth and opportunity on which we are ready to begin collaborating. »

“This transaction combines two like-minded organizations and strengthens our ability to have a meaningful impact on the banking system and society at large for the better,” said Robert M. Wrobel, Chairman and Chief Executive Officer of ABOC. “This will improve our ability to serve our customers and our communities and create opportunities for our employees. I am incredibly proud of the company that the amazing team at Amalgamated Bank of Chicago has built. I am confident that the partnership of the strong management teams and dedicated employees of both organizations will take the company to even greater heights in service of our important social and planetary goals.

Upon closing of the transaction, which is expected to occur by the end of the year, AMAL President and CEO Priscilla Sims Brown will lead the combined company, and current President and CEO ABOC’s management, Robert M. Wrobel, and its chairman, James T. Landenberger, will serve as transition consultants for the combined company until December 31, 2022. Select members of ABOC’s current board of directors will join a new board advisory to be created post-closing, bringing together the strong leadership of the two experienced banks. local and national union leaders.

Strategic Rationale

  • Solidifies the combined bank as the largest mission-driven bank in the United States with $7.6 billion in assets
  • Provides entry to Chicago, the third-largest MSA in the United States with $18 billion in target client assets and significant new loan organic growth opportunities
  • Adds new lending expertise with market-proven operational performance
  • Joining the asset management and custody businesses of AMAL and ABOC offers the opportunity to create a stronger and more profitable operating platform
  • Adds to AMAL’s industry-leading deposit franchise by adding ABOC’s $836 million in low-cost deposits, 62% of which are non-interest bearing
  • Build a stronger union leadership team with extensive experience in workers’ rights and the labor movement, supporting and advocating for socially responsible individuals and organizations, unions and workers across the country

Attractive financial profile

The full economic benefits expected to be realized in 2023 assuming the transaction closes in the fourth quarter of 2021 include:

  • Tangible book value per share dilution gain of less than three years
  • Significant improvement in accretive AMAL financial metrics for ROAA and ROATCE
  • Significant cost reduction opportunities through elimination of duplicate functions drive expected EPS increase of 17.5%
  • Redeploying excess cash from ABOC into productive assets with higher risk-adjusted returns

Approvals

The boards of directors of both companies have unanimously approved the transaction. The acquisition is expected to be completed by the end of the year and is subject to customary closing conditions, including receipt of required regulatory approvals and approval by shareholders of Amalgamated Investments Company.

Advisors

Keefe, Bruyette & WoodsA Stifel company, served as financial advisor and Nelson Mullins Riley & Scarborough LLP served as legal advisor to Amalgamated Bank. Piper Sandler & Co. served as financial advisor and Hinshaw & Culbertson LLP served as legal advisor to Amalgamated Bank of Chicago.

Darcy J. Skinner