Amalgamated Bank is ready to enter the next phase of its turnaround, though the next chapter will not involve the executive who helped stabilize the New York bank.

Ed Grebow, a former managing director at J.C. Flowers who had been the $3.6 billion-asset bank's president and chief executive since 2011, stepped down earlier the month. Gabriel Caprio, Amalgamated's chief executive from 1991 to 2006, was named interim CEO.

Amalgamated was hit hard by the economic downturn. In the first quarter of 2008, the bank lost $10 million, largely because of it set aside $24.5 million to address concerns associated with a Countrywide Financial home equity loan book that it had acquired.

During his short tenure, Grebow delivered on a vow to raise the bank's leverage ratio to 8% from 6%. Amalgamated's third-quarter earnings rose 48% from the second quarter and more than doubled what it made a year earlier, at $2.2 million.

Still, profitability and efficiency have been inconsistent as the bank made long-term moves such as prepaying Federal Home Loan Bank debt. The bank lost money in the fourth quarter of 2012 and this year's first quarter.

Amalgamated had four straight quarters with an efficiency ratio above 100%, meaning it spent more than a dollar for each buck it earned, before it lowered the metric to 88% in the third quarter.

Through the first nine months of this year, the bank's return on equity was 0.29%, compared to 2.79% a year earlier, according to the Federal Deposit Insurance Corp.

Grebow "joined the bank as a turnaround manager and he has done a good job cleaning it up and bringing stability to it," says Wilbur Ross of WL Ross & Co., which invested $50 million in Amalgamated in September 2011.

"Amalgamated now will search for someone to take the bank to the next stage which hopefully will consist of measured growth and a respectable return on equity," Ross says.

"I am sure that [his] skills will be very useful to his next position," Ross adds, noting that Grebow joined Amalgamated after leading a turnaround effort at the insurance company ULINCO. "It might not necessarily be in banking."

"I've appreciated the opportunity to lead this tremendous institution during a difficult period," Grebow said in a press release. "It has been both challenging and fulfilling, and I am very proud of our progress. I look forward to resuming my career as an investment banker and advisor to financial institutions, companies, and not-for-profit organizations."

Grebow, who spearheaded other efforts at Amalgamated that included the creation of a public finance unit, could not be reached for additional comment. Yucaipa Cos., a private equity firm that also invested $50 million in September 2011, did not return calls seeking comment.

Grebow's departure was not the result of any displeasure with his management, says Noel Beasley, Amalgamated's chairman and president of Workers United, the union that owns the largest stake in the bank. Grebow "did a fantastic job," Beasley says.

Amalgamated has hired a search firm to find a permanent CEO and the board hopes to complete the search by middle of next year, Beasley says.

"We're in a very stable position right now," Beasley adds. "The bank was in quite a state of turmoil [when Grebow was hired] and he did a terrific job of stabilizing it."

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.