Amalgamated Financial Corp. Q4 FY2025 earnings call

Management Statement and Operational Highlights:

• Earnings: Core earnings was 99¢ per diluted share. Net income was $26.6 million or $0.88 per diluted share, core net income (non-GAAP) was $30 million or 99¢ per diluted share.
• Deposit Gathering: Record-breaking quarter with nearly $1 billion of new deposits, surpassing previous record set in 2020.
• Net Interest Margin: Expanded again, net interest income grew 1% to $77.9 million, margin increased six basis points to 3.66%.
• Expenses: Core expense $44.9 million, core efficiency ratio 51.13%.
• Asset Quality: Some credit turbulence, marked for sale non-accrual multifamily asset, increased reserves in DC market, but working on restructuring.

Segment Performance:

• Deposits: On-balance sheet deposits grew $179 million to $7.9 billion; off-balance sheet deposits increased $789 million to $1.1 billion. Political deposits increased $287 million to $1.7 billion. Not-for-profit grew $388 million, Social and philanthropy grew $122 million, climate and sustainability grew $77 million.
• Loans: Loans increased $167 million or 3.5% to $4.9 billion. Growth mode portfolios (multifamily, CRE, C&I) increased by 7% or $218 million. PACE portfolio total assessments grew $38 million or 3% to $1.3 billion, with $27 million growth in C PACE.

Guidance:

• 2026 Guidance: Aim for net interest income $327M-$331M (10%-11% growth), core pretax pre-provision earnings $180M-$183M (9%-10% growth). Performance targets: core return on average assets to 1.35%, core return on tangible common equity to 15%, balance sheet growth ~5%. Expense discipline: core OpEx to $188M, technology spend ~18% growth, net loan growth 1.5%-2% quarterly.

Risks:

• Credit Turbulence: Non-accrual multifamily asset, stress in DC market borrower leading to increased reserves and nonaccrual loans.
• Economic Challenges: Operating through extraordinary environmental challenges like pandemic, inflation, rate hikes, inverted yield curve, liquidity drain.

Question and Answer: Q: Outlook for provision in 2026 and effective tax rate A: Provision outlook roughly same as 2025, manageable; targeting effective tax rate starting at 26.5% with potential to lower.

Q: Political deposits outlook A: Expected to build through election, with 20% quarter-over-quarter growth in political deposits, usually peaks before election.

Q: Multifamily growth and geographic diversification A: Strong multifamily growth, slightly under half outside NYC, good geographic diversification, pipeline for more growth.

Q: Commercial loan yields, mix of fixed vs floating, PACE portfolio growth A: Loan yields in C&I ~5.9-6%, multifamily ~5.7%, PACE in high sixes to 7%; moving down on traditional securities to fund loan growth and PACE, with commercial PACE origination at $27M in quarter, expecting more growth.