Amalgamated Financial outlines $164M–$165M 2025 earnings target amid accelerating loan and deposit growth

Earnings Call Insights: Amalgamated Financial Corp. (AMAL) Q3 2025

MANAGEMENT VIEW

* Priscilla Sims Brown, President and CEO, stated Amalgamated delivered core earnings per share of $0.91 in Q3, highlighted by balance sheet strength, accelerating loan growth, and share gain in the deposit franchise. Brown emphasized, "Amalgamated has now delivered $2.66 year-to-date core earnings per share, which is about 3% growth, making our case for an implied value of our stock well above where we have been trading recently."
* Brown highlighted a "quick, successful and final resolution" of a $10.8 million syndicated C&I loan under stress, stating the resolution was "all absorbed within our core earnings" and resulted in improvements to nonperforming assets and credit quality metrics.
* Loan growth accelerated, with loans increasing by $99 million across multifamily, CRE, and C&I portfolios, representing 3.3% growth, benefiting from new C&I origination team members. The PACE portfolio also saw $27.4 million growth in total assessments, with over 8% growth in C-PACE.
* Deposit franchise performance was strong, with $415 million in new deposit generation. The political segment increased deposits by $235 million (19%) to $1.4 billion, Climate and Sustainability by $86 million (21%), not-for-profit by $42 million, and Labor by $26 million.
* Brown announced the launch of a fully integrated digital modernization platform in Q3, which is "already seeing the benefits across our organization."
* Jason Darby, CFO & Senior Executive VP, reported, "Net income was $26.8 million or $0.88 per diluted share, while core net income, a non-GAAP measure, was $27.6 million or $0.91 per diluted share. Our net interest income grew by 4.9% to $76.4 million, which exceeded the high end of our guidance range."

OUTLOOK

* Darby stated, "we are raising our full year 2025 core pretax pre-provision earnings guidance to $164 million to $165 million and tightening our 2025 net interest income guidance to $295 million to $296 million."
* For Q4 2025, Amalgamated targets average balance sheet size at approximately $8.65 billion and net interest income between $75 million and $76 million. Net interest margin is expected to remain near flat, with anticipated downward pressure on loan yields due to projected Fed rate cuts.

FINANCIAL RESULTS

* Core revenue per diluted share rose to $2.84, up $0.17 from the prior quarter, attributed to higher net interest income and share repurchases.
* Tangible book value per share increased $0.98 to $25.31, marking a 4% rise.
* Leverage ratio was reported at 9.18%. The TCE ratio improved to 8.79%, with $4.5 million in credit loss absorption, $10.4 million in share repurchases, and a $0.14 dividend payment.
* Core noninterest expense was $43.4 million, a $2.9 million increase from Q2, mainly due to compensation and technology spend.
* Core efficiency ratio stood at 50.17%. Net charge-offs were 0.81% of total loans, including a $5.4 million charge-off on the resolved C&I loan, with the P&L impact this quarter at $3.1 million due to prior reserves. Allowance for credit losses on loans decreased $2.5 million to $56.5 million.

Q&A

* Mark Fitzgibbon, Piper Sandler: Asked about a $1.9 million specific reserve in the multifamily portfolio. Jason Darby responded the reserve related to an updated appraisal leading to a nonaccrual status, stating "the reserve was put in place to effectively account for a change in the LTV."
* Fitzgibbon: Inquired about potential impacts from rent regulation changes in New York. Priscilla Sims Brown said, "we don't expect that we're going to see impact in the next 18 to 24 months, certainly based on those changes," noting broader policy tools could create upside for housing.
* Fitzgibbon: Questioned exposure to Department of Energy funding pullbacks for green energy projects. Sam Brown, Chief Banking Officer, said "in the existing portfolio, we feel totally great about where we are. Those projects are already in the ground... their funding streams... is locked in."
* Fitzgibbon: Asked about regulatory risks amid "debanking" discussions. Brown responded, "we continue to be a bank that just follows all laws and regulations, and we always will."
* Mark Shutley, KBW: Asked about expense run rate versus guidance. Darby explained expense management was in line with expectations, with potential upside to the $170 million OpEx target if Q4 expenses mirror Q3.
* Shutley: Inquired about loan yield trends. Darby detailed expected 25–50 basis point declines in bring-on yields for C&I and real estate portfolios next quarter, noting "a bit of a one-timer that flowed through with the recapture of some interest income."

SENTIMENT ANALYSIS

* Analysts' tone was neutral to slightly skeptical, pressing on credit quality, regulatory risk, green energy funding, and expense trajectory. Fitzgibbon expressed disbelief on green project funding insulation: "it's hard to believe, Sam, that none of the projects you're involved in... federal funds have been pulled back from."
* Management maintained a confident and proactive tone during prepared remarks and Q&A, emphasizing decisive action on credit issues and operational resilience. Brown repeatedly stressed confidence: "we feel very good about our current rent stabilization exposure."
* Compared to the previous quarter, analyst skepticism remained steady, while management’s confidence was incrementally more assertive due to successful credit resolutions and strong deposit growth.

QUARTER-OVER-QUARTER COMPARISON

* Guidance for full-year core pretax pre-provision earnings was raised from the prior $159–$163 million range to $164–$165 million, and net interest income guidance narrowed.
* Loan growth accelerated from Q2’s $60 million to Q3’s $99 million across growth portfolios, while deposit growth also increased substantially.
* Management commentary shifted to highlight digital transformation benefits and successful credit risk resolution, whereas the previous quarter focused more on team expansion and market entry, especially in California.
* Analysts' focus shifted from asking about expansion and credit provisioning in Q2 to probing regulatory, policy, and funding risks in Q3.
* Management’s confidence increased as they cited "decisive action" on problem credits and underscored the sustainability of earnings.

RISKS AND CONCERNS

* Management acknowledged the ongoing credit cycle and referenced "big reserves and charge-offs taken by some super regional banks recently," emphasizing early disclosure and resolution.
* Analysts pressed on potential negative impacts from New York rent regulation, green energy funding clawbacks, and regulatory scrutiny, but management asserted current exposures are insulated or manageable.
* A specific reserve was built against a multifamily property due to a lower appraisal, with ongoing efforts to resolve the situation.
* Management flagged expected downward pressure on loan yields from anticipated Fed rate cuts, with modelled impacts for further interest rate declines.

FINAL TAKEAWAY

Amalgamated Financial emphasized a strong third quarter, marked by robust deposit and loan growth, the successful resolution of a legacy credit issue, and ongoing benefits from a digital modernization initiative. Management raised full-year guidance and projected continued buybacks and disciplined expense control, expressing high confidence in the bank’s ability to generate sustainable, high-quality earnings and deliver long-term value for shareholders.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/amal/earnings/transcripts]

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