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Amalgamated Financial (AMAL) Q2 Earnings call transcript Jul 25, 2024

AInvestThursday, Jul 25, 2024 9:11 pm ET
2min read

Amalgamated Financial, a mission-based bank, held its second quarter earnings call for 2024, highlighting the company's impressive financial performance and strategic initiatives. The call, led by Chief Financial Officer Jason Darby and President and CEO Priscilla Sims Brown, provided insights into the company's key financial metrics, strategic direction, and market positioning.

Financial Highlights

Amalgamated Financial reported a net income of $26.8 million or $0.87 per diluted share for the second quarter of 2024. This figure represents a growing and sustainable earnings base, with core net income standing at $26.2 million or $0.85 per diluted share. The company's deposit franchise continued to perform robustly, with over $759 million in new deposits, led by strength across political, union, and nonprofit customer segments.

Strategic Initiatives

The company's strategic focus on social responsibility and mission-based banking has resonated well with customers and impact investors. Amalgamated Financial's attendance at various conferences, including the Milken Institute Global Conference and the Sorenson Impact Summit, underscores its commitment to driving positive change through banking. The company is also exploring opportunities in the social impact space, particularly in the areas of private equity and product innovation.

Market Positioning and Challenges

Amalgamated Financial is at the forefront of the climate finance sector, positioning itself to capitalize on the growing demand for sustainable financing. The company's partnership with the Global Alliance for Banking on Values and the Net Zero Banking Alliance underscores its leadership in this area. However, the company faces challenges in managing political deposits, which are subject to significant fluctuations due to election cycles. The company's strategic off-balance sheet deposits have helped mitigate these risks, allowing it to maintain a stable funding mix.

Financial Metrics and Outlook

Amalgamated Financial's financial metrics are strong, with tangible book value per share increasing by 4.5% to $20.61, core revenue per diluted share at $2.52, and a core return on average equity of 16.93%. The company's Tier 1 leverage ratio has improved significantly, standing at 8.42%. Looking ahead, Amalgamated Financial is optimistic about its financial performance, with a full-year 2024 guidance of core pretax pre-provision earnings of $149 million to $152 million and net interest income of $274 million to $278 million.

Credit and Lending

Amalgamated Financial's credit and lending portfolio are performing well, with a relatively benign exposure profile in its real estate portfolio. The company has been proactive in managing its multifamily and commercial real estate loans, renewing $12 million of pre-1974 loans and anticipating the maturity of $134 million in lower-priced commercial real estate and multifamily loans.

Challenges and Opportunities

Amalgamated Financial faces challenges in managing its political deposit base, which is subject to significant fluctuations due to election cycles. However, the company is well-positioned to capitalize on the growing demand for sustainable financing, particularly in the climate finance sector. Amalgamated Financial's strategic partnerships and initiatives in this area position it as a leader in the sustainable finance space, with significant growth opportunities on the horizon.

Conclusion

Amalgamated Financial's second quarter earnings call highlighted the company's strong financial performance, strategic initiatives, and market positioning. With a focus on social responsibility and mission-based banking, Amalgamated Financial is well-positioned to capitalize on the growing demand for sustainable financing. The company's financial metrics and outlook are strong, with a full-year 2024 guidance of core pretax pre-provision earnings of $149 million to $152 million and net interest income of $274 million to $278 million. Amalgamated Financial's strategic initiatives in the climate finance sector and its strong financial performance underscore its leadership in the sustainable finance space, providing a positive outlook for the company's future growth and returns.

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