Amalgamated Bank ((AMAL)) has held its Q4 earnings call. Read on for the main highlights of the call.
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Amalgamated Bank Reports Strong Earnings Amid Strategic Growth and Conservative Risk Management
The recent earnings call from Amalgamated Bank painted a robust picture of the bank’s financial performance, despite facing challenges like political deposit declines and criticized asset increases. The overall sentiment was positive, emphasizing record earnings, increased deposits, and improved margins. The bank’s strategic investments and conservative risk management were highlighted as key factors positioning it well for future growth.
Near-Record Core Earnings Per Share
Amalgamated Bank reported a near-record quarter with core earnings per share of $0.90. This figure underscores the bank’s strong earnings and profitability, marking it as one of the highest performances in its history.
Significant Growth in Political Deposits
During this election cycle, Amalgamated Bank experienced significant growth in political deposits, ending at $326 million, which is 50.6% higher than the previous cycle. This increase brought the total political deposits to nearly $1 billion, reflecting the bank’s robust deposit growth strategy.
Record Full-Year Earnings
For the full year, Amalgamated delivered record earnings of $106.4 million, driven by strong loan growth and expanding margins. This milestone highlights the bank’s effective growth strategies and its ability to capitalize on market opportunities.
Positive Deposit Growth
Amalgamated Bank saw an increase in total deposits by $410.8 million, or over 6%, excluding brokered CDs. This growth is particularly impressive in a year where many banks faced negative deposit growth, showcasing the bank’s strong deposit base.
Improved Capital Position
Throughout the year, Amalgamated built its capital position, which enhances its capacity to reinvest in the business and return capital to shareholders. This strategic capital management is a testament to the bank’s prudent financial practices.
Increase in Net Interest Margin
The bank’s net interest margin rose to 3.59%, with an 8 basis point increase from the previous quarter, despite challenges such as deposit remixing. This improvement indicates effective interest rate management and operational efficiency.
Decline in Political Deposit Balances
A notable decline in political deposit balances was observed, yet the bank exceeded expectations with $1 million of net interest income growth. This demonstrates the bank’s resilience in managing fluctuations in deposit sources.
Criticized Assets Increase
Criticized assets modestly increased by $7.3 million to $95.9 million, mainly due to downgrades in four commercial and industrial loans. While this poses a challenge, the increase was relatively contained.
Restructuring Losses
The bank incurred a $4 million pre-tax loss from marking and moving $32 million of performing residential loans to held for sale. Despite this setback, the bank continues to focus on optimizing its asset portfolio.
Forward-Looking Guidance
Looking ahead, Amalgamated Bank’s guidance for 2025 focuses on strategic growth and investment. The bank aims for a 2% quarterly loan growth by shrinking its securities portfolio and enhancing its commercial and industrial lending business. It expects core pre-tax pre-provision earnings of $159 million to $163 million and net interest income of $293 million to $297 million, taking into account potential interest rate cuts. An investment of approximately $170 million is planned to support technology and sales initiatives, representing a 6% increase from 2024. Additionally, Amalgamated is targeting a quarterly payout ratio of 20% to 25%, including dividends and share repurchases.
In conclusion, Amalgamated Bank’s earnings call highlighted a strong financial performance with key achievements in earnings, deposits, and margins. The bank’s strategic investments and conservative risk management underpin its optimistic outlook for future growth, positioning it as a resilient player in the financial sector.
