Amalgamated Bank ((AMAL)) has held its Q2 earnings call. Read on for the main highlights of the call.
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Amalgamated Financial’s recent earnings call painted a picture of robust performance and positive momentum, with the company reporting strong earnings and significant deposit growth. The bank’s recognition as a top performer further underscores its current success. However, the call also highlighted challenges, particularly within certain loan portfolios and an increase in non-performing assets, suggesting areas that require attention.
Strong Earnings Performance
Amalgamated Financial reported solid results this quarter, with core earnings per share reaching $0.88. This figure underscores the bank’s strong profitability and performance, setting it apart from its peers in the industry.
Significant Deposit Growth
The bank experienced a substantial increase in deposits, growing by $209 million, excluding temporary pension funding deposits. Notably, political deposits surged by $137 million, a 13% increase, while the not-for-profit segment saw deposits rise by over $100 million.
Loan Portfolio Expansion
Amalgamated’s loan portfolio has expanded significantly, growing at a 10% compound annual growth rate from $3.1 billion in Q2 2021 to $4.7 billion by Q2 2025. The PACE portfolio, in particular, demonstrated impressive growth with a 22% compound annual growth rate.
Recognition for Bank Performance
The bank’s performance has not gone unnoticed, as it was ranked #38 out of 338 banks on the American Banker’s top-performing banks list. Impressively, Amalgamated was the #1 most improved bank in the top 100, climbing nearly 50 spots in just one year.
Challenges with Consumer Solar and Residential Loans
Despite overall growth, the bank faces challenges with its consumer solar and residential real estate loan portfolios, which are in runoff mode. This situation has led to declines, impacting the bank’s overall loan growth targets.
Non-Performing Assets Increase
The bank reported an increase in non-performing assets, which rose to $35.2 million. This includes net charge-offs of $2.6 million in consumer solar loans, highlighting a key area of concern.
Specific C&I Loan Stress
A particular commercial and industrial loan to a consumer loan originator for renewable energy efficiency improvements has required increased reserves. This is due to a fluid workout situation, indicating stress within this segment.
Forward-Looking Guidance
Looking ahead, Amalgamated Financial remains optimistic about its continued strong performance despite external pressures. The bank maintains a net interest margin of 3.55% and a leverage ratio target of 9.2%. It has also executed the largest share repurchase in its history and announced a $0.14 per common share dividend. The company expects modest balance sheet growth and margin expansion in the second half of the year, with full-year 2025 guidance for core pretax pre-provision earnings between $159 million to $163 million and net interest income between $293 million to $297 million.
In summary, Amalgamated Financial’s earnings call reflects a company on a positive trajectory, with strong earnings and deposit growth, alongside recognition for its performance improvements. However, challenges remain, particularly with certain loan portfolios and non-performing assets. The bank’s forward-looking guidance suggests confidence in overcoming these hurdles and continuing its growth path.