Amalgamated Financial (US:AMAL)2023-04-30 14:56Financial Data and Key Metrics Changes - The net income for Q1 2023 was $21.3 million or $0.69 per diluted share, down from $24.8 million or $0.80 per diluted share in Q4 2022, primarily due to a loss related to the sale of a portion of the Silicon Valley Bank senior note and increased expenses [19][20] - Core net income for Q1 2023 was $23.0 million or $0.74 per diluted share, compared to $27.2 million or $0.87 per diluted share in Q4 2022 [20] - The net interest margin increased to 3.59% in Q1 2023, up 5 basis points from 3.54% in Q4 2022, driven by loan growth and higher yields [28] Business Line Data and Key Metrics Changes - Total loans receivable increased by $92.2 million or 2.2% to $4.2 billion, with multifamily loans increasing by $95.3 million and residential loans by $18.4 million, while consumer loans and commercial real estate loans decreased [26][27] - The PACE portfolio grew by $84.5 million or 9.3% [11] - Core deposits decreased by 1% to $6.6 billion, primarily due to pension customer timing and client diversification for yield [21] Market Data and Key Metrics Changes - Total deposits at March 31, 2023, were $7.0 billion, an increase of $446.4 million from Q4 2022, but decreased to approximately $6.8 billion by April 21, 2023 [21][22] - Non-interest-bearing deposits represented 48% of average deposits, contributing to an average cost of deposits of 81 basis points, a 47 basis point increase from the previous quarter [21] Company Strategy and Development Direction - The company emphasizes its mission-based banking model, which has shown resilience amid market turmoil, and aims to continue its "Growth For Good" strategy [11][17] - The focus is on digital transformation to enhance customer experience and maintain competitive advantage [18] - The company plans to manage expenses carefully while investing in growth opportunities [18] Management's Comments on Operating Environment and Future Outlook - Management acknowledged headwinds in the banking industry but expressed confidence in the bank's stability and competitive advantage [12][19] - The company expects net interest income to decline to approximately $62 million to $63 million in Q2 2023 due to pressure on deposit costs [39] - Future loan growth is anticipated to moderate to approximately 2% to 3% for the remainder of 2023, primarily driven by commercial portfolios [37] Other Important Information - The bank celebrated its 100th anniversary on March 16, 2023, highlighting its long-standing commitment to responsible banking [9][10] - The allowance for credit losses on loans increased to $67.3 million, reflecting the adoption of the CECL standard [31][32] Q&A Session Summary Question: Can you provide more details on the deposit shifts and the impact of recent bank failures? - Management noted that the shift from non-interest-bearing to interest-bearing deposits began in Q4 2022 and accelerated post-SVB and Signature Bank events, with a focus on customer needs and deposit insurance [40][41] Question: How does the bank plan to manage potential recession impacts on donations and contributions? - Management indicated that historical trends show deposits from donor-based organizations have grown during past recessions, suggesting resilience in their deposit base [43][45] Question: What is the current status of the construction loan that became non-performing? - The loan was previously a special mention and is structured in two parts, with one part still performing. Management expressed confidence in eventual repayment despite current challenges [46][47] Question: What factors contributed to the decline in core deposits? - The decline was primarily due to slower new customer acquisition following recent bank events, although there were some new deposit wins during the quarter [48][49] Question: Can you elaborate on the CECL reserve build and its impact on the consumer solar loan portfolio? - The majority of the CECL build was related to the consumer solar portfolio, with expectations for charge-off rates to decrease over time [56][59]