Amalgamated Financial (US:AMAL)2022-07-30 21:34Financial Data and Key Metrics Changes - The company reported record earnings of $0.63 per share, an increase of $0.18 from Q1 2022 [8] - Net income for Q2 2022 was $19.6 million, up from $14.2 million in Q1 2022, driven by an $8.1 million increase in net interest income [21][22] - The return on average assets increased to 1.01% from 0.78% in Q1 2022 [8] - Net interest margin expanded by 27 basis points to 3.03% [27] Business Line Data and Key Metrics Changes - Total loans increased by 5.1% to $3.6 billion, with significant growth in residential loans and multifamily loans [26] - Deposits grew by 4.6% to $7.3 billion, with noninterest-bearing deposits representing 54% of total deposits [24] - Core noninterest income rose to $8.7 million from $7.2 million in Q1 2022 [27] Market Data and Key Metrics Changes - Political deposits increased to $1.3 billion, with expectations of further increases in Q3 2022 [24] - The company anticipates a runoff of approximately $500 million to $600 million in political deposits in Q4 2022 [25] Company Strategy and Development Direction - The company aims to become the most improved bank in the country regarding financial performance metrics [10] - The "growth for good" strategy focuses on loan growth, profitability, and social impact [7][9] - The company is enhancing its digital strategy and information technology capabilities to support growth [18] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about loan growth potential in new markets, despite economic uncertainty [19] - The company expects to exceed high single-digit loan growth guidance for the full year 2022 [19] - Management highlighted the importance of maintaining expense control while pursuing growth [10] Other Important Information - The company is actively involved in social issues, including reproductive health care access and gun violence prevention [12][13] - The company released its 2021 Annual Corporate and Social Responsibility Report, showcasing its ESG efforts [14] Q&A Session Summary Question: Why didn't the PPNR and NII guide increase despite rate hikes? - Management indicated a cautious approach due to uncertainty in the rate environment and potential changes in deposit expense behavior [38][39] Question: What are the expectations for deposit beta and plans for deposit rate increases? - Management noted that there was no change in cost of funds in Q2 2022, but deposit repricing occurred in June, with an implied beta of about 5% [41] Question: How will the company fill the gap from political deposit runoff in Q4? - Management expects balance sheet contraction but does not foresee a need for borrowings, relying on cash and short-term agreements [43][44] Question: What are the current loan origination yields and growth drivers for the second half of the year? - Yields are rising, with multifamily loans in the low to mid-4% range, and management expects a shift towards commercial loans for growth [46][48] Question: What is the outlook for noninterest-bearing deposits by the end of 2023? - Management anticipates a normalization of the ratio to around 50-50, influenced by political deposit fluctuations [61] Question: Will there be growth in residential loans in the second half of 2022? - Management expects continued growth in residential loans but at a slower pace compared to the first half of the year [64][66] Question: What is the trajectory of NIM through 2023? - Management is optimistic about continued NIM expansion, driven by rising earning asset yields and potential balance sheet contraction [68][70]