Amalgamated Financial (AMAL) - 2025 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Net income for Q1 2025 was $25 million or $0.81 per diluted share, while core net income was $27.1 million or $0.88 per diluted share, reflecting the sustainability of earnings [17] - Core earnings per share was $0.88 supported by net interest income of $70.6 million, which was within the guidance range [10][17] - Total deposits increased by $446 million to $7.6 billion, with a significant portion attributed to political deposits growing by 11% [21][11] Business Line Data and Key Metrics Changes - Net loans receivable increased by $7 million or 0.2% to $4.6 billion, driven by increases in multifamily and commercial loans, while consumer solar and residential loans decreased [24][25] - Core non-interest income decreased to $9.1 million from $9.5 million in the previous quarter, primarily due to lower commercial banking fees [27] - Core non-interest expense increased to $41.5 million, mainly due to higher professional fees related to digital transformation [28] Market Data and Key Metrics Changes - Political deposits increased by $103 million to $1.1 billion, following historical patterns post-election [11] - The not-for-profit deposit segment grew significantly, increasing from $285 million at year-end 2020 to $1.37 billion at the end of Q1 2025, reflecting a 29% increase over the last twelve months [24] Company Strategy and Development Direction - The company plans to maintain a conservative approach while focusing on capital strength and liquidity to navigate uncertain environments [12][6] - A new $40 million share repurchase program was authorized, indicating a commitment to returning capital to shareholders [20] - The company is expanding its commercial PACE franchise to diversify volume and increase originations [13][14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the bank's ability to adapt to changing market conditions and emphasized the importance of a strong balance sheet [6][7] - The outlook for C&I loan growth is expected to remain muted in Q2, with reacceleration anticipated in the latter half of the year [13] - Management remains optimistic about net interest margin expansion and revenue growth for the remainder of the year [32] Other Important Information - The allowance for credit losses on loans decreased to $57.7 million, with a ratio of 1.23% of total loans [30] - Non-performing assets totaled $33.9 million or 0.41% of total assets, reflecting an increase primarily due to commercial and industrial non-accrual loans [29] Q&A Session Summary Question: Any color on the $8.3 million loan that went on non-accrual this quarter? - Management indicated that the loan had been classified for some time and there is sufficient collateral value, allowing them to maintain no increase in reserve coverage [34][35] Question: Are you seeing funding dry up for clean energy projects? - Management confirmed that there is no observed decline in funding for clean energy projects and demand for electricity continues to rise [37][39] Question: What is the outlook for the political deposit franchise? - Management expressed optimism about the political deposit growth and noted strong performance across all sectors [52][53] Question: Where are you willing to take the capital ratios down to? - Management stated that they are comfortable maintaining a Tier 1 leverage ratio above 9% while being aggressive with the buyback program [44][47] Question: Have you seen any tangible impact from the new administration on lending or deposits? - Management reported no significant impact on lending or deposits, maintaining a strong deposit base across all segments [66][67]