Amalgamated Financial (AMAL) - 2025 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Core earnings were $0.99 per diluted share, indicating consistent earnings power and potential for growing returns on tangible common equity [4] - Net income was $26.6 million, or $0.88 per diluted share, with core net income at $30 million, or $0.99 per diluted share [11] - Net interest income grew by 1.8% to $77.9 million, exceeding guidance [12] - Tangible book value per share rose $0.87, or 3.4%, with a strong tier one leverage ratio of 9.36% [13] Business Line Data and Key Metrics Changes - On-balance sheet deposits grew by $179 million to $7.9 billion, while off-balance sheet deposits increased by $789 million to $1.1 billion [4] - Loans increased by $167 million, or 3.5%, to $4.9 billion, with growth in growth mode portfolios accelerating to 7% [5][6] - The PACE portfolio saw total assessments grow by $38 million, or 3%, to $1.3 billion [7] Market Data and Key Metrics Changes - Political deposits increased by $287 million to $1.7 billion, reflecting growth in fundraising ahead of elections [5] - Not-for-profit deposits grew by $388 million, social and philanthropy deposits by $122 million, and climate and sustainability deposits by $77 million [5] Company Strategy and Development Direction - The company aims to cross $10 billion in assets and is investing in people and technology for growth [7] - The business model is positioned for reliable growth, with a focus on profitability tied to mission purpose and a strong capital base [10] - The management team emphasizes disciplined balance sheet management and a values-aligned client franchise to attract mission-driven deposits [43] Management's Comments on Operating Environment and Future Outlook - The management highlighted the challenges faced in the banking sector, including rapid rate hikes and liquidity drains, but noted the bank's growth from $6 billion to nearly $9 billion in assets [8][9] - Expectations for growth and performance in 2026 are bold, with guidance indicating net interest income growth of 10%-11% and core pre-tax, pre-provision earnings growth of 9%-10% [16] Other Important Information - The company is implementing a new tax strategy that aims to improve the effective tax rate, targeting 26.5% for the upcoming year [25] - Asset quality metrics remained solid, although there was some credit turbulence, particularly related to a borrower in the DC market [14][15] Q&A Session Summary Question: Outlook for provision in 2026 and effective tax rate - Management expects provision outlook to remain similar to 2025, with a conservative approach to provisioning due to credit activity [24][25] Question: Political deposits outlook - Management anticipates growth in political deposits leading up to the election, with a strong pipeline for fundraising [27][28] Question: Multifamily growth and geographic distribution - Multifamily growth was strong, with nearly half of the growth occurring outside New York City, indicating good geographic diversification [29][31] Question: NIM expansion and commercial loan yields - NIM expansion was noted despite a down rate quarter, with loan yields expected to rise, particularly from repricing older real estate loans [34][35] Question: Growth potential of the PACE portfolio - There is significant room for growth in the CPACE portfolio, with strong yield opportunities and a focus on commercial PACE [36][37]