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Amalgamated Financial Corp. (AMAL)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 delivered resilient core profitability despite election-cycle deposit outflows: core diluted EPS was $0.90 (flat QoQ), GAAP diluted EPS $0.79 (down from $0.90 in Q3) as non-core items weighed; net interest margin expanded 8 bps to 3.59% and net interest income rose to $73.1M .
  • Deposits fell $414M (-5.5%) on election-related outflows and the calling of $102M brokered CDs to zero, but liquidity remained strong ($3.2B within two days; 86% of uninsured deposits) and nonperforming assets improved to 0.31% of assets .
  • Management raised capital return via a 17% dividend increase to $0.14 and guided FY 2025 net interest income to $293–$297M and core PTPP to $159–$163M; Q1 2025 NII guided to $70–$71M with 2–3 bps NIM compression during deposit rebuild .
  • Strategic themes: loan growth (+$126M QoQ; C&I +$117M, Multifamily +$60M), continued securities/loan portfolio optimization, investments in technology and trust platform, and focus on sustainable lending with attractive yields .
  • Potential stock catalysts: NIM expansion resilience, 2025 guidance, dividend step-up, and deposit rebuild trajectory into mid-2025; risks include consumer solar charge-offs and criticized C&I loan uptick .

What Went Well and What Went Wrong

  • What Went Well

    • “Our fourth quarter was outstanding…we performed substantially better across all our key metrics,” supported by core EPS of $0.90 and NIM rising to 3.59% despite election-cycle outflows .
    • Net loans receivable increased $126.4M (+2.8% QoQ), with strong C&I (+$117.1M) and multifamily (+$60.2M) contributions; loan yield rose 21 bps to 5.00% .
    • Capital strengthened: Tier 1 leverage rose 43 bps to 9.06%, CET1 13.90%, TCE ratio 8.41% for a ninth consecutive quarter of improvement; TBV/share increased to $22.60 .

  • What Went Wrong

    • GAAP EPS fell to $0.79 (from $0.90) primarily due to lower non-core ICS fees and fair value losses on residential loans moved to held-for-sale (pre-tax ~$4.1M) .
    • Deposits declined $414M (-5.5%) sequentially (political deposits -$992M), and the mix shifted with lower DDA (40% of ending deposits), pressuring near-term NIM guide in Q1 2025 .
    • Credit provisioning increased to $3.7M (vs $1.8M in Q3) on consumer solar/small business charge-offs and a multifamily note sale; criticized loans rose to $95.9M driven by downgrades of four C&I loans .

Financial Results

MetricQ4 2023Q2 2024Q3 2024Q4 2024
Net Interest Income ($USD Millions)$67.319 $69.192 $72.107 $73.095
Non-Interest Income ($USD Millions)$9.406 $9.258 $8.939 $4.789
Core Operating Revenue ($USD Millions)$75.814 $77.691 $80.876 $82.577
Diluted EPS ($USD)$0.74 $0.87 $0.90 $0.79
Core Diluted EPS ($USD)$0.72 $0.85 $0.91 $0.90
Net Interest Margin %3.44% 3.46% 3.51% 3.59%
Efficiency Ratio % (GAAP)49.20% 50.37% 50.54% 52.83%
Core Efficiency Ratio %49.73% 50.80% 50.35% 49.82%
Return on Avg Assets %1.13% 1.30% 1.32% 1.17%
CET1 Ratio %12.98% 13.48% 13.82% 13.90%
TCE Ratio %7.16% 7.66% 8.14% 8.41%

Actual vs Estimates (Q4 2024)

  • S&P Global consensus estimates were unavailable at the time of analysis; beat/miss vs estimates cannot be assessed.

Segment/Portfolio Breakdown (Selected)

  • Loans Held for Investment ($USD Thousands)
CategoryQ4 2023Q3 2024Q4 2024
Commercial & Industrial$1,010,998 $1,058,376 $1,175,490
Multifamily$1,148,120 $1,291,380 $1,351,604
Commercial Real Estate$353,432 $415,077 $411,387
Construction & Land$23,626 $22,224 $20,683
Residential Real Estate$1,425,596 $1,350,347 $1,313,617
Consumer Solar$408,260 $374,499 $365,516
Consumer & Other$41,287 $36,000 $34,627
  • Deposit Composition (Ending)
CategoryQ4 2023Q3 2024Q4 2024
Non-Interest-Bearing DDA$2,940,398 $3,801,834 $2,868,506
NOW Accounts$200,382 $186,557 $179,765
Money Market$3,100,681 $2,959,264 $3,564,423
Savings$340,860 $327,935 $328,696
Time Deposits$187,457 $216,901 $239,215
Brokered CDs$242,210 $102,073 $0
Total Deposits$7,011,988 $7,594,564 $7,180,605

Key KPIs

KPIQ3 2024Q4 2024
Non-Interest-Bearing % (Ending)51% 40%
Avg Cost of Deposits (ex Brokered CDs)1.51% 1.52%
Uninsured Deposits ($B)$4.52 $3.71
Liquidity (2-day) vs Uninsured Deposits107% 86%
Net Loans Receivable ($B)$4.486 $4.613
NPA / Total Assets %0.34% 0.31%
ACL / Total Loans %1.35% 1.29%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net Interest IncomeFY 2025N/A$293–$297M New
Core Pre-Tax, Pre-Provision (PTPP)FY 2025N/A$159–$163M New
Net Interest IncomeQ1 2025N/A$70–$71M New
Net Interest MarginQ1 2025N/ACompress 2–3 bps QoQ New
Operating ExpensesFY 2025N/A~$170M (≈6% YoY) New
Loan Growth TargetFY 2025N/A~2% per quarter New
Securities Portfolio StrategyFY 2025N/AShrink traditional securities to fund loan growth New
Dividend per ShareOngoing$0.12$0.14 (+17%) Raised
Total Payout Ratio (Dividends + Buybacks)OngoingN/ATarget 20–25% New

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 2024, Q3 2024)Current Period (Q4 2024)Trend
Political Deposits CyclePeak $1.7–$2.0B; modeled trough ~$700–$875M; off-balance strategy drove ICS fees Trough ~ $1.0B as of 12/31; rebuild expected over 2025; average DDA down to 40% Rebuilding in 2025
Net Interest Margin & NIINIM obfuscated by discrete items; guided Q4 NII $70–$72M NIM up to 3.59%; Q1 2025 NIM -2–3 bps; NII guide $70–$71M Slight near-term compression, mid-year expansion
Loan Growth & PipelineMultifamily and CRE originations high-6s to low-7s; C&I renewable pipeline improving C&I yields low–mid 7s; multifamily mid–high 6s; ~2% quarterly loan growth target Balanced growth at higher yields
Securities/Loan Repositioning~$715–$820M securities turnover since 2022; resi loan sales planned Continued optimization; $36M low-yield resi moved to HFS; non-core losses offset by fees Ongoing optimization
Technology & Trust InvestmentsAnnounced trust leadership and digital investments Increased data processing spend; 2025 tech and trust investment to drive 2026 revenue Investing ahead of growth
Credit QualityConsumer solar charge-offs elevated; increased ACL coverage to ~7% Provision up to $3.7M; consumer solar NCOs 1.71% annualized; criticized loans $95.9M Watch solar and select C&I credits

Management Commentary

  • CEO: “Our fourth quarter was outstanding…we performed substantially better across all our key metrics. We enter the new year in an envious position and ready to take advantage of the many opportunities…” .
  • CFO: “NII increased $1M…NIM increased 8 bps…loan growth of nearly 4%…we targeted a quarterly 20–25% total payout ratio” .
  • Strategy: “Developing a repeatable and more predictable C&I lending business, primarily rooted in sustainable lending, is a key strategic objective…balanced contribution keeps our CRE concentration at conservative levels” .
  • Technology/Trust: “We will also make investments in our trust business…do not expect significant growth in trust revenue in 2025…the investments will be made with 2026 results in mind” .

Q&A Highlights

  • Loan pipeline and yields: Multifamily mid–high 6% and C&I low–mid 7%; expect ~2% quarterly loan growth with diversified mix .
  • Criticized C&I loans: Four loans downgraded to substandard and accruing; conservative risk-rating approach; all current on payments .
  • PACE wildfire exposure: No material impact identified; portfolio review by zip code .
  • 2025 expenses: Target ~$170M, ramping through the year as hiring/tech investments come online .
  • Deposit rebuild timing and NIM: Modeled slow, steady rebuild; Q1 NIM compression 2–3 bps with NII $70–$71M; expect expansion later in 2025 .
  • Rate path in guidance: Two Fed cuts (50 bps total), weighted to 2H 2025 .
  • Consumer solar charge-offs: Expect similar loss rates to 2024; pursuing servicing-rights acquisition to improve recoveries .

Estimates Context

  • S&P Global consensus estimates (EPS, revenue) for Q4 2024 were unavailable at the time of analysis; as a result, beat/miss vs estimates cannot be determined. Sequentially, GAAP EPS declined due to lower non-core ICS fees and loan fair value marks, while core EPS was stable at $0.90, and NIM expanded 8 bps .

Key Takeaways for Investors

  • Core earnings power intact: Core diluted EPS $0.90 and NIM up to 3.59% despite election-cycle pressures—evidence of pricing discipline and balance-sheet optimization .
  • Balance-sheet resilience: Liquidity at $3.2B (two-day) and capital ratios at industry-strong levels (CET1 13.9%, leverage 9.06%) support growth and capital return .
  • Growth vector: Expect loan growth ~2% per quarter with attractive yields (C&I low–mid 7%, multifamily mid–high 6%) and continued securities/loan mix upgrades—supports NII trajectory .
  • Near-term setup: Modest NIM compression in Q1 (2–3 bps) as deposits remix; watch for deposit rebuild and margin expansion through 2025 as political cycles re-accumulate .
  • Capital return: Dividend raised 17% to $0.14; management targeting a 20–25% total payout ratio—a supportive shareholder yield .
  • Risk monitor: Track criticized C&I book (now $95.9M) and consumer solar charge-offs (annualized 1.71%)—management actions (servicing strategy) could improve recoveries .
  • Medium-term thesis: Investments in technology and trust in 2025 aim to expand revenue in 2026; sustainable lending remains a secular tailwind with broad geographic reach .