Amalgamated Financial Corp. (NASDAQ:AMAL), the holding company for Amalgamated Bank, today reported its financial results for the second quarter ended June 30, 2024. The company delivered another quarter of strong performance, highlighted by robust deposit growth, margin expansion, and a growing and sustainable earnings base.

Financials

Net income for the second quarter of 2024 was $26.8 million, or $0.87 per diluted share, compared to $27.2 million, or $0.89 per diluted share, in the first quarter of 2024. On a core basis, which excludes certain non-recurring items, net income was $26.2 million, or $0.85 per diluted share, compared to $25.6 million, or $0.83 per diluted share, in the prior quarter. For the first half of 2024, net income was $54.0 million, or $1.75 per diluted share, compared to $43.0 million, or $1.39 per diluted share, in the first half of 2023.

Deposit Growth

Total deposits grew $143.2 million, or 2.0%, to $7.4 billion during the quarter, with on-balance sheet deposits excluding brokered CDs increasing $152.0 million, or 2.1%, to $7.3 billion. Non-interest-bearing deposits comprised 46% of average total deposits and 47% of ending total deposits, excluding brokered CDs, contributing to a strong average cost of deposits of 155 basis points. The company's off-balance sheet deposits increased $607.0 million, or 133%, to $1.1 billion, comprised of both transactional political deposits and excess non-political deposits.

Net Interest Income and Margin

Net interest income grew $1.2 million, or 1.7%, to $69.2 million, driven by higher yields and average balances on interest-earning assets, partially offset by higher costs and average balances on interest-bearing liabilities. Net interest margin was 3.46%, a decrease of 3 basis points from the prior quarter, primarily due to $2.1 million of accelerated amortization related to the payoff of a commercial and industrial loan. Excluding this one-time impact, the company's net interest margin would have expanded 7 basis points to 3.56%.

Priscilla Sims Brown, President and Chief Executive Officer, commented, "Our second quarter financial results clearly demonstrate that Amalgamated is continuing its high performance across key metrics. We delivered outstanding deposit growth, strong returns, and a continuously growing, sustainable earnings base that will provide us with optionality as we look to further expand our franchise over the medium term."

Loan Portfolio and Credit Quality

The company's loan portfolio grew $49.0 million, or 1.1%, to $4.4 billion, with increases in commercial real estate and multifamily loans partially offset by declines in consumer solar and residential real estate lending. Criticized and classified loans decreased $6.4 million to $94.5 million, or 2.12% of total loans, driven by paydowns and upgrades in the commercial and industrial portfolio.

Nonperforming assets were $35.7 million, or 0.43% of total assets, at June 30, 2024, relatively stable compared to the prior quarter. The allowance for credit losses on loans decreased $1.0 million to $63.4 million, or 1.42% of total loans, primarily due to a commercial and industrial loan charge-off that was previously fully reserved.

Capital Position

The company's capital position remained strong, with a Common Equity Tier 1 ratio of 13.48% and a Tier 1 leverage ratio of 8.42% at June 30, 2024. Tangible book value per share increased $0.88, or 4.5%, to $20.61 during the quarter.

Outlook

Looking ahead, Amalgamated is raising its full-year 2024 guidance for core pre-tax, pre-provision earnings to $149 million to $152 million, and net interest income to $274 million to $278 million. The company expects its net interest margin to expand 2 to 4 basis points in the third quarter, including the impact of $1.5 million to $2.0 million in deferred loan cost amortization. In the fourth quarter, the company anticipates modest margin pressure of 2 to 4 basis points as non-interest-bearing deposits are the first to exit during the election cycle, but believes this will set up a new inflection point for margin expansion heading into 2025.

Business Overview

Amalgamated's deposit franchise continues to be a key competitive advantage, with the company now managing $1.1 billion in off-balance sheet deposits. This provides the company with significant flexibility to structure its balance sheet for sustainable profitability and returns, without the need for additional wholesale funding to support political deposit outflows expected in the fourth quarter.

The company's trust business also remains a bright spot, with the recent leadership changes and focus on the union and non-profit segments expected to drive continued growth. Amalgamated is the largest bank for unions in the U.S., and sees significant runway for expansion in this market, as well as the broader non-profit space where it has built a strong referral network.

Conclusion

In conclusion, Amalgamated delivered another quarter of impressive results, driven by its mission-aligned deposit franchise, prudent balance sheet management, and diversified revenue streams. The company's optimistic outlook for the remainder of 2024 and into 2025 underscores its ability to consistently generate strong financial performance and shareholder value.