Amalgamated Financial Corp. (AMAL) is a Delaware public benefit corporation and the holding company for Amalgamated Bank, a New York-based full-service commercial bank and trust company. As one of the largest socially responsible banks in the United States, Amalgamated Financial Corp. has established itself as a leader in sustainable and mission-aligned banking, catering to a diverse customer base that includes labor unions, nonprofits, foundations, and socially conscious businesses.
Business Overview and History
Amalgamated Financial Corp. traces its roots back to 1923 when Amalgamated Bank of New York was founded by the Amalgamated Clothing Workers of America, one of the country's oldest labor unions. Although no longer majority union-owned, the bank's ties to the labor movement remain strong, with the Amalgamated Clothing Workers' successor, Workers United, an affiliate of the Service Employees International Union, holding approximately 37% of the company's equity as of December 31, 2024.
Over its 100-year history, Amalgamated has faced various challenges and milestones. During the Great Depression, the bank weathered the economic downturn and continued to provide banking services to its union-based customer base. In the late 1990s, Amalgamated expanded its geographic footprint beyond New York City by opening a branch in Washington, D.C., diversifying its customer base and revenue streams. The bank further expanded its presence in 2018 by acquiring New Resource Bank, establishing itself in the San Francisco market.
Throughout its history, Amalgamated has navigated various regulatory and economic challenges, including the 2008 financial crisis, while remaining well-capitalized. The bank has also adapted to changes in the banking industry, such as the rise of fintech competitors, by maintaining its focus on providing personalized, values-based banking services to its target customer base.
In 2021, the company underwent a reorganization, becoming a public benefit corporation and establishing itself as a bank holding company. This strategic move has allowed the company to enhance its corporate governance and better serve its mission-aligned customer base, which includes advocacy-based non-profits, social welfare organizations, national labor unions, political organizations, foundations, and socially responsible businesses.
Business Segments
Amalgamated Financial Corp. operates through three primary business segments: Commercial Banking, Trust and Investment Management, and Consumer Banking.
Commercial Banking: This segment focuses on providing a full suite of commercial and industrial (C&I) loans, multifamily mortgages, commercial real estate (CRE) loans, and construction and land development loans to its target customer base. As of December 31, 2024, the commercial loan portfolio comprised 63.3% of the company's total loan portfolio, with C&I loans accounting for 25.2%, multifamily loans 28.9%, CRE loans 8.8%, and construction and land development loans 0.4%. The company's commercial lending strategy emphasizes relationships with mission-aligned businesses, such as those in organic and natural products, sustainable companies, clean energy, nonprofits, and B Corporations. Commercial loans are underwritten using stringent guidelines on loan-to-value and debt service coverage ratios to mitigate credit and concentration risk.
Trust and Investment Management: This segment provides a wide range of trust, custody, and investment management services to institutional clients, such as multi-employer pension funds and Taft-Hartley funds. As of December 31, 2024, the company had $35.02 billion in assets under custody and $14.62 billion in assets under management. The growth of the commercial banking business has contributed to the expansion of the trust and investment management services, as approximately one-third of the trust and investment management clients utilize the company's deposit products. The company's investment strategies consist of both index and actively-managed portfolios spanning equity, fixed-income, real estate, and alternative investment strategies, with a focus on aligning with the values of its socially responsible client base.
Consumer Banking: The consumer banking segment includes residential real estate lending, consumer solar loans, and other consumer loans. As of December 31, 2024, the retail loan portfolio comprised 36.7% of the company's total loan portfolio, with residential real estate lending accounting for 28.1%, consumer solar loans 7.8%, and consumer and other loans 0.8%. The company's residential real estate lending focuses on one-to-four family mortgages, both originated and purchased, with a strategy of developing relationships with mission-aligned borrowers. The consumer solar loan portfolio is comprised of purchased residential solar loans secured by Uniform Commercial Code financing statements.
Financial Performance and Ratios
Amalgamated Financial Corp. has consistently delivered strong financial results, even in the face of challenging market conditions. For the full year 2024, the company reported record net income of $106.4 million, or $3.44 per diluted share, up from $87.98 million, or $2.86 per diluted share, in 2023. This impressive performance was driven by robust loan growth, expanding net interest margins, and disciplined expense management.
The company's financial ratios further demonstrate its strength and stability. As of December 31, 2024, Amalgamated Financial Corp. reported a Common Equity Tier 1 (CET1) capital ratio of 13.90%, well above the regulatory minimum, and a tangible common equity ratio of 8.41%, underscoring its solid capital position. The company's return on average assets (ROAA) was 1.29% in 2024, while its return on average equity (ROAE) stood at 15.80%, placing it among the top performers in the banking industry.
For the most recent fiscal year, Amalgamated Financial Corp. reported annual revenue of $401.30 million, annual net income of $106.43 million, annual operating cash flow of $124.06 million, and annual free cash flow of $122.29 million. In the most recent quarter, the company reported revenue of $78.41 million and net income of $24.49 million. The company experienced year-over-year growth in the quarter driven by higher net interest income, which increased by $1.1 million, and a decrease in provision for credit losses of $4.4 million. These were partially offset by an increase in non-interest expense of $8.6 million and an increase in income tax expense of $2.4 million.
Loan Portfolio and Asset Quality
Amalgamated Financial Corp.'s loan portfolio is well-diversified, consisting of commercial and industrial (C&I) loans, multifamily mortgages, commercial real estate (CRE) loans, and consumer loans, primarily in the residential solar sector. As of December 31, 2024, the company's total loan portfolio stood at $4.61 billion, up from $4.35 billion a year earlier, representing a 2.8% increase.
The company's asset quality remains strong, with nonperforming assets (NPAs) totaling $25.87 million, or 0.31% of total assets, as of December 31, 2024, down from $34.20 million, or 0.43% of total assets, a year earlier. The allowance for credit losses (ACL) as a percentage of total loans was 1.29% at the end of 2024, down from 1.49% at the end of 2023, reflecting the company's prudent risk management practices.
Deposit Growth and Funding
Amalgamated Financial Corp. has a strong deposit franchise, with total deposits of $7.18 billion as of December 31, 2024, down from $7.01 billion a year earlier. The company's deposit base is predominantly composed of low-cost, core deposits, with noninterest-bearing demand deposits accounting for 40% of total deposits as of the end of 2024.
The company's funding profile has also remained robust, with a loan-to-deposit ratio of 64.2% as of December 31, 2024. Amalgamated Financial Corp. has access to additional liquidity sources, including $1.78 billion in available borrowing capacity from the Federal Home Loan Bank of New York and $890.70 million in available borrowing capacity from the Federal Reserve's discount window.
Diversified Revenue Streams and Growth Initiatives
In addition to its strong commercial banking operations, Amalgamated Financial Corp. has built a sizable trust and investment management business, which contributed $15.2 million in fee income in 2024, up slightly from $15.18 million in 2023. The company's trust and investment management assets under custody and management totaled $35.02 billion and $14.62 billion, respectively, as of December 31, 2024.
To drive further growth, Amalgamated Financial Corp. is focused on several key initiatives, including:
1. Expanding its commercial and industrial (C&I) lending business, particularly in the sustainable lending space, to diversify its loan portfolio and enhance its asset yields. 2. Investing in its trust and investment management business to generate additional fee income and improve revenue diversification. 3. Upgrading its technology infrastructure to support future growth and scale.
These strategic initiatives, coupled with the company's strong deposit franchise and disciplined risk management practices, position Amalgamated Financial Corp. for continued success in the years ahead.
Regulatory and Compliance Landscape
As a regulated financial institution, Amalgamated Financial Corp. operates in a complex and evolving regulatory environment. The company is subject to oversight by various federal and state agencies, including the Federal Reserve, the Federal Deposit Insurance Corporation (FDIC), and the New York Department of Financial Services (NYDFS).
The company has a strong track record of compliance and has invested significant resources in its risk management and internal control frameworks. Amalgamated Financial Corp. is also actively engaged in advocating for responsible banking practices and has been recognized for its commitment to environmental, social, and governance (ESG) principles.
Geographic Presence and Market Position
Amalgamated Financial Corp.'s operations are primarily concentrated in New York City, Washington D.C., San Francisco, and Boston. Approximately 85.9% of the properties securing the company's CRE, multifamily, or construction loans outstanding were located in the states of New York and California, and in Washington, D.C. This geographic focus allows the company to leverage its deep understanding of these key markets and maintain strong relationships with its target customer base.
The company faces competition from local and regional banks, large banks, national direct banks, fintech non-banks, and other socially responsible banks and financial services companies. However, Amalgamated Financial Corp.'s unique positioning as a socially responsible bank with a strong commitment to environmental, social, and governance (ESG) principles sets it apart from many of its competitors.
Liquidity and Capital Position
Amalgamated Financial Corp. maintains a strong liquidity and capital position. As of December 31, 2024, the company reported:
- Debt-to-Equity ratio: 0.47 - Cash and cash equivalents: $60.75 million - Available credit line: $1.78 billion in remaining credit availability from the Federal Home Loan Bank of New York and $890.7 million in additional borrowing capacity from the Federal Reserve's discount window
This robust liquidity profile provides the company with ample flexibility to pursue growth opportunities and navigate potential economic challenges.
Future Outlook and Guidance
Based on its strong performance in 2024 and ongoing strategic initiatives, Amalgamated Financial Corp. has provided guidance for the full year 2025:
- Core pre-tax pre-provision earnings of $159 million to $163 million - Net interest income of $293 million to $297 million
For the first quarter of 2025, the company expects net interest income to range between $70 million and $71 million, with a potential 2-3 basis point compression in net interest margin as political deposits rebuild and short-term borrowings are paid down.
In terms of loan growth, Amalgamated Financial Corp. is targeting around 2% growth per quarter in 2025, with a similar balance between commercial real estate and C&I lending. The company plans to continue investing in its C&I lending business, particularly in sustainable lending, as well as its trust business to generate more revenue and diversify its revenue mix.
Risks and Challenges
While Amalgamated Financial Corp. has demonstrated resilience and adaptability, the company faces a range of risks and challenges, including:
1. Macroeconomic and interest rate environment: The company's performance is sensitive to changes in overall economic conditions and fluctuations in interest rates, which can impact its net interest margin and asset quality. 2. Regulatory and compliance requirements: The banking industry is heavily regulated, and any changes in the regulatory landscape could increase the company's compliance costs and operational complexity. 3. Competition from larger financial institutions and fintech disruptors: Amalgamated Financial Corp. competes with a range of financial services providers, including national banks, regional banks, and emerging fintech firms, which could pressure the company's market share and profitability. 4. Cybersecurity threats: As a financial institution, Amalgamated Financial Corp. is exposed to the risk of cyber attacks and data breaches, which could result in significant financial and reputational damage.
Despite these challenges, Amalgamated Financial Corp.'s strong market position, diversified business model, and commitment to sustainable and socially responsible banking practices position the company well to navigate the evolving financial services landscape.
Conclusion
Amalgamated Financial Corp. has established itself as a leader in the socially responsible banking space, catering to a growing base of mission-driven customers who value the company's values-based approach to financial services. With its robust financial performance, diversified revenue streams, and strategic growth initiatives, the company is well-positioned to capitalize on the increasing demand for sustainable and impact-oriented banking solutions. As Amalgamated Financial Corp. continues to execute on its strategic priorities, investors can expect the company to deliver sustainable growth and attractive returns over the long term.