On January 23, 2025, Amalgamated Financial Corp (AMAL, Financial) released its 8-K filing detailing its financial performance for the fourth quarter and full year of 2024. The bank holding company, known for its comprehensive commercial banking and trust services, reported a net income of $24.5 million, or $0.79 per diluted share, falling short of the analyst estimate of $0.88 per share. Despite this, the company demonstrated solid loan growth and an improved net interest margin.
Company Overview
Amalgamated Financial Corp is a full-service commercial bank and chartered trust company offering a wide range of products and services to both commercial and retail customers. The company operates nationally, providing investment management, trust, and custody services.
Performance and Challenges
Amalgamated Financial Corp reported a decrease in net income from the previous quarter, primarily due to a $6.7 million decrease in non-core ICS One Way Sell fee income. However, the company managed to increase its net interest income by $1.0 million, reaching $73.1 million. The net interest margin expanded by 8 basis points to 3.59%, indicating improved profitability from its lending activities.
The decrease in deposits, particularly political deposits, posed a challenge, with total deposits falling by $414.0 million, or 5.5%, to $7.2 billion. This decline was partly due to the conclusion of the election cycle, which typically results in political deposit outflows.
Financial Achievements
Despite the challenges, Amalgamated Financial Corp achieved significant milestones. The company's net loans receivable increased by $126.4 million, or 2.8%, to $4.6 billion, reflecting strong loan demand. The Common Equity Tier 1 Capital Ratio stood at 13.90%, and the Tangible Common Equity Ratio improved to 8.41%, marking the ninth consecutive quarter of improvement. These metrics are crucial for banks as they indicate financial stability and the ability to absorb potential losses.
Income Statement and Key Metrics
For the full year 2024, Amalgamated Financial Corp reported a net income of $106.4 million, or $3.44 per diluted share, which is below the annual estimate of $3.54 per share. The company's net interest income increased by 8.1% to $282.4 million, driven by higher loan interest income and improved loan yields.
Non-interest income decreased to $4.8 million from $8.9 million in the previous quarter, primarily due to lower fee income from off-balance sheet deposit strategies. Non-interest expenses rose slightly to $41.1 million, influenced by increased compensation and data processing costs.
Balance Sheet and Capital Ratios
Amalgamated Financial Corp's total assets were $8.3 billion as of December 31, 2024, with total deposits at $7.2 billion. The company's capital ratios remained strong, with a Tier 1 leverage ratio of 9.06% and a Total Risk-Based Capital Ratio of 16.26%. These ratios are vital for maintaining investor confidence and ensuring regulatory compliance.
Analysis and Outlook
Amalgamated Financial Corp's performance in the fourth quarter of 2024 highlights its resilience in a challenging environment marked by political deposit outflows. The company's ability to grow its loan portfolio and improve its net interest margin are positive indicators of its operational strength. However, the decline in deposits and non-interest income suggests areas for improvement. As the company moves forward, maintaining strong capital ratios and managing deposit costs will be crucial for sustaining growth and profitability.
Priscilla Sims Brown, President and Chief Executive Officer, commented, “Our fourth quarter was outstanding, particularly when considering it was an Election Cycle Conclusion quarter. Historically, an Election Cycle Conclusion quarter is one where we see the most pressure on our business due to political deposit outflows and yet in this cycle 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 we see to drive value for all our stakeholders.”
Explore the complete 8-K earnings release (here) from Amalgamated Financial Corp for further details.
