Amalgamated Financial (NASDAQ:AMAL) reported record third-quarter core net income of $34.6 million, or $1.14 per diluted share, as net revenue surpassed $100 million for the first time, according to executives on the company’s earnings call.
Chief Financial Officer Jason Darby said net interest income reached a record $87.9 million while net interest margin held at 3.77%. Core return on average assets rose to 1.44%, and core return on average tangible common equity increased to 16.57%.
“The earnings profile of the company continues to strengthen,” Darby said, adding that the company’s core efficiency ratio remained near 49% despite continued spending on technology, talent and costs tied to its headquarters move.
Deposits, Lending and Liquidity
President and Chief Executive Officer Priscilla Sims Brown said on-balance-sheet deposits increased by $256 million during the quarter to $8.7 billion, while off-balance-sheet deposits totaled $1.1 billion. Political deposits remained at approximately $2 billion at quarter-end, even as the company moved beyond the peak of the prior presidential election cycle.
As of Oct. 15, political deposits had declined to about $1.7 billion, Chief Banking Officer Sam Brown said, reflecting the expected spending phase approaching Election Day. Darby said the company expects demand deposit accounts to decline from about 42% of total deposits at the end of the third quarter to roughly 36% by the end of the fourth quarter.
The company maintained approximately $5 billion of cash, borrowing capacity and unpledged securities, which CEO Brown said provides substantial liquidity and flexibility. Darby said Amalgamated expects to manage the post-election runoff without needing a borrowing position.
Commercial loans increased by approximately $93 million during the quarter, while commercial property assessed clean energy, or PACE, assessments increased by $54.2 million. Lower-yielding residential mortgages and consumer solar balances declined through planned runoff, allowing the company to redeploy capital into higher-performing assets.
Darby said the company is considering ways to accelerate reductions in its consumer solar loan portfolio, citing the portfolio’s performance and the effects of its current expected credit loss, or CECL, model on economics. He identified PACE as a primary destination for redeployed capital, alongside other lending opportunities.
- Interest-earning assets increased by $141 million across lending, PACE and traditional securities portfolios.
- Runoff loan portfolios generated approximately $39 million of redeployed cash.
- PACE originations during the quarter were priced around 7%, Darby said, with potential yields of 7.75% to nearly 8% possible in 2027.
PACE Growth and Credit Outlook
Management highlighted PACE as an area of opportunity, though Sam Brown cautioned that the $54 million of quarterly production represented a high mark that benefited from substantial activity. He said the company sees potential to broaden its origination partners and expand both large transactions and its smaller-dollar program.
Priscilla Sims Brown said the PACE portfolio diversified during the quarter across transaction sizes, geographies and property types. She added that regulatory support for clean-energy investments could support sustainable fee-based growth.
Credit performance remained stable, according to Darby. Pass-rated loans represented approximately 97% of the portfolio, while annualized net charge-offs declined to 20 basis points.
The company continues to manage a previously disclosed multifamily relationship in the Washington, D.C., area. Darby said the borrower remains engaged in a constructive resolution process, though no asset disposition was recorded during the third quarter. Amalgamated is still considering a note sale involving certain degraded properties that were previously classified as nonaccrual.
Darby said the company was not prepared to change its fourth-quarter provision expense forecast of approximately $5 million to $5.5 million.
Fourth-Quarter Outlook and Investment Spending
Amalgamated raised its full-year net interest income outlook to a range of $341 million to $342 million, from a prior high-end forecast of $340 million. It also raised its core pre-tax, pre-provision earnings outlook to $193 million to $194 million, compared with a previous high-end target of $190 million.
However, management expects modest net interest margin compression in the fourth quarter as political DDA balances decline and the deposit mix shifts toward interest-bearing off-balance-sheet deposits. Darby said fourth-quarter net interest income is expected to be similar to the third-quarter level as the company maintains a neutral balance sheet through the election cycle.
Looking further ahead, Darby said management sees potential for net interest income growth and margin expansion in 2027, driven by asset yields and the anticipated rebuilding of DDA balances. He said the company historically has experienced an interest-bearing deposit beta below 40% through the prior rising-rate cycle, while emphasizing that management intends to remain competitive on deposit pricing.
The company expects headquarters transition costs, including double rent, building-move expenses and restoration costs at its prior location, to continue into the fourth quarter. Darby said those costs are not expected to materially spike from third-quarter levels. As those expenses subside, the company expects to continue investing in technology infrastructure and talent rather than reducing its overall expense run rate.
Management said it expanded AI-enabled tools during the quarter and continued investments intended to simplify operations, improve customer and employee experiences, strengthen controls and support additional business without a proportional increase in complexity.
Capital Return
Darby said share repurchases remain part of Amalgamated’s shareholder-return strategy. The company increased its repurchase authorization to $40 million before the third quarter and resumed buying shares when the stock price declined alongside broader market movements.
He did not provide a specific repurchase schedule but said management believes the shares retain value. “I’ll continue to just buy the stock as long as I think there’s value to be had,” Darby said.
About Amalgamated Financial (NASDAQ:AMAL)
Amalgamated Financial Corporation (NASDAQ:AMAL) is the parent company of Amalgamated Bank, a commercial bank that provides banking, lending and financial services to businesses, nonprofit organizations, labor unions, political organizations and individual consumers. The bank is known for serving mission-driven and socially responsible organizations, as well as customers seeking conventional banking products.
Amalgamated Bank offers commercial and consumer deposits, commercial and real estate lending, treasury management, online and mobile banking, payment services, and investment management.
