"Amalgamated Financial Reports Robust Third Quarter Growth with a Focus on Sustainability"
Amalgamated Financial (ticker: AF) announced strong results for the third quarter of 2024, reporting significant growth in deposits and loans. The company's net income was $27.9 million, or $0.90 per diluted share, while core net income was $28 million, or $0.91 per diluted share. The bank experienced a substantial increase in deposits, including political and sustainable funds, with total deposits rising to $7.6 billion. Loan growth was 2.7%, focusing on commercial, industrial, and sustainable loans. The Tier 1 leverage ratio increased to 8.63%, and the company's stock price showed a moderate increase to $2.62. Amalgamated Financial revised its full-year guidance upward and appears optimistic about growth opportunities, particularly in sustainable banking.
Highlights include $27.9 million in net income and $28 million in core net income for the third quarter of 2024. There was a $311 million increase in new deposits, driven by growth in social, philanthropic, and sustainable funds. Loan growth across sectors was balanced at 2.7%. The company targets sustainable loan growth to support the US's net zero emissions goal by 2050. The Tier 1 leverage ratio rose to 8.63%, with a target of reaching 9% in the near future. The guidance for core pre-tax pre-provision earnings and net interest income for the full year 2024 has been revised. Amalgamated Financial anticipates stable charge-off rates in the mortgage market as interest rates decline, with potential improvements. Expected political deposit outflows are set to decrease by the year's end, removing the need for wholesale funding. The company aims to maintain a balance sheet size of $8.35 billion by year-end.
Negative aspects include the probable suspension of share repurchases until the Tier 1 leverage ratio reaches 9%. Expenses are expected to remain high in the fourth quarter, including some one-time costs. Positive aspects feature strong pipeline loan growth of 1% to 2%, particularly with strong yields in the C&I sectors. Current loan origination yields are expected to be between 6.25% and 8%. No specific shortcomings were reported during the earnings call. The financial outlook, operational strategies, and Tier 1 leverage ratio targets were discussed during the Q&A, with further updates to be provided at the Investor Day on December 3. The capital return strategy will be outlined in the fourth quarter.
Amalgamated Financial's third-quarter 2024 performance reflects a strong commitment to growth and sustainability. Executives, including CFO Jason Darby and CEO Priscilla Sims Brown, highlighted the bank's strategic approach to focusing on higher-yield options as below-market-yield loans mature. Looking ahead, Amalgamated Financial positions itself as a key player in financing the transition to a net zero emissions economy in the US. The bank's operational strategies and financial outlook predict a steady trajectory, with more details to be shared at the upcoming Investor Day.
InvestingPro Insights support Amalgamated Financial's strong third-quarter results. The company's market capitalization stands at $1.04 billion, reflecting its solid position in the financial sector. With a P/E ratio of 10.41, the stock appears reasonably valued compared to sector peers. InvestingPro data reveals impressive revenue growth for Amalgamated Financial, showing a 12.39% increase over the past twelve months as of the third quarter of 2024, with an even stronger 16.65% growth in the most recent quarter. This aligns with the deposit and loan growth reported in the earnings report. An InvestingPro Tip highlights that Amalgamated Financial has experienced "a significant price increase over the past six months," corroborated by InvestingPro data showing a notable 41.1% price total return over the same period. This significant increase reflects investor confidence in the company's performance and growth strategy. Another relevant InvestingPro Tip notes that the company has been "profitable over the past twelve months," consistent with the strong net income figures reported during the earnings call. The operating income margin of 49.44% for the twelve months ending the third quarter of 2024 further underscores the company’s operational efficiency. Investors can gain a more comprehensive analysis of Amalgamated Financial's financial health and market position with seven additional tips provided by InvestingPro.