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Amalgamated Bank Has Unique Deposit Base, Raymond James Says In Bullish Initiation

Shanthi Rexaline

Amalgamated Bank (NASDAQ: AMAL) recently offered 6.7 million shares in an IPO priced at $15.50, within the estimated price range of $15 to $17.

With the IPO quiet period expiring, the sell-side is starting coverage of the company.

The Analyst

Raymond James analyst William Wallace initiated coverage of Amalgamated Bank with an Outperform rating and $20 price target.

The Thesis

Amalgamated Bank, a union-owned bank, has seen meaningful improvements in profitability and efficiency metrics thanks to a financial transformation it underwent over the last few years that led to improved credit metrics, significant branch closures, robust core deposit growth and expense rationalization, Wallace said in a Friday note. (See the analyst's track record here.)

The company has recently expanded on the west coast through its first-ever acquisition, the analyst said.

Amalgamated will now pursue a combination of organic growth and M&A-led growth in its pursuit to become the nationwide values-driven bank of choice, he said.

The bank's unique base of labor union, non-profit and political action committee deposits are likely to fare well in a rising rate environment, Wallace said. The New Resource deal could catalyze earnings and aid in market share expansion, he said.

Raymond James estimates non-GAAP EPS of $1.35 for both 2018 and 2019.

"Ultimately, with our expectation for solid balance sheet growth, improving efficiency and a unique funding base that should demonstrate a better-than-peer deposit beta, we view the risk-reward dynamic positively at current valuation levels," Wallace said.

The Price Action

Amalgamated Bank shares have gained 15.8 percent since their Aug. 9 listing.

Related Links:

The IPO Outlook For The Week: An Airline, A Biotech And 2 Banks

Bank On This Bank ETF

Latest Ratings for AMAL

Date

Firm

Action

From

To

Sep 2018

Barclays

Initiates Coverage On

Overweight

Sep 2018

JP Morgan

Initiates Coverage On

Overweight

Sep 2018

Keefe Bruyette & Woods

Initiates Coverage On

Market Perform

View More Analyst Ratings for AMAL
View the Latest Analyst Ratings

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