Amalgamated Financial Corp. Reports Solid Growth Amidst Economic Headwinds
Net Income: $22.7 million for Q4 2023, a slight increase from $22.3 million in Q3 2023.
Core Net Income: $22.1 million for Q4 2023, down from $23.3 million in Q3 2023.
Deposit Growth: Excluding Brokered CDs, deposits grew by $170.8 million, or 2.6%, to $6.8 billion.
Net Interest Margin: Expanded by 15 basis points to 3.44%.
Common Equity Tier 1 Capital Ratio: Strong at 12.98%.
Return on Average Assets: Increased to 1.13%.
On January 25, 2024, Amalgamated Financial Corp (NASDAQ:AMAL) released its 8-K filing, announcing its financial results for the fourth quarter ended December 31, 2023. The bank holding company, which operates through its wholly-owned subsidiary, Amalgamated Bank, reported a modest increase in net income and a notable rise in net interest margin, reflecting its ability to navigate a challenging economic landscape.
Amalgamated Financial Corp is a bank holding company and a chartered trust company that provides a full suite of commercial and retail banking, investment management, and trust and custody services nationally. The company's focus on commercial banking and trust services has positioned it to manage deposit liquidity effectively, as highlighted by President and CEO Priscilla Sims Brown, who remarked on the company's strong liquidity position and ability to deliver above-peer returns.
Financial Performance and Challenges
AMAL's fourth-quarter performance was marked by a $22.7 million net income, or $0.74 per diluted share, compared to the third quarter's $22.3 million, or $0.73 per diluted share. Core net income for the quarter was slightly lower at $22.1 million, or $0.72 per diluted share, compared to $23.3 million, or $0.76 per diluted share, in the previous quarter. A tax adjustment of $3.3 million negatively impacted both GAAP and core net income by $0.11 per diluted share.
The company's deposit growth, excluding Brokered CDs, was a significant achievement, with an increase of $170.8 million or 2.6% to $6.8 billion. This growth is particularly important for a bank like AMAL, as deposits are a primary source of funds for lending activities and a key indicator of customer trust and banking relationships.
Income Statement and Balance Sheet Highlights
AMAL's net interest income grew by $3.6 million, or 5.63%, to $67.3 million, and the net interest margin expanded by 15 basis points to 3.44%. Total deposits increased by $21.1 million, or 0.3%, to $7.0 billion, including a $149.7 million decline in Brokered CDs. The bank's loan portfolio also saw growth, with net loans receivable increasing by $48.7 million, or 1.1%, to $4.3 billion.
On the balance sheet, total assets were $8.0 billion at the end of the quarter, with net loans receivable at $4.3 billion. Total deposits stood at $7.0 billion, and the Common Equity Tier 1 Capital ratio was a robust 12.98%, indicating a conservative asset mix and a strong capital position.
Key Financial Metrics
Important metrics for AMAL include the net interest margin, which is crucial for understanding the bank's profitability from its lending and investment activities. The Common Equity Tier 1 Capital ratio is also vital as it measures the bank's core equity capital compared with its total risk-weighted assets, ensuring financial stability and regulatory compliance.
"We are operating in an enviable position of managing deposit liquidity instead of searching for it. In today's highly constrained liquidity environment, we are punching well above our weight, giving us many options to deliver above peer returns," said Priscilla Sims Brown, President and CEO of Amalgamated Financial Corp.
Analysis and Outlook
AMAL's earnings report reflects a company that is effectively managing its resources and capitalizing on growth opportunities despite economic challenges. The increase in net interest income and the expansion of the net interest margin suggest that the company is successfully navigating the interest rate environment and growing its lending activities profitably.
The company's solid capital ratios and liquidity position it well for future growth and resilience against potential economic downturns. However, the increase in provision for credit losses and the tax adjustment highlight the need for vigilance in credit risk management and tax planning.
Overall, AMAL's earnings report demonstrates a company with a strong financial foundation and the ability to adapt to changing market conditions, positioning it as a potentially attractive option for value investors.
For more detailed financial information and performance analysis, investors and interested parties are encouraged to visit the investor relations section of Amalgamated Financial Corp's website and review the full 8-K filing.
Explore the complete 8-K earnings release (here) from Amalgamated Financial Corp for further details.
This article first appeared on GuruFocus.
