Yahoo Finanzas Amalgamated Financial Corp (AMAL) Q1 2024 Earnings Call Transcript Highlights: Strong ...
Core Net Income: Increased by 16%.
Net Interest Margin: Expanded by 5 basis points.
Deposit Growth: On-balance sheet deposits up by $374 million or 5.5%.
Net Income: $27.2 million or $0.89 per diluted share.
Core Revenue Per Diluted Share: $2.48, consistent with the previous quarter.
Core Return on Average Equity: 17.14%, showing an increase from the prior quarter.
Core Return on Average Assets: 1.27%.
Tier One Leverage Ratio: Improved by 22 basis points to 8.29%.
Total Deposits: Increased to $7.3 billion, up by $293.8 million.
Political Deposits: Grew to approximately $1.4 billion, an increase of $250.4 million.
Net Interest Income: Increased to $68 million.
Dividend: Increased to $0.12 per share.
Release Date: April 25, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q & A Highlights
Q: Could you provide more details on how Amalgamated could engage with the greenhouse gas reduction fund and other sustainability initiatives under the IRA? A: Priscilla Brown, President and CEO, explained that Amalgamated is well-positioned to manage the distribution of these funds, whether for immediate use or staged over time, similar to previous large-scale transactions with union clients. The bank's political group has close ties to the IRA, providing a unique advantage. Amalgamated is familiar with many of the potential fund recipients, particularly through relationships with green banks, enhancing its competitive edge in advising and potentially financing these initiatives.
Q: How will Amalgamated handle the expected political deposit outflows in the upcoming quarters? A: Jason Darby, CFO, noted that off-balance sheet deposits would likely be the first line of defense against the outflows of political deposits as the election approaches. The bank has planned for these outflows and has the flexibility to manage them through various strategies, including potentially advancing the paydown of borrowings.
Q: Can you discuss the growth and characteristics of the multifamily loans added this quarter? A: Jason Darby indicated that growth in multifamily loans primarily occurred in segments less affected by rent stabilization, such as 421A and Section 8 housing. These loans offer more predictable revenue streams, aligning with the bank's strategy to navigate away from more regulated and potentially volatile market segments.
Q: What are the expected impacts of higher interest rates on the bank's multifamily portfolio, particularly those due for refinancing? A: Jason Darby reassured that the bank has proactively engaged with borrowers well ahead of loan maturities, which has helped maintain stability. The bank's multifamily loans are characterized by strong loan-to-value (LTV) ratios and debt service coverage ratios (DSCR), suggesting a lower risk of default despite the challenging interest rate environment.
Q: How does Amalgamated plan to replace political deposits and manage the funding gap in the second half of the year? A: Jason Darby explained that the bank anticipates needing between $500 million and $600 million to manage political deposit outflows. However, the actual amount could be lower if non-political deposit growth continues to exceed expectations. The bank's strategy includes attracting lower-cost deposits from its core segments to offset the higher-cost borrowings.
Q: What are the bank's strategies for stock buybacks as it approaches its Tier 1 leverage target? A: Jason Darby stated that stock buybacks are always considered as part of the bank's capital strategy. The decision to buy back stock will depend on the market value of the shares relative to the book value and the overall capital position. The bank has incorporated provisions for buybacks in its capital planning, allowing flexibility to execute buybacks without compromising its leverage targets.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
