Amalgamated Financial Corp. Common Stock (DE) 2026 Q3 Earnings Call

Please go ahead, sir. Thank you, operator, and good morning, everyone.

We appreciate your participation in our earnings call. With me today is Priscilla Sims Brown, our President and Chief Executive Officer. Additionally, Sam Brown, our Chief Banking Officer, is here for the Q&A portion of today's call. We will keep our prepared remarks brief to limit repeating details you have already reviewed in the earnings materials. I will now turn the call over to Priscilla.

Good morning, everyone, and thank you for joining us. We delivered another strong quarter, and I am very pleased with both our results and the continued progress we are making against our strategy. What stands out to me this quarter is not simply the level of performance, but the consistency of our execution and the way the different elements of our strategy are increasingly reinforcing one another. Our differentiated deposit franchise continues to provide a strong foundation for the bank. We are putting that funding and our capital to work deliberately, focusing on opportunities where we believe we can generate attractive risk-adjusted returns while serving the customers and communities at the core of our mission. We saw that clearly in the balance sheet this quarter. On-balance sheet deposits increased $256 million during the quarter to $8.7 billion, while off-balance sheet deposits totaled $1.1 billion.

Very notably, political deposits remained at approximately $2 billion while also moving beyond the peak of the prior presidential election cycle. Growth across our mission-aligned customer segments continue to demonstrate the strength, resiliency, and diversity of our bank. We also maintained approximately $5 billion of cash, borrowing capacity, and unpledged securities, providing substantial liquidity and strategic flexibility. That funding strength allowed us to deploy capital into nicely balanced opportunities across the balance sheet. Commercial loans increased approximately $93 million during the quarter, and CPACE assessments increased approximately $54.2 million. At the same time, lower-yielding residential mortgages and consumer solar balances declined through planned runoff, allowing us to redeploy that capital into higher-performing assets. This is a good example of how we expect to continue converting the strength of our pipeline into attractive deployment opportunities in the quarters ahead.

Importantly, our focus remains on the quality and economics of that growth, not simply on adding assets. At the same time, we continue to invest for the future. During the quarter, we advanced several modernization initiatives. We expanded the use of AI-enabled tools across the organization, and we continued building the technology foundation to support our long-term ambitions. These investments are designed to simplify how we operate, improve the customer and employee experience, strengthen our control environment, and enable us to support more business without adding complexity at the same pace. Just as importantly, we continued investing in our people. We strengthened their capabilities to better serve our communities and our customers. Taken together, this is the strategy at work.

We are putting our differentiated funding base and capital to work more effectively while building the capabilities that allow us to serve our customers better and sustain stronger performance over time. We are focused on creating greater value from the franchise we have built with the discipline and risk management that have always defined how we operate. Our strong balance sheet, differentiated deposit franchise, mission-driven customer base, and disciplined execution give us the confidence in both where we are today and the opportunity ahead. With that, I will turn the call over to Jason.

Thanks, Priscilla. Last quarter, we discussed harvesting the earnings power of the bank. This quarter, I will spend some time talking about how that earnings power is showing up in the numbers. The earnings profile of the company continues to strengthen. Core net income increased to a record $34.6 million, or $1.14 per diluted share. Net revenue exceeded $100 million for the first time in the bank's history. Net interest income reached a record $87.9 million while maintaining a net interest margin of 3.77%. Core profitability metrics again improved to record levels as core return on average assets increased to 1.44% and core return on average tangible common equity increased to 16.57%. Collectively, these results demonstrate both strong and consistent performance. We reached our target balance sheet size of approximately $9.6 billion this quarter by adding $141 million of interest-earning assets across the lending, PACE, and traditional securities portfolios.

Runoff loan portfolios generated approximately $39 million of redeployed cash. While we believe our balance sheet is well optimized, we are considering ways to accelerate reduction of our consumer solar loan portfolio as we continue pursuing productive revenue generation and future profitability. The scalability of the bank is starting to show. Revenue growth allowed us to continue investments in our technology ecosystem and necessary talent and also absorb an expected increase in occupancy expense associated with our headquarters move. Our core efficiency ratio remained remarkably stable at approximately 49%, demonstrating the positive operating leverage embedded within the bank and providing a glimpse into the long-term value we believe is still ahead of us. Our key takeaway this quarter is that our outlook remains favorable. Credit performance remains stable overall. Pass-rated loans continue to represent approximately 97% of the portfolio.

Annualized net charge-offs declined to 20 basis points, and we continue actively managing the previously discussed multifamily relationship. As another election cycle concludes in Q4, we expect to run a neutral balance sheet. We are comfortable with our liquidity position and ability to limit both NII and margin volatility. With that, we are increasing our net interest income outlook for the year from a high end of $340 million to a range of $341 million-$342 million, but project modest margin compression in the fourth quarter related to the DDA/IBA deposit remix as the election cycle concludes.

For core pre-tax, pre-provision earnings, we are raising from the prior high-end target of $190 million to a new range of $193 million-$194 million, driven mainly by our strong Q3 performance. In upcoming quarters, you'll hear us talk about meaningful but responsible growth. This means growing in a way that strengthens the bank rather than simply enlarging it. We're not attempting to become a larger bank for the sake of size. We are building a more productive bank. The objective is to generate stronger earnings, efficient returns, and increasing operating leverage with less inherent structural risk. Said differently, the objective is to derive more value from each incremental dollar of asset growth. We believe the strongest banks are not those that grow the fastest, but those that become more productive.

That philosophy benefits all our stakeholders by requiring strong financial performance, expansion of our capacity to serve customers, and scale a model for financial success and community impact. Ultimately, the point is, as Amalgamated grows, the voice and impact of the mission-driven communities we serve grows with us. We're now ready for questions.