Socially responsible bank Amalgamated Financial (NASDAQ: AMAL) fell short of the market’s revenue expectations in Q3 CY2025, with sales flat year on year at $80.31 million. Its non-GAAP profit of $0.91 per share was 4% above analysts’ consensus estimates.

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StockStory’s Take

Amalgamated Financial’s third quarter was marked by continued momentum in deposit growth and loan expansion, which management described as key contributors to the positive results. CEO Priscilla Sims Brown cited market share gains across all deposit segments and an acceleration in lending activity, particularly in multifamily, commercial real estate, and commercial and industrial portfolios. The quarter also featured the decisive resolution of a previously stressed loan, which management highlighted as a driver of improved credit quality metrics. Commenting on this, Brown said, “We keep delivering great results. And the quality and sustainability of our earnings allows us to handle problem situations with ease.”

Looking ahead, management is focused on sustaining balanced growth while closely monitoring emerging risks and policy changes. Brown emphasized ongoing investments in digital modernization to enhance productivity and expand customer solutions, stating the new platform is “already seeing the benefits across our organization.” CFO Jason Darby outlined expectations for stable net interest margins and disciplined expense management, while also cautioning that future rate cuts and regulatory developments could impact loan yields and funding costs. The leadership team aims to maintain a strong efficiency ratio and leverage geographic diversity for future growth.

Key Insights from Management’s Remarks

Management attributed the quarter’s results to robust deposit inflows, loan portfolio expansion, and technology investments, while also pointing to decisive credit actions and ongoing operational discipline.

• Deposit franchise expansion: Amalgamated’s deposit gathering team drove over $415 million in new deposits, with notable gains in the political and climate sustainability segments. Management highlighted the 19% growth in political deposits and 21% growth in climate and sustainability deposits as evidence of the bank’s unique positioning.

• Accelerating loan growth: Lending activity accelerated with $99 million of new loans, mainly in multifamily, commercial real estate (CRE), and commercial & industrial (C&I) portfolios. This 3.3% growth was boosted by new originators joining the C&I team, supporting management’s growth targets.

• Resolution of problem loans: Management resolved a previously stressed syndicated business loan, resulting in a one-time charge-off but improving nonperforming asset and credit quality ratios. Nonperforming assets fell by 34.6%, and credit quality metrics reached their best levels since Brown became CEO.

• Digital modernization platform rollout: The bank’s digital transformation platform went live in the quarter, aiming to drive productivity, provide a comprehensive customer view, and enable more customized solutions. Early benefits are already being realized across operations and customer engagement.

• Expense and margin discipline: Core efficiency ratio remained strong at 50.17%, placing Amalgamated at the top of its peer group. While technology investments and compensation accruals increased expenses, management remains focused on maintaining annual operating expenses around $170 million, with potential upside if current trends continue.

Drivers of Future Performance

Management expects continued deposit and loan growth to drive revenue, with digital initiatives and expense controls supporting stable margins.

• Interest rate environment impact: CFO Jason Darby noted that anticipated Federal Reserve rate cuts may reduce loan yields and net interest income, particularly as variable-rate portfolios reprice. The bank models a 25 basis point rate decrease as reducing annual net interest income by approximately $2.2 million.

• Geographic and segment diversification: CEO Priscilla Sims Brown emphasized the bank’s geographic diversity and balanced contribution from lending channels, which are expected to help manage future growth targets and mitigate risks tied to specific markets, such as New York rent stabilization policies.

• Digital transformation benefits: The fully integrated digital platform is expected to improve productivity and customer insights, enabling new, customized solutions and revenue streams. Management believes this will support both top-line growth and expense efficiency over the coming year.

Catalysts in Upcoming Quarters

In future quarters, the StockStory team will be monitoring (1) continued momentum in deposit growth across core segments, (2) the impact of interest rate changes on loan yields and net interest income, and (3) execution of the digital transformation program to drive productivity and customer engagement. Additionally, we will watch for developments in regulatory and policy environments, particularly those affecting the multifamily and renewable energy loan portfolios.

Amalgamated Financial currently trades at $27.45, up from $26.66 just before the earnings. Is there an opportunity in the stock?Find out in our full research report (it’s free for active Edge members).

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