AMAL Q1 Deep Dive: Deposit Growth and Disciplined Risk Management Anchor Performance

Socially responsible bank Amalgamated Financial (NASDAQ:AMAL) met Wall Street’s revenue expectations in Q1 CY2025, but sales were flat year on year at $76.98 million. Its non-GAAP profit of $0.88 per share was 10% above analysts’ consensus estimates.

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StockStory’s Take

Amalgamated Financial’s first quarter results aligned with Wall Street revenue expectations, while the company delivered non-GAAP profits ahead of analyst estimates. Management attributed the quarter’s outcome to prudent balance sheet management, broad-based deposit growth, and a continued focus on maintaining strong liquidity. CEO Priscilla Sims Brown highlighted that, despite market uncertainty, the bank’s conservative asset profile and low commercial real estate exposure enabled it to weather external challenges. She emphasized, “Our long-standing approach has not been to predict the future but rather to remain vigilant and adaptable.”

Looking ahead, Amalgamated Financial’s guidance is built on expectations for continued deposit strength and cautious loan growth, particularly in commercial and industrial lending. Management sees opportunities to expand its C-PACE (Commercial Property Assessed Clean Energy) originations and expects margin expansion as the year progresses. CFO Jason Darby noted that expense growth will be driven by digital transformation initiatives and selective hiring, but the company aims to maintain efficiency. Brown stated, “We remain nimble and prepared to adjust our tactics swiftly in response to changing conditions.”

Key Insights from Management’s Remarks

Management pointed to a resilient balance sheet, diversified deposit inflows, and disciplined capital deployment as central to Q1 performance.

• Deposit franchise diversification: Amalgamated continued to see broad-based deposit growth, including a notable 11% sequential increase in political deposits as post-election fundraising activity resumed. Management highlighted growth across all customer segments, supporting loan paydowns and reducing short-term borrowings.
• Balance sheet resilience: The company maintained a low-risk asset profile, with limited exposure to commercial real estate. High liquidity and robust capital ratios, such as a 14.32% CET1 ratio, were emphasized as buffers against economic and industry shocks.
• Shareholder capital return: Amalgamated returned over 30% of earnings to shareholders through dividends and buybacks in Q1, and introduced a new $40 million share repurchase program. Management indicated plans for more aggressive buybacks through the remainder of the year, while maintaining at least a 9% tier one leverage ratio.
• Expense management and digital investment: Professional fees increased due to investments in digital transformation, particularly a new CRM platform and advisory services. Despite these investments, management kept the core efficiency ratio near its target band of 52% by offsetting higher professional fees with lower compensation expenses.
• Nonprofit segment growth: Deposits from not-for-profit organizations, including 501(c)(3) entities, have grown rapidly and now represent 18.5% of total deposits. Management described this segment as both stable and valuable, with strict underwriting standards applied to related loans.

Drivers of Future Performance

Management’s outlook centers on continued deposit momentum, disciplined expense management, and targeted loan growth in areas with attractive risk-adjusted returns.

• C-PACE loan expansion: Management is prioritizing growth in its C-PACE (Commercial Property Assessed Clean Energy) loan franchise, with expectations for $15 to $20 million in new originations per quarter in the second half of the year. This product is viewed as offering strong credit quality and yield, supporting both growth and diversification.
• Expense ramp and digital initiatives: Projected expense increases will be driven by ongoing digital transformation, including CRM deployment and targeted hiring. Management expects these investments to enhance operational efficiency in the long run, though they will pressure near-term margins.
• Navigating economic uncertainty: While management is confident in the credit quality and diversification of the deposit base, they remain alert to potential headwinds from changes in federal funding or regulatory actions. The company is maintaining elevated liquidity and adhering to conservative lending standards to mitigate these risks.

Catalysts in Upcoming Quarters

The StockStory team will be watching (1) continued growth and stability in core and political deposit segments, (2) progress on scaling C-PACE originations and the pace of loan growth in targeted verticals, and (3) the impact of digital transformation initiatives on expense management and operational efficiency. Updates on credit quality and capital deployment will also be key signposts.

Amalgamated Financial currently trades at $30.80, up from $28.09 just before the earnings. At this price, is it a buy or sell? See for yourself in our full research report (it’s free).

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