Amalgamated Financial Corp.

Ladies and gentlemen thank you for standing by. The program will begin shortly. Once again thank you for standing by and thank you for your patience. We will begin the program shortly. Good morning, ladies and gentlemen, and welcome to the Amalgamated Financial Corporation Second Quarter 2023 Earnings Conference Call. During today's presentation, all parties will be in a listen-only mode. Following the presentation, the conference will be open for questions with instructions to follow at that time. As a reminder, this conference call is being recorded. I would now like to turn the call over to Mr. Jason Darby, Chief Financial Officer. Please go ahead, sir.

Thank you, operator, and good morning, everyone. We appreciate your participation in our second quarter 2023 earnings call. With me today is Priscilla Sims-Brown, President and Chief Executive Officer. As a reminder, a telephonic replay of this call will be available on the investor section of our website for an extended period of time. Additionally, a slide deck to complement today's discussion is also available on the Investors section of our website. Before we begin, let me remind everyone that this call may contain certain statements that constitute forward-looking statements within the meaning of the Private Securities Legation Reform Act of 1995. We caution investors that actual results may differ from the expectations indicated or implied by any such forward-looking information or statements. Investors should refer to slide 2 of our earnings deck, as well as our 2022 10-K filed on March 9, 2023, for a list of risk factors that could cause actual results to differ materially from those indicated or implied by such statements. Additionally, during today's call, we will discuss certain non-GAAP measures, which we believe are useful in evaluating our performance. The presentation of this additional information should not be considered in isolation or as a substitute for results prepared in accordance with U.S. GAAP. A reconciliation of these non-GAAP measures to the most appropriate or comparable GAAP measure can be found in our earnings release as well as on our website. Let me now turn the call over to Priscilla.

Thank you, Jason. Good morning, everyone. We appreciate your time and interest today. Now that we are a few months out from the banking events that occurred in early March, things have begun to return to the new normal environment of fierce competition for deposits, higher for longer interest rates, metropolitan office credit concerns, and more. We have been operating our business from a position of strength. Demonstrating agility and the flexibility of our strategy, we quickly pivoted to a modified growth strategy centered on a flat balance sheet and building capital. Loan growth is still expected, funded mainly from runoff of our securities portfolio as is preparing our balance sheet to accommodate growing political deposits as the next presidential election cycle begins in earnest. Despite nagging headline activity in the banking sector, I believe there's reason for optimism. The economy has proved quite resilient. Inflation data has improved. Large and medium bank earnings have been in line, and investors are starting to move back into the banking sector. At Amalgamated, it's a very exciting time as our differentiated yet simple model uniquely positions us to win. Given that you've had our material financial information for almost two weeks, I'd like to spend our time together talking about three keys to our continued future success, those being our deposit franchise, our lending segments, and our earnings potential. Our deposit franchise features an industry-leading cost of funds, and customers that have banked with us for decades given our shared values and union heritage. Given the strength and longevity of our customer relationships, we introduced a designation last quarter called SuperCore Deposits in order to provide more transparency into our deposit base. Our super core deposits come from loyal customers that a bank with amalgamated for more than five years and cumulatively represent approximately $3.6 billion or 54% of our core deposits at the end of the second quarter. These customer relationships have been with us for more than 17 years on average. When thinking about a bank's deposit stability, our super core deposits are an incredible advantage. one earned from over 100 years of relationship-based banking. Another deposit-based advantage for Amalgamated is our political banking franchise, which we began developing nearly a decade ago. We uniquely understand the needs of our political customers, and our ability to execute on the demands of the most sophisticated campaign finance professionals sets us apart. Our political deposits balance this trend with major election cycles and normally rise leading up to an election and then decline in the quarters near its conclusion. We experienced this once again following the midterm elections last November. As national election cycles have greatly lengthened, we are now in an accumulation phase, boosted by the onset of presidential candidates announcing their intentions to run during the quarter. Through the second quarter, we have seen a strong inflow of deposits from politically active customers as the election cycle begins to gain momentum. We anticipate these political inflows to continue through the balance of the year and into next year, which is a powerful driver for our bank. Our political franchise is a big contributor of non-interest bearing deposits as funds are largely in DBA accounts given their life cycle. And this helps to mitigate the rise in deposit costs and adds flexibility for us as some of our customers' deposits move off balance sheet into our treasury investment services, where they seek higher yields in the current rate environment. Overall, we are maintaining our non-interest-bearing deposits and mitigating the rise in funding costs, all while reducing our uninsured deposit balances, which is quite an accomplishment given the current market backdrop. Shifting to our lending segments, we spent much time discussing the expansion of our banking team over the last two years, which has driven a notable acceleration to loan growth and loan yields. This has provided an important lift to the earnings power of the bank. But one area that I would like to spend more time on today are the initiatives we have around sustainable lending. This is a growing industry where it is estimated that $3 trillion of investment over the next 10 years is necessary for the U.S. to achieve the goal of net zero emissions by 2050. This is a significant market opportunity, which we believe will grow through economic cycles, given the importance, urgency, and the momentum to address climate change. We have deeply experienced bankers in sustainable lending with customer relationships across renewable energy, energy efficiency, battery storage, and pace, to name a few. Our team includes recognized industry thought leaders and sustainable lending experts who help drive the dialogue around financing and source significant opportunities. But more importantly, we have the sophistication to prudently underwrite emerging technologies. This leads directly into our future earnings potential. As we continue to demonstrate our expertise in sustainable lending, we are going to drive a powerful mix shift in our balance sheet as we replace lower yielding loans and securities with higher yielding sustainable loans. It's important to remember that we are still turning over an older balance sheet as our lending strategy is just in its early innings. As lower-yielding multifamily loans and securities roll off our balance sheet over the next 12 to 18 months, we should experience a strong lift in yields and, as a result, margins and earnings. Paired with our already strong and well-protected earnings stream, our ability to grow net interest income next year and maintain a margin over 3% is encouraging, with great opportunity for margin to expand as Fed interest rates normalize around a lower terminal rate. To conclude, we are running our bank and leading on issues we care about. In April, we hosted the Global Alliance for Banking on Values annual meeting in New York City. Over 200 people attended, spanning a range of international bankers, impact investors, customers, and software providers to discuss using finance to deliver sustainable economic, social, and environmental development. As our presence in this area grows, so will our business. We are America's socially responsible bank, and we're glad that people are starting to notice. In the end, results are what matters. Results for shareholders, for customers, and the communities we serve. Our second quarter results clearly demonstrate the strength of our customer relationships, as well as the significant opportunity that we possess to drive earnings growth for many years to come. Let me now turn the call back over to Jason provide a review of our second quarter financial results.