Amalgamated Financial Corp.

Good morning, ladies and gentlemen, and welcome to the Amalgamated Financial Corporation Third 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 third quarter 2023 earnings call. With me today is Priscilla Sims-Brown, our 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, the slide deck to complement today's discussion is also available on the investor 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 Litigation 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 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, and good morning, everyone. I'm excited to be here today to discuss our third quarter results as they clearly demonstrate the business of social responsibility is a business that can do well financially while also doing good in the world. While the banking events from earlier in the year are no longer dominating the news headlines, we are conscious of the economic environment we're operating in. With the Fed continuing to maintain a hawkish stance and the reality of this higher for longer interest rate position slowly settling into the bond markets, We believe we have a solid strategy to prepare our balance sheet for growth optionality by the second half of next year. As a reminder, in mid-March, we quickly pivoted to a modified growth strategy centered on a neutral balance sheet, building capital, and increasing our tangible common equity ratio. Now, two full quarters in, our neutral balance sheet strategy is playing out well, and perhaps even better than we expected. Since our March results, our leverage ratio has improved 39 basis points to 7.89% as we steadily march towards an 8.5% leverage target. And our tangible common equity ratio has increased modestly by 29 basis points to 6.72% as we target 7.5%. The TCE ratio is very important to us, and we have been measuring ourselves against a minimum target of 6% since the second quarter of 2022. Looking more closely at our balance sheet, we continue to fund loan growth predominantly from runoff of our securities portfolio, augmented by select security sales. As we change the mix of assets from securities to loans, The balance sheet help will benefit as the portfolio amortization will naturally reduce unrealized loss positions and replace those assets with loans at market rates. During the quarter, we reduced our traditional securities portfolio by $109.6 million, or nearly 5%, and by $185.3 million, or nearly 8% since March. In tandem, loans have continued to grow. During the quarter, net loans receivable increased $113 million, or 2.7%, to $4.4 billion. Importantly, the growth was mainly driven by our commercial and industrial asset class, which I will discuss more fully in just a bit. Shifting to deposits, total deposits excluding broker CDs increased $172.8 million or 2.7%, to $6.6 billion during the quarter. Importantly, we experienced approximately 68 million new deposit inflows from our customer segments outside of the political segment, which includes sustainability and not-for-profit organizations. That highlights the diversity of our deposit franchise. Our political deposit segment is important, and it's a differentiator for the bank. particularly in this tight liquidity environment. During the quarter, political contributed $115.4 million of our deposit growth as the presidential campaign cycle kicks into high gear with the election now only a year away. Looking forward, we expect our political inflows to continue well into next year, which provides important visibility to further deposit growth in the quarters ahead. As our balance sheet continues to take shape, the trajectory for growth of our profitability is becoming more clear and predictable. Our net interest income was $63.7 million and our net interest margin was 3.29%, with each better than the guidance range we provided in the second quarter. It's important to note that we believe our margin is reaching an inflection point as our loan yields increased 23 basis points to 4.56%, mostly offsetting the rise in our cost of funds. As I discussed last quarter, we are in the midst of turning over an older balance sheet as our lower yielding residential loans, multifamily loans, and securities roll off over the next 12 to 18 months, and they are replaced with higher yielding loans and PACE assets. When paired with our deposit franchise, I'm excited about our prospects for margin expansion in 2024. Perhaps what is most important to highlight is how we are achieving our results. We are working directly with our mission aligned business model and we're having success. I have often said that we want to use our voice to drive change that both our customers and our employees are passionate about. and to do this in a way that also drives profitability and earnings growth. Importantly, we're just getting started, and we have a long runway for continued growth. We believe we're only in the early innings of the asset mix shift that I spoke of earlier, given the opportunities apparent in our sustainable lending franchise. We have deeply experienced bankers in sustainable lending with the sophistication to prudently underwrite sustainable loans and rapidly expanding asset classes in the renewable sector. Sustainability is a huge opportunity for us. Efforts to combat climate change are growing with an estimated $3 trillion of investment needed over the next 10 years in order for the U.S. to achieve a 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 momentum to address the issue. Additionally, the Inflation Reduction Act is funneling money to critical projects in the renewable infrastructure and water segments of the market, which will need additional capital, but we are well-suited to participate and provide visibility into in the years ahead. The importance of combating climate change was on full display during Climate Week, which took place in partnership with the UN General Assembly in New York City in September. Amalgamated Bank was honored to be a part of the UN's General Secretary's Client Ambition Summit, which speaks to our industry-leading position, highlighted by the fact that we are only one of four banks to be a part of the UN's Zero Target Banking Alliance, as well as having our own zero-based emission targets that have been validated by the Science-Based Targets Initiative. Wrapping up my comments, our quarterly results clearly demonstrate the clarity of our current balance sheet strategy the value of our franchise, and the strength of our differentiated business model, which positions us to win even if the environment proves to be more challenging. We are America's socially responsible bank, and we deliver results for our shareholders, our customers, and the communities we serve. Most importantly, we have a long runway ahead for continued earnings growth and value creation. Let me now turn the call over to Jason to provide a few of our third quarter financial results.