Amalgamated Financial Corp.

Good morning, ladies and gentlemen, and welcome to the Amalgamated Financial First Quarter 2025 Earnings 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 earnings call. With me today is Priscilla Sims-Brown, our president and chief executive officer. Additionally, Sam Brown, our chief banking officer, is also here for the Q&A portion of today's call. As a reminder, a telephonic replay of this call will be available in the investor section of our website for an extended period of time. Additionally, a slide deck to complement today's discussion is also available in 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 statements or information. Investors should refer to slide two of our earnings slide deck as well as our 2024 10-K filed on March 6, 2025 statements. for a list of risk factors that could cause actual results to differ materially from those indicated or implied by such statements. We'll also discuss certain non-GAAP measures during today's call, 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 paired 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.

Good morning, everyone, and thank you for joining us. Over the quarter, we saw increased turbulence and uncertainty in the markets, a dynamic that rarely brings comfort to the industry or our investors. However, our longstanding approach has not been to predict the future, but rather to remain vigilant and adaptable. We closely monitor emerging trends, and are prepared to adjust our tactics swiftly in response to changing conditions. This disciplined approach has enabled us to build a resilient institution, one that is well positioned to thrive in challenging and unpredictable environments. For the past year or so, I've been talking about the strength of our balance sheet as our key driver of valuation and the strength of our capital position to support growth initiatives. But it's important to remember that these strengths also insulate us from adverse scenarios. As I speak to you today, our balance sheet boasts a low-risk asset profile, including low commercial real estate lending concentration, high levels of immediate and two-day liquidity, and return metrics at the top of our peer stack. Of course, none of this is new, as we have been managing the bank this way for quite some time. And as you would expect, Amalgamated runs multiple risk-based scenarios to test our ability to respond. Ordinarily, I would not be leading my comments with these observations, but not to do so given the recent macroeconomic and social environment would seem like a miss. So let's dig in a bit further. To me, the most important aspect of a healthy bank is the quality of its earning streams and, well, our Q1 results really do speak for themselves. So let me just share a few highlights with you. Most notably, all of our key earnings metrics came in strong and as expected, showing again that at Amalgamated, we do what we say we will do. Core earnings per share was $0.88, supported by net interest income of $70.6 million dollars, which was right within the guidance of 70 to $71 million that we gave during our fourth quarter call. And we reported a strong net interest margin of 3.55% within one basis point of our guidance. And while our core earnings and revenue declined modestly from the fourth quarter, this was expected. as rate cuts from the previous quarter were fully recognized, and we remixed the liability side of our balance sheet in the fourth quarter to support the 2024 election cycle conclusion. We also remind you that Q1 was expected to be the quarter with the most earnings pressure for the full year. Based on how we performed, we are confident in our projections for revenue growth and margin expansion throughout the remainder of the year, and our full year earnings guidance remains unchanged. The main driver of our confidence starts with deposits. We experienced $446 million of total deposit growth through the first quarter, which were broad-based across our customer segments. These inflows allowed us to pay off $245 million of short-term borrowings that we utilized in the fourth quarter. Our political deposits increased 103 million or 11% to $1.1 billion in the quarter, following nicely our historical pattern of rebuilding deposits after an election cycle. And while we think our deposit gathering performance was remarkable, it is also encouraging to see our market segments are active. Our confidence continues with our balance sheet structure. As we have carefully managed our balance sheet to a generally neutral position regarding interest rate sensitivity, we continue to see reliable revenue streams. And our quarterly earnings contribute significant organic capital each quarter, allowing our Tier 1 leverage ratio to soar. Even as we have established 9% as our Tier 1 leverage threshold, this quarter we were delighted to return more capital than ever to our shareholders. We paid our dividend at 14 cents per share, and we repurchased around $3.5 million worth of stock, bringing our combined payout ratio to over 30% of earnings. While there are several other bright spots for the quarter, the highlights I just mentioned really best illustrate the strength and stability of Amalgamated, strength that has been built over many years. And even though we are quite happy with these results, we nevertheless are taking a conservative approach given the uncertain environment that we're working through. As the federal government reduces funding to organizations across the country, as well as headcount at federal agencies, we expect some of our clients could be impacted. That said, we feel very good about our credit profile and we'll be keeping higher levels of liquidity on balance sheet until we better understand the ultimate impact of these actions. Looking to the balance of the year, we expect C&I loan growth to remain somewhat muted in the second quarter, with reacceleration more likely in the back half of the year, consistent with prior years. Importantly, we have many levers that we can utilize as we remain nimble and meet our asset generation goals. One lever is our commercial PACE franchise, where we are working on new flow partnerships which will deliver lower face value originations allowing us to better diversify volume. As we consummate new partnerships, we expect our CPACE originations to ramp up to an average of $15 to $20 million of new originations per quarter in the back half of the year. CPACE is an area where we see a large growth potential and are working to expand given the strong credit profile and attractive yield of the product. Before turning it over to Jason, I want to take a moment and mention our recent exciting news of our planned move to a new New York City headquarters location in the mid-2026, a long-term investment that will position Amalgamated to continue attracting and retaining top-tier talent. I am so grateful we've earned the ability to deliver a state-of-the-art facility with best-of-breed amenities to our employees and our customers. I'll have plenty more updates on our move as the year progresses. As I wrap up my comments, I'm comforted by the knowledge, wisdom, and expertise that we have in both our board and our executive management team to manage through these current times. And while we know political challenges exist, you can expect calm and steady to be the key tenants of our ongoing strategy. And with that, let me turn the call back over to Jason.