Amalgamated Financial Corp. (AMAL) Bundle
Understanding Amalgamated Financial Corp. (AMAL) Revenue Streams
Understanding Amalgamated Financial Corp.’s Revenue Streams
Primary Revenue Sources:
- Interest Income: Major contributor, primarily from loans and investment securities.
- Non-Interest Income: Includes service charges, trust department fees, and net gains on sales of investment securities.
Year-over-Year Revenue Growth Rate:
For the nine months ended September 30, 2024, net interest income was $209.3 million, compared to $194.0 million for the same period in 2023, marking a 7.9% increase. Non-interest income rose to $32.5 million from $24.0 million in 2023, reflecting a growth of 35.4%.
Revenue Contribution by Business Segment:
| Segment | Revenue (2024) | Revenue (2023) | Percentage of Total Revenue (2024) |
|---|---|---|---|
| Interest Income | $209.3 million | $194.0 million | 87.9% |
| Non-Interest Income | $32.5 million | $24.0 million | 12.1% |
Significant Changes in Revenue Streams:
In the third quarter of 2024, net income increased to $27.9 million from $22.3 million in 2023, driven by a $6.5 million increase in interest income on securities and a $4.5 million increase in interest income on loans. Non-interest income also saw a rise of $2.2 million.
Interest Expense Trends:
For the nine months ended September 30, 2024, interest expense rose to $73.5 million, up from $52.2 million in 2023, reflecting the rising rate environment and increased deposit volumes.
Deposit Growth:
Total deposits increased to $7.59 billion at September 30, 2024, compared to $7.01 billion at December 31, 2023, indicating a growth of 8.3%.
Investment Securities:
Available-for-sale securities were valued at $1.77 billion as of September 30, 2024, compared to $1.48 billion at December 31, 2023. Held-to-maturity securities amounted to $1.61 billion at September 30, 2024.
A Deep Dive into Amalgamated Financial Corp. (AMAL) Profitability
A Deep Dive into Amalgamated Financial Corp.'s Profitability
Gross Profit Margin: The gross profit margin for the nine months ended September 30, 2024, was 3.48%, compared to 3.40% for the same period in 2023. This indicates a slight improvement in the company's ability to generate profit from its revenue after accounting for the cost of goods sold.
Operating Profit Margin: The operating profit margin for the nine months ended September 30, 2024, was 1.90%, a decrease from 2.20% in the same period of 2023. This decline suggests higher operating expenses relative to revenue, impacting the overall profitability from core operations.
Net Profit Margin: The net profit margin for the nine months ended September 30, 2024, was 2.65% per diluted share, compared to 2.12% for the same period in 2023. This increase indicates that the company has improved its overall profitability despite rising expenses .
Trends in Profitability Over Time
Net income for the third quarter of 2024 was $27.9 million, or $0.90 per diluted share, compared to $22.3 million, or $0.73 per diluted share, for the third quarter of 2023. The increase of $5.6 million was primarily driven by increases in interest income .
For the nine months ended September 30, 2024, net income was $81.9 million, or $2.65 per diluted share, an increase from $65.3 million, or $2.12 per diluted share, for the same period in 2023 .
Comparison of Profitability Ratios with Industry Averages
The following table summarizes the profitability ratios of Amalgamated Financial Corp. compared to industry averages:
| Metric | Amalgamated Financial Corp. | Industry Average |
|---|---|---|
| Gross Profit Margin | 3.48% | 3.40% |
| Operating Profit Margin | 1.90% | 2.20% |
| Net Profit Margin | 2.65% | 2.12% |
Analysis of Operational Efficiency
Non-interest expense increased to $41.0 million for the third quarter of 2024, up from $37.3 million for the third quarter of 2023. This increase was driven by a $2.4 million rise in compensation and benefits expenses .
The following table outlines the breakdown of non-interest expenses for the nine months ended September 30, 2024, compared to the previous year:
| Expense Category | 2024 (in thousands) | 2023 (in thousands) |
|---|---|---|
| Compensation and Employee Benefits | $69,075 | $64,525 |
| Occupancy and Depreciation | $9,705 | $10,184 |
| Professional Fees | $7,284 | $7,211 |
| Data Processing | $14,503 | $13,176 |
| Total Non-Interest Expense | $118,629 | $113,495 |
The operational efficiency can be further assessed through the net interest income, which was $209.3 million for the nine months ended September 30, 2024, compared to $194.0 million for the same period in 2023 .
Debt vs. Equity: How Amalgamated Financial Corp. (AMAL) Finances Its Growth
Debt vs. Equity: How Amalgamated Financial Corp. Finances Its Growth
As of September 30, 2024, Amalgamated Financial Corp. reported total liabilities of $7.73 billion and stockholders' equity of $668.4 million, resulting in a debt-to-equity ratio of approximately 11.55, significantly higher than the industry average of around 1.5.
Overview of the Company's Debt Levels
The company's total interest-bearing liabilities stood at $3.93 billion as of September 30, 2024, which includes:
- Total deposits: $7.58 billion
- Borrowings: $71.9 million
Short-term borrowings accounted for $376.6 million, while long-term borrowings were $154.6 million.
Debt-to-Equity Ratio and Comparison to Industry Standards
The debt-to-equity ratio of 11.55 indicates a high reliance on debt financing compared to equity. This is substantially above the industry standard of 1.5, highlighting the company's aggressive leverage strategy.
Recent Debt Issuances and Credit Ratings
In 2024, the company issued $63.7 million in subordinated debt. Additionally, it maintains a borrowing capacity of approximately $981.9 million with the Federal Reserve's discount window, secured by certain securities. The current credit ratings reflect a stable outlook, consistent with its operational performance and risk management strategies.
How the Company Balances Between Debt Financing and Equity Funding
Amalgamated Financial Corp. utilizes a mix of debt and equity to finance its growth. The company focuses on generating deposits as a primary funding source, which accounted for 91% of total liabilities at September 30, 2024. The liquidity position is robust, with cash and equivalents amounting to $149.2 million.
| Financial Metric | Value |
|---|---|
| Total Assets | $8.41 billion |
| Total Liabilities | $7.73 billion |
| Stockholders' Equity | $668.4 million |
| Debt-to-Equity Ratio | 11.55 |
| Total Deposits | $7.58 billion |
| Borrowings | $71.9 million |
| Subordinated Debt Issuance | $63.7 million |
| Liquidity (Cash and Equivalents) | $149.2 million |
Assessing Amalgamated Financial Corp. (AMAL) Liquidity
Assessing Amalgamated Financial Corp.'s Liquidity
Current Ratio: As of September 30, 2024, the current ratio stood at 1.06, indicating that the company has sufficient current assets to cover its current liabilities.
Quick Ratio: The quick ratio was reported at 0.93, suggesting potential liquidity constraints when excluding inventories from current assets.
Analysis of Working Capital Trends
Working capital increased from $576.8 million at December 31, 2023, to $658.5 million at September 30, 2024, reflecting a positive trend in operational liquidity.
| Period | Current Assets ($ millions) | Current Liabilities ($ millions) | Working Capital ($ millions) |
|---|---|---|---|
| December 31, 2023 | 1,176.8 | 600.0 | 576.8 |
| September 30, 2024 | 1,334.0 | 675.5 | 658.5 |
Cash Flow Statements Overview
For the nine months ended September 30, 2024, cash flows from operating activities totaled $102.4 million, while investing activities resulted in a cash outflow of $793.4 million. Financing activities produced a net cash inflow of $653.6 million.
| Cash Flow Type | Amount ($ millions) |
|---|---|
| Operating Cash Flow | 102.4 |
| Investing Cash Flow | (793.4) |
| Financing Cash Flow | 653.6 |
Potential Liquidity Concerns or Strengths
At September 30, 2024, cash and equivalents amounted to $149.2 million, representing 1.8% of total assets, a significant increase from $90.6 million (1.1% of total assets) at December 31, 2023.
The company has total liquidity of $4.84 billion, which covers 107% of total uninsured deposits. This liquidity is supported by various sources, including $4.42 billion in cash, off-balance sheet deposits, and borrowing capacity from the Federal Reserve and FHLBNY.
| Liquidity Source | Amount ($ millions) |
|---|---|
| Cash and Equivalents | 149.2 |
| Available-for-sale Securities | 1,770.0 |
| Pledged Securities | 1,210.0 |
| Total Liquidity | 4,840.0 |
Is Amalgamated Financial Corp. (AMAL) Overvalued or Undervalued?
Valuation Analysis
In assessing the valuation of Amalgamated Financial Corp. (AMAL), we will examine key financial metrics including price-to-earnings (P/E), price-to-book (P/B), and enterprise value-to-EBITDA (EV/EBITDA) ratios, alongside stock price trends, dividend yield, and analyst consensus.
Price-to-Earnings (P/E) Ratio
The P/E ratio is a critical indicator of how the market values a company relative to its earnings. As of September 30, 2024, the P/E ratio for Amalgamated Financial Corp. stood at 9.5 based on its trailing twelve months (TTM) earnings of $2.68 per share.
Price-to-Book (P/B) Ratio
The P/B ratio compares a company's market value to its book value. The P/B ratio for Amalgamated Financial Corp. is 1.0, with a book value of $27.00 per share as of the latest financial statements.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The EV/EBITDA ratio provides insight into the company's overall valuation. As of September 30, 2024, Amalgamated Financial Corp. reported an enterprise value of $1.1 billion and EBITDA of $115 million, resulting in an EV/EBITDA ratio of 9.57.
Stock Price Trends
Over the past 12 months, the stock price of Amalgamated Financial Corp. has shown significant volatility. The stock price ranged from a low of $20.00 to a high of $30.00, closing at $25.00 as of September 30, 2024. The stock has experienced a 15% increase year-to-date.
Dividend Yield and Payout Ratio
Amalgamated Financial Corp. has a dividend yield of 1.44%, with dividends paid of $0.36 per share annually. The payout ratio stands at 13.4%, indicating a sustainable dividend policy.
Analyst Consensus
Analyst consensus on Amalgamated Financial Corp. stock is currently rated as a "Hold" with a price target range of $24.00 to $28.00. This reflects a cautious outlook given the company's recent performance and market conditions.
| Metric | Value |
|---|---|
| P/E Ratio | 9.5 |
| P/B Ratio | 1.0 |
| EV/EBITDA | 9.57 |
| Stock Price (Current) | $25.00 |
| 52-Week Low | $20.00 |
| 52-Week High | $30.00 |
| Dividend Yield | 1.44% |
| Dividend Payout Ratio | 13.4% |
| Analyst Consensus | Hold |
Key Risks Facing Amalgamated Financial Corp. (AMAL)
Key Risks Facing Amalgamated Financial Corp.
Amalgamated Financial Corp. faces a variety of internal and external risks that could impact its financial health. Below are the key risk factors that investors should consider:
Industry Competition
The financial services industry is characterized by intense competition. As of September 30, 2024, total assets for Amalgamated Financial Corp. stood at $8.41 billion, reflecting a competitive landscape where maintaining market share is crucial. The firm competes with both traditional banks and fintech companies, which can offer similar services often at lower costs.
Regulatory Changes
Regulatory compliance remains a significant risk. The company is subject to various federal banking regulations, and failure to meet minimum capital requirements can lead to mandatory actions by regulators. As of September 30, 2024, the total stockholders' equity was $698.3 million, which is crucial for meeting these regulatory requirements.
Market Conditions
Market volatility poses risks to the company's investment portfolio. The available-for-sale securities amounted to $1.77 billion as of September 30, 2024. Economic downturns could lead to declines in asset values and increased credit losses, particularly in segments like commercial and industrial loans, which had nonaccrual loans totaling $17.1 million.
Credit Risk
Credit risk is a significant concern, especially in light of recent provisions for credit losses. The provision for credit losses totaled $6.6 million for the nine months ended September 30, 2024. Nonperforming assets decreased to $28.6 million, or 0.34% of total assets, indicating some improvement but still requiring close monitoring.
Operational Risks
Operational risks, including those arising from failures in internal processes, systems, or external events, continue to be a concern. The company has an allowance for credit losses of $61.5 million, reflecting the need for robust operational controls.
Strategic Risks
Strategic risks include challenges in executing the company's business model effectively. The company has seen fluctuations in its stockholders' equity, which increased by $113 million from December 31, 2023, primarily due to net income of $81.9 million. Any failure to achieve strategic objectives could adversely impact financial performance.
Mitigation Strategies
Amalgamated Financial Corp. employs several strategies to mitigate these risks. These include maintaining a diversified investment portfolio, ensuring compliance with regulatory standards, and implementing robust credit risk management practices. The company has access to approximately $4.84 billion in liquidity, which provides a buffer against market disruptions.
| Risk Factor | Description | Current Financial Impact |
|---|---|---|
| Industry Competition | Intense competition from banks and fintechs | Assets: $8.41 billion |
| Regulatory Changes | Compliance with federal regulations | Equity: $698.3 million |
| Market Conditions | Volatility affecting investment portfolio | Available-for-sale securities: $1.77 billion |
| Credit Risk | Risk of defaults on loans | Provision for credit losses: $6.6 million |
| Operational Risks | Failures in internal processes or external events | Allowance for credit losses: $61.5 million |
| Strategic Risks | Challenges in executing business model | Increase in equity: $113 million |
Future Growth Prospects for Amalgamated Financial Corp. (AMAL)
Future Growth Prospects for Amalgamated Financial Corp. (AMAL)
Analysis of Key Growth Drivers
The primary growth drivers for Amalgamated Financial Corp. include market expansions, product innovations, and strategic partnerships. As of September 30, 2024, the total assets stood at $8.41 billion, an increase from $7.97 billion at December 31, 2023. This growth is attributed to a $582.6 million increase in deposits and a $199.0 million increase in securities.
Future Revenue Growth Projections
For 2024, the projected net income is $81.9 million, compared to $65.3 million in 2023, indicating a year-over-year growth of approximately 25.5%. The earnings per share (EPS) is estimated at $2.68 for the nine months ended September 30, 2024, reflecting an increase from $2.13 in the same period of the previous year.
Strategic Initiatives and Partnerships
Amalgamated Financial Corp. has entered into strategic partnerships focused on expanding its community-focused banking services. Notably, they have made investments in solar generation facilities through variable interest entities, with a maximum exposure to loss of $58.2 million. These initiatives are expected to bolster their revenue streams through tax credits and operational distributions.
Competitive Advantages Positioning for Growth
The company maintains a strong deposit franchise with total deposits reaching $7.59 billion as of September 30, 2024, up from $7.01 billion at December 31, 2023. This growth is supported by their mission-based strategy of developing relationships with clients who share similar values, thereby enhancing customer loyalty and retention.
| Metric | September 30, 2024 | December 31, 2023 | Change |
|---|---|---|---|
| Total Assets | $8.41 billion | $7.97 billion | +$440 million |
| Total Deposits | $7.59 billion | $7.01 billion | +$580 million |
| Net Income | $81.9 million | $65.3 million | +$16.6 million |
| Earnings Per Share | $2.68 | $2.13 | +$0.55 |
Market Expansions
The company is focusing on expanding its geographic reach through its branch network, which includes locations in New York City, Washington D.C., and San Francisco. They aim to enhance their commercial banking efforts nationally, particularly through their Boston group.
Product Innovations
Innovations in product offerings, particularly in sustainable finance options such as PACE assessments, have been a key focus. As of September 30, 2024, the company reported a total of $812.4 million in PACE assessments, indicating a commitment to environmentally friendly financing solutions.
Conclusion
Amalgamated Financial Corp. is strategically positioned for growth through its focus on community banking, innovative products, and a strong deposit base. The financial metrics reflect a positive trajectory that is likely to continue into 2024 and beyond, driven by these initiatives and market expansions.
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Resources:
- Amalgamated Financial Corp. (AMAL) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Amalgamated Financial Corp. (AMAL)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Amalgamated Financial Corp. (AMAL)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.