Amalgamated Financial (AMAL)

Socially responsible bank Amalgamated Financial (NASDAQ:AMAL) reported Q3 CY2025 results beating Wall Street’s revenue expectations, with sales up 5.6% year on year to $85.61 million. Its non-GAAP profit of $0.91 per share was 4% above analysts’ consensus estimates.

Company Overview

Founded in 1923 by labor unions seeking a financial institution aligned with worker values, Amalgamated Financial (NASDAQGM:AMAL) operates a values-oriented bank that provides commercial banking, trust services, and investment management to socially responsible organizations and individuals.

Regional banks, financial institutions operating within specific geographic areas, serve as intermediaries between local depositors and borrowers. They benefit from rising interest rates that improve net interest margins (the difference between loan yields and deposit costs), digital transformation reducing operational expenses, and local economic growth driving loan demand. However, these banks face headwinds from fintech competition, deposit outflows to higher-yielding alternatives, credit deterioration (increasing loan defaults) during economic slowdowns, and regulatory compliance costs. Recent concerns about regional bank stability following high-profile failures and significant commercial real estate exposure present additional challenges.

Amalgamated Financial competes with larger financial institutions like JPMorgan Chase (NYSE:JPM) and Bank of America (NYSE:BAC) in commercial banking, while facing competition from specialized custodial institutions such as State Street (NYSE:STT) and Bank of New York Mellon (NYSE:BK) in trust services. In the socially responsible banking niche, it competes with smaller mission-driven banks and credit unions.

From lending activities to service fees, most banks build their revenue model around two income sources. Interest rate spreads between loans and deposits create the first stream, with the second coming from charges on everything from basic bank accounts to complex investment banking transactions. Thankfully, Amalgamated Financial’s 9.8% annualized revenue growth over the last five years was impressive. Its growth surpassed the average banking company and shows its offerings resonate with customers, a great starting point for our analysis.

Long-term growth is the most important, but within financials, a half-decade historical view may miss recent interest rate changes and market returns. Amalgamated Financial’s annualized revenue growth of 6.1% over the last two years is below its five-year trend, but we still think the results were respectable. Note: Quarters not shown were determined to be outliers, impacted by outsized investment gains/losses that are not indicative of the recurring fundamentals of the business.

This quarter, Amalgamated Financial reported year-on-year revenue growth of 5.6%, and its $85.61 million of revenue exceeded Wall Street’s estimates by 2.7%.

Net interest income made up 89.1% of the company’s total revenue during the last five years, meaning Amalgamated Financial barely relies on non-interest income to drive its overall growth.

Net interest income commands greater market attention due to its reliability and consistency, whereas non-interest income is often seen as lower-quality revenue that lacks the same dependable characteristics.

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

Amalgamated Financial’s EPS grew at an astounding 18% compounded annual growth rate over the last five years, higher than its 9.8% annualized revenue growth. However, this alone doesn’t tell us much about its business quality because its efficiency ratio didn’t improve.

Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

For Amalgamated Financial, its two-year annual EPS growth of 8.2% was lower than its five-year trend. We still think its growth was good and hope it can accelerate in the future.

In Q3, Amalgamated Financial reported adjusted EPS of $0.91, in line with the same quarter last year. This print beat analysts’ estimates by 4%. Over the next 12 months, Wall Street expects Amalgamated Financial’s full-year EPS of $3.57 to grow 7.7%.

The balance sheet drives banking profitability since earnings flow from the spread between borrowing and lending rates. As such, valuations for these companies concentrate on capital strength and sustainable equity accumulation potential.

Because of this, tangible book value per share (TBVPS) emerges as the critical performance benchmark. By excluding intangible assets with uncertain liquidation values, this metric captures real, liquid net worth per share. Traditional metrics like EPS are helpful but face distortion from M&A activity and loan loss accounting rules.

Amalgamated Financial’s TBVPS grew at an exceptional 9.3% annual clip over the last five years. TBVPS growth has also accelerated recently, growing by 20.5% annually over the last two years from $17.43 to $25.31 per share.

Over the next 12 months, Consensus estimates call for Amalgamated Financial’s TBVPS to grow by 11% to $28.09, solid growth rate.

Leverage is core to a financial firm’s business model (loans funded by deposits). To ensure economic stability and avoid a repeat of the 2008 GFC, regulators require certain levels of capital and liquidity, focusing on the Tier 1 capital ratio.

Tier 1 capital is the highest-quality capital that a firm holds, consisting primarily of common stock and retained earnings, but also physical gold. It serves as the primary cushion against losses and is the first line of defense in times of financial distress.

This capital is divided by risk-weighted assets to derive the Tier 1 capital ratio. Risk-weighted means that cash and US treasury securities are assigned little risk while unsecured consumer loans and equity investments get much higher risk weights, for example.

New regulation after the 2008 financial crisis requires that all firms must maintain a Tier 1 capital ratio greater than 4.5%. On top of this, there are additional buffers based on scale, risk profile, and other regulatory classifications, so that at the end of the day, firms generally must maintain a 7-10% ratio at minimum.

Over the last two years, Amalgamated Financial has averaged a Tier 1 capital ratio of 13.8%, which is considered safe and well capitalized in the event that macro or market conditions suddenly deteriorate.

Return on equity (ROE) reveals the profit generated per dollar of shareholder equity, which represents a key source of bank funding. Banks maintaining elevated ROE levels tend to accelerate wealth creation for shareholders via earnings retention, buybacks, and distributions.

Over the last five years, Amalgamated Financial has averaged an ROE of 14.3%, exceptional for a company operating in a sector where the average shakes out around 7.5% and those putting up 15%+ are greatly admired. This shows Amalgamated Financial has a strong competitive moat.

We enjoyed seeing Amalgamated Financial beat analysts’ net interest income expectations this quarter. We were also glad its revenue outperformed Wall Street’s estimates. Overall, we think this was a decent quarter with some key metrics above expectations. The stock remained flat at $26.68 immediately following the results.

Updated: December 3, 2025 at 11:38 PM EST

The latest quarterly earnings matters, sure, but we actually think longer-term fundamentals and valuation matter more. Investors should consider all these pieces before deciding whether or not to invest in Amalgamated Financial.

Amalgamated Financial possesses a number of positive attributes. Although its revenue growth was mediocre over the last five years, its astounding EPS growth over the last five years shows its profits are trickling down to shareholders. And while its estimated net interest income for the next 12 months are weak, its TBVPS growth was exceptional over the last five years.

Amalgamated Financial’s P/B ratio based on the next 12 months is 1.1x. Looking at the banking space right now, Amalgamated Financial trades at a compelling valuation. For those confident in the business and its management team, this is a good time to invest.

Wall Street analysts have a consensus one-year price target of $32 on the company (compared to the current share price of $30.97), implying they see 3.3% upside in buying Amalgamated Financial in the short term.