Amalgamated Financial Corp. (AMAL) Q3 2026 earnings review
Amalgamated raises its profit plan while campaign deposits flow out
Amalgamated Financial Corp., the bank for unions, non-profits and political campaigns, grew its interest income while pre-election cash withdrawals began. Net interest income rose 15% from a year ago to $88 million, and profit per share excluding one-offs jumped 25%. Chief executive Priscilla Sims Brown raised the full-year outlook for a third time, keeping fourth-quarter interest income steady near $88 million.
| Net interest income | $87.9M +15% from a year ago |
|---|---|
| Profit per share, excluding one-offs | $1.14 +25% from a year ago |
| Political deposits (incl. off-balance-sheet) | $2.0B down to $1.7B by October 15 |
| Full-year net interest income outlook | Raised $2.5M to $341–342M (+15% growth) |
⚖️ Verdict: 🟢 Bullish
The story got better because union and non-profit deposits plus higher-yielding commercial loans are absorbing the midterm election cash drain without the fourth-quarter profit dip the prior plan pointed to. The caution: apartment building credit trouble spread beyond the single Washington, D.C. borrower that defaulted earlier this year, with two more apartment loans needing individual reserves and another $3 million loan stopping payments.
The question now is whether apartment building defaults stay small enough for the bank's rising lending spreads to cover them, or widen as $440 million of apartment loans mature through 2027. Fourth-quarter troubled loan balances and the 2027 credit provision outlook will tell.
🐂 Bull Case
Higher-Yielding Commercial Loans Lift Interest Income
Amalgamated Financial Corp., the New York-based bank serving labor unions, non-profits and political groups, is replacing older home mortgages and consumer solar loans with commercial loans that pay more interest. Chief executive Priscilla Sims Brown said "the earnings power we have built is long-lasting and supported by multiple strengths across the bank." In the third quarter, net interest income (the profit from lending minus what the bank pays depositors) rose 15% from a year ago to a record $87.9 million.
- Commercial growth portfolios (business, apartment building and commercial property loans): up $90.6 million, or 2.5% from last quarter, to $3.70 billion
- Commercial PACE assessments (financing for clean-energy building upgrades repaid through property taxes): up $54.2 million, or 14.8% from last quarter, to $419.6 million
- Older residential and consumer solar loans: down $40.4 million as borrowers paid them off
This shift matters because the bank is earning more without needing a much larger loan book. Total loans grew only 1.0% from last quarter, because older consumer portfolios are "generating redeployed cash through planned runoff" to fund commercial lending and clean-energy property assessments that yield 6.10%.
What to watch: fourth-quarter additions to the commercial loan and clean-energy assessment books. Continued additions near $140 million combined would show the bank can keep lifting asset yields even while overall assets stay flat during the election cash drain.
Union and Non-Profit Deposits Offset Campaign Outflows
Because Amalgamated banks Democratic campaigns and political action committees, its deposits normally shrink right before and during a November election as campaigns spend their cash. Political deposits, including accounts held off the balance sheet, fell $76.5 million in the third quarter to $2.0 billion, "in keeping with the election cycle." Yet total deposits on the balance sheet still grew $256.0 million, or 3.0% from last quarter, to $8.71 billion, while off-balance-sheet accounts added another $89.0 million.
The bank grew anyway because of "growth across the labor and not-for-profit segments" (along with $120.4 million of one-week pension funding cash that arrived on the last day of September). Checking accounts that pay no interest rose from 39% to 42% of ending deposits, which kept the bank's average deposit cost unchanged at 1.46%.
What to watch: non-political deposit balances at year-end. Steady inflows from unions and non-profits in the fourth quarter would reduce how much off-balance-sheet cash the bank must pull back onto its books to cover election spending.
Third Straight Outlook Raise Despite Election Outflows
Amalgamated raised its full-year 2026 outlook for a third consecutive quarter. Management lifted its full-year net interest income plan to $341–342 million and its pre-tax pre-provision profit plan (operating profit before credit loss reserves and taxes, excluding one-offs) to $193–194 million. It also lifted its full-year return on average assets target, excluding one-offs, to above 1.30% from about 1.29%.
By our math, the prior full-year plan pointed to fourth-quarter net interest income of $83.8–87.8 million, which allowed for a dip as political deposits leave. Instead, the new fourth-quarter plan calls for $87–88 million, essentially matching the third quarter's $87.9 million record. Purchased tax credits recognized in the tax line added $0.6 million to third-quarter profit excluding one-offs, up from $0.5 million last quarter.
What to watch: fourth-quarter net interest income against the $87–88 million plan. Delivering inside that range during peak campaign withdrawals would show the bank's lending spreads can absorb the election cycle without a drop in quarterly interest income.
🐻 Bear Case
Apartment Building Loan Troubles Spread Beyond One Borrower
Earlier this year, a single Washington, D.C. borrower with $78.0 million of subsidized apartment building loans stopped paying on $67.7 million of them, and management framed the problem as isolated to that relationship. While that borrower required no new reserves in the third quarter and the bank is working to exit the loans "through foreclosure, note sales, or other exit strategies", stress is showing up in other apartment building and business loans.
- Nonaccrual multifamily loans (apartment building loans no longer paying interest): $90.1 million, up from $87.1 million last quarter after one $3.1 million loan stopped paying
- New multifamily reserve needs: credit provision of $3.6 million included reserves for "two newly identified multifamily loans requiring individual reserve analysis"
- Post-quarter loss: a separate $3.8 million Washington, D.C. apartment loan settled after September 30 at a discount, causing a $2.5 million charge-off (already reserved)
- Criticized and classified loans (loans showing early signs of financial weakness): up $7.4 million to $159.5 million, led by an $11 million business loan downgrade "despite certain positive trends in the borrower’s financial performance"
This cuts against the idea that credit trouble is confined to one borrower, especially because multifamily lending is Amalgamated's largest and fastest-growing book, up 30.8% from a year ago to $1.90 billion. Meanwhile, total loan-loss reserves cover 67.1% of nonaccrual loans, down from 250.6% a year ago.
What to watch: fourth-quarter multifamily nonaccrual and criticized loan balances, plus the $91 million of multifamily loans maturing in late 2026 at a 75.1% loan-to-value ratio. Another rise in troubled loans outside the original D.C. borrower would require higher credit provisions in 2027.
Midterm Election Cash Outflows Have Started
Political customers built up $2.08 billion of deposits at Amalgamated by June 2026 ahead of the November midterm elections. Those accounts dropped by $76.5 million during the third quarter to $2.00 billion, and the presentation shows they fell another $300 million in the first two weeks of October to $1.7 billion by October 15.
That two-week outflow pulled total deposits (including off-balance-sheet accounts) down from $9.8 billion at September 30 to $9.5 billion on October 15. To replace zero-interest political cash, the bank brings off-balance-sheet deposits back onto its balance sheet (which fell from $1.1 billion to $0.9 billion by October 15). Doing so eliminates the fee income the bank earns for placing those deposits elsewhere ($2.9 million in the third quarter) and raises its funding cost.
What to watch: total political deposits and off-balance-sheet deposit balances at December 31. If political withdrawals exceed the remaining $0.9 billion off-balance-sheet buffer, the bank will have to use higher-cost borrowings that squeeze its net interest margin.
Bond Losses From Higher Rates Cut Equity Ratio
Over the past year, Amalgamated used its deposit inflows to buy investment securities, lifting its bond and PACE portfolio to $4.0 billion. In the third quarter, bond prices fell "resulting from increases in long-term rates in the quarter." That created a $27.9 million after-tax mark-to-market loss in stockholders' equity, which pushed the tangible common equity ratio (stockholders' equity minus goodwill, divided by tangible assets) down 0.30 percentage points from last quarter to 8.44%.
Across both available-for-sale and held-to-maturity portfolios, total unrealized valuation losses grew by $82.9 million in the quarter to $261.3 million. Those paper losses kept tangible book value per share nearly flat (+0.2% from last quarter to $27.54) even though the bank earned a record $36.4 million in net income.
What to watch: the tangible common equity ratio and unrealized bond losses in the fourth quarter. A rebound in bond prices coupled with fourth-quarter election deposit outflows shrinking the asset base would lift the ratio back above 8.7%.
Risks this quarter didn't answer
Three standing concerns from prior quarters remained open in the third-quarter release and presentation.
- Consumer solar loan losses: net charge-offs in the runoff solar book were $2.2 million (2.98% annualized), and the bank raised its solar loss reserve to 10.46% of the book from 9.83% last quarter; fourth-quarter charge-offs will show if the higher reserve is enough.
- Costs of crossing $10 billion in assets: total assets reached $9.73 billion ($9.61 billion excluding one-week pension cash), right below the $10 billion regulatory threshold that caps debit-card fees and adds federal oversight; the 2027 outlook in January should size the cost.
- Political and regulatory scrutiny of mission-aligned banking: federal clean-energy policy and scrutiny of progressive banks remain external risks, though clean-energy PACE assessments still grew 4.0% in the quarter.
👓 Other Themes
New Headquarters Move and Tech Spend Lift Costs
Non-interest expense rose $1.6 million from last quarter to $48.9 million. Occupancy costs increased $1.2 million (up 1.0 percentage point of revenue to 4.6%) because of "a double rent period related to the lease of our new headquarters", which ends when the bank exits its old office in the fourth quarter. Management also lifted its full-year technology spending growth projection to about 22% from 18%, trimming projected full-year operating leverage (revenue growth minus expense growth) to about 2% from 3–4%.
💲 Other KPIs
Edged down 0.01 percentage points from last quarter and rose 0.17 percentage points from a year ago. Net interest margin is the percentage spread the bank earns on its loans and bonds after paying for deposits. Last quarter included a 0.03-point one-time boost from a paid-off troubled construction loan, so underlying lending spreads expanded.
Rose 12.0% from last quarter and 12.0% from a year ago on higher retail banking fees and consumer wealth management fees. Including $2.9 million of fees from placing off-balance-sheet political deposits and $0.4 million of bond sale losses, total non-interest income was $13.8 million. Amalgamated raised its full-year fee growth projection to about 10% from 4%.
Grew 0.2% from last quarter and 8.8% from a year ago, after rising 3.3% in the second quarter. Tangible book value measures the bank's net worth per share excluding goodwill. Record quarterly profit of $36.4 million was almost entirely offset by $27.9 million of unrealized bond losses, $5.1 million of dividends ($0.17 per share) and $6.5 million of share buybacks (137,000 shares).
🔮 Guidance
Raised. The middle of the range moved up $2.5 million, to 14.7% growth for the year. It is the third raise this year: +$3.0M in Q1, +$7.0M in Q2, and +$2.5M in Q3. The bank has met or topped its quarterly net interest income plan in five straight quarters, by an average of 1.9%.
Raised against what the prior full-year plan implied. The new fourth-quarter plan calls for 12.4% growth from a year ago at the middle of the range, and a 0.5% dip from the third quarter's $87.9 million as political deposits flow out.
Raised. Management lifted the middle of the full-year range by $4.5 million, to 16.6% growth from 2025. That follows raises of $2.5 million in the first quarter and $5.0 million in the second quarter, helped by stronger commercial banking and wealth fees.
New. The fourth-quarter plan points to 12.9% growth from a year ago at the middle of the range, and a 3.7% step down from the third quarter's $50.3 million as technology spending rises.
Raised. After cutting its full-year return on assets target from 1.35% to 1.26% in the first quarter on apartment loan reserves and lifting it to 1.29% in the second quarter, the bank now projects a return above 1.30% (versus 1.33% through the first nine months).
Raised slightly from about 15% to above 15%. Through the first nine months of 2026, the bank earned 15.16% on average tangible common equity, and 16.57% in the third quarter.
Raised. Management lifted its full-year fee growth projection from about 4% to about 10% after deposit service charges and wealth fees rose in the third quarter.
Cut. The bank lowered its full-year target for revenue growth minus expense growth from 3–4% to about 2%, because of higher technology spending and temporary double rent on its new headquarters.
Raised. Full-year technology spending is now projected to rise about 22% instead of 18% as the bank rolls out new data and enterprise software platforms. Through nine months, technology expense is up 27.4% from a year ago.
Improved. Management tightened its full-year cost-to-revenue ceiling from 52% to below 50%. The ratio was 49.23% in the third quarter and 49.31% over the first nine months.
Raised from about 8% to about 9%. Against $8.87 billion of assets at the end of 2025, a 9% increase points to year-end assets near $9.67 billion, slightly below September's $9.73 billion as campaign deposits leave.
❓ Key Questions
What is driving new apartment loan reserves outside D.C.?
Two newly identified apartment building loans needed individual reserve analysis this quarter, another $3.1 million apartment loan stopped paying, and a $3.8 million D.C. loan took a $2.5 million write-off after quarter-end. Investors need to know whether stress is spreading into New York rent-stabilized buildings.
Why was an $11 million business loan downgraded?
Criticized and classified loans rose by $7.4 million to $159.5 million because the bank downgraded one $11 million commercial and industrial loan "despite certain positive trends in the borrower’s financial performance." Management did not name the borrower's industry or explain what triggered the downgrade.
How low will political deposits fall after the November election?
Political deposits fell $76.5 million in the third quarter and dropped another $300 million in the first two weeks of October to $1.7 billion. How much of the $1.1 billion off-balance-sheet buffer will remain by December 31, and how much fee income will disappear?
What will crossing $10 billion in assets cost in 2027?
Total assets reached $9.73 billion at September 30, just shy of the $10 billion regulatory mark that triggers federal debit-card fee caps and heavier supervision. With technology spending growth raised to 22% this year, how much more expense is still ahead for 2027?