Amalgamated Financial (NASDAQ:AMAL) reported what management called a “very strong” first quarter of 2026, highlighted by higher revenue, margin expansion and continued deposit growth, while also disclosing a sizable reserve build tied to a single multifamily borrower relationship that moved to non-accrual during the period.
First-quarter results: revenue growth, margin expansion, and deposit strength
President and CEO Priscilla Sims Brown said the company “delivered a very strong first quarter that underscores the strength of our balance sheet and purpose-driven model.” She reported net revenue grew 9.7% year over year to $93.4 million, and net interest margin expanded 9 basis points to 3.75%.
Net interest income increased 3% to $80.2 million, which Darby said was in line with quarterly guidance. He attributed margin expansion to “higher yielding commercial loan originations and modest reductions in overall funding costs,” while cautioning that net interest margin is expected to “moderately decline in the second quarter related to balance sheet growth.” He also noted there will be “a little bit of non-accrual impact” on margin tied to the credit issue discussed later on the call.
Deposit growth led by political, labor, and nonprofit segments
Sims Brown emphasized continued strength in the deposit franchise, pointing to growth across core customer segments and an improved mix. On-balance sheet deposits rose $229 million to $8.2 billion in the quarter, and average non-interest-bearing deposits increased to 41% of total deposits. She added that “super core deposits are approaching 60% of total on-balance-sheet deposits.”
By segment, Sims Brown said political deposits increased $133 million to $1.9 billion as midterm elections approach, the labor franchise added $106 million, and not-for-profit deposits grew $115 million.
During the Q&A, Chief Banking Officer Sam Brown said political deposit trends appear consistent with prior cycles, emphasizing “the predictability and the repeatable nature of how those deposits come in and out.” Darby added that the company does not see indications that the pattern will change, describing a cycle where “each trough is bigger than the trough before it… and the high point’s bigger than the high point before.”
Sims Brown said the bank chose to keep more deposits on balance sheet in the quarter to support core net interest income, noting that “the portfolio repositioning from selling lower-yielding securities is largely behind us.” She added the company plans to manage through the midterm election cycle with sufficient off-balance-sheet deposits to absorb expected political deposit outflows after the elections, “which should result in no borrowings post-election.”
Loan growth and portfolio composition
On the asset side, Sims Brown said loan growth was “solid,” with net loans up about $66 million, or 1.3%, driven by commercial real estate lending production. She said loans in the bank’s “growth mode categories”—C&I, commercial real estate and multifamily—grew $109 million, or 3.3%.
The company also reported continued expansion in its PACE portfolio. Sims Brown said total assessments increased $15.8 million, or 1.2%, bringing the PACE portfolio to approximately $1.3 billion.
In response to analyst questions, management said it expects continued growth but with more balance across categories. Sam Brown said the bank is “really pleased with the pipeline,” and highlighted “tightly underwritten financial metrics” and “enhanced structural protections.” Darby said the company remains prepared to target “about 1.5%-2% sequential loan growth in the net book,” and expects higher growth within C&I, multifamily, and CRE portfolios relative to the overall net book due to run-off elsewhere.
On C-PACE, Darby said it has been “tremendous,” and referenced the company’s previously announced partnership with Allectrify, stating it has been “very strong” and is contributing to the pipeline.
Credit quality: reserve build tied to a single multifamily borrower relationship
Both Sims Brown and Darby addressed an incremental $9.2 million provision recorded in the quarter tied to a single multifamily borrower relationship that moved to non-accrual. Sims Brown said the collateral supports the bank’s position and that Amalgamated is “aggressively pursuing resolution options to preserve and optimize value,” adding that management views it as “an isolated event with one borrower.” She said the reserve build reduced earnings per share by $0.23, but the company still delivered “solid core earnings of $0.80 per share.”
Darby provided additional detail, explaining that last quarter the company disclosed stress tied to a D.C.-area borrower related to the use of the Section 8 Rapid Rehousing program. After the borrower indicated an expected default before the quarter was closed, the bank classified all 10 loans in the $78 million relationship, including four previously performing loans totaling $41.5 million. Darby said additional specific reserves of $9.2 million were established based on loan-level assessments, including third-party appraisals, occupancy and in-place cash flows, bringing total reserves for the relationship to $11.1 million.
Darby said the bank is evaluating resolution options that “may include foreclosure, note sales, or other exit strategies,” and added that while the bank has not historically taken title to foreclosed properties, “it is prepared to do so if necessary” and would engage an experienced third-party property manager if it takes possession.
As a result, Darby said non-performing assets increased to $99.3 million, or 1.08% of total assets, and criticized and classified loans increased $51.6 million, primarily due to downgrades on the single borrower. The allowance for credit losses rose to $68.2 million, representing 1.35% of total loans.
In response to questions about loan-to-value and timing of resolution, Darby said predictability is limited given the “fairly new” developments, but the reserving was “designed to limit any volatility that you might see going through the P&L into future quarters.” He said the reserve approach was conservative and intended to account for costs to sell and other embedded expenses.
Management also emphasized the issue was borrower-specific, not indicative of broader portfolio weakness. Addressing questions about the Rapid Rehousing and Section 8 programs, Darby said management wants investors to understand “this was the borrower’s behavior and financial condition as the driver, not the subsidy program itself.” He added that the bank reviewed its exposure across Rapid Rehousing and other geographies and found “very little” migration outside the disclosed relationship.
Guidance raised on higher balance sheet growth targets
Despite the credit headwind, Darby said the company raised its 2026 guidance. The net interest income target was increased to $333 million, and the core pre-tax, pre-provision earnings target was raised to $183 million. He attributed the increase to a higher annual balance sheet growth target of about 8% for 2026, up from a prior 5% growth target. Darby said the company now expects the balance sheet to end the year around $9.6 billion on a spot basis.
For the second quarter, Darby estimated net interest income of $81 million to $83 million, and said it should “ramp upward” as the year progresses. On net interest margin, he said the company expects some compression in the second quarter, followed by modest expansion later in the year.
In closing remarks, Sims Brown reiterated confidence in the bank’s fundamentals and approach to risk management, stating that when the company identified the issue it “acted early,” “acted conservatively,” expanded disclosure, and confirmed “the impact is contained without losing momentum anywhere else in the business.”
About Amalgamated Financial (NASDAQ:AMAL)
Amalgamated Financial Corp. (NASDAQ: AMAL) is the bank holding company for Amalgamated Bank, a fully insured commercial bank with a historic mission of serving labor unions, progressive non-profits and mission-driven organizations. Founded in 1923 by the Amalgamated Clothing Workers of America, Amalgamated Bank has grown into a national institution offering a broad suite of banking services, including deposit accounts, commercial and consumer lending, cash management, and treasury solutions tailored to organizations with social responsibility or union affiliations.
In addition to core banking, Amalgamated Financial provides wealth management and trust services, retirement plan consulting and impact investing strategies.
