Amalgamated Financial Corp.

AMAL Details

Amalgamated Financial Corp. (NASDAQ: AMAL) is a New York-based commercial bank and chartered trust company and operates as the holding company for Amalgamated Bank. Three of the company's six branches are in New York City, one each in Washington, DC, San Francisco, and Boston. It provides consumers and businesses with a full range of commercial and retail banking products, investment management services, and trust and custodial services. Residential Mortgage Loans, Commercial and Industrial Loans (C&I), Commercial Real Estate Loans (CRE), Multifamily Mortgages, and other commercial and consumer deposit products are among AMAL's product lines.

Inorganic Endeavors: On September 22, 2021, AMAL signed a formal agreement to buy Amalgamated Investments Company, the holding company for Amalgamated Bank of Chicago (ABOC), for approximately USD 98.1 million in cash, including an earnout of up to USD 1.1 million. AMAL will be able to extend its market footprint and strengthen its position as the country's largest bank of its sort as a result of this acquisition.

H1FY21 Results: The company reported a slight decline of 5.94% in net interest income to USD 83.84 million during H1FY21 (ended June 30, 2021) compared to USD 89.13 million during H1FY20, due to a decrease in average loans and lower yields earned on interest-bearing assets. However, its net income rose to USD 22.60 million during H1FY21 compared to USD 19.92 million during H1FY20. As of June 30, 2021, AMAL recorded a 10.70% sequential growth in total deposits to USD 5.91 billion compared to USD 5.34 billion as of December 31, 2020. Net Interest Margin (NIM) decreased by 47 bps YoY to 2.80% for H1FY21. Total Non-Performing Assets (NPAs) declined by 13.69% sequentially to USD 70.98 million as of June 30, 2021.

Key Risks: As of December 31, 2020, New York, Washington, DC and California, accounted for 92% of the properties financing the company's CRE, Multifamily, and Construction Loans. This puts the firm in jeopardy of geographic concentration. As a result, the company's sales and financial health might be harmed if these regions experience a slowdown or disruption in economic conditions.

Outlook: As of July 29, 2021, the company expects its core pre-tax earnings to be in the range of USD 66 – 72 million in FY21, excluding any impact from solar tax equity income and no changes in Fed interest rate targets. It projects its net interest income to be in the range of USD 168 – 174 million.

Valuation Methodology: Price/Book Value Per Share Multiple Based Relative Valuation

(Analysis by Kalkine Group)

* % Premium/(Discount) is based on our assessment of the company's NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

AMAL Daily Technical Chart (Source: REFINITIV)

Stock Recommendation: AMAL's stock price has surged 31.78% in the past twelve months and is currently leaning above the mid-point of the 52-week range of USD 10.51 to USD 20.22. The stock is currently trading above its 50 and 200 DMA levels, and its RSI Index is at 61.94. We have valued the stock using the Price/Book Value-based relative valuation methodology and arrived at a target price of USD 15.67. Considering the significant uptick in the stock price, we believe the business fundamentals are adequately reflected at the current trading levels. Hence, we recommend a "Sell" rating on the stock at the current price of USD 16.24, down 0.64% as of October 06, 2021, 2:29 PM ET.

* The reference data in this report has been partly sourced from REFINITIV.

* All forecasted figures and industry information have been taken from REFINITIV.