Q2 2024 Amalgamated Financial Corp Earnings Call

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Operator: Good morning, ladies and gentlemen, and welcome to the Amalgamated Financial second quarter 2024 earnings call. During this presentation, all parties will be in listen-only mode. Following the presentation, the conference will be open for questions, with instructions to follow that time. As a reminder, this conference call is being recorded.

Operator: Good morning, ladies and gentlemen, and welcome to the Amalgamated Financial second quarter 2024 earnings call. During today's presentation, all parties will be in listen-only mode.

Good morning, ladies and gentlemen, and welcome to the Amalgamated Financial second quarter 2024 earnings call. During today's presentation, all parties will be in listen-only mode. Following the presentation, the conference will be open for questions with instructions to follow at that time.

Operator: Following the presentation, the conference will be open for questions with instructions to follow at that time. As a reminder, this conference call is being recorded. I would now like to turn the call over to Mr. Jason Darby, Chief Financial Officer. Please go ahead, sir.

Operator: I would now like to turn the call over to Mr. Jason Darby, Chief Financial Officer.

As a reminder, this conference call is being recorded.

I would now like to turn the call over to Mr. Jason Darby, Chief Financial Officer. Please go ahead, sir.

Operator: Please go ahead, sir.

Jason Darby: Thank you, operator, and good morning, everyone. We appreciate your participation in our earnings call. With me today is Priscilla Sims-Brown, our President and Chief Executive Officer.

Jason Darby: Thank you, operator, and good morning, everyone. We appreciate your participation in our earnings call. With me today is Priscilla Sims Brown, our president and chief executive officer.

Thank you, operator, and good morning, everyone. We appreciate your participation in our earnings call.

Jason Darby: As a reminder, a telephonic replay of this call will be available on the investor section of our website for an extended period of time. Additionally, a slide deck to complement today's discussion is also available on the investor section of our website. Before we begin, let me remind everyone that this call may contain certain statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. We caution investors that actual results may differ from the expectations indicated or implied by any such forward-looking statements or information.

Jason Darby: As a reminder, a telephone and a replay of this call will be available on the investor section of our website for an extended period of time. Additionally, a slide deck to compliment today's discussion is also available on the investor section of our website.

With me today is Priscilla Sims-Brown, our President and Chief Executive Officer. As a reminder, a telephonic replay of this call will be available on the investor section of our website for an extended period of time. Additionally, a slide deck to complement today's discussion is also available on the investor section of our website.

Jason Darby: Before we begin, let me remind everyone that this call may contain certain statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. We cautioned investors that actual results may differ from the expectations indicated or implied by any such forward-looking statements or information. Investors should refer to slide two on our earnings deck, as well as our 223.10K file on March 7th, 2024, for a list of risk factors that could cause actual results to differ materially from those indicated or implied by such statements.

Before we begin, let me remind everyone that this call may contain certain statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. We caution investors that actual results may differ from the expectations indicated or implied by any such forward-looking statements or information.

Jason Darby: Investors should refer to slide 2 of our earnings slide deck as well as our 2023 10-K filed on March 7, 2024 for a list of risk factors that could cause actual results to differ materially from those indicated or implied by such statements. Additionally, during today's call, we will discuss certain non-GEP measures which we believe are useful in evaluating our performance. The presentation of this additional information should not be considered in isolation or as a substitute for results prepared in accordance with U.S. GAAP. A reconciliation of these non-GAAP measures to the most comparable GAAP measure can be found in our earnings release as well as on our website. Let me now turn the call over to Priscilla.

Investors should refer to slide two on our earnings slide deck as well as our 2023 10k filed on March 7th, 2024 for a list of risk factors that could cause actual results to differ materially from those indicated or implied by such statements.

Jason Darby: Additionally, during today's call, we will discuss certain non-get measures, which we believe are useful in evaluating our performance. The presentation of this additional information should not be considered in isolation or as a substitute for results prepared in accordance with the US GAAP.

Additionally, during today's call, we will discuss certain non-GEP measures, which we believe are useful in evaluating our performance.

The presentation of this additional information should not be considered in isolation or as a substitute for results prepared in accordance with the U.S. GAAP. A reconciliation of these non-GAAP measures to the most comparable GAAP measure can be found in our earnings release as well as on our website. And let me now turn the call over to Priscilla.

Jason Darby: The reconciliation of these non-GAAP measures to the most comparable GAAP measure can be found in our earnings release as well as on our website, and let me now turn the call over to Priscilla.

Priscilla Sims Brown: Good morning everyone, and thank you for joining us. Our second quarter financial results clearly demonstrate that Amalgamated is continuing its high performance across key metrics. We deliver outstanding deposit growth, strong returns, and a continuously growing sustainable earnings base that will provide us with optionality as we look to further expand our franchise over the medium term. It was also nice to see the recent enthusiasm in our stock price for our shareholders. Clearly, our mission-based banking model is resonating with purpose-driven customers and impact investors alike more than ever, as they increasingly become aware of and care about what their money is doing. During the quarter, we attended the Milken Institute Global Conference, the Sorensen Impact Summit, and several other conferences, where we gave keynotes, participated in panels or fireside chats, as well as listened intently to insights from changemakers.

Priscilla Sims Brown: Good morning, everyone, and thank you for joining us. Our second quarter of financial results clearly demonstrate that Amalgamated is continuing its high performance across key metrics. We delivered outstanding deposit growth, strong returns, and a continuously growing sustainable earnings base that will provide us with optionality as we look to further expand our franchise over the medium term. It was also nice to see the recent enthusiasm and our stock price for shareholders. Clearly, our mission-based banking model is resonating with purpose-driven customers and impact investors alike more than ever, as they increasingly become aware of and care about what their money is doing.

Good morning everyone and thank you for joining us. Our second quarter financial results clearly demonstrate that Amalgamated is continuing its high performance across key metrics.

We deliver outstanding deposit growth, strong returns, and a continuously growing sustainable earnings base that will provide us with optionality as we look to further expand our franchise over the medium term.

It was also nice to see the recent enthusiasm in our stock price for our shareholders.

Clearly, our mission-based banking model is resonating with purpose-driven customers and impact investors alike more than ever, as they increasingly become aware of and care about what their money is doing.

Priscilla Sims Brown: During the quarter, we attended the Milken Institute Global Conference, the Sorenson Impact Summit, and several other conferences where we gave key notes, participated in panels or fire site chats, as well as listened intently to insights from change makers. We enjoy meetings like this where we get the opportunity to see firsthand just how effective people become when they learn more about the positive impact their deposits can have when placed with a responsible bank. It is also interesting to note that acceleration of private equity and product innovation in the social impact space is occurring. The top change makers in global impact investing are mobilized, and Amalgamated is at the forefront to meet actionable opportunities.

During the quarter, we attended the Milken Institute Global Conference, the Sorensen Impact Summit, and several other conferences, where we gave keynotes, participated in panels or fireside chats, as well as listened intently to insights from changemakers.

Priscilla Sims Brown: We enjoy meetings like this where we get the opportunity to see firsthand just how effective people become when they learn more about the positive impact their deposits can have when placed with a responsible bank. It is also interesting to note that an acceleration of private equity and product innovation in the social impact space is occurring. The top changemakers in global impact investing are mobilizing, and Amalgamated is at the forefront to meet actionable opportunities.

We enjoy meetings like this where we get the opportunity to see firsthand just how effective people become when they learn more about the positive impact that deposits can have when placed with a responsible bank.

It is also interesting to note that acceleration of private equity and product innovation in the social impact space is occurring.

The top changemakers in global impact investing are mobilized, and Amalgamated is at the forefront to meet actionable opportunities.

Priscilla Sims Brown: It's worth taking a moment to recognize that strong and consistent financial performance leads to invitations to events like these and to recognitions of being added to the 2024 Forbes list of Best Banks in each state. Our second quarter results drive this point home as our deposit franchise once again performed above peers with over $759 million in new deposits, led by strength across our political, our union, and non-profit customer segments. Our non-political deposits were strong again this quarter as union deposits rose $258 million and non-profit rose $240 million. This is a huge area of growth for us.

Priscilla Sims Brown: It's worth taking a moment to recognize that strong and consistent financial performance leads to invitations to events like these and to recognitions such as being added to the 2024 Forbes list of best banks in each state. Our second quarter results drive this point home as our deposit franchise once again performed above peers with over $759 million in new deposits, led by strength across our political, union, and non-profit customer segments. Our non-political deposits were strong again this quarter, as union deposits rose $258 million, and non-profit deposits rose $240 million. This is a huge area of growth for us. There are over 30,000 unions in the U.S., and they are growing in number and size.

It's worth taking a moment to recognize that strong and consistent financial performance leads to invitations to events like these and to recognitions, like being added to the 2024 Forbes list of best banks in each state.

Our second quarter results drive this point home as our deposit franchise once again performed above peers with over $759 million in new deposits led by strength across our political, our union, and non-profit customer segments.

Our non-political deposits were strong again this quarter, as union deposits rose $258 million and non-profit rose $240 million.

Priscilla Sims Brown: There are over 30,000 unions in the US, and they are growing in number and size. As the largest bank for unions, we are excited about the runway. In the non-profit segment, our effective execution has earned a strong name recognition and an extensive referral network. Our political deposit balances grew over 20% and ended the quarter at $1.7 billion. Well ahead of our prior peak of $1.3 billion achieved during the midterm elections in 2022. Looking forward, we expect our political deposits to begin exiting during the third quarter as campaigns increase their advertising spend. I also want to point out that we are witnessing increased enthusiasm among donors in response to headlines in the political space.

This is a huge area of growth for us. There are over 30,000 unions in the U.S. and they are growing in number and size. As the largest bank for unions, we are excited about the runway.

Priscilla Sims Brown: As the largest bank for unions, we are excited about the runway. In the nonprofit segment, our effective execution has earned us strong name recognition and an extensive referral network. Our political deposit balances grew over 20% and ended the quarter at $1.7 billion, well ahead of our prior peak of $1.3 billion achieved during the midterm elections in 2022. Looking forward, we expect our political deposits to begin exiting during the third quarter as campaigns increase their advertising spend. I also want to point out that we are witnessing increased enthusiasm among donors in response to the headlines in the political space. These are unprecedented times, with fundraising records being broken by the hour.

In the nonprofit segment, our effective execution has earned us strong name recognition and an extensive referral network.

Our political deposit balances grew over 20% and ended the quarter at $1.7 billion, well ahead of our prior peak of $1.3 billion achieved during the midterm elections in 2022.

Looking forward, we expect our political deposits to begin exiting during the third quarter as campaigns increase their advertising spend.

I also want to point out that we are witnessing increased enthusiasm among donors in response to headlines in the political space.

Priscilla Sims Brown: These are unprecedented times with fundraising records being broken by the hour.

These are unprecedented times, with fundraising records being broken by the hour.

Priscilla Sims Brown: I am humbled to note that Vice President Harris's paperwork filed with the Federal Election Commission to officially become a candidate for president listed a malgumated bank as the campaign's bank of record. Our current model shows that our political deposits will drop at approximately $700 million at the end of the year. Modestly above the 2022 trough. In preparation for this, we moved another $600 million in deposits off balance sheet during the quarter and are now managing nearly $1.1 billion in off balance sheet deposits within our reciprocal network. At the end of the second quarter, our non-political deposit growth has also been well ahead of our internal plan, which places us in a position where we now think the most likely scenario is that we will not add any significant level of borrowing to our funding mix through year in 24.

Priscilla Sims Brown: I am humbled to note that Vice President Harris's paperwork filed with the Federal Election Commission to officially become a candidate for president listed Amalgamated Bank as the campaign's bank of record. Our current model shows that our political deposits will trough at approximately $700 million at the end of the year, modestly above the 2022 trough. In preparation for this, we moved another $600 million in deposits off balance sheet during the quarter and are now managing nearly $1.1 billion in off balance sheet deposits within our reciprocal network.

I am humbled to note that Vice President Harris's paperwork filed with the Federal Election Commission to officially become a candidate for president listed Amalgamated Bank as the campaign's bank of record.

Our current model shows that our political deposits will trough at approximately $700 million at the end of the year, modestly above the 2022 trough.

In preparation for this, we moved another $600 million in deposits off balance sheet during the quarter and are now managing nearly $1.1 billion in off balance sheet deposits within our reciprocal network.

Priscilla Sims Brown: At the end of the second quarter, our non-political deposit growth has also been well ahead of our internal plan, which places us in a position where we now think the most likely scenario is that we will not add any significant level of borrowing to our funding mix through year-end. Turning to the other side of our balance sheet, loan growth was healthy in the quarter and largely comprised of commercial real estate and multifamily loans, while our climate-related loan originations were muted by $87 million of commercial and industrial payoffs and paydowns during the quarter.

At the end of the second quarter, our non-political deposit growth has also been well ahead of our internal plan, which places us in a position

where we now think the most likely scenario is that we will not add any significant level of borrowing to our funding mix.

Priscilla Sims Brown: Turning to the other side of our balance sheet, loan growth was healthy in the quarter and largely comprised of commercial real estate and multi-family loans, while our climate-related loan originations were muted by $87 million of commercial and industrial payoffs and paydowns during the quarter. Looking to the third quarter, we have approved several impact loan commitments in the first few weeks of July, and our sustainable lending pipeline looks promising for the second half of the year after showing modest growth in the second quarter.

through year-end 24.

Turning to the other side of our balance sheet, loan growth was healthy in the quarter and largely comprised of commercial real estate and multifamily loans, while our climate-related loan originations were muted by $87 million of commercial and industrial payoffs and paydowns during the quarter.

Priscilla Sims Brown: Looking to the third quarter, we have approved several impact loan commitments in the first few weeks of July, and our sustainable lending pipeline looks promising for the second half of the year after showing modest growth in the second quarter. Looking ahead, the political landscape is rapidly changing. Things like the Greenhouse Gas Reduction Fund could see some restructuring, but we remind you that none of our 2024 projections assume any GGRF lending. Our conservative forecasting takes into account the fact that those dollars have not actually been transferred out of the government yet.

Looking to the third quarter, we have approved several impact loan commitments in the first few weeks of July , and our sustainable lending pipeline looks promising for the second half of the year, after showing modest growth in the second quarter.

Priscilla Sims Brown: Looking ahead, the political landscape is rapidly changing. Things like the Greenhouse Gas Reduction Fund could see some restructuring, but we remind you that none of our 2024 projections assume any GGRF lending. Our conservative forecasting takes into account the fact that those dollars have not actually been transferred out of the government yet. Regardless, the world of mobilize to meet the climate finance needs, which will require an estimated $3 trillion of financing over the next 10 years for just the US to reduce net emissions to zero by 2050. And GGRF is a small portion of this needed capital.

Looking ahead, the political landscape is rapidly changing. Things like the Greenhouse Gas Reduction Fund could see some restructuring, but we remind you that none of our 2024 projections assume any GGRF lending.

Our conservative forecasting takes into account the fact that those dollars have not actually been transferred out of the government yet.

Priscilla Sims Brown: Regardless, the world is mobilizing to meet the climate finance needs, which will require an estimated $3 trillion of financing over the next 10 years for just the U.S. to reduce net emissions to zero by 2050, and GGRF is a small portion of this needed capital. We believe this investment will occur, no matter the political landscape, and Amalgamated is well positioned to play a very important role as a provider of financing for these needed projects.

Regardless, the world is mobilized to meet the climate finance needs, which will require an estimated $3 trillion of financing over the next 10 years for just the U.S. to reduce net emissions to zero by 2050.

Priscilla Sims Brown: We believe this investment will occur no matter the political landscape and Amalgamated as well positioned to play a very important role as a provider of financing to these needed projects. As I mentioned earlier, Amalgamated is recognized as an industry leader in climate finance and position not only to take domestic share, but to have an international impact as well. We have spoken about our alliances with banks globally through the Net Zero Banking Alliance and with Global Alliance for Banking on Values. Recently, we've also partnered with the UK-based Green Finance Institute, who are pioneering a properly linked finance product that is much like PACE financing here in the US.

Priscilla Sims Brown: As I mentioned earlier, Amalgamated is recognized as an industry leader in climate finance and positioned not only to take domestic share but to have an international impact as well. We have spoken about our alliances with banks globally through the Net Zero Banking Alliance and the Global Alliance for Banking on Values. Recently, we've also partnered with the UK-based Green Finance Institute, who are pioneering a property-linked finance product that is much like Pace Financing here in the U.S. We see long-term opportunities to participate in climate-related projects globally, especially as the UK and other governments look to mobilize public decarbonization capital similar to the U.S. GGRF.

We have spoken about our alliances with banks globally through the net zero banking Alliance and the global Alliance for banking on values.

Recently, we've also partnered with a U K based Green Finance Institute, who we're pioneering a property linked finance product that is much like pes financings here in the U S.

Priscilla Sims Brown: We see long-term opportunities to participate in climate-related projects globally, especially as the UK and other governments look to mobilize public decarbonization capital similar to the US's GGRF.

We see long term opportunities to participate in climate related projects globally, especially as the U K and other governments look to mobilize public de carbonization of capital similar to the U S is G. G. R. S.

Priscilla Sims Brown: As you can see, we have a long runway ahead of us as we appropriately grow the bank. And our financial results prove that socially responsible banking is not only good for customers and communities, but also good business, delivering value for our shareholders.

Priscilla Sims Brown: As you can see, we have a long runway ahead of us as we appropriately grow the bank. And our financial results prove that socially responsible banking is not only good for customers and communities but also good business, delivering value for our shareholders. Jason, over to you.

As you can see we have a long runway ahead of us as we appropriately grow the bank.

Our financial results to the social responsible banking is not only good for customers and communities, but also good business delivering value for our shareholders.

Jason Darby: Jason, over to you.

Over to you.

Jason Darby: Thank you, Priscilla.

Jason Darby: Thank you, Priscilla, and good morning, everyone. To keep things moving, I'm going to hit on fewer slides in the earnings deck and try to highlight just the most important items. If I miss anything, I'll be happy to cover it in Q&A. Let's start off on slide three. Our 2024 second quarter produced more solid results. Net income was $26.8 million, or $0.87 per diluted share. Core net income, which is a non-GET measure, was $26.2 million, or $0.85 per diluted share, representing a growing and sustainable earnings base.

Thank you Priscilla and good morning, everyone keep things moving I'm going to hit on less slides in the earnings deck and tried to highlight just the most important items, if I Miss anything I'll be happy to cover it in Q&A.

Jason Darby: Good morning, everyone. Keep things moving. I'm going to head on less slides in the earnings deck and try to highlight just the most important items. If I miss anything, I'll be happy to cover it in Q&A. Let's start off on slide three. Our 2024 second quarter produced more solid results. Net income was $26.8 million, or $0.87 per diluted share. Coordinate income, which is an on-get manager, was $26.2 million or $0.85 per diluted share, representing a growing and sustainable earnings base. The quarterly results also feature significant deposit growth with a low total cost of deposits of 155 basis points.

Jason Darby: The quarterly results also featured significant deposit growth with a low total cost of deposits of 155 basis points, net interest income growth, and a 13 basis point leverage ratio increase. There's also a little bit of noise in the quarter, which is obscuring our margin improvement and net interest income growth, as we had $2.1 million of accelerated amortization on $20 million of C&I loans that we put back to the government, which lowered our net interest margin by approximately 10 basis points.

Let's start off on slide three.

Our 2020 for a second quarter produced more solid results net income was $26 $8 million or 87 cents per diluted share coordinating.

Core net income, which is a non-GAAP measure was $26 $2 million or <unk> 85 cents per diluted share representing a growing and sustainable earnings base.

Quarterly results also featured significant deposit growth with a low total cost of deposits of 155 basis points net.

Jason Darby: Net interest income growth and a 13 basis point leverage ratio increase. There's also a little bit of noise in the quarter, which is obscuring our margin improvement and net interest income growth. As we had $2.1 million of accelerated amortization on $20 million of CNI loans that we put back to the government, which lowered our net interest margin by approximately 10 basis points. Excluding the unexpected impact, our net interest margin would have risen 7 basis points to 3.56% from 3.49% in the prior quarter. That said, in Q3 we anticipate recognizing $1.5 to $2 million of net deferred loan costs, which will reduce our NIM by around 10 basis points from the second quarter's adjusted level of 3.56%, all else equal.

Net interest income growth.

13 basis point leverage ratio increase.

There's also a little bit of noise in the quarter, which was obscuring or margin improvement in net interest income growth as we had $2.1 million of accelerated amortization on $20 million of C&I loans that we put back to the government, which lowered our net interest margin by approximately 10 basis points.

Jason Darby: Excluding this unexpected impact, our net interest margin would have risen 7 basis points to 3.56% from 3.49% in the prior quarter. That said, in Q3, we anticipate recognizing $1.5 to $2 million of net deferred loan costs, which will reduce our NIM by around 10 basis points from the second quarter's adjusted level of 3.56%, all else equal. Our neutral balance sheet strategy continues to pay dividends for us, and we are now managing $1.1 billion of off-balance sheet deposits comprised of both transactional political deposits and excess non-political deposits. Our deposit strength allows us great flexibility to structure our balance sheet for sustainable profitability and returns.

Excluding this unexpected impact our net interest margin would've risen seven basis points to 356% from 3.49% in the prior quarter.

That said in Q3, we anticipate recognizing $1.5 million to $2 million of net deferred loan costs, which will reduce our NIM by around 10 basis points from the second quarter's adjusted level of 3.56%.

All else equal.

Jason Darby: Our neutral balance sheet strategy continues to pay dividends for us, and we are now managing $1.1 billion of all balance sheet deposits, comprised of both transactional political deposits and access non-political deposits. Our deposit strength allows us great flexibility to structure our balance sheet for sustainable profitability and returns, and in the second quarter, our balance sheet deposits generated approximately $4.9 million of non-core non-interesting income. Over the past few quarters, we have been utilizing this off balance sheet income to further reposition our security portfolio, and we sold another $140.1 million during the quarter. We expect that we will continue to utilize this non-core interesting income through the third quarter to further sell securities and residential loans focused on improving our core earnings.

Our neutral balance sheet strategy continues to pay dividends for us and we are now managing $1.1 billion of off balance sheet deposits comprised of both transactional political deposits and excess non political deposits.

Our deposit strength allows us great flexibility to structure, our balance sheet for sustainable profitability and returns and.

Jason Darby: And in the second quarter, off-balance sheet deposits generated approximately $4.9 million of non-core, non-interest income. Over the past few quarters, we've been utilizing this off-balance sheet income to further reposition our securities portfolio, and we sold another $140.1 million during the quarter. We expect that we will continue to utilize this non-core interest income through the third quarter to further sell securities and residential loans focused on improving our core earnings. And more to come on this when I close out my comments.

And in the second quarter off balance sheet deposits generated approximately $4 $9 million of non core non interest income.

Over the past few quarters, we've been utilizing this off balance sheet income to further reposition our securities portfolio and we sold another $140 $1 million during the quarter.

We expect that we will continue to utilize this noncore interest income through the third quarter to further sell securities and residential loans focused on improving our core earnings.

Jason Darby: I'm more to come on this when I close out my comments. Continuing to slide four, we look at some of our key performance metrics during the second quarter. Starting off on the left, our tangible book value per share increased 88 cents, or a healthy 4.5%, to $20.61, crossing $20 for the first time in the bank's history. Our core revenue per deleted share was $2.52 for the second quarter of 4 basis point increase from the prior quarter. We think this nicely shows our commitment to delivering long-term shareholder value. Moving across to our returns core return and average equity was 16.93%, which we expect to modestly decline as we build our equity-based earnings and market improvement.

More to come on this when I close out my comments.

Jason Darby: Continuing to slide four, we look at some of our key performance metrics during the second quarter. Starting off on the left, our tangible book value per share increased 88 cents, or a healthy 4.5%, to $20.61, crossing $20 for the first time in the bank's history. Our core revenue per diluted share was $2.52 for the second quarter, a four basis point increase from the prior quarter, and we think this nicely shows our commitment to delivering long-term shareholder value.

Continuing to slide four we look at some of our key performance metrics during the second quarter.

Starting off on the left our tangible book value per share increased 88 cents.

Or a healthy 4.5% to $20.61 crossing $20 for the first time in the bank's history.

Our core revenue per diluted share was $2.52 for the second quarter, a four basis point increase from the prior quarter.

And we think this nicely shows our commitment to delivering long term shareholder value.

Jason Darby: Moving across to our returns, core return on average equity was 16.93%, which we expect to modestly decline as we build our equity base through earnings and mark-to-market improvement. And we are especially pleased with our consistent core return on average assets of 1.27%, showing the earnings power and potential of the bank. Moving to capital, our Tier 1 leverage ratio improved another 13 basis points to 8.42%, and we have made significant progress building capital over the last year or so.

Moving across to our returns core return on average equity was $16 nine 3%, which we expect to modestly decline as we build our equity base through earnings and Mark to market improvement.

Jason Darby: And we are especially pleased with our consistent core return and average assets of 1.27%, showing the earnings power and potential of the bank. Moving to capital, our tier one leverage ratio improved in other 13 basis points to 8.42%, and we have made significant progress building capital over the last year or so. Our changeable common equity and tangible assets was 7.66%, improving from the previous quarter despite long-term interest rates modestly ticking up. Turning to slide five, total deposits of June 30th, 2024, was $7.4 billion and increased of $143.2 million in the length quarter, which, as Priscilla noted, only tells part of the story.

And we were especially pleased with our consistent core return on average assets of one point to 7% showing the earnings power and potential of the bank.

Moving to capital our tier one leverage ratio improved another 13 basis points to 8.42% and we have made significant progress building capital over the last year or so.

Jason Darby: Our Tangible Common Equity and Tangible Assets were 7.66%, improving from the previous quarter, despite long-term interest rates modestly ticking up. Turning to slide 5, total deposits of June 30, 2024 were $7.4 billion, an increase of $143.2 million from the length of the quarter, which, as Priscilla noted, only tells part of the story. On balance sheet deposits, excluding brokerage CDs, increased $152 million, or 2.1%, to $7.3 billion, though there was significant additional deposit growth during the quarter. Non-interest-bearing deposits actually increased to approximately 46 percent of average deposits and 47 percent of ending deposits excluding brokered CDs, contributing to a strong average cost of deposits of 155 basis points in the second quarter.

Our tangible common equity to tangible assets was 766% improving from the previous quarter. Despite long term interest rates modestly ticking up.

Turning to slide five total deposits at June 30 of 2024 was $7 $4 billion, an increase of $143 $2 million from the linked quarter, which as pursuing noted only tells part of the story unbound.

Jason Darby: On balance sheet, deposits excluding broker CDs increased $152 million, or 2.1%, to $7.3 billion; though there were a significant additional deposit growth during the quarter. Non-intersparing deposits actually increased to approximately 46% of average deposits and 47% of ending deposits excluding broker CDs, contributing to a strong average cost of deposits of 155 basis points in the second quarter. Jumping ahead to slide six and seven, the book value of our traditional securias portfolio increased $121.2 million during the quarter. Primarily as a result of $342.2 million in purchases offset by $140.1 million in strategic sales and $81.5 million in traditional securities pay-downs as part of a strategy to reduce our downside interest rate risk.

On balance sheet deposits, excluding brokered Cds increased $152 million or 2.1% to $7.3 billion. So there were a significant additional deposit growth during the quarter.

Noninterest bearing deposits actually increased to approximately 46% of average deposits and 47% of ending deposits, excluding brokered Cds contributing to a strong average cost of deposits of 155 basis points in the second quarter.

Jason Darby: Jumping ahead to slides six and seven, the book value of our traditional securities portfolio increased $121.2 million during the quarter, primarily as a result of $342.2 million in purchases offset by $140.1 million in strategic sales and $81.5 million in traditional securities paydowns as part of our strategy to reduce our downside interest rate risk. During the quarter, we also utilized derivative hedges and repositioned our securities portfolio in order to minimize the downside interest rate risk associated with strong deposit growth. The net PACE assessment growth is $27.4 million.

Jumping ahead to slide six and seven the book value of our traditional securities portfolio increased $121 $2 million during the quarter, primarily as a result of $342.2 million in purchases offset by $141 million in strategic sales and $81.5 million in traditional securities Paydowns as part of our strategy.

To reduce our downside interest rate risk.

Jason Darby: During the quarter, we also utilized derivative hedges and repositioned our securities portfolio in order to minimize downside interest rate risk associated with a strong deposit growth. Net paste assessment growth is $27.4 million. Our paste production modestly exceeded the $20.25 million range that we provided on the first quarter call. And looking to the third quarter, we anticipate our paste production of an additional $20.25 million as we add additional purchases. Turning to slide 8, net loans receivable at June 30, 2024, were $4.4 billion, an increase of $49 million, or 1.1%, compared to the linked quarter. The yield in our total loans decreased 8 basis points to 4.68% during the quarter.

During the quarter, we also utilize derivative hedges and repositioned our securities portfolio in order to minimize downside interest rate risk associated with the strong deposit growth.

Net patient assessment credits was $27 $4 million.

Jason Darby: Our pace production modestly exceeded the $20 to $25 million range that we provided on the first quarter call. And looking to the third quarter, we anticipate our pace production of an additional $20 to $25 million as we add additional purchases. Turning to slide 8, net loans receivable at June 30, 2024 were $4.4 billion, an increase of $49 million or 1.1% compared to the linked quarter. The yield on our total loans decreased 8 basis points to 4.68% during the quarter. The decrease in loan income and yield was primarily due to $20 million of government-guaranteed C&I loans that we put back to the government.

Our paste production modestly exceeded the $20 million to $25 million range that we provided on our first quarter call.

Looking to the third quarter, we anticipate our paste production of an additional $20 million to $25 million as we add additional purchases.

Turning to slide eight net loans receivable at June 30 of 'twenty 'twenty four were $4 $4 billion, an increase of $49 million or one 1% compared to the linked quarter.

The yield on our total loans decreased eight basis points to 468% during the quarter.

Jason Darby: And the decrease in loan income and yield was primarily due to $20 million with the government guaranteeing CNI loans that we put back to the government. These loans had a $2.1 million premium, which required accelerating the amortization of the premium and which had a one-time impact on our second quarter loan yield and interest margin. Moving to slide 9, 10, and 11, looking at the real estate portfolio, we have $134 million in maturing, lower price commercial real estate and multi-family loans over the balance of the year. Importantly, we have a relatively benign exposure profile as our office-only commercial real estate portfolio was $61 million in prize of all past grade credits, and less than 23% of our multi-family portfolio had loans with units subject to pre-1974 rate stabilization rules.

The decrease in loan income in yield was primarily due to $20 million of the government guaranteed C&I loans that we put back to the government.

Jason Darby: These loans had a $2.1 million premium, which required accelerating the amortization of the premium and which had a one-time impact on our second quarter loan yield and interest margin. Moving to slides 9, 10, and 11, looking at the real estate portfolio, we have $134 million in maturing, lower-priced commercial real estate, and multifamily loans over the balance of the year. Importantly, we have a relatively benign exposure profile as our office-only commercial real estate portfolio was $61 million, comprised of all past-grade credits, and less than 23% of our multifamily portfolio had loans with units subject to pre-1974 rent stabilization rules.

These loans had a $2 $1 million premium, which required accelerating the amortization of the premium and which had a one time impact on our second quarter loan yield and net interest margin.

Moving to slides 910, and 11 looking at the real estate portfolio, we have $134 million in maturing lower price commercial real estate and multifamily loans over the balance of the year.

Importantly, we have a relatively benign exposure profile as our office only commercial real estate portfolio was $61 million.

Prize of all past grade credits and less than 23% of our multifamily portfolio had loans with units subject to pre 1974 rent stabilization rules.

Jason Darby: Early in the third quarter, we have one of our office-only credits for $18 million to set the payoff, which will nicely improve the risk profile of our CRE basket. On the multi-family side, we have already been working with all of the borrowers well in advance of maturity and feel comfortable with our plans for action, relative risk, and related allowance reserve coverage at this time. During the quarter, we renewed $12 million of pre-1974 exposure across two credits via a combination of cash infusions and amortizing terms in exchange for modest rate concessions. In the third quarter, we have $35 million of pre-1974 loans maturing.

Jason Darby: Early in the third quarter, we have one of our office-only credits for $18 million set for payoff, which will nicely improve the risk profile of our CRE basket. On the multifamily side, we have already been working with all of the borrowers well in advance of maturity and feel comfortable with our plans for action, relative risk, and related allowance reserve coverage at this time. During the quarter, we renewed $12 million of pre-1974 exposure across two credits via a combination of cash infusions and amortizing terms in exchange for a modest rate concession. In the third quarter, we have $35 million of pre-1974 loans maturing.

Early in the third quarter, we have one of our office only credits for $18 million set to pay off which will nicely improved the risk profile of our CRE basket.

On the multifamily side, we have already been working with all of the borrowers well in advance of maturity and feel comfortable with our plans for action relative risk and related allowance reserve coverage at this time.

During the quarter, we renewed $12 million of pre 1974 exposure across two credits via a combination of cash infusions and amortizing terms in exchange for modest rate concessions.

In the third quarter, we have $35 million of pre 1974 loans maturing.

Jason Darby: Moving to slide 14, non-performing assets were relatively stable at $35.7 million or 0.43% of period and total assets at June 30, 2024, and our criticized assets decreased $6.4 million to $94.5 million on a linked quarter basis. That said, our consumer solo charge loss remained elevated as we experienced a high net charge-off rate of 23 basis points, and we added approximately $1 million of additional reserves to boost our coverage ratio to 7% of that portfolio, showing on slide 15. Given the trends that we have been seeing in our consumer solo portfolio, we have made the decision to move our ACL coverage ratio higher in order to get ahead of potentially year-unchanges in our CSO model.

Jason Darby: Moving to slide 14, non-performing assets were relatively stable at $35.7 million, or 0.43% of period end total assets at June 30, 2024, and our impaired assets decreased $6.4 million to $94.5 million on a linked quarter basis. Now that said, our consumer solo charge-offs remained elevated as we experienced a high net charge-off rate of 23 basis points, and we added approximately $1 million of additional reserves to boost our coverage ratio to 7% of that portfolio, as shown on slide 15.

Moving to slide 14, non performing assets were relatively stable at $35 $7 million, 4.43% of period end total assets at June 30 of 'twenty 'twenty, four and our criticized assets decreased $6 $4 million to $94 $5 million on a linked quarter basis.

Now that said our consumer solar charge offs remained elevated as we experienced a high net charge off rate of 23 basis points and we added approximately $1 million of additional reserves to boost our coverage ratio to 7% of that portfolio shown on slide 15.

Jason Darby: Given the trends that we have been seeing in our consumer solar portfolio, we have made the decision to move our ACL coverage ratio higher in order to get ahead of potential year-end changes in our CECL model. Turning to slide 16, we are raising our full year 2024 guidance to core pre-tax, pre-provision earnings of $149 to $152 million and net interest income of $274 to $278 million, which considers the effect of the forward rate curve in 2024.

Given the trends that we've been seeing in our consumer solar portfolio. We've made the decision to move our ACL coverage ratio higher in order to get ahead of potential year end changes in our <unk> model.

Jason Darby: Turning to slide 16, we are raising our full year 2024 guidance to core pre-tax, pre-provision hearings of $149 to $152 million, and net interest income of $274 to $278 million, which considers the effect of the forward rate curve of 2024. Additionally, we estimate approximately $1.4 million decrease in annual net interest income for a parallel 25 basis point decrease and interest rates beyond with the forward curve currently suggests, down from a $2.2 million decrease in annual net income in the preceding quarter. To conclude, we are updating our target balance sheet size for year-un to approximately $8.3 billion.

Turning to slide 16, we are raising our full year 'twenty 'twenty four guidance to core pretax pre provision earnings of $149 million to $152 million.

And net interest income of $274 million to $278 million, which considers the effect of the forward rate curve 'twenty 'twenty four.

Jason Darby: Additionally, we estimate an approximately $1.4 million decrease in annual net interest income for a parallel 25 basis point decrease in interest rates beyond what the forward curve currently suggests, down from a $2.2 million decrease in annual net income in the preceding quarter.

Additionally, we estimate an approximately $1.4 million decrease in annual net interest income for a parallel 25 basis point decrease in interest rates beyond what the forward curve currently suggests.

Down from a $2 $2 million decrease in annual net income in the preceding quarter.

Jason Darby: To conclude, we are updating our target balance sheet size for year end to approximately $8.3 billion. We have been very happy with our tier one leverage growth, and even at a slightly larger balance sheet, we believe we can still improve leverage well beyond 8.5% in the coming quarters. We've consistently said the most important factor for us to expand the balance sheet was the performance of our nonpolitical deposit gathering franchise. Halfway through the year, we were remarkably ahead of our deposit plan, and now believe it's likely we will not need wholesale funding support for the significant political deposit outflows that we expect in the fourth quarter when the presidential election concludes.

To conclude we are updating our target balance sheet size for year end to approximately $8 $3 billion.

Jason Darby: We have been very happy with our tier-one leverage growth, and even at a slightly larger balance sheet, we believe we can still improve leverage well beyond 8.5% in the coming quarters. We've consistently said the most important factor for us to expand the balance sheet was the performance of our non-political deposit gathering franchise. Halfway through the year, we're remarkably ahead of our deposit plan and now believe it's likely we will not need wholesale funding support for the significant political deposit outflows that we expect in the fourth quarter when the presidential election concludes. In fact, we believe our outlook shows how Amalgamated can continue to deliver margin expansion and earnings growth well beyond the current year.

We've been very happy with our tier one leverage growth and even at a slightly larger balance sheet. We believe we can still improve leverage well beyond eight 5% in the coming quarters.

We've consistently said the most important factor for us to expand the balance sheet was the performance of our non political deposit gathering franchise.

Halfway through the year, we're remarkably ahead of our deposit plan and now believe it's likely we will not need wholesale funding support for the significant political deposit outflows that we expect in the fourth quarter when the presidential election concludes.

Jason Darby: In fact, we believe our outlook shows how Amalgamated can continue to deliver margin expansion and earnings growth well beyond the current year. Looking at the third quarter, we are reasonably optimistic that our net interest margin can expand by two to four basis points, including the absorption of the deferred costs discussed earlier. Correspondingly, we anticipate our net interest income to range between $69 and $71 million in the third quarter. In the fourth quarter, we could see some margin pressure as non-interest bearing deposits will likely be first out for the election, but we believe the effect will be minimal at between two to four basis points off the third quarter and will likely also serve as a new inflection point heading into 2025 as we have much runway ahead of us for loan yield expansion.

In fact, we believe our outlook shows how amalgamated can continue to deliver margin expansion and earnings growth well beyond the current year.

Jason Darby: Briefly looking at the third quarter, we are reasonably optimistic that our net interest margin can expand two to four basis points, including the absorption of the deferred costs discussed earlier. Correspondingly, we anticipate our net interest income to range between 69 and 71 million dollars in the third quarter. In the fourth quarter, we could see some margin pressure as non-interest bearing deposits will likely be first out for the election, but we believe the effect will be minimal at between two to four basis points off the third quarter and will likely also serve as a new inflection point heading into 2025 as we have much runway ahead of us for loan yield expansion.

Briefly looking at the third quarter, we are reasonably optimistic that our net interest margin can expand two to four basis points, including the absorption of the deferred costs discussed earlier chorus.

Correspondingly, we anticipate our net interest income to range between 69 and $71 million in the third quarter.

In the fourth quarter, we could see some margin pressure as noninterest bearing deposits will likely be first out for the election, but we believe the effect will be minimal at between two to four basis points off the third quarter.

And will likely also serve as a new inflection point heading into 2020 five as we have much runway ahead of us for loan yield expansion.

Jason Darby: So, in closing, we're very happy with our second quarter results and are quite optimistic for the remainder of the year and 2025 as well.

Jason Darby: So in closing, we're very happy with our second quarter results and are quite optimistic for the remainder of the year and 2025 as well. We'll look forward to updating you all again with our third quarter results in October. Operator? Thank you.

So in closing we are very happy with our second quarter results and are quite optimistic for the remainder of the year and 'twenty 'twenty five as well.

Operator: We'll look forward to updating you all again with our third quarter results in October, and with that, I'd like to ask the operator to open up the line for any questions.

We'll look forward to updating you all again with our third quarter results in October.

Speaker Change: And with that I'd like to ask the operator to open up the line for any questions operator.

Operator: Operator? Thank you. At this time, we'll be conducting a question-and-answer session. If you'd like to ask a question, at this time, you may press star one from your telephone keypad, and a confirmation tone indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. For participants that may be using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please. Will we pull for questions in that star one? Thank you. Thank you, and our first question is from the line of Janet Lee with J.P.

Speaker Change: Thank you at this time, we'll be conducting a question and answer session.

Operator: Thank you. At this time, we'll be conducting a question and answer session. If you would like to ask a question at this time, you may press star 1 on your telephone keypad, and a confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants that may be using speaker equipment, it may be necessary to pick up your handset before pressing the star key. One moment, please, while we poll for questions, and that's star number one. Thank you. Thank you, and our first question is from the line of Janet Lee with J.P. Morgan. Please receive your question.

Speaker Change: If you'd like to ask a question at this time you May press star one from your telephone keypad and a confirmation tone will indicate your line is in the question queue.

Speaker Change: You May press star two if you'd like to remove your question from the queue.

Speaker Change: For participants that may be using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

Speaker Change: One moment, please pull for questions and Thats Star one thank you.

Speaker Change: Okay.

Speaker Change: Thank you and our first question is from the line of Janet Lee with J P. Morgan. Please proceed with your questions.

Janet Lee: Morgan.

Janet Lee: Please receive your questions.

Janet Lee: Hello. Good morning. Yes. Good morning.

Speaker Change: Hello.

Janet Lee: Good morning. Good morning.

Janet Lee: Good morning.

Janet Lee: Morning.

Janet Lee: So, one of your peers in your market reported a large credit loss from your office and rising credit pressure from a rent-regulated portfolio. It appears your credit metrics are pretty stable. Can you give us an update on how your credit expectations for your rent-regulated portfolio have changed, if at all, over the past quarter? And what makes you confident that the current reserve ratio on your asset class is sufficient?

Jason Darby: So what have your peers in your market reported a large credit loss from your office and rising credit pressure from their rent-regulated portfolio? It appears your credit metrics are pretty stable. Can you give us an update on how your credit expectation on your rent-regulated portfolio have changed, if at all, over the past quarter?

Janet Lee: So what is your peers and your market reported a large credit loss from New York office, and and and rising credit pressure from no rent regulated for Fi al.

Speaker Change: It appears your credit metrics are pretty stable and can you give us an update on how your credit expectation on your rent regulated portfolio have changed if at all over the past quarter and what makes you confident that the current reserve ratio on your asset class is sufficient.

Jason Darby: And what makes you confident that the current reserve ratio on your asset class is sufficient? Thanks, Janet.

Jason Darby: Thanks, Janet. I'll take that.

Ken: Thanks, Ken I'll take that we feel.

Jason Darby: I'll take that. We feel really good about our real estate portfolio right now, and we're aware of the news. It's unfortunate, but we do think that the portfolios are rather different. We've spoken about that publicly. Just the nature of our portfolio, the geography is similar, but the client base is quite a bit different from some of the other banks that are reporting negative news. We have had some success, again, this past quarter, with renewals on the and the loans that we think are the most susceptible to the market rate risk in the multi-family portfolio. Those being the pre-1974s, we had about $10 or $12 million that came due in the second quarter, and we were able to find a renewal path, which consisted of a combination of cash injection and amortizing terms. We did give some modest rate concession to keep the borrowers in their properties, but we think all else equal.

Jason Darby: We feel really good about our real estate portfolio right now, and we're aware of the news. Unfortunately, but we do think that the portfolios are rather different. We've spoken about that publicly; just the nature of our portfolio, the geography is similar, but the client base is quite a bit different from some of the other banks that are reporting negative news. We had some success again this past quarter with renewals on the loans that we think are the most susceptible to market rate risk. In the multifamily portfolio, those being the pre-1974s, we had about $10 or $12 million that came due in the second quarter, and we were able to find a renewal path that consisted of a combination of cash injections and amortizing terms.

Speaker Change: Really good about our real estate portfolio right now and we're aware of the news is.

Speaker Change: Unfortunate, but we do think that the portfolios are rather different we've spoken about that publicly just a nature of our portfolio geography is similar but the client base is quite a bit different from some of the other banks that are reporting negative news.

Speaker Change: As we have had some success again this past quarter with renewals on the loans that we think are the most susceptible to the market right risk.

Speaker Change: And the multifamily portfolio are those being the pre 1974 is we had about 10 or $12 million that came due in the second quarter and we were able to find a renewal path, which consisted of a combination.

Speaker Change: Cash injection and amortizing terms, we did give some modest rate concession to keep their borrowers and their properties, but we think all else equal there are very strong outcomes, there and we've talked about this before but the upcoming tranche. It is we have $35 million of the 2000 1974 style.

Jason Darby: There are very strong outcomes there, and we've talked about this before, but the upcoming tranches, we have $35 million of the pre-1974 style loans coming due. In this quarter, we've been very active with the borrowers well in advance of this renewal dates. There are no anticipated surprises with the borrowers, at least in terms of what the renewal expectations are. We think between the ability for the borrowers, we put cash into the deal and having strong LTVs that were in a really good place to be able to continue to manage those properties or those renewals effectively, and we're very conscious of the reserve coverages.

Jason Darby: We did give some modest rate concessions to keep the borrowers in their properties, but we think, all else equal, there were very strong outcomes there, and we've talked about this before, but in the upcoming tranches, we have $35 million of the pre-1974 style loans coming due in this quarter. We've been very active with the borrowers well in advance of this renewal date, so there are no anticipated surprises for the borrower, at least in terms of what the renewal expectations are.

Speaker Change: <unk> coming due in this quarter, we've been very active with the borrower as well in advance of this renewal dates are no anticipated surprises with tomorrow or at least in terms of what the renewal expectations are we think between the ability for the bar to put cash into the deal and having strong ltvs that we're in a really good place.

Jason Darby: We think, between the ability for the borrower to put cash into the deal and having strong LTVs, we're in a really good place to be able to continue to manage those properties or those renewals effectively, and we're very conscious of the reserve coverage. The macroeconomic forecast was actually benign relative to our CECL model, but we elected to not take any benefit through our ACL relative to the macroeconomic factors and keep those reserve ratios on both the CRE and the multifamily portfolios flat from the prior quarter.

Speaker Change: To be able to continue to manage those properties are those renewals effectively and we're very conscious of the reserve coverage is the macroeconomic forecast was actually benign relative to our seasonal model, but we elected to not take any benefit.

Jason Darby: The macroeconomic forecast was actually benign relative to our Cecil model, but we elected to not take any benefit through our ACL relative to the macroeconomic factors and keep those reserve ratios on both the CRE and the multi-family portfolios flat from the prior quarter. Just again, given the loss history and how we see the portfolio going forward, we didn't feel a need to move up those coverage ratios at this time, but we take a very cautious approach towards the portfolio. We have a very, very close eye on each of the credits that are there, and if there are anything that we thought was a significant risk, you'd certainly see that in our financial results relative to coverage ratios or otherwise.

Speaker Change: Through our ACL relative to the macroeconomic factors and keep those reserve ratios on both the CRE and multifamily portfolio was flat from the prior quarter.

Jason Darby: Just again, given the loss history and how we see the portfolio going forward, we didn't feel a need to move up those coverage ratios at this time, but we take a very cautious approach to the portfolio. We have a very, very close eye on each of the credits that are there, and if there were anything that we felt was a significant risk, you'd certainly see that in our financial results relative to coverage ratios or otherwise.

Speaker Change: Just again, given the loss history, and how we see the portfolio going forward, we didn't feel a need to move those coverage ratios at this time, but we take a very cautious approach towards the portfolio. We have been very very close eye on each of the credits that are there and if there are anything.

Speaker Change: That we felt was a significant risk you'd certainly see that in our financial results relative to coverage ratios or otherwise. So those are the long answer for your question, Jonathan I think the way that we manage the portfolio the amount of Derisking that we did prior to where we are in current status and.

Jason Darby: So a little bit of a long answer for your question, Janet, but I think the way that we manage the portfolio, the amount of de-risking that we did prior to where we are in our current status, and the proactive nature we have in portfolio management is a deciding or a differentiating factor between us and some of the other banks right now, and we'll continue to be very, very cautious with it. Okay.

Jason Darby: So those of a long answer for your question, Janet, but I think the way that we met as a portfolio, the amount of the risking that we did prior to where we are in current status, and the proactive nature we have in portfolio management is a deciding or differentiating factor between us and some of the other banks right now, and we'll continue to be very, very cautious with it.

Speaker Change: Proactive nature, we have in portfolio management.

Speaker Change: As a deciding or a differentiating factor between us and some of the other banks right now and will continue to be very cautious with it.

Janet Lee: Okay, that's very helpful. And just some consumer solar, so the 2.5% in the charge of ratio, is that the level that we should expect in the coming quarters until we get a rate cut? Like is that the sort of a good run rate of net charge of ratio that you expect from this asset class, or how should we think about that? I think it's a good proxy to use going forward until we see a more substantive rate decline. Yeah, I think the NCOs were about 23 basis points this quarter, which is the higher high S, then we've had in the charge of rate right now.

Janet Lee: Okay, that's very helpful. And just on consumer solar, so the 2.5% net charge-off ratio, is that the level that we should expect in the coming quarters until we get a rate cut? Like, is that the sort of a good run rate of net charge-off ratio that you expect from this asset class, or how should we think about that?

Jonathan: Okay. That's very helpful and just on consumer is solar so the 2.5% net charge off ratio is that the level that we should expect in the coming quarters until we get a rate cut like is that the sort of a good run rate of net charge off ratio that you expect.

Speaker Change: From this asset class or how should we think about that.

I think.

Jason Darby: It's a good proxy to use going forward until we see a more substantive rate decline. I think the NCOs were about 23 basis points this quarter, which is the higher, highest end we've had in the charge-off rate right now. Like a range of that 15 to 23 basis points, we are very active in driving recoveries. We haven't been able to see that flow through the financial statements yet, but I do believe we're going to have some level of benefit moving through the financials.

Speaker Change: It's a good proxy to use going forward until we see a more substantive rate decline.

Speaker Change: Yeah, I think the Ncos were about 23 basis points this quarter, which is the higher high asked and we've had in the charge off rate right now.

Jason Darby: Like a range of that 15 to 23 basis points, we are very active in driving recoveries. We haven't been able to see that flow through the financial statements yet, but I do believe we're going to have some level of benefit moving through the financials.

Speaker Change: Like a range of that 15 to 23 basis points. We are very active in driving recoveries, we haven't been able to see that flow through the financial statements, yet, but I do believe we're going to have some level of benefit moving through the financials, but.

Jason Darby: It's at a point where I think it's more conservative to use the current loss rate as your proxy going forward until we can demonstrate some better recovery metrics at this point. And that's why we move that coverage ratio up to 7% on the overall consumer portfolio for this quarter. We think that there could be a little bit of a Cecil impact as we get closer to the end of the year. So, looking at that loss rate and adding a little bit more coverage, we think was a prudent thing to do and really reflective of probably forecast if there being an ongoing higher elevation or a higher rate of charge-offs in the portfolio than we would have liked at this point.

Jason Darby: It's at a point where I think it's more conservative to use the current loss rate as your proxy going forward until we can demonstrate some better recovery metrics at this point. And that's why we moved that coverage ratio up to 7% on the overall consumer portfolio for this quarter. We think that there could be a little bit of a Cecil impact as we get closer to the end of the year. So, looking at that loss rate and adding a little bit more coverage was a prudent thing to do and really reflective of probably a forecast of there being an ongoing higher level or a higher rate of charge-offs in the portfolio than we would have liked at this point.

Speaker Change: It's at a point, where I think it's more conservative to use the current loss rate as your proxy going forward until we can demonstrate some better recovery metrics at this point and that's why we move that coverage ratio up to 7% on the overall consumer portfolio for this quarter, we think that there could be a little.

Speaker Change: Bit of a seasonal impact as we get closer to the end of the year. So.

Speaker Change: Looking at that loss rate and adding a little bit more coverage. We think was a prudent thing to do and really reflective of probably forecasts of there being an ongoing higher elevation or a higher rate of charge offs in the portfolio than we would've liked at this point.

Janet Lee: Okay, got it. And on CNI, it looks like you guys are seeing some increase in commitments and, hopefully, some lessening payoffs there. Priscilla, you talked about modest growth in the second half of 2024. Can you give us a little more details about your expectations for CNI growth and more overall loan growth as we head into the back half of the year, as well as heading into 2025, potentially, as we also get rate cuts?

Janet Lee: Okay, got it.

Speaker Change: Okay got it and on C&I. It looks like you guys are seeing some increase in commitments and hopefully some some lessening payoffs.

Janet Lee: And on CNI, it looks like you guys are seeing some increase in commitments and hopefully some lessening payoffs there.

Speaker Change: There.

Jason Darby: Priscilla, you talked about modest growth in the second half of 2024. Can you give us a little more details about your expectations on CNI growth and more overall loan growth as we head into the back half of the year as well as heading into 2025 potentially as we also get rate cuts? Yes, absolutely.

Speaker Change: Hello, you talked about modest growth in the second half of 'twenty 'twenty four can you give us a little more details about your expectations on C&I growth and and more overall loan growth as we head into the back half of the air as well as heading into 'twenty twenty-five potentially as we also got rate cuts.

Jason Darby: Yes, absolutely. I'll take the first part of that question, Janet, and then flip it over to Priscilla for a little bit more of a forward look.

Janet Lee: Yes, absolutely I'll take the first part of that question, Janet and then flip it over to Priscilla for a little bit more of the forward, but in the current quarter. We didn't show much growth in the C&I. In fact, I think it was net down very slightly but there was actually some really good activity that happened during the quarter, we had about.

Jason Darby: I'll take the first part of that question, Jen, and then flip it over to Priscilla for a little bit more of the forward look. In the current quarter, we didn't show much growth in the CNI. In fact, I think it was net down very slightly, but there was actually some really good activity that happened during the quarter. We had about 37 million or so new originations that were all climate related, and we had another 47 million dollars that was drawn from previously booked deals. We also had a couple of good points in the quarter that obfuscated those results.

Jason Darby: In the current quarter, we didn't show much growth in C&I. In fact, I think it was net down very slightly, but there was actually some really good activity that happened during the quarter. We had about 37 million or so new originations that were all climate-related, and we had another 47 million dollars that were drawn from previously booked deals.

Priscilla: $37 million or so new originations at we're all climate related and we had another $47 million that was drawn from previously booked deals.

Speaker Change: We also had a couple of good points in.

Jason Darby: We also had a couple of good points. In the quarter that obfuscated those results, we had a payoff from one of our past rated C&I loans, but it was sixth grade. We weren't thrilled with the outcome that might happen in the upcoming quarter, so the payoff was actually a very, very good thing. And then we put back $20 million of USDA loans to the government. So net-net, it really obfuscated what we thought was a pretty decent quarter so far in C&I.

Speaker Change: In the quarter that office cases results, we had a pay off from one of our.

Jason Darby: We had to pay off in one of our pass rated CNI loans, but it was sixth grade. We weren't thrilled with the outcome that might happen in the upcoming quarter, so the payoff was actually a very, very good thing. Then we put back 20 million dollars of USDA loans to the government. Net net, it really obfuscated what we thought was a pretty decent quarter so far in CNI. We had some nice closing and up commitments early in July that are reflected in our off-bound sheet reserve.

Priscilla: Past rated C&I loans, but it was six gray, we weren't thrilled with the outcome that might happen in the upcoming quarters. So that pay up is actually a very very good thing and then we put back $20 million of USDA loans to the government. So net net really office gave what we felt was a pretty decent quarter. Some foreign C&I and we had some.

Jason Darby: And we had some nice closing up commitments early in July that are reflected in our off-balance sheet reserve. So we think there's some momentum there, and Priscilla, do you want to share a little bit about what we think the unrest in the reserve will look like? Sure, sure, sure.

Speaker Change: Nice closing another commitments early in July that are reflected in our off balance sheet reserve. So we think there's some momentum there in preceding months, yeah. What we think the rest of the sure sure sure.

Priscilla Sims Brown: We think there's some momentum there, and Priscilla, you want to show it up? We think the unrest is over there.

Priscilla Sims Brown: Sure. Janet, I think for the full year, we are still comfortable with the target of about 4 percent, and that equates to about somewhere between 275 million to 320 million of loans, and that will be pretty, in the third quarter and both fourth quarter, we're targeting something along the lines of 100 to 120 million, so for both quarters. Of that, we expect just looking at the pipeline, we're going to bring on somewhere between 150 and 185 million in climate-related loans by the end of the year, but to the point Jason just made about draws, we think that will amount to about 50 million in draw in the year.

Priscilla Sims Brown: Janet, I think for the full year, we are still comfortable with a target of about 4%, and that equates to about somewhere between $275 million and $320 million of loans. And that'll be pretty – in the third quarter and both the fourth quarter, we're targeting something along the lines of $100 million to $120 million, so for both quarters. Of that, we expect, just looking at the pipeline, we're going to bring in somewhere between $150 million and $185 million in climate-related loans by the end of the year.

Speaker Change: Janet I think for the for the full year, we are still comfortable with a target of about 4%.

Speaker Change: And you know that equates to about somewhere between 275 million to 320 million of our loans.

Speaker Change: And that'll be pretty in the third quarter in both the fourth quarter, we're targeting something along the lines of $100 million to $120 million.

Priscilla: Both quarters of that.

Speaker Change: We expect just looking at the pipeline, we're going to bring on somewhere between 150, and 185 million and climate related loans by the end of the year, but to.

Priscilla Sims Brown: But to the point Jason just made about draws, I mean, we think that will amount to about $50 million in draws during the year. And, you know, none of this takes into account anything that may come through from like a GGRF or anything else. This is just the normal course of business that we see through the pipeline today.

Speaker Change: To the point, Jason just made about draws I mean, we think that will amount to about $50 million and draw in the year and and you know none of this takes into account anything that may come through from like a G. G. R F or anything else. This is just the normal course of business.

Janet Lee: and none of this takes into account anything that may come through from like a GGRF or anything else. This is just the normal course of business that we see through the pipeline today. Got it, that's helpful.

Speaker Change: That we see through the pipeline today.

Janet Lee: Got it. That's helpful. And my last question, if I could.

Got it that's helpful and my last question if I could.

Jason Darby: And my last question, if I could, it appears that you experience a similar pace of intersparing deposit costs in the second quarter versus the last quarter. Can you give us some color on your deposit pricing competition in your market and your end name outlook for the third quarter and fourth quarter? Are you baking in that, you know, as we get a couple of rate cuts potentially this year, assuming the fourth curve, you expected the deposit cost decline towards the end of the year? So the NII forecast for the guidance update that we gave does assume 50 basis points of rate cuts as the fourth curve suggests the to back it up and tell you how we get there.

Janet Lee: It appears that you experienced a similar pace of interest-bearing deposit costs in the second quarter versus the last quarter. Can you give us some color on your deposit pricing competition in your market and your NIM outlook for the third quarter and fourth quarter? Are you baking in that as we get a couple of rate cuts potentially this year, and assuming the forward curve, you expect deposit costs to decline towards the end of the year?

Speaker Change: It appears that you experienced a similar paces.

Speaker Change: Interest bearing deposit costs in the second quarter versus the last quarter can you give.

Speaker Change: Give us some color on your deposit pricing competition in your market and and and your and NIM outlook for the third quarter at fourth quarter or are you baking in that you know as as we get a couple of rate cuts potentially does.

Speaker Change: Yeah.

Speaker Change: Assuming the forward curve, you expect deposit cost decline towards the end of the year.

Jason Darby: So the NII forecast for the guidance update that we gave does assume 50 basis points of rate cuts, as the forward curve suggests. To back it up and tell you how we get there, I think I have seen them trend.

Speaker Change: So the NII forecast or the guidance update that we gave does assume 50 basis points of rate cuts as the forward curve suggests the.

Speaker Change: To back it up and tell you how we get there I think the.

Jason Darby: I think the deposit rates, the way we've seen them trend, we were predicting it to be right around this cost of funds that we had in the third quarter, just based on the stated rates that we had at the end of the second quarter. I think that's a track pretty nicely. And I usually turn to the money market rate on our deposit disclosure, and our press release has a good indicator as to where our overall deposit cost of funds are going. We have not seen in the latter half of the second quarter and early into the third quarter any significant deposit pricing pressure relative to our competition.

Speaker Change: Deposit rates the way, we've seen them trend. The we were predicting it to be right around the cost of funds that we had in the third quarter just based on the standard rates that we had at the end of the second quarter, I think that subtract pretty nicely and I, usually turned to the money market rate on our <unk>.

Jason Darby: We were predicting it to be right around this cost of funds that we had in the third quarter just based on the stated rates that we had at the end of the second quarter. I think that's tracked pretty nicely. And I usually turn to the money market rate on our deposit disclosure and our press release as a good indicator as to where our overall deposit cost of funds is going. We have not seen in the latter half of the second quarter and early into the third quarter any significant deposit pricing pressure relative to our competition, and so I'm not expecting a big increase in stated cost of funds throughout the rest of the third quarter. That said,

Speaker Change: Deposit disclosure in our press release is a good indicator as to where our overall deposit cost of funds are going we.

Speaker Change: We have not seen in the latter half of the second quarter and early into the third quarter any significant deposit pricing pressure relative to our competition and so I'm not expecting a big increase in stated cost of funds throughout the rest of it.

Jason Darby: And so I'm not expecting a big increase in stated cost of funds throughout the rest of the third quarter. That said, when we get to, and I think before I get to the fourth quarter, that said, I think that's going to be a big contributor for our ability to deliver margin and NII expansion in the third quarter, presuming everything stays as we are hoping it will.

Speaker Change: The third quarter.

Speaker Change: That said.

Jason Darby: When we get to, and let me, before I get to the fourth quarter, I think that's going to be a big contributor to our ability to deliver margin and NII expansion in the third quarter, presuming everything stays as we are hoping it will. When we get to the fourth quarter, what should be interesting is the migration of the balances to the election cycle. So figure.

Speaker Change: When we get to and I think let me before I get to the fourth grade. That's I think that's going to be a big contributor for our ability to deliver margin and NII.

Speaker Change: Expansion in the third quarter presuming everything stays as we are hoping it will when we get to the fourth quarter, which should be interesting is.

Jason Darby: When we get to the fourth quarter, what should be interesting is the migration of the balances to the election cycle. So figure we're estimating somewhere around a billion dollars. We'll move out of the bank and into the campaigns. We've got about a billion one sitting off balance sheet right now. And we had been consciously keeping some of the cost deposits on our books to smooth out any effect we might have had, Janet, for the need to use higher cost borrowings in the fourth quarter to fill the gap for political deposit outflow. As it looks right now, we don't think we're going to need any borrowings or wholesale funding to support that outflow.

Speaker Change: The migration of the balances to the election cycle so figure.

Jason Darby: We're estimating somewhere around a billion dollars will move out of the bank and into the campaigns. We've got about a billion sitting off the balance sheet right now. And we had been consciously keeping some of the higher-cost deposits on our books to smooth out any effect we might have had, Janet, for the need to use higher-cost borrowings in the fourth quarter to fill the gap for political deposit outflows. As it looks right now, we don't think we're going to need any borrowings or wholesale funding to support that outflow.

Speaker Change: We're estimating somewhere around $1 billion will move out of the bank and into the campaigns. We've got about 1 billion, one sitting off balance sheet right now.

Speaker Change: And we had been consciously keeping some of the higher cost deposits on our books.

Speaker Change: To smooth out any effect, we might've had janet for the need to use higher cost borrowings in the fourth quarter to fill the gap for political deposit outflow as it looks right now we don't think we're going to need.

Speaker Change: Any borrowings or wholesale funding to support that outflow. So while we do expect the noninterest bearing deposits to be first out if you will the interest bearing deposits that would move back onto the balance sheet.

Jason Darby: So while we do expect the non-intersparing deposits to be first out, if you will, the intersparing deposits that would move back on to the balance sheet. probably are priced a little bit lower than what we're showing on our state of rates right now in the third quarter. And so that gives the math, if you will, to get to a lesser of an impact on the margin than we would normally have expected in the fourth quarter and really set us up for an a new inflection point in margin expansion and hopefully NII growth as we move into 2025.

Jason Darby: So while we do expect the non-interest bearing deposits to be first out, if you will, the interest-bearing deposits that would move back onto the balance sheet probably are priced a little bit lower than what we're showing on our stated rates right now in the third quarter. And so that gives the... math, if you will, to get to a lesser of an impact on the margin than we would normally have expected in the fourth quarter and really set us up for a new inflection point and margin expansion and hopefully NII growth as we move into 2025. So that was a lot. I'm happy to take a follow-on if you want to dissect that a little bit.

Speaker Change: Probably are priced a little bit lower than what we're showing on our stated rates right now in the third quarter and so that gives the.

Speaker Change: Math, if you will to get to a lesser of an impact on the margin than we would normally have expected in the fourth quarter and really set us up for in a new inflection point in margin expansion and hopefully NII growth as we move into 2025.

Jason Darby: So that's a lot.

Janet Lee: I'm having to take a follow-on if you want to dissect that a little bit. So that's very helpful.

Speaker Change: What I'm happy to take a follow on if you want to dissect that a little bit.

Jason Darby: That's very helpful. That's it. Thank you. Janet, you'd also ask.

No that's very helpful. That's it thank you.

Janet Lee: That's it. Thank you.

Jason Darby: Janet, you also asked about 25 and we'll be talking more about that at the end of the year, as usual.

Mark Fitzgibbon: Janet, you'd also asked about 25, and we'll be talking more about that at the end of the year, as usual. Thanks.

Speaker Change: Jenny.

Speaker Change: Also asked about 25, it will be talking more about that at the end of the year as usual.

Speaker Change: Sure.

Speaker Change: Thanks.

Mark Fitzgibbon: Our next questions are from the line of Mark Fitzgibbon with Play Percentler. Please receive their questions.

Mark Fitzgibbon: Our next questions are from the line of Mark Fitzgibbon with Piper Sandler.

Speaker Change: Our next questions are from the line of Mark Fitzgibbon with Piper Sandler. Please proceed with your question.

Operator: Good morning. Hello, and welcome. Thank you.

Mark Fitzgibbon: Good morning. Hello and welcome. Thank you.

Mark Fitzgibbon: Good morning, Hello, and welcome thank.

Chris: Thank you Hey, Mark Chris.

Priscilla Sims Brown: Priscilla, I was curious, do you think the late change in the Democratic presidential candidate will affect the flow of political deposits in the third quarter at all? Well, you know, as you've already seen, we are trending about half a billion above where we would normally be at the peak toward, you know, a later point in the cycle. So I think the enthusiasm on both sides will continue. I think fundraising, as you've seen in the last, you know, four days, has kicked up, and I think there's new enthusiasm, and you'll see those numbers continue to grow.

Priscilla Sims Brown: Priscilla, I was curious, do you think the late change in the Democratic presidential candidate will affect the flow of political deposits in the third quarter at all?

Mark Fitzgibbon: So I was curious do you think the late change in the Democratic presidential candidate will affect the flow of political deposits in the third quarter at all.

Priscilla Sims Brown: Well, you know, as you've already seen, we are trending about half a billion above where we would normally be at the peak toward, you know, a later point in the cycle. So I think the enthusiasm on both sides will continue. I think fundraising, as you've seen in the last, you know, four days, has kicked into high gear, and I think there's new enthusiasm, and you'll see those numbers continue to grow. So no, I don't expect that you're going to see a decline.

Speaker Change: Well you know as as you've already seen them, we are trending about half a billion above where we would normally be at the peak toward you know a later point in the cycle.

Mark Fitzgibbon: So I think the enthusiasm on both sides will continue I think fundraising as you've seen in the last you know.

Mark Fitzgibbon:

Mark Fitzgibbon: Four days has kicked up and I think I think theres, new enthusiasm and you'll you'll see those numbers continue to grow so no I don't I don't expect that youre going to see a decline.

Priscilla Sims Brown: So no, I don't expect that you're going to see it decline.

Mark Fitzgibbon: And do you have a sense for what the billion eight that you have in political deposits represents as a Maybe a percentage of the Democratic political deposits as a whole? I guess I'm just trying to get a sense for, you know, what percentage of the total pie do you guys represent?

Priscilla Sims Brown: And do you have a sense for what the billionate that you have in political deposits represents as maybe a percentage of the Democratic political deposits as a whole? I guess I'm just trying to get a sense for, you know, what percentage of the total pie do you guys represent? I think your firm and others have looked at that not so much on just the demo side, but on general fundraising and elections. But we don't do that. So I don't know what the larger fundraising has been in the whole ecosystem. Because keep in mind it's not just what the candidates raise and their super PACs.

Speaker Change: And do you have a sense for what the 1 billion eight that you have in political deposits represents as a maybe a percentage of the democratic political deposits as a whole I guess I'm just trying to get a sense for what percentage of the total pie to you guys represent.

Priscilla Sims Brown: I think your firm and others have looked at that, not so much on just the DEM side but on general fundraising and elections, but we don't do that. So I don't know what the larger fundraising has been in the whole ecosystem, because keep in mind, it's not just what the candidates raise and their super PACs. It's also the ecosystem of people like ActBlue and other major clients, and I don't have that number. Do you?

Mark Fitzgibbon:

Speaker Change: I think I I think your firm and others have looked at that not so much.

Speaker Change: On just the downside, but on a general fundraising and elections and but we don't do that so I don't know what the larger.

Speaker Change: Fundraising has been in the whole ecosystem because keep in mind, it's not just what the candidates raise and they're super packs. It's also the the ecosystem of people.

Priscilla Sims Brown: It's also the ecosystem of, you know, people like ActBlue and other major clients. And I don't think I don't have that number to you. We don't have that number. We know we have a significant portion, but what we like to point to as an indicator would be.

Speaker Change: People like Actblue in other major clients and I don't think I don't have that number to you.

Jason Darby: We don't have that number yet. We know we have a significant portion, but what we like to point to as an indicator would be... So Harris has recently been moved towards the presumptive nominee for the Democratic Party, and in her campaign election filing with the Federal Election Commission, Amalgamated Bank is listed as the bank of record for the campaign. And so, without being able to specifically quote what our share is of that space, we do think it's really important to see how entrenched Amalgamated is in this whole process with campaign finance and the Democratic Party, and hopefully, that gives us a good indication of our position relative to a pretty significant change that just occurred in the party process.

Speaker Change: We don't have that number we know we have a significant portion, but what we like to point to is an indicator would be.

Priscilla Sims Brown: So Harris recently has been moved towards the presumptive nominee for the Democratic Party and her campaign election filing with the Federal Election Commission. A maligrated bank has listed as the banker record for the campaign. And so, without being able to specifically quote what our share is about space, we do think it's really important to see how entrenched a malgaming it is in this whole process with the campaign finance and the Democratic Party.

So Harris recently has been moved towards the presumptive nominee for the Democratic Party and her campaign election filing with the federal election Commission amalgamated Bank is listed as the bank of record for the campaign and so without being able to specifically quote what our share is in that space we do.

Speaker Change: Do think it's really important to see how entrenched amalgamated is in this whole process with the campaign finance in the Democratic Party and hopefully that gives you a good indication of our position relative to a pretty significant change that just occurred in the party process.

Priscilla Sims Brown: And hopefully that gives us a good indication of our position relative to a pretty significant change that just occurred in the party process.

Mark Fitzgibbon: Access. Okay, great.

Mark Fitzgibbon: Okay, great. And then, changing gears a little bit, I was wondering if you could share with us what the average yields on the multifamily and commercial real estate loans that are set to mature in the back half of this year look like?

Speaker Change: Okay, Great and then changing gears a little bit I was wondering if you could share with us what the average yields on the multifamily and commercial real estate loans that are set to mature this.

Mark Fitzgibbon: And then, changing gears a little bit, I was wondering if you could share with us what the average yields on the multi-family commercial real estate loans that are set to mature this in the back after this year look like. We're going to have some shorter-term higher-yielding loans moving off the books. So, while we're going to get some ability to grow yield relative to the real estate portfolio, we're going to have to replace some higher yielding assets on the CNI side. So the effect will be a little bit muted in the back half of the year, but that hopefully gives you a sense of what's turning over on the real estate portfolio.

Speaker Change: In the back half of this year look like.

Jason Darby: Yeah, back half of the year, they're still coming in that low 4% range for the multifamily and for the CRE. We're probably going to have a little bit of noise, though, because on the C&I side, not that you asked this, but on the C&I side, we're going to have some shorter-term, higher-yielding loans moving off the books. So while we're going to get some ability to grow yields, relative to the real estate portfolio, we're going to have to replace some higher yielding assets on the CNI side. So the effect will be a little bit muted in the back half of the year, but that hopefully gives you a sense of what's turning over in the real estate portfolio.

Speaker Change: Yeah back half of the year, they are still coming in that low 4% range for the multifamily and for the CRE.

Speaker Change: We're probably going to have a little bit of noise, though because on the C&I side and not that you asked this but.

Speaker Change: On the C&I side, we're going to have some shorter term higher yielding loans moving off the books, so while we're going to get some ability to grow yield.

Speaker Change: Relative to the real estate portfolio, we're going to have to replace some higher yielding assets on the C&I side. So the effect will be a little bit muted in the back half of the year, but that hopefully gives you a sense of what's turning over on the real estate portfolio. It does and then in terms of like you're originating I think 55 million of multifamily loans in the second quarter or what.

Mark Fitzgibbon: It does. And then, in terms of, like, you originated, I think, $55 million in multifamily loans in the second quarter. What kind of rates did those new loans come on at?

Mark Fitzgibbon: It does.

Jason Darby: And then in terms of like you originally, I think 55 million of multi-family loans in the second quarter, what kind of rates did those new loans come on at? Yeah, they were coming on in the call. It high six to low seven, somewhere in that 685 to 7% range. The LTVs on those were real strong.

Speaker Change: Rates did those new loans come on up.

Jason Darby: Yeah, they were coming on in the, call it... high six to low seven, somewhere in that 685 to 7% range. LTVs on those were real strong. I think we booked some really prudent credits and I'm really happy with those real estate assets that we were able to add from a client point of view. Rates have come down a bit and spreads are tightening, so I don't think we're gonna have those same types of bring-ons in the third quarter. We think it's gonna be more in the low to mid-six range for real estate assets that we sell in the third quarter.

Speaker Change: Yeah, they were coming on in the call it.

Speaker Change: Hi, six to low seven somewhere in that $6, 85% to 7% range the.

Speaker Change: Ltvs on those were real strong I think we booked some really prudent credits and I'm really happy with those real estate assets that we were able to add from a client point of view now.

Jason Darby: I think we've booked some really prudent credits, and I'm really happy with those real estate assets that we were able to add from a client point of view. Now, rates have come down a bit, and spreads are tightening up, so I don't think we're going to have those same types of bring-ons in the third quarter. We're thinking it's going to be more in the low to mid six range for real estate assets that we were doing the third quarter.

Speaker Change: Rates have come down a bit and spreads are tightening up so I don't think we're going to have those same types of bring ons in the third quarter, we're thinking it's going to be more in the low to mid six range for real estate assets that we would do in the third quarter.

Mark Fitzgibbon: Okay, and then lastly, could you share with us any thoughts on operating expenses in the third and fourth quarter? Yeah, we are moving.

Mark Fitzgibbon: Okay, and then lastly, could you share with us any thoughts on operating expenses in the third and fourth quarter? Yeah, we are moving very much according to our plan. We were a little accelerated in object system quarter versus Q1, but that was expected. We had said in Q1 that we were a little lower than our annualized run rate. We are targeting a 157 million dollar annual expense run rate, and we're tracking very much to that. We think the quarterly expense run rate would be 39 and a quarter million or something along those lines for both Q3 and Q4.

Speaker Change: Okay, and then lastly could you share with it with us any thoughts on operating expenses in the third and fourth quarter.

Jason Darby: Yeah, we are moving very much according to our plan. We were a little accelerated in OPEX this quarter versus Q1, but that was expected. We said in Q1 that we were a little lower than our annualized run rate. We are targeting a $157 million annual expense run rate, and we're tracking very much to that. We think the quarterly expense run rate would be $39.25 million or something along those lines for both Q3 and Q4.

Speaker Change: Yeah, we are moving very much. According to our plan we were a little accelerated in Opex this quarter versus Q1, but that was expected. We had said in Q1 that we were a little lower than our annualized run rate, we are targeting a $157 million annual.

Speaker Change: Our expense run rate and we're tracking very much too that we think the quarterly expense run rate would be 39, and a quarter of million or something along those lines for both Q3 and Q4 now that said it will be very open about forecast when we get to the Q3 call. If we continue to track toward.

Jason Darby: Now, that said, and we'll be very open about forecasting when we get to the Q3 call. If we continue to track towards the higher end of our new guidance, we may look to advance some project work that we have scheduled for next year into this year to get a head start, which would necessarily increase the object, but we'd be very mindful obviously of how that would affect core efficiency. So long as the top lines there mark, we would be potentially adding to the expense base a little bit sooner than we would have coming into next year, and that would drive that number from 157 million up maybe to 158 or 159 million.

Jason Darby: Now that said, and we'll be very open about forecasting when we get to the Q3 call, if we continue to track towards the higher end of our new guidance, we may look to advance some project work that we had scheduled for next year into this year to get a head start, which would necessarily increase the OPEX, but we'd be very mindful, obviously, of how that would affect core efficiency. As long as the top line is there, Mark, we could potentially add to the expense base a little bit sooner than we would have coming into next year, and that would drive that number from $157 million up maybe to $158 or $159 million. Great, thank you.

Speaker Change: The higher end of our new guidance, we may look to advance some project work that we had scheduled for next year into this year to get a head start which would necessarily increase the opex, but we'd be very mindful, obviously of how that would affect core efficiency. So as long as the top line's aramark, we would be potentially adding to the <unk>.

Speaker Change: Fence base, a little bit sooner than we would have coming into next year and that would drive that number from $157 million up maybe to 158 or $159 million.

Mark Fitzgibbon: Great.

Mark Fitzgibbon: Thank you.

Speaker Change: Great. Thank you.

Mark Fitzgibbon: You're very welcome. Thank you.

Speaker Change: Youre very welcome.

Operator: Thank you. As a reminder, to ask a question today, you may press star one on your telephone keypad.

Speaker Change: Thank you as a reminder to ask a question today you May press star one from your telephone keypad.

Chris O'connell: As a reminder, to ask a question today, you may press star one from your telephone keypad. The next question is from the line of Chris O'Connell with KBW.

Speaker Change: The next question is from the line of Chris O'connell with K B W.

Chris O'connell: Please receive your questions. Hey Chris. Hey.

Speaker Change: And with your questions.

Chris O'connell: Hey, Chris.

Chris O'connell: Good morning. So just wanted to start up on the political deposit and the flows into the back after the year. So, if I'm, you know, reading everything right, I think, you know, the 1.7 in change, 1.7 to 1.8 of total political deposits, you know, with about, you know, there's only about, you know, 700 million, 600 million in change on the balance sheet right now, is that correct? It's a little bit more on the political side. It's probably closer to a billion that's on the balance sheet right now. We've got about 450 million of that off balance.

Chris O'connell: Hey, good morning.

Operator: So just want to start off on the political deposits in the flows into the back half of the year. So if I'm reading everything right, I think the 1.7 and change, 1.7 to 1.8 of total political deposits, about, you know, there's only about, you know,

Speaker Change: Just wanted to start off on the political deposits and flows into the back half of the year.

Chris O'connell: <unk>.

Speaker Change: So if I'm reading everything right I think the $1 seven and change one seven to one eight of total political deposits.

Speaker Change: You know with.

Speaker Change: About theres only about you know.

Speaker Change: 700 million $600 million in change on the balance sheet right now is that correct.

It's a little bit more on the political side, it's probably closer to 1 billion. That's on the balance sheet right now we've got about $450 million of that.

Jason Darby: I might have the numbers a little bit off, but I think we do a reconciliation in the back part of the earnings deck for you on that, Chris. Okay, got it. And then so more or less like the off balance sheet really reduces the risk of, you know, a large deposit change, even with the election cycle in the fourth quarter, you know, maybe only, you know, 2 to 300 million of on balance sheet reduction. I think that's right. You know, it's, it's more about the mix. I mean, if you just think about it as a first line of defense, the off balance sheet deposits would be the ones that would go against the political deposit outflow.

Speaker Change: Off balance sheet I might have those numbers a little bit off but I think we do a reconciliation in the back part of the earnings deck for you on that Chris.

Chris O'connell: Okay got it and then so more or less like the off balance sheet really reduces the risk.

Speaker Change: No.

Speaker Change: A large deposit change even with the election cycle in the fourth quarter, and maybe I'll need $2 million to $300 million of on balance sheet reduction.

Chris O'connell: I think that's right.

Speaker Change: It's more about the mix I mean, if you just think about it as a.

Speaker Change: First line of defense the off balance sheet deposits would be the ones that would.

Speaker Change: Go against the political deposit outflow. So if we had 1 billion one off balance sheet right now and we expect around 1 billion or 1 billion wanted to go out on the political campaign that would effectively reduce that off balance sheet to zero, obviously, but the idea would be you.

Jason Darby: So if we have a billion 1 off balance sheet right now, and we expect around a billion or a billion 1 to go out on the political campaign, that would effectively reduce that off balance sheet to zero. Obviously, but the idea would be you'd be taking on balance sheet quite a bit of those off balance sheet that sit there because they're not political. And that would be the impact, if you will. I was talking about January earlier that would happen to our overall cost of funds. And like I said before, we've had some of the higher priced deposits on balance sheet for the specific purpose of not having a wild blip in funding cost if we had to go out to the borrowing windows and plug the hole for deposit outflow like we've done in the past.

Operator: you'd be taking on the balance sheet.

Speaker Change: You'd be taking on balance sheet.

Speaker Change: Quite a bit of those off balance sheet that sit there because they are not political.

Speaker Change: And that would be the impact.

Speaker Change: Impact if you will that was talking about Jan earlier that what happened to our overall cost of funds and like I said before we've had some of the higher priced deposits on balance sheet for the specific purpose of not having a wild blip in funding costs. If we had to go out today borrowing windows and.

Speaker Change: Plug the hole for deposit also like we've done in the past in this case, we'd be just changing that mix and you'd be seeing interest bearing deposits coming back on the books and probably drive that noninterest bearing to interest bearing ratio down a bit but all equal it should be a nice benefit relative to what the price would have been on wholesale funding costs.

Jason Darby: In this case, we'd be just changing that mix, and you'd be seeing interest-bearing deposits coming back on the books that probably drive that not interest-bearing to interest-bearing ratio down a bit, but all equal, it should be a nice benefit relative to what the price would have been on wholesale funding costs. I'm not sure if I'm answering exactly your question, but that's the way to think about that off balance sheet and deposit outflow for political, or at least that's how we're thinking about it. No, yeah, that's very helpful.

Speaker Change: Not sure if I'm answering exactly your question, but that's the way to think about that off balance sheet and deposit outflow for political or at least that's how we're thinking about it.

Operator: No, yeah, that's very helpful.

Speaker Change: No yeah, that's that's very helpful and.

Jason Darby: And so is the intention or your expectation that there's probably some level of additional ICS fees that you get in the third quarter, and then that kind of trends off down to zero into the fourth quarter and then revisit that strategy, depending on the level of excess deposit growth. That is the baseline assumption, Chris, that the ICS fees will be fairly substantial here on Q3, and we think we have some great opportunities to do some additional balance sheet restructuring beyond securities, particularly looking at residential loans and moving some of that in the form of a sale so we can create better ability to continue to improve the earnings stream.

Speaker Change: So is the intention or your expectation.

Speaker Change: That there's probably some level of.

Speaker Change: Additional Ics fees that you get in the third quarter and that kind of trends off down to zero in to the fourth quarter, and then kind of revisit that strategy depending on the.

Speaker Change: Level of.

Excess deposit growth in 2025.

Jason Darby: That is the baseline assumption, Chris, that the ICS fees will be fairly substantial here in Q3, and we think we have some great opportunities to do some additional balance sheet restructuring beyond securities, particularly looking at residential loans and moving some of that in the form of a sale so we can create a better ability to continue to improve the earnings stream.

Speaker Change: That is the baseline assumption, Chris that the Ics fees will be fairly substantial here in Q3, and we think there's some great opportunities to do some additional balance sheet restructuring beyond securities, particularly looking at residential loans and moving some of that in the form of.

Speaker Change: The sales so we can create better ability to continue to improve the earnings stream.

Jason Darby: and you get to the fourth quarter and theory, we get closer to zero if the outflow is matched. what I just said for you for the off balance sheet and then you would chart to think about building that back up if deposits continue outpacing. We want to keep our balance sheet relatively level to where we are at this $8.38 billion range. The trick would be, is the political outflow going to be a billion dollars? Is it going to be less, or is it going to be more? We still don't really know, but going in, we think that $700 million, which was our trough at the end of 2023, we think that's going to be our baseline assumption.

Chris O'connell: And you get to the fourth quarter in theory, we get closer to zero, if the outflows matched what I just said for your for the off balance sheet.

Speaker Change: And then you would start to think about building that back up if deposits continue to outpace and we wanted to keep our balance sheet.

Chris O'connell: Relatively level to where we are at this 838 $4 billion range.

Chris O'connell: The truck would be is the political outflow going to be a billion dollar or is it going to be less or is it going to be more we still don't really know, but going in we think that 700 million, which was our trough at the end of 2023, we think that's going to be our baseline assumption, Chris So all else in that.

Jason Darby: So all else in, that's the way this hopefully will end up for us. And in theory, if it does that happen that way, we could start to see more ICS income in the coming year. Great.

Chris O'connell: That's the way this hopefully will end up for us and in theory, if it does that happen that way, we could start to see more Ics and come in the coming year.

Chris O'connell: Great.

Jason Darby: And then you mentioned the securities that were sold during the quarter. Do you have a yield of what those were on balance sheet out? I don't have that on the top of my head. I can probably get that for you and post if that's okay, or perhaps somebody can send me that. But if you can hold on a minute, I can get that for you. Don't exactly know that answer. Yeah.

Chris O'connell: And then.

Speaker Change: You mentioned the securities that were sold during the quarter.

Speaker Change: Do you have the yield of what those were on balance sheet.

Speaker Change: I don't have that off the top of my head I can probably get that for you and.

Operator: host if that's okay, or perhaps somebody can send me a note, but I if you can hold on a minute, I can get that for you. I don't exactly know the answer.

Speaker Change: Post if that's okay or perhaps somebody can send me a note, but I. If you can hold on to me I can get that for you I don't exactly know that answer.

Operator: Yeah, and then just, you know, you talked about maybe doing a little bit more of that, you know, to help out the margin in the back half of the year, any sense of, you know, the size, and just the ballpark yields on what you have left to be able to do there.

Jason Darby: And then just, you know, you could talk about maybe doing a little bit more of that, you know, to help out, you know, the margin in the back after the year. Any sense of, you know, the size and just the, you know, ballpark yields on what you have left to be able to do there? Yeah. In the securities portfolio, there's still a fair clip of agency and non-agency that's in that call it high three to mid four range where we can get some impressive opportunity to flip over the earnings stream. But what we're really focused on now is more the real estate portfolio.

Speaker Change: And then just you know you talked about maybe doing a little bit more of that.

Speaker Change: To help out the margin.

Speaker Change: In the back half of the year and a sense of the size and just the.

Speaker Change: Ballpark yields.

Speaker Change: On what you have left to be able to do there.

Jason Darby: Yeah, on the securities portfolio, there's still a fair clip of agency and non-agency that's in that, call it, high three to mid-four range where we can get some... Impressive opportunity to flip over the earning stream, but we're really focused on now more the real estate portfolio. We'll probably do less.

Speaker Change: Yeah on the Securities portfolio, there's still a fair clip of agency and non agency that's in that call. It high three to mid four range, where we can get some.

Speaker Change: Impressive opportunity to flip over the earnings stream, but where we're really focused on now is more the real estate portfolio, we will probably do less securities portfolio restructuring, we've done now 715 million or so maybe a little bit more in securities turnover since.

Jason Darby: We'll probably do less securities portfolio restructuring. I mean, we've done now 715 million or so. It might be a little bit more in securities turnover since the first quarter of last year. And right now the focus is moving a little bit more to the long portfolio where we want to do a couple of things, particularly with Rezi. Number one, we want to demonstrate some liquidity out of that portfolio. Number two, we want to be able to move the lowest price assets that we have on the balance sheet. In that space, we have a bunch of assets in that three to three 50 range where we think we can get some pretty strong paybacks in terms of time relative to the pricing of those loans.

Jason Darby: Securities Portfolio Restructure. I mean, we've done 715 million or so, it might be a little bit more, in securities turnover since the first quarter of last year. And right now, the focus is moving a little bit more to the loan portfolio, where we want to do a couple of things, particularly with Resy. Number one, we want to demonstrate some liquidity from that portfolio. Number two, we want to be able to move the lowest-priced assets that we have on the balance sheet.

Speaker Change: The first quarter of last year and right now the focus is moving a little bit more to the loan portfolio, where we want to do a couple of things, particularly with Rajiv number one we want demonstrate some liquidity out of that portfolio number two we want to be able to move the lowest priced assets that we have on the balance sheet and.

Jason Darby: In that space, we have a bunch of assets in that $3 to $3.50 range where we think we can get some pretty strong paybacks in terms of time relative to the pricing of those loans. And so that's where more of the focus is going to be in the third quarter, relative to how much we generate from the ICS income. So figure, less on securities, more or new loans. And I'm getting a note, Chris, the sales were around five and a quarter percent for the securities that we just took off in the third quarter.

Speaker Change: That space, we have a bunch of assets in that three to $3 50 range, where we think we can get some pretty strong paybacks in terms of time relative to the pricing of those loans and so that's where more of the focus is going to be in the third quarter.

Jason Darby: And so that's where more of the focus is going to be in the third quarter relative to how much we generate from the ICS income. So figure less on securities, more or new with loans. And I'm getting a note, Chris. The sales were around 5.25% for the securities that we just took off in the third quarter. So I hope that gives you a little. I'm sorry, in the second quarter. I hope that gives you a little bit of a sense for what we're trying to do. And the securities guy, sorry, I said 350 to 450.

Speaker Change: Relative to how much we generate from the Ics income so figure.

Lessened securities more or new with loans and I'm getting a note Christie sales were around 5.25% for the securities that we just took off in the third quarter. So.

Jason Darby: Hopefully, that gives you a little bit of a sense for what we're trying to do. The securities again, sorry I said $350 to $450. I think it's going to be more in that $450 to $525 range for the securities that we might do in the third quarter and fourth quarter also. Apologies for the misquote earlier.

I hope that gives you a little I'm sorry in the second quarter and I hope that gives you a little bit of a sense for what we're trying to do and.

Speaker Change: The Securities again, I'm, sorry, I said 350 to $4 50, I think it should be more in that $4 50 to five and a quarter range for the securities that we might do in the third quarter and fourth quarter also apologies for the misquote earlier.

Jason Darby: I think it's going to be more than that 450 to 5.25 range for the securities that we might do in the third quarter and fourth quarter. So apologies for the mis-coder. earlier.

Chris O'connell: Nope, it's all good.

Speaker Change: No it's all good.

Operator: And then, can you talk just a little bit about, you know, the non-political deposit, kind of a Socially Responsible Organization or, you know, the rest of the deposit pipeline into the back half of the year?

Chris O'connell: And then can you talk it just a little bit about, you know, the non-political deposit, you know, kind of socially responsible organization, or, you know, the rest of the deposit pipeline into the back after the year? Yeah, that's a really good part of the story for us, Chris. You know, it really is a reflection of the credibility that we enjoy with not-for-profits and the incredible kind of connection or conversations that take place between them. So a lot of that is referral business from existing clients or from clients who have moved from one non-for-profit to another.

Speaker Change: And then.

Speaker Change: Can you talk just a little bit about the <unk>.

Speaker Change: Non political deposit.

Speaker Change: Okay.

Speaker Change: She'll be responsible organization or you know.

Speaker Change: The rest of the deposit pipeline into the back half of the year.

Speaker Change: Yeah.

Speaker Change: That's that's a really good part of the story for Us is great.

Speaker Change: It really is a reflection of.

Speaker Change: The credibility that we enjoy with not for profits and the incredible kind of connection or or conversations that take place between them. So a lot of that is referral business.

Speaker Change: From existing clients or from clients, who have moved from one not for profit to another.

Priscilla Sims Brown: And, you know, we continue to have really strong relationships in that arena. So that's worked out very well. And then, of course, there's also the climate-related organizations as well, placing deposits.

Speaker Change: And you know we continue to have really strong relationships in that arena. So that's worked out very well and then and then of course, there's also the climate related organizations as well placing deposits.

Priscilla Sims Brown: Great. And then, you know, have you, you know, talked about, you know, some of those, you know, other organizations and, you know, the potential, you know, the kind of impact the trust business in a positive way going forward. You know, any updates on, you know, what you see from that side of the business on a go forward basis?

Speaker Change: Great and then you know have you.

Operator: We've talked about, you know, some of those other organizations and, you know, the potential, you know, the kind of impact trust business will have in a positive way going forward. Any updates on, you know, what you see from that side of the business on a going forward basis?

Speaker Change: And you've talked about some of those other organizations and.

Speaker Change: The potential.

Speaker Change: What kind of impact.

Speaker Change: Impact trust business in a positive way going forward.

Speaker Change: Any updates on.

Speaker Change: What you see from from that side of the business on a go forward basis.

Priscilla Sims Brown: You're speaking specifically to the trust business? Yeah. Okay, sorry. Yeah.

Speaker Change: Speak.

Speaker Change: Speaking specifically to the trust business.

Speaker Change: Yeah, Yeah, Okay, sorry, yeah, I'm feeling very good about what we are doing on the trust side right now.

Priscilla Sims Brown: I'm feeling very good about what we are doing on the trust side right now. Last quarter, we brought on a new leader, moved the organization together under one leader. So you have one real profit center and the ability, you know, one person with responsibility for the P&L. We also think the opportunity, obviously, in the union space is huge. And we are only scratching the surface, even as the largest bank in that space. We're barely scratching the surface there. We brought on new clients in the quarter. We're continuing now to just expand our awareness and providing services there.

Speaker Change: Last quarter, we brought on a new leader moved the organization together under one leader. So you haven't won a real profit center and the ability you know one person with responsibility for the P&L.

Speaker Change: We also think the opportunity obviously in the Union space is huge and we are only scratching the surface, even as the largest bank in that space.

Speaker Change: We're barely scratching the surface there we brought on new clients in the quarter. We're continuing now to just expand our awareness and providing services there and so we have a lot of optimism as it relates to our trust in the Union space.

Priscilla Sims Brown: And so we have a lot of optimism as relates to trust in the union space. Great.

Speaker Change: Great.

Chris O'connell: And shake my questions. Thank you.

Speaker Change: Taking my questions.

Speaker Change: Thank you.

Speaker Change: Thank you at this time. This concludes our question and answer session I'll now turn floor back to Crisil assumes brown for closing remarks.

Operator: At this time, this concludes our question-and-answer session.

Priscilla Sims Brown: I'd now turn the floor back to Priscilla Sims, perhaps. Closing remarks. Great. Thank you for all of those good questions. We appreciate them and the opportunity to discuss our second quarter results. And we hope to continue the conversations offline as you as you work to to find to your models. We think the quarter can shows that we've continued to demonstrate the strength and competitive advantages that we enjoy as we look to the second half of the year. I'd like to thank our employees for their hard work and their dedication to the bank and to all of our customers.

Speaker Change: Great. Thank you operator, and thanks for all of those good questions and we appreciate them and the opportunity to discuss our second quarter results and we hope to.

Speaker Change: Continue the conversations offline as you as you work to to fine tune. Your models, we think the quarter shows that we've continued to demonstrate the strength and competitive advantages that we enjoy as we looked at the second half of the year I'd like to thank our employees for their hard work and their dedication to the bank.

And to all of our customers our success would not be possible without the commitment and determination of a really talented team that is maturing well over the course of the last three years.

Priscilla Sims Brown: Our success would not be possible without the commitment and determination of a really talented team that is maturing well over the course of the last three years.

Priscilla Sims Brown: To conclude, I could not be more excited with the opportunities that lay ahead for Amalgamated Bank. We're operating at a high level with strong earning space and multiple avenues to drive further growth and returns. We're well positioned for the significant secular changes that are occurring, specifically in climate finance, and I look forward to updating you on our progress on our third quarter call. So once again, thank you for your time today, and we look forward to continuing the dialogue.

Speaker Change: To conclude I could not be more excited with the opportunities that lay ahead for amalgamated bank. We're operating at a high level with strong earnings space in multiple avenues to drive further growth and returns were well positioned for the significant secular changes that are occurring specifically in climate finance and I look forward to updating you on our <unk>.

Speaker Change: Progress on our third quarter call.

Speaker Change: Once again, thank you for your time today, and we look forward to continuing the dialogue.

Operator: That concludes today's conference. Let me disconnect your lines at this time. Thank you for your participation, and have a wonderful day.

Speaker Change: That concludes today's conference you may disconnect. Your lines at this time. Thank you for your participation and have a wonderful day.

Speaker Change: Yeah.