Q4 2024 Amalgamated Financial Corp Earnings Call
Presentation. The conference will be opened for questions with instructions to follow at that time.
As a reminder, this conference call is being recorded.
I'd now like to turn the call over to Mr. Jason Darby Chief Financial Officer. Please go ahead Sir.
Speaker Change: Thank you operator, and good morning, everyone. We appreciate your participation in our earnings call with me today is Chris Silicones, Brown, our president and Chief Executive Officer.
Speaker Change: Additionally, Sam Brown, our Chief Banking Officer is also here for the Q&A portion of today's call.
Speaker Change: As a reminder, a telephonic replay of this call will be available on the investors section of our website for an extended period of time.
Speaker Change: Additionally, a slide deck to complement today's discussion is also available on the investors section of our website.
Speaker Change: 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 weeks.
Speaker Change: We caution investors that actual results may differ from the expectations indicated or implied by any such forward looking information or statements.
Speaker Change: Investors should refer to slide two of earnings deck as well as our 2023 10-K filed on March 7th 'twenty 'twenty four for.
Speaker Change: For a list of risk factors that could cause actual results to differ materially from those indicated or implied by such statements.
We will also discuss certain non-GAAP measures during today's call, which we believe are useful in evaluating our performance.
Speaker Change: <unk> of this additional information should not be considered in isolation or as a substitute for results prepared in accordance with U S. GAAP.
Speaker Change: 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.
Priscilla: Let me now turn the call over to Priscilla.
Priscilla: Good morning, and thank you for joining us our quarterly results continue to show the power and sustainability of our earnings and profitability as we posted another near record quarter of 90, <unk> core earnings per share.
Speaker Change: One of the most important things to remember is that this quarter concluded another election cycle for amalgamated in the country.
Speaker Change: Historically due to the expected outflows of our political deposits there is predictable noise.
In the quarter during the end of the election period with related impact on our funding mix and net interest margin and while there certainly was heavy spending again this cycle our diverse segments drove remarkable stability.
Speaker Change: Deposits outperformed the previous 2022 election cycle across all relevant metrics.
Speaker Change: Our ending political deposits were $326 million or 56% higher than the prior cycle and totaled nearly $1 billion.
Speaker Change: Our use of short term borrowings was only $250 7 million substantially lower than the $580 million from the prior cycle.
Speaker Change: Our cost of deposits and cost of funds went down and our net interest margin actually increased 359%.
Speaker Change: Despite a remix of nearly $400 million from DDA to interest bearing deposit accounts.
And as we experienced a change in power in Washington, I am delighted at how well our bank performed and how well we are positioned for continued success in 2025.
Speaker Change: Given the unique but predictable nature of how an election year cycle concludes for US it's helpful to zoom out from the quarter and actually look at the year in totality.
Speaker Change: For the full year, we delivered record earnings of $106 $4 million, driven by strong loan growth and expanding margins.
Speaker Change: Posit growth also played a huge role in our story as total deposits, excluding brokered Cds increased by 410 $8 million that's over 6%. This.
Speaker Change: This occurred in a year, where many many banks experienced negative deposit growth as liquidity pressure remained very high driven by the interest rate environment.
Speaker Change: We also build capital throughout the year, which positions us to not only reinvest in our business, but also begin to return more capital to shareholders over time.
Speaker Change: We enter the new year, and an enviable position and we're ready to take advantage of the many opportunities that we see to drive value for all of our stakeholders.
Speaker Change: As the new administration ushers in changes in DC, the trend of sequentially higher political fund raising continues and the ecosystem around politics also continues to grow with leaders and organizations, who support their customers communities and society and need a bank to partner with them.
Speaker Change: As evidenced by our 2024 results, we have a defensible position and business model that is well diversified and not dependent on a single customer segment. It has delivered robust growth cycle after cycle during our more than 100 year history in fact, we've seen.
Speaker Change: Rod based strength across segments over the past year as our customers increasingly understand that their money can have a significant impact in the world when they bank with amalgamated.
Speaker Change: Our segment focused relationship bankers made strong progress throughout the year growing deposits across our labor and not for profit customer segments, where we are.
Speaker Change: Have significant opportunity to increase our share of these markets.
Speaker Change: Now looking to 2025, I see many opportunities to further grow amalgamated and deliver increased value to our shareholders. One thing that is paramount is that we keep growing revenue per share. So that we can continue to invest in the bank with positive operating leverage.
Speaker Change: Accordingly, developing a repeatable and more predictable C&I lending business, primarily rooted in sustainable lending is a key strategic objective.
Speaker Change: This will result in two things first our pipeline to higher priced loans that lift our asset yield and second a balanced contribution that keeps our commercial real estate portfolio concentration at conservative levels.
Speaker Change: Our sustainability lending segment is well positioned for growth.
Speaker Change: States and municipalities strive to meet the country's growing demand for energy.
Speaker Change: The outlook for renewable energy demand is strong in 2022 annual U S energy generation and renewables surpassed coal for the first time in history.
Speaker Change: And by the end of 2025 domestic solar energy generation is expected to increase by 75%.
Speaker Change: And this investment doesn't breakdown of long party lines Red States represent six of the top 10 states with the most permitted utility scale renewable energy projects in the country with Texas, leading the way.
Speaker Change: So we will continue to invest in attracting top talent to our sustainable lending team to capitalize on this enormous opportunity space.
Speaker Change: I believe amalgamated bank is nearing the inflection point of becoming a larger bank over the past three and a half years, we've seen tremendous improvement in our capital base, our currency value in our return metrics, but we still have more work to do to responsibly grow the size of the bank.
Conference Center, may I have your name please? Hi, good morning, may I get your name please? Perhaps you're muted, I may have to leave you here.
Speaker Change: In addition to the investment in our C&I business that I. Just mentioned, we will also make investments in our trust business to generate more revenue and better diversify our revenue mix.
Speaker Change: And while I do not expect to show any significant growth in trust revenue in 2025 investments. Nevertheless will be made with 2026 results in mind.
Speaker Change: We will also continue to invest in our technology infrastructure. So that we can grow at scale.
Speaker Change: <unk> portion of this work is already well underway.
Speaker Change: As I hope you can tell I'm very excited about the opportunities that lay ahead for amalgamated our employees our customers and our shareholders. We recognize the bar for success has been set very high for 2025 and beyond and we believe were up to the challenge.
Speaker Change: Know that if we focus on the things that I've outlined today, we will continue to thrive in the years to come.
Jason Darby: Jason over to you.
Good morning, everyone.
Speaker Change: When considering this was an election cycle confusion quarter I'm, particularly proud of the solid results reproduced as usually this is a tougher quarter for us financially.
Speaker Change: Slide three shows net income was $24 $5 million or <unk> 79 per diluted share and core net income a non-GAAP measure was $28 million or <unk> 90 per diluted share <unk> <unk> below our prior quarter record, reflecting the power and sustainability of our earnings.
Speaker Change: And while the quarter does show the large but also expected decline in political deposit balances, which peak at a record $2 billion. During October we also beat our expectations with $1 million of net interest income growth of 43 basis point leverage ratio increase an eight basis point increase in our net interest margin and loan growth of nearly 4%.
Speaker Change: Looking a little more closely the NII increase was aided by our ability to call our above market brokerage Cds early in the quarter enabled by the higher political deposit balances and by our interest bearing deposits repricing nicely in response to the movement in the fed rate.
Speaker Change: We did have a significant remix of our deposits as our DDA to IPA ratio declined from 50% to 40%.
Speaker Change: And yet our margins still improved as our cost of funds lowered and we were able to shrink the balance sheet, a little bit by selling securities at a nominal gain to fund our loan growth.
Speaker Change: Overall, we were quite pleased with our core financial performance.
Speaker Change: Now the GAAP EPS was lower but this reflects our continued work on restructuring the lowest yielding part of our loan portfolio by marking and moving to held for sale another $32 million of performing residential loans at a $4 million pre tax loss.
Speaker Change: This loss brings the full year 2024 difference between noncore off balance sheet deposit income and.
Noncore security sales losses, and noncore fair value marks on our residential loans held for sale to nearly zero.
Speaker Change: Additionally, we agreed to sell $3 $9 million of nonperforming residential loans and sell the note for $2 $3 million nonperforming multifamily loans.
Speaker Change: Taken as a whole all of this work was done to strengthen our balance sheet, which we believe is the number one driver of bank valuation.
Speaker Change: Continuing to slide four we look at some of our key performance metrics during the fourth quarter.
Speaker Change: Starting on the left our tangible book value per share increased 31, or one 4% to $22 60.
Speaker Change: And our core revenue per diluted share was $2 67 for the fourth quarter, a 5% increase from the prior quarter.
Moving across to our returns core return on average equity was 15, 8%. This decline has been expected as we added over $120 million of organic capital during the year that said, we remain near the top of the pack and well positioned to return more capital to shareholders as Brazil had previously mentioned.
Our core return on average assets was 134% demonstrating our earnings optimization at our current asset size.
Speaker Change: Regarding capital our CET one ratio is at an industry, leading 13, 9% demonstrating the strength of our balance sheet and conservative risk based allocation of our capital while still generating top level earnings.
Tier one leverage improved another 43 basis points to nine 6% showing the momentum that amalgamated now builds capital.
Speaker Change: As a result, our board of directors authorized a 17% increase to our dividend to be paid in February and we repurchased approximately $845000 in shares in the fourth quarter.
Speaker Change: Going forward, we are targeting a quarterly $20 to 25% total payout ratio, which includes both dividends and share repurchases.
Speaker Change: Our tangible common equity to tangible assets was 841% representing the ninth consecutive quarter of improvement district.
Speaker Change: This reveals the impact of selling over $835 $7 million of underwater securities since March of 2022.
Speaker Change: Moving to slide five total deposits at December 31, 2024 were $7 2 billion, a decrease of $414 million from the linked quarter.
Speaker Change: On balance sheet deposits, excluding brokered Cds decreased by $311 9 million or four 2% $7 2 billion.
Speaker Change: Additionally, our noninterest bearing deposits decreased to approximately 44% of average deposits and 40% of ending deposits excluding brokered Cds in relation.
Speaker Change: Political deposit outflows.
Speaker Change: Importantly, our average cost of deposits, excluding brokered Cds held relatively steady at 152 basis points in the fourth quarter as compared to 151 basis points in the linked quarter.
Speaker Change: As noted we borrowed $257 million of short term funds to cover the year end outflows, we were already seeing reduced borrowing levels are cyclical pension deposits returned to the balance sheet.
Speaker Change: And while our political deposit balance has not changed much since year end, we expect balances to steadily increase in the coming months as we begin the accumulation phase of what should be a highly spirit of 2026 midterm election.
Speaker Change: Jumping ahead to slide eight net loans receivable at December 31, 2024 were $4 6 billion, an increase of $126 4 million or two 8% compared to the linked quarter.
Speaker Change: The yield on our total loans increased 21 basis points to 5% during the quarter.
Speaker Change: The increase in loan income and yield was primarily due to $126 $2 million increase in average loan balances as well as the recognition of a $1 3 million acceleration of deferred costs on certain loans in the prior quarter.
Speaker Change: Adjusted for this discrete item.
Speaker Change: Loan interest income increased by $2 $6 million in the quarter and yields increased nine basis points.
Speaker Change: Importantly, our loan growth in the quarter was well balanced with $56 $5 million in commercial real estate and $117 $1 million in C&I.
Speaker Change: For 2025, we target around 2% loan growth per quarter with similar balance between commercial real estate and C&I.
Speaker Change: Moving to slides 910, and 11 looking at the real estate portfolio, we have $297 million in lower price commercial real estate and multifamily loans maturing over the course of 2025 and another $148 million in 2026.
Speaker Change: During the quarter, we renewed one $5 $4 million credit with pre 1974 exposure via a combination of cash infusion and amortizing terms in exchange for modest rate concessions.
Speaker Change: In 2025, we are just $28 million of pre 1974 loans maturing.
Speaker Change: Perhaps most notably we reduced our allowance coverage ratio on our multifamily portfolio to 21 basis points, reflecting our confidence in the portfolio asset quality after selling the note for rapidly deteriorating credit.
Speaker Change: Moving to slide 14, there were a fair amount of puts and takes in our criticized assets during the quarter.
While our total criticized assets modestly increased $7 $3 million to $95 9 million there were downgrades to for commercial industrial loans totaling $38 $2 million to sub standard and accruing as well as downgrades to one $5 $4 million performing multifamily loan and an additional <unk> $9 million of small business loans.
Speaker Change: These movements were mostly offset by other payoffs or upgrades along with charge offs that reflect our decisive action on problem assets.
Speaker Change: Finishing on slide 15, we are introducing full year 2025 guidance.
Speaker Change: Core pretax pre provision earnings of 159 million to $163 million.
Net interest income of $293 million to $297 million, which considers the effect of the forward rate curve of 2025.
Speaker Change: Additionally, we estimate an approximate $1 $7 million decrease in annual net interest income for parallel 25 basis point decrease in interest rates beyond what the forward curve currently suggests.
Speaker Change: Briefly looking at the first quarter of 2025, our net interest margin may compress two to three basis points from our Q4, Mark while our political deposits rebuild and we pay down our short term borrowings from year end.
Speaker Change: As a result, we expect our net interest income to range between 70% and $71 million in the first quarter.
Speaker Change: Rounding out 2025 full year guidance, our plan shows solid growth in revenue in core pretax pre provision earnings, albeit at a more normalized pace compared to our stellar growth rates in 2024.
Speaker Change: 2025 will be a transformative year, we would make necessary investments for the purpose of significantly growing revenue in 2026 and infrastructure preparations are becoming larger in the years to come.
Speaker Change: With that said, we have appropriate constraints in our plan that prioritize performance metrics and shareholders.
Speaker Change: Wrapping up we are delighted to deliver record results for our shareholders in 2024 and look forward to opportunities to grow the bank in the years and year ahead.
Speaker Change: And now operator, please open up the line for any questions.
Speaker Change: Later.
Speaker Change: Thank you we will now be conducting a question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad.
Speaker Change: Confirmation tone will indicate your line is in the question queue.
Speaker Change: Press Star two if you'd like to remove your question from the queue.
Speaker Change: For participants using speaker equipment and may be necessary to pick up your handset before pressing the star keys.
Speaker Change: One moment, please while we poll for questions.
Speaker Change: Yeah.
Speaker Change: Yeah.
Speaker Change: Okay.
Speaker Change: Thank you. Our first question is from Mark Fitzgibbon with Piper Sandler. Please proceed with your question.
Speaker Change: Good morning first question, Jason just to clarify something you said before I think you said you expect 2% loan growth per quarter in 2025, but your guidance.
Speaker Change: In the slide for balance sheet growth is only about 3%. So should we assume the securities book is going to shrink a bunch this year.
Speaker Change: Yes, Mark.
Speaker Change: That's exactly the play the balance sheet is going to work in concert with the movement in the securities portfolio and we do expect to see.
Speaker Change: During the traditional securities portfolio to support the loan growth that we're talking about 2% is probably going to be our outer range in terms of growth for the quarter or if it's something less than that we will still be in a good spot to meet the balance sheet targets that we've set out but to answer your question specifically, yes, we are.
Speaker Change: See the securities portfolio due to the funding for a decent portion of that loan growth that would be.
Speaker Change: In that 2% target.
Speaker Change: Okay, Great and then secondly, I wondered if you could share any color with us on the loan pipeline, maybe size complexion and average rate things like that.
Speaker Change: Hey market Sam good morning, Thanks for joining us.
Speaker Change: Happy to.
Speaker Change: We're optimistic about the pipeline.
Speaker Change: It's definitely got good diversified components between C&I and the multifamily and CRE book.
Speaker Change: Seeing Rob.
Speaker Change: <unk> is coming on the pipeline on the CRE side in that kind of mid to high sixes on the C&I side, you're higher than that and that kind of low to mid sevens.
Speaker Change: Also seeing some good activity coming on in the <unk> portfolio, which we're pretty happy about so.
Speaker Change: So I think all in all between pipeline and our maturity schedule, we feel really good about being able to hit that 2% per quarter range.
Speaker Change: Range.
Speaker Change: Great and then I wondered if you could share any comments with us on the for C&I loans that caused that uptick in critical criticized and classified.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Yeah. So.
Speaker Change: Mark.
Speaker Change: That comes from you know Theres, just a lot of puts and takes in the C&I book from the effects of the higher for longer interest rate environment.
Speaker Change: We feel very good about the structures on those loans.
Speaker Change: And.
Speaker Change: Those are the puts and takes you see in the criticized bucket and carrying those through so there's never any surprises.
Speaker Change: We also feel very good about the conversations we're having with those borrowers and getting what we need when.
Speaker Change: When we talked to them through things like equity infusions into those projects.
Speaker Change: Feel like those.
Speaker Change: Those structures are in a good spot.
We are we feel good about the trajectory of those.
Speaker Change: Okay.
Speaker Change: We're pretty conservative Mark in terms of how we put our risk rating together and if things are marginal on performance metrics.
Move to classify them in a manner that we think is appropriate for investors to understand what the credit look like but it is important to note that all of them are in accruing standard and none of them have missed payments at this point in time, it's just our look at the most recent financials and how we view our presentation to inverse.
Speaker Change: <unk> for conservative purposes, but on the flip side, we've done that for several other credits throughout the year that have return to favorability and that's what drove that.
Speaker Change: Relatively minor overall increase in criticized classified and that other credits that are similar.
Speaker Change: Type of grading earlier in the year Denver.
Speaker Change: Returned to a performing status during the quarter as well.
Speaker Change: Okay, and then lastly, some you and I talked about previously Jason I was curious any impact on the pace credits related to the California wildfires.
Speaker Change: There have been no impact.
Speaker Change: Our portfolio there might be one very small credit that was affected by it.
Speaker Change: Very immaterial, but we've done a review of the portfolio by ZIP code and we feel very good about the quality of <unk> portfolio and the risk that where there is nothing in our commercial portfolio as well so all in while it's a <unk> situation.
Speaker Change: The credit distribution that we have was able to escape that particular ratio obviously that buyers are still ongoing. So we will see hiring plays out but we've not made any moves in our portfolio or have we made any additional coverages through the ACL to account for anything related to the virus.
Speaker Change: Thank you.
Speaker Change: Youre welcome.
Speaker Change: Thank you. Our next question is from Chris O'connell with <unk>. Please proceed with your question.
Speaker Change: Good morning.
Speaker Change: Just wanted to start off.
Speaker Change: I may have missed it did you mention.
Speaker Change: Guide for 'twenty five.
Speaker Change: Hey, Chris Sorry, we did not put a specific reference in the guidance relative to expenses, but we are targeting about $170 million for the year. So it's about a 6% lift from where we are closing out 2024.
Speaker Change: It takes into account a number of what we feel are necessary investments to be able to grow revenue both towards the end of this year and into the future in terms of the $170 million I don't have a ratable distribution I think what we'll see is we'll be very similar maybe a little bit elevated in Q1 relative to our Q4.
Speaker Change: Number and then it will slowly ramp as we get through the year because most of the expense lift is going to be in the form of additional hiring for production purposes or for technology related investments that will start to come onto the P&L towards the back half of the year.
Speaker Change: Okay great.
Speaker Change:
Speaker Change: And is that.
Speaker Change: Is that kind of 6% pace do you think that continues.
Speaker Change: Obviously very early but.
Speaker Change: More or less into 2026.
Speaker Change: These this is kind of.
Speaker Change: Pes inclusive.
Speaker Change: Efforts in preparations towards getting to the $10 billion Mark.
Speaker Change: Difficult to say, what the pace of expense will be in 2026, but what I can comment on.
Speaker Change: Yes.
Speaker Change: The investments now or a little bit ahead of the revenue growth because we know that we need to have.
Speaker Change: Assets put in place to be able to continue to drive revenue growth above where the expense growth will be in the coming years. So we intend to get back to a positive operating leverage model.
Speaker Change: In 2026, and the extent to which revenues are going to grow would really dictate what the expense base will grow as well yeah.
Speaker Change: This is <unk>. Thanks for the question I, absolutely would underscore that this is a little bit different than what we've talked about for the last three years around instead of putting revenue ahead of expense in this instance, what we're telling you is that we recognize that some technology.
Speaker Change: Investment some investments both in trust in other parts of the.
Speaker Change: Sales areas would benefit us over the long run and you will start to see that revenue towards the end of 'twenty five.
Speaker Change: Certainly by the beginning of 2006.
Speaker Change: Okay.
Speaker Change: Brazil.
Speaker Change: And then just circling back.
Speaker Change: To the balance sheet.
Speaker Change: Appreciate the overall growth color.
Speaker Change: On the loan side.
Speaker Change: How are you guys thinking about the <unk>.
Speaker Change: Level of pace growth into next year.
Speaker Change: Yes.
Speaker Change: I think we're targeting.
Speaker Change: Oh.
Speaker Change: $20 million, a quarter and rather the pace I think there is also that on a net basis, Chris right.
Speaker Change: I think there's also a basket to fill on commercial pace somewhere in that $60 million to $75 million range.
Speaker Change: We're not constrained by that at all I think we have capacity to grow we see our pipeline, having a lot of really good opportunities, particularly on the commercial side, but pace is still going to be an important asset class for us and we think if we can put on between the two tranches of our vacancy based somewhere around $150 million net.
Speaker Change: That'd be a good number for us for the year.
Speaker Change: And with the rates being somewhere in that.
Speaker Change: Low 7% range on both of those asset tranches, that's a really good way for us to drive yield and also continuing to keep our CET, one and a really strong place.
Speaker Change: Okay great.
Speaker Change: And then.
Speaker Change: On.
Speaker Change: The deposit side can you talk about maybe some of the timing and the impact that you guys had towards the end of the quarter.
Speaker Change: Yeah.
Speaker Change: The outflows that I think we're more.
Speaker Change: More than just related to the political outflows and does that you see that building back fairly quickly in the first quarter.
Speaker Change: 25, or more of a steady ramp over time.
Speaker Change: I think it's probably best.
Speaker Change: Two things first of all think about it over the course of the year, where you saw the growth.
Speaker Change: In deposits.
Speaker Change: And in each of our segments, but.
Speaker Change: As you look at what happened in the fourth quarter.
Speaker Change: Think about the political piece I think.
Speaker Change: You've got the bar chart, and you've heard us talk.
Speaker Change: Year about what the cycle would look like and particularly in the year in the quarter of my election, you would see that.
Speaker Change: Money being spent that is also true about the ecosystem around it. So we saw that a little bit in each of the other.
Speaker Change: Not for profit and other segments.
Speaker Change: We're spending in investments were taking place in the fourth quarter.
Speaker Change: In anticipation of a new administration and then I think.
Speaker Change: The labor.
Speaker Change: Cycle is pretty predictable every year as well.
At the end of every last.
Speaker Change: Every quarter is usually a little downturn in the fourth quarter in particular.
Sam Brown: Police and spending we've seen some of that come back already Sam you may have more color on that.
Sam Brown: Yes, that's right, Chris I think what happened in the in the labor bucket.
Sam Brown: Very seasonal very.
Sam Brown: Ah demonstrated through our mouth history over many many years and just as Brazil is that on page five where we showed what has already come back and just in the first few weeks of the year very much focused in the labor space.
Sam Brown: There was in our social and philanthropic bucket a number of investments that were made at the end of the year that drove a lot of that we were happy with the actual amount for profit section those relatively flat quarter over quarter.
Sam Brown: Bye.
Sam Brown: We are we are bolstered by what we're seeing in pipeline and activity and just again what is already rebuilding as we enter the replenishment phase in the first quarter here in 'twenty five.
Speaker Change: So Chris if you owned those emails at one last part to this answer for you, which hopefully this fulsome.
Sam Brown: The.
Sam Brown: Way that we modeled the rebuild though for the first quarter has been quite.
Sam Brown: Slow and steady right so to San Francisco is pointing out we do expect to see us move.
Sam Brown: To move back in and not just on political but across all of our segments throughout the year, but the way that we see that first quarter shaping up and Thats why we decided we might have a low margin compression it might see NII would be down a little bit is that we're going to be working through the short term borrowing position that we ended up with at the end of the year and because.
Sam Brown: We are operating from a significantly higher place in terms of interest bearing accounts versus non we've moved from 50%.
Sam Brown: DVA ibi down to 40% Youll see us have too.
We accumulate those lower DTA related deposits to see again I start to lift and that will probably start to happen again in Q2, Q3 and Q4, so you'll see a little bit of dip in NII, probably in Q1, and then margin expansion NII expansion as we move throughout the rest of the year in relation to the answers that salmon Pearsall, Bulgaria and.
Sam Brown: Not to belabor the point is just one other thing.
Sam Brown: It is important.
Sam Brown: No that I mentioned at the beginning that you should really think about.
Sam Brown: This really pretty stellar year against a system or an industry that was.
Sam Brown: But that had negative deposit growth, we grew 5% and if you look at our Super cores.
Sam Brown: We continue to grow there 200 basis points year over year, which really just shows the continued migration of newer relationships to policy.
Sam Brown: Long term.
Sam Brown: <unk> term sticky relationships so.
So yes, the bill will be slow because there will continue to be investments made.
Made by these sectors.
Sam Brown: But we absolutely think of this as.
Sam Brown: Clinical pretty predictable and.
Sam Brown: I feel very optimistic about the pipeline.
Sam Brown: Great appreciate.
Sam Brown: Appreciate all the detail and I know you guys are following the forward curve.
Sam Brown: Hi, guys, but just a bit.
Sam Brown: A bit more specific.
Speaker Change: Would you mind disclosing.
Sam Brown: How many.
Sam Brown: These cuts you have in there and just the timing.
Sam Brown: Sure.
Sam Brown: We are modeling two rate cuts in the NII guide right now the timing generally as March and then December although we don't have it.
Sam Brown: Typically marked on those.
Sam Brown: Particular months or just sort of following what we think the cut will be a little bit more blended but I would call it weighted more towards the second half of the year than the first but those two cuts 50 basis points.
Sam Brown: In total and that's where we come up with our NII projections.
Sam Brown: And we think they are pretty conservative assumptions to relatives debaters and things of that nature I think we always try to give you.
Sam Brown: Our most conservative view on what NII will look like especially this early in the year and you can probably expect us to refine our guidance targets throughout the year as we get a little bit more view.
Sam Brown: And.
Sam Brown: And certainty as to what's going to happen with the rate environment and the overall macroeconomic environment as well.
Sam Brown: Perfect.
Sam Brown: Yeah.
Sam Brown: And then just last couple for me.
Sam Brown: Yeah.
Sam Brown: On the credit side.
Sam Brown: It seems like this quarter had a couple of clean ups.
Sam Brown: Sales.
Speaker Change: Uh huh.
Sam Brown: Some non performers and otherwise has been.
Sam Brown: Trending in a pretty.
Sam Brown: Good direction here.
Sam Brown: Have you seen.
Sam Brown: The consumer solar do you think that continues to migrate downwards.
Sam Brown: Where it's been.
Sam Brown: It's pretty similar in the last couple of quarters.
Sam Brown: Allen from earlier do you think that continues to migrate lower in terms of charge offs into 2025 and introduce.
Are you thinking about I guess more normalized.
Sam Brown: Net charge offs levels into next year.
Sam Brown: Sure so on the consumer solar.
Sam Brown: Really difficult to predict.
Sam Brown: Just given the historical performance of the portfolio and also the fact that the rate environment is probably going to remain in an elevated place.
Sam Brown: No.
Sam Brown: The longer that goes on the more stress placed on certain types of consumers.
Sam Brown: With all that said, we model charge offs for this year similar to what we experienced last year trying to take a conservative approach on that but we've also been working very hard and have talked about this a little bit before they are working very hard behind the scenes to control our destiny, a little bit better on the collection side is probably.
Sam Brown: No Chris the consumer solar portfolios are all serviced by other and the bank has been active in acquiring those servicing rights. So that we can perform our own collections now were not at a place to say, where we are exactly with that acquisition, but at the same time.
Sam Brown: We feel pretty good that if we are able to get a hold of the servicing rights that will be able to drive more recoveries through the process, which will ultimately have a beneficial impact on that NCO, but as of right. Now we're modeling it to look similar to last year with the hopes that this will be the peak.
Sam Brown: In terms of elevation levels and that will be able to drive that number lower going forward.
Speaker Change: I don't know if ive got the whole question, there, but that was the consumer colored bar was there something else that I didn't answer there.
Sam Brown: No no that was great.
Sam Brown: Oh, yes.
Speaker Change: Sorry, Chris.
Speaker Change: Got it.
Speaker Change: Just a last is just.
Speaker Change: Let's see.
Good go forward tax rate here.
Speaker Change: I'm, sorry to a country or a tax rate I'm, sorry about that yes, we are.
Looking at 26.85% as an effective tax rate coming up. So there are 27% I think that's a good model estimate for the coming year, and we feel pretty good that we've been able to move most of the discrete items off of the provision inventory and have a pretty clean.
Speaker Change: Taxpayer going forward, which will hopefully reduce a lot of the volatility that we've had in past years.
Speaker Change: Great.
Speaker Change: Appreciate the time.
Speaker Change: Thanks for taking my questions. Thank you thanks, Chris.
Speaker Change: Okay.
Speaker Change: Thank you there are no further questions at this time I would like to hand, the floor back over to Priscilla Brown for any closing comments.
Speaker Change: Thank you operator, and thank you for those questions and your continued interest we appreciate the time.
Speaker Change: We love talking about our results and we believe that they continue to demonstrate the strength and competitive advantages that amalgamated has.
Speaker Change: I'd like to thank our employees as usual for their hard work and dedication to the bank.
Speaker Change: It's been a stellar year and our success would not be possible without the commitment and determination as of every one of our talented team members many of whom are on this call.
Speaker Change: And to conclude I, just would say that we couldnt be more excited about the opportunities that lay ahead for the company. The bank continues to operate at a high level with strong earnings base in multiple avenues to drive further growth and return.
Speaker Change: And we look forward to updating you on our progress on the first quarter call.
Speaker Change: Again for your time today.
Speaker Change: Yeah.
Speaker Change: This concludes today's conference you may disconnect. Your lines at this time. Thank you for your participation and enjoy the rest of your day.