KBRA Affirms Ratings for Amalgamated Financial Corp.; Maintains Positive Outlook

KBRA affirms the senior unsecured debt rating of BBB, the subordinated debt rating of BBB-, and the short-term debt rating of K3 for Amalgamated Financial Corp. (NASDAQ: AMAL) (“the company”). In addition, KBRA affirms the deposit and senior unsecured debt ratings of BBB+, the subordinated debt rating of BBB, and the short-term deposit and debt ratings of K2 for the subsidiary, Amalgamated Bank. The Outlook for all long-term ratings is Positive.

Key Credit Considerations

The Positive Outlook reflects AMAL’s consistent and resilient earnings profile, underpinned by its differentiated, low-cost deposit franchise and disciplined capital management. Earnings have remained durable across varying interest rate environments, supported by favorable funding costs, with total deposit costs of 1.46% in 2Q26. In addition, the continued asset remixing from lower-yielding residential and consumer loans into higher-yielding commercial loans and securities has provided further support to NIM expansion in recent years. The company has also demonstrated conservative capital management, with a CET1 ratio of 14.2% as of 2Q26—roughly 200 bps above KBRA-rated peers—supported by solid internal capital generation. Management indicated a preference to maintain strong capital metrics generally targeting a consolidated CET1 ratio above 13%. The combination of solid earnings and comparatively strong capital provides ample capacity to support organic growth while preserving optionality for excess capital deployment. The deposit franchise remains a strength, highlighted by a meaningful NIB component comprising 39% of deposits and a long-tenured, mission-aligned customer base. While the deposit base is somewhat concentrated among AMAL’s specialized customer segments, particularly labor organizations, these relationships are relatively granular and have demonstrated considerable longevity, with an average relationship duration of 25 years. The deposit base also includes a comparatively high level of uninsured deposits at 57% of on-balance-sheet deposits at 2Q26 (51% including off-balance sheet deposits). However, AMAL maintains adequate two-day available liquidity, providing full coverage of uninsured deposits. While political deposits introduce an element of cyclicality, management has demonstrated an ability to actively manage election-related inflows and subsequent runoff. AMAL also has limited reliance on wholesale funding sources, with core deposits comprising ~95% of total funding, and ample funding flexibility, with a loan-to-deposit ratio of just 61% at 2Q26, or 77% including PACE assessments.

AMAL’s loan portfolio has historically demonstrated sound credit performance, supported by conservative underwriting and strengthened credit administration practices; however, asset quality metrics have weakened over the past year (NPAs at 1.58% of loans and PACE assessments as of 2Q26), primarily due to a single $78 million multifamily borrower relationship in the Washington, D.C. market. The relationship remains well collateralized and carries solid reserves, while management continues to actively pursue a resolution. Importantly, the deterioration appears relatively isolated, with 97% of the total loan portfolio remaining pass rated. Multifamily is the largest component of the loan portfolio at 36% of loans, of which, New York City rent-stabilized multifamily represents roughly 60%. However, just $397 million, or 8% of total loans, represents pre-1974 rent-stabilized multifamily, which we view as the segment most exposed to the 2019 rent-law changes. Moreover, management noted that most of these loans have already repriced higher, with limited near-term maturities remaining, which meaningfully reduces refinancing risk. Additionally, the portfolio continues to reflect conservative underwriting, with a weighted average LTV of 56% and DSCR of 1.53x. Furthermore, loss content has remained manageable—annual NCOs have averaged 31 bps of total loans since 2021 and are largely tied to the consumer solar loan book, which is in runoff with the remaining balance carrying solid reserves.

Rating Sensitivities

Given the Positive Outlook, a rating upgrade is likely over the medium term, supported by sustained earnings performance, sound credit quality with continued progress toward resolution of the larger NPA relationship, sufficient capital levels, and a healthy funding profile. Conversely, further deterioration in credit quality resulting in significant losses that materially pressure earnings over a sustained period, aggressive capital management, or a meaningful shift in risk appetite could result in negative rating pressure.

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