KBRA Affirms Ratings for Amalgamated Financial Corp; Revises Outlook to Positive

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 revised to Positive from Stable.

Key Credit Considerations

The ratings and Positive Outlook reflects AMAL’s consistent earnings resilience through the higher rate environment (average ROAA of 1.16% since 2022), underpinned by its attractive, low-cost deposit base. As of 1H25, the company reported a cost of deposits of 1.62%, 60 bps below similarly rated peer averages which has, in turn, supported NIM durability in the higher rate environment. Additionally, the company has also demonstrated conservative capital management with a CET1 ratio of 14.1% as of 2Q25—approximately 250 bps above similarly rated peers. AMAL’s earnings capacity, combined with controlled loan growth, has supported solid internal capital generation and optionality for excess capital deployment. The deposit franchise is highlighted by a meaningful amount of NIB accounts comprising 36% of total deposits and a long-tenured, mission-aligned customer base, with nearly 90% of funding derived from core deposits. We note the core deposit base is somewhat concentrated towards labor unions, though these deposits have an average relationship of ~25 years. Nonetheless, the low-cost deposit base has offset the company’s lower yielding loan portfolio given its concentration in residential mortgage and multifamily lending combined with a lower loan to earning asset mix. However, management has actively repositioned the securities portfolio through smaller scale AFS securities sales since 2022, utilizing one-way ICS fee income to offset losses on the sale of securities, improving the loan to earning asset mix from 49% to 57% while the average investment security yields have increased meaningfully to 5.02% for 2Q25. As such, AMAL’s margin has continued to expand amid the higher rate environment increasing to 3.54% for 1H25 vs. 3.35% for similarly rated peers.

The loan portfolio benefits from conservative underwriting, particularly within the multifamily portfolio, which is concentrated toward New York rent-regulated and affordable housing exposures, characterized by low LTVs, solid DSCRs, and limited repricing risk through YE25. Additionally, despite the concentration in multifamily loans, the company maintains a below peer CRE concentration at 200% of risk-based capital. While we recognize that NPAs have tracked moderately above peers, loss content has remained manageable with NCOs averaging 26 bps since 2021 and is largely tied to consumer solar loans, which is in run-off mode with adequate reserves, and legacy credit resolutions. Elsewhere, while AMAL is a mission driven bank, we do not expect the "debanking" executive order signed in August 2025 to have material impact on AMAL's strategy.

Rating Sensitivities

Given the Positive Outlook, a rating upgrade is likely over the medium term via continued earnings and credit quality outperformance along with maintenance of sufficient capital levels and of a healthy funding profile. Conversely, unexpected credit quality issues or significant losses, aggressive capital management, or a material shift in risk appetite could pressure ratings.

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Methodologies