Amalgamated Financial expects up to $4.5M rise in net interest income

Jason Darby, CFO and senior executive vice president of New York-based Amalgamated Financial Corp., expects net interest income to rise by up to $4.5 million as the company looks at a conservative deposit beta in the current rate cycle.

During an earnings call, Darby suggested that the deposit beta on its overall deposit book is likely to be about 10% due to a mix of interest-bearing deposits and demand deposit accounts.

"When we factor in the rate sensitivity on the forward curve, I think if we got lower to, or if our deposit beta kind of looked a lot like our historical deposit beta, you'd be at that $4.5 million range, possibly even a little bit better than that," Darby said.

The company expects an increase of $4 million to $4.5 million in annual net interest income, or NII, for every 25 basis points rate hike by the Federal Reserve.

Darby also provided updated guidance on the company's NII during the call. Based on a 25-basis-point hike by the Fed in March, Amalgamated Financial expects NII of $205 million to $215 million, and based on the forward rate curve through the rest of the year the NII is expected to be $220 million to $230 million.

Amalgamated Financial's net interest income increased by 2.8% due to the asset-sensitive balance sheet and low-cost deposit franchise.

During the first quarter, deposits increased by $617.2 million to $7.0 billion quarter over quarter. Non-interest-bearing deposits represented 53% of average deposits and 54% of ending deposits during the first quarter, which contributed to an average cost of deposits of 9 basis points.

The company is focused on driving earnings through "prudent deployment of our liquidity" and said its liquidity position, borrowing capacity and low-cost deposit-gathering ability protect it from acquiring realization of the transitory market declines.