Amalgamated says profits are ‘best answer’ to political risk

• Key Insight: The Trump administration’s aggressive efforts to punish “debanking” may leave Amalgamated, which works with Democratic campaigns, vulnerable to political targeting.
• Supporting Data: CEO Priscilla Sims Brown says the bank’s profits — net income rose to $26.8 million last quarter, beating Wall Street’s estimates — are its best protection against such risks.
• Expert Quote: “Those solid returns and strong profitability is really our best answer to what you’re hearing,” Brown said during Amalgamated’s third-quarter earnings call.

As the risks grow that it could find itself in the Trump administration’s crosshairs, Amalgamated Financial says strong profits are its best defense.
Amalgamated is widely known as the bank of the Democratic Party. The New York-based parent company of Amalgamated Bank has longstanding ties to labor unions, and has handled the deposits of major political campaigns, including those of former House Speaker Nancy Pelosi and former Vice President Kamala Harris.

Now, as President Donald Trump wages war on what he calls the “debanking” of conservative clients — while also pushing regulators to root out what his administration describes as illegal left-wing activity — some investors are worried that Amalgamated has a target on its back. 

During the bank’s earnings call last week, Piper Sandler analyst Mark Fitzgibbon asked Amalgamated’s CEO, Priscilla Sims Brown, how the $8.7 billion-asset bank can avoid running afoul of Trump-era regulators. Sims Brown pointed to the bank’s third-quarter performance.

“Those solid returns and strong profitability is really our best answer to what you’re hearing,” she said. “And we don’t expect to see any material risk to our business model or our customer base, based on the fact that we are a bank first and foremost.”

On Oct. 23, Amalgamated posted what it called a “rock solid” quarter. Net income was $26.8 million, edging past analysts’ consensus estimate of $26.7 million, according to S&P. Earnings per share came out to 88 cents, in line with analysts’ expectations.

Political deposits, importantly, rose to $1.4 billion, up 19% from the previous quarter. (Amalgamated focuses on quarter-to-quarter comparisons, because political donations tend to be higher in election years.)

In addition to its steady performance, Sims Brown said, Amalgamated protects itself by scrupulously following the rules, leaving no potential opening for a politically motivated investigation.

“There’s a lot of noise in the news, and we certainly see it all as well,” she said. “I guess the best way I can address that is to say we continue to be a bank that just follows all laws and regulations, and we always will.”

The questions about Amalgamated’s political exposure come at a time when the bank is contending with a headline-grabbing lawsuit. Earlier this year, three former and current employees filed suit against the bank, accusing it of racial discrimination and abuses of company funds. The case is still ongoing.

Amalgamated has said it cannot comment on active litigation, but does not tolerate harassment or discrimination of any kind, and intends to defend itself against the litigation.

After last week’s earnings call, Piper Sandler reiterated its underweight rating of Amalgamated, citing its political concerns. Shares in Amalgamated have fallen by 15.2% since the start of the year.

“Although the quarter exceeded our estimates, the concerns we have about the company becoming a target for regulators regarding debanking issues remain in place,” Fitzgibbon wrote in a research note.

Piper Sandler downgraded Amalgamated from neutral to underweight in August, after Trump signed an executive order designed to combat debanking. That order told regulators to punish any banks that cut off service to clients due to their political beliefs, and to remove the concept of reputational risk from their guidance documents.

Right away, Fitzgibbon thought this spelled trouble for Amalgamated.

“Although we believe that Amalgamated is a very well-managed and profitable bank … due to the company being the bank of the Democratic Party and being a major player in the Green Energy space, it could see parts of its business pressured and regulatory scrutiny ramp up,” he wrote at the time. “If this new regulatory order is enacted, we can’t help but worry that Amalgamated could become a target.”

One month later, Trump signed an order directing regulators to “investigate, disrupt, and dismantle” the anti-fascist movement “antifa,” as well as anyone who funds it. Experts have said the order leaves banks with prominent progressive clients particularly vulnerable.

“Any bank needs to be concerned, although the focus … will be on influencing the largest banks to shed clients the administration deems objectionable,” Todd Baker, founder of the bank consulting firm Broadmoor Consulting, recently told American Banker. “There is also likely to be risk for the few others, such as Amalgamated Bank and Beneficial State Bank, that have relatively large numbers of so-called ‘progressive’ nonprofits in their customer base.”

So far, Amalgamated’s response to these concerns has been to point to its bottom line.

“We focus on risk management, and we focus on solid, consistent performance,” Sims Brown said. “Organizations that manage with appropriate [know-your-client] and [Bank Secrecy Act] requirements, they know we’re open for business.”