Problems at Amalgamated Bank (AMAL)

Problems at Amalgamated Bank (AMAL)

Amalgamated Bank (NASDAQ: AMAL — $739 million) is on a mission to be “America’s socially responsible bank.” Amalgamated Bank is 41%-owned by the Workers United Labor Union, which represents workers in fields like apparel, food service, and hospitality, and is deeply rooted in advancing liberal causes. Amalgamated Bank may be a dream for ESG investors and a nightmare for return-oriented ones.

Founded in 1923 by the Amalgamated Clothing Workers of America Union, Amalgamated Bank has a rich history of supporting progressive causes including loaning bail money to the NAACP in the 1950s and being the first bank to offer unsecured personal loans. Its strategy ran into problems during the housing crisis and in 2012 investment funds for billionaires Wilbur Ross and Ronald Burkle invested around $100 million for a ~40% stake. Nonetheless, Amalgamated Bank has stayed true to its progressive roots.

In 2015, Amalgamated Bank gave a $1 million loan to the Ready for Clinton Super PAC, and in 2019, the presidential campaigns of Joe Biden, Bernie Sanders, Elizabeth Warren, Kamala Harris, and Pete Buttigieg all banked with Amalgamated, which currently has around $1.3 billion in deposits from “politically active customers, such as campaigns, PACs, and state and national party committees.”

Today, Amalgamated’s homepage prominently highlights “issues we care about” including dedicated webpages for climate justice, immigrant rights, LGBTQ+ rights, anti-violence, criminal justice, workers’ rights, reproductive rights, voting rights, racial justice, and economic justice.

Less visible is a group of recent executive resignations, the departure of its chief credit risk officer, regulatory “issues” preventing an acquisition, a big “reclassification” of assets, and a large share sale by its billionaire backer Ronald Burkle.

Let’s dig in.