Amerant Reports Second Quarter 2023 Results

Board of Directors Declares Quarterly Cash Dividend of $0.09 per Common Share

 CORAL GABLES, Fla., July 20, 2023 (GLOBE NEWSWIRE) -- Amerant Bancorp Inc. (NASDAQ: AMTB) (the “Company” or “Amerant”) today reported net income attributable to the Company of $7.3 million in the second quarter of 2023, or $0.22 per diluted share, compared to net income attributable to the Company of $20.2 million, or $0.60 per diluted share, in the first quarter of 2023.

“Achieving strong organic deposit growth was a significant accomplishment this quarter” stated Jerry Plush, Chairman and CEO. “While elevated reserve coverage levels were needed related to a legacy NY based commercial real estate loan along with updated economic forecasts, we continued to show solid growth in pre-provision net revenue, driven primarily by a strong net interest margin. We remain keenly focused on driving profitable growth and achieving our goal of becoming the bank of choice in the markets we serve.”

  • Total assets increased $24.2 million, or 0.3%, to $9.5 billion compared to 1Q23.

  • Total gross loans increased $101.9 million, or 1.4%, to $7.22 billion compared to $7.12 billion in 1Q23.

  • Cash and cash equivalents were $445.1 million, down $40.7 million, or 8.4%, compared to $485.8 million in 1Q23.

  • Total deposits were $7.58 billion, up $292.8 million, or 4.0%, compared to $7.29 billion in 1Q23. Organic deposit growth in commercial, consumer and international banking was $432 million, which enabled reductions in brokered deposits and institutional deposits of $52 million and $136 million, respectively.

  • Total advances from Federal Home Loan Bank (“FHLB”) were $770.0 million, down $282.0 million, or 26.8%, compared to $1.1 billion in 1Q23, the result of early repayments of $355 million in the quarter in connection with asset/liability management strategies. An additional $2.1 billion remained available from FHLB as of June 30, 2023.

  • Average yield on loans increased to 6.79% in 2Q23, compared to 6.38% in 1Q23.

  • Total non-performing assets increased to $67.4 million, up $18.7 million, or 38.3%, compared to $48.7 million as of 1Q23.

  • The allowance for credit losses ("ACL") was $106.0 million, an increase of $21.6 million, or 25.6%, compared to $84.4 million as of 1Q23.

  • Core deposits were $5.50 billion, up $140.6 million, or 2.6%, compared to $5.36 billion in 1Q23.

  • Average cost of total deposits increased to 2.40% in 2Q23 compared to 1.91% in 1Q23.

  • Loan to deposit ratio improved to 95.22% in 2Q23 compared to 97.64% in 1Q23.

  • Assets Under Management and custody (“AUM”) totaled $2.15 billion, slightly up $39.9 million, or 1.9%, from $2.11 billion in 1Q23.

  • Pre-provision net revenue (“PPNR”)(1) was $38.3 million in 2Q23, an increase of $1.1 million or 2.9%, compared to $37.2 million in 1Q23.

  • Core Pre-Provision Net Revenue (“Core PPNR”)(1) was $39.2 million in 2Q23, up $2.1 million, or 5.6%, from $37.1 million in 1Q23.

  • Net Interest Margin (“NIM”) was 3.83% in 2Q23 compared to 3.90% in 1Q23.

  • Net Interest Income (“NII”) was $83.9 million, up $1.5 million, or 1.9%, from $82.3 million in 1Q23.

  • Provision for credit losses was $29.1 million in 2Q23, up $17.4 million, or 148.5%, compared to $11.7 million in 1Q23. The provision for credit losses in 2Q23 was comprised of $15.7 million in connection with charge-offs and credit quality, $1.4 million related to loan growth and $12.0 million to reflect updated economic factors.

  • Non-interest income was $26.6 million in 2Q23, up $7.3 million, or 37.6%, from $19.3 million in 1Q23. 2Q23 included $12.4 million in non-routine net gains.

  • Non-interest expense was $72.5 million, up $7.8 million, or 12.0%, from $64.7 million in 1Q23. 2Q23 included $13.4 million in non-routine noninterest expenses.

  • The efficiency ratio was 65.6% in 2Q23 compared to 63.7% in 1Q23.

  • Return on average assets (“ROA”) was 0.31% in 2Q23 compared to 0.88% in 1Q23.

  • Return on average equity (“ROE”) was 3.92% in 2Q23 compared to 11.15% in 1Q23.

Additional details on second quarter 2023 results can be found in Exhibits to this earnings release, and the earnings presentation available under the Investor Relations section of the Company’s website at https://investor.amerantbank.com.

On July 19, 2023, the Company’s board of directors declared a quarterly cash dividend of $0.09 per common share. The dividend is payable on August 31, 2023 to shareholders of record on August 15, 2023.

1 Non-GAAP measure, see “Non-GAAP Financial Measures” for more information and Exhibit 2 for a reconciliation to GAAP.

Second Quarter 2023 Earnings Conference Call

The Company will hold an earnings conference call on Friday, July 21, 2023 at 9:00 a.m. (Eastern Time) to discuss its second quarter 2023 results. The conference call and presentation materials can be accessed via webcast by logging on from the Investor Relations section of the Company’s website at https://investor.amerantbank.com. The online replay will remain available for approximately one month following the call through the above link.

About Amerant Bancorp Inc. (NASDAQ: AMTB)

Amerant Bancorp Inc. is a bank holding company headquartered in Coral Gables, Florida since 1979. The Company operates through its main subsidiary, Amerant Bank, N.A. (the “Bank”), as well as its other subsidiaries: Amerant Investments, Inc., Elant Bank and Trust Ltd., and Amerant Mortgage, LLC. The Company provides individuals and businesses in the U.S. with deposit, credit and wealth management services. The Bank, which has operated for over 40 years, is the largest community bank headquartered in Florida. The Bank operates 23 banking centers – 17 in South Florida and 6 in the Houston, Texas area, as well as an LPO in Tampa, Florida. For more information, visit investor.amerantbank.com.

FIS® and any associated brand names/logos are the trademarks of FIS and/or its affiliates.

Cautionary Notice Regarding Forward-Looking Statements

This press release contains “forward-looking statements” including statements with respect to the Company’s objectives, expectations and intentions and other statements that are not historical facts. All statements other than statements of historical fact are statements that could be forward-looking statements. You can identify these forward-looking statements through our use of words such as “may,” “will,” “anticipate,” “assume,” “should,” “indicate,” “would,” “believe,” “contemplate,” “expect,” “estimate,” “continue,” “plan,” “point to,” “project,” “could,” “intend,” “target,” “goals,” “outlooks,” “modeled,” “dedicated,” “create,” and other similar words and expressions of the future.

Forward-looking statements, including those relating to our beliefs, plans, objectives, goals, expectations, anticipations, estimates and intentions, involve known and unknown risks, uncertainties and other factors, which may be beyond our control, and which may cause the Company’s actual results, performance, achievements, or financial condition to be materially different from future results, performance, achievements, or financial condition expressed or implied by such forward-looking statements. You should not rely on any forward-looking statements as predictions of future events. You should not expect us to update any forward-looking statements, except as required by law. All written or oral forward-looking statements attributable to us are expressly qualified in their entirety by this cautionary notice, together with those risks and uncertainties described in “Risk factors” in our annual report on Form 10-K for the fiscal year ended December 31, 2022 filed on March 1, 2023 (the “Form 10-K”), our quarterly report on Form 10-Q for the quarter ended March 31, 2023 filed on May 2, 2023, and in our other filings with the U.S. Securities and Exchange Commission (the “SEC”), which are available at the SEC’s website www.sec.gov.

Interim Financial Information

Unaudited financial information as of and for interim periods, including the three and six month periods ended June 30, 2023 and 2022 and the three months ended March 31, 2023 and December 31, 2022, may not reflect our results of operations for our fiscal year ending, or financial condition, as of December 31, 2023, or any other period of time or date.

As previously disclosed in the Form 10-K, the Company adopted the new guidance on accounting for current expected credit losses on financial instruments (“CECL”) effective as of January 1, 2022. Quarterly amounts previously reported on our quarterly reports on Form 10-Q for the periods ended March 31, 2022, June 30, 2022 and September 30, 2022 do not reflect the adoption of CECL. In the fourth quarter of 2022, the Company recorded a provision for credit losses totaling $20.9 million, including $11.1 million related to the retroactive effect of adopting CECL for all previous quarterly periods in the year ended December 31, 2022, including loan growth and changes to macro-economic conditions during the period. Quarterly amounts included in the Form 10-K and this earnings release and accompanying presentation reflect the impacts of the adoption of CECL on each interim period of 2022. See the Form 10-K for more details on the adoption of CECL.

The following table shows changes to previously-reported amounts for the quarter ended December 31, 2022 versus the corresponding amounts reflecting the adoption of CECL in 2022:

(in thousands, except per share amounts) As Reported   As Recast   Changes
Total interest income $ 113,374     $ 113,374     $  
Total interest expense   31,196       31,196        
Net interest income   82,178       82,178        
Provision for credit losses   20,945       16,857       (4,088 )
Net interest income after provision for credit losses   61,233       65,321       4,088  
Total noninterest income   24,365       24,365        
Total noninterest expense   62,241       62,241        
Income before income taxes   23,357       27,445       4,088  
Income tax expense   (4,746 )     (5,627 )     (881 )
Net income before attribution of noncontrolling interest   18,611       21,818       3,207  
Noncontrolling interest   (155 )     (155 )      
Net income attributable to Amerant Bancorp Inc. $ 18,766     $ 21,973     $ 3,207  
Basic earnings per common share $ 0.56     $ 0.66     $ 0.10  
Diluted earnings per common share $ 0.55     $ 0.65     $ 0.10  
Cash dividends declared per common share $ 0.09     $ 0.09     $  
                       

Non-GAAP Financial Measures

The Company supplements its financial results that are determined in accordance with accounting principles generally accepted in the United States of America (“GAAP”) with non-GAAP financial measures, such as “pre-provision net revenue (PPNR)”, “core pre-provision net revenue (Core PPNR)”, “core noninterest income”, “core noninterest expenses”, “core net income”, “core earnings per share (basic and diluted)”, “core return on assets (Core ROA)”, “core return on equity (Core ROE)”, “core efficiency ratio”, “tangible stockholders’ equity (book value) per common share”, “tangible common equity ratio, adjusted for unrealized losses on debt securities held to maturity”, and “tangible stockholders' equity (book value) per common share, adjusted for unrealized losses on debt securities held to maturity”. This supplemental information is not required by, or is not presented in accordance with GAAP. The Company refers to these financial measures and ratios as “non-GAAP financial measures” and they should not be considered in isolation or as a substitute for the GAAP measures presented herein.

We use certain non-GAAP financial measures, including those mentioned above, both to explain our results to shareholders and the investment community and in the internal evaluation and management of our businesses. Our management believes that these non-GAAP financial measures and the information they provide are useful to investors since these measures permit investors to view our performance using the same tools that our management uses to evaluate our past performance and prospects for future performance, especially in light of the additional costs we have incurred in connection with the Company’s restructuring activities that began in 2018 and continued in 2023, including the effect of non-core banking activities such as the sale of loans and securities and other repossessed assets, the valuation of securities, derivatives, loans held for sale and other real estate owned and repossessed assets, the early repayment of FHLB advances, impairment of investments, and other non-routine actions intended to improve customer service and operating performance. While we believe that these non-GAAP financial measures are useful in evaluating our performance, this information should be considered as supplemental and not as a substitute for or superior to the related financial information prepared in accordance with GAAP. Additionally, these non-GAAP financial measures may differ from similar measures presented by other companies.

Exhibit 2 reconciles these non-GAAP financial measures to reported results.

Exhibit 1- Selected Financial Information

The following table sets forth selected financial information derived from our interim unaudited and annual audited consolidated financial statements.

(in thousands) June 30,
2023
  March 31,
2023
  December 31,
2022
Consolidated Balance Sheets         (audited)
Total assets $ 9,519,526     $ 9,495,302     $ 9,127,804  
Total investments   1,315,303       1,347,697       1,366,680  
Total gross loans (1)   7,216,958       7,115,035       6,919,632  
Allowance for credit losses   105,956       84,361       83,500  
Total deposits   7,579,571       7,286,726       7,044,199  
Core deposits (2)   5,498,017       5,357,386       5,315,944  
Advances from the Federal Home Loan Bank   770,000       1,052,012       906,486  
Senior notes   59,368       59,289       59,210  
Subordinated notes   29,369       29,326       29,284  
Junior subordinated debentures   64,178       64,178       64,178  
Stockholders' equity (3)(4)   720,956       729,056       705,726  
Assets under management and custody (5)   2,147,465       2,107,603       1,995,666  


  Three Months Ended
(in thousands, except percentages, share data and per share amounts) June 30,
2023
  March 31,
2023
  December 31,
2022
Consolidated Results of Operations          
Net interest income $ 83,877     $ 82,333     $ 82,178  
Provision for credit losses (6)   29,077       11,700       16,857  
Noninterest income   26,619       19,343       24,365  
Noninterest expense   72,500       64,733       62,241  
Net income attributable to Amerant Bancorp Inc. (6) (7)   7,308       20,186       21,973  
Effective income tax rate (6)   21.00%       21.00%       20.50%  
           
Common Share Data          
Stockholders' book value per common share $ 21.37     $ 21.56     $ 20.87  
Tangible stockholders' equity (book value) per common share (8) $ 20.66     $ 20.84     $ 20.19  
Tangible stockholders' equity (book value) per common share, adjusted for unrealized losses on debt securities held to maturity (8) $ 20.11     $ 20.38     $ 19.65  
Basic earnings per common share (6) $ 0.22     $ 0.60     $ 0.66  
Diluted earnings per common share (6)(9) $ 0.22     $ 0.60     $ 0.65  
Basic weighted average shares outstanding   33,564,770       33,559,718       33,496,096  
Diluted weighted average shares outstanding (9)   33,717,702       33,855,994       33,813,593  
Cash dividend declared per common share (4) $ 0.09     $ 0.09     $ 0.09  


  Three Months Ended
  June 30,
2023
  March 31,
2023
  December 31,
2022
Other Financial and Operating Data (10)          
           
Profitability Indicators (%)          
Net interest income / Average total interest earning assets (NIM) (11) 3.83%     3.90%     3.96%  
Net income / Average total assets (ROA) (6) (12) 0.31%     0.88%     0.97%  
Net income / Average stockholders' equity (ROE) (6)(13) 3.92%     11.15%     12.10%  
Noninterest income / Total revenue (14) 24.09%     19.02%     22.87%  
           
Capital Indicators (%)          
Total capital ratio (15) 12.41%     12.36%     12.39%  
Tier 1 capital ratio (16) 10.79%     10.88%     10.89%  
Tier 1 leverage ratio (17) 8.91%     9.04%     9.18%  
Common equity tier 1 capital ratio (CET1) (18) 10.02%     10.10%     10.10%  
Tangible common equity ratio (19) 7.34%     7.44%     7.50%  
Tangible common equity ratio, adjusted for unrealized losses on debt securities held to maturity (20) 7.16%     7.29%     7.31%  
           
Liquidity Ratios (%)          
Loans to Deposits (21) 95.22%     97.64%     98.23%  
           
Asset Quality Indicators (%)          
Non-performing assets / Total assets (22) 0.71%     0.51%     0.41%  
Non-performing loans / Total gross loans (1) (23) 0.65%     0.31%     0.54%  
Allowance for credit losses / Total non-performing loans (23) 224.51%     380.31%     222.08%  
Allowance for credit losses / Total loans held for investment 1.48%     1.20%     1.22%  
Net charge-offs / Average total loans held for investment (24) 0.42%     0.64%     0.59%  
           
Efficiency Indicators (% except FTE)          
Noninterest expense / Average total assets 3.06%     2.82%     2.75%  
Salaries and employee benefits / Average total assets 1.45%     1.52%     1.45%  
Other operating expenses/ Average total assets (25) 1.62%     1.30%     1.30%  
Efficiency ratio (26) 65.61%     63.67%     58.42%  
Full-Time-Equivalent Employees (FTEs) (27) 710     722     692  


  Three Months Ended
(in thousands, except percentages and per share amounts) June 30,
2023
  March 31,
2023
  December 31,
2022
Core Selected Consolidated Results of Operations and Other Data (8)          
           
Pre-provision net revenue (PPNR) $ 38,258     $ 37,187     $ 44,457  
Core pre-provision net revenue (Core PPNR) $ 39,196     $ 37,103     $ 37,838  
Core net income (6) $ 8,048     $ 20,120     $ 16,817  
Core basic earnings per common share (6)   0.24       0.60       0.50  
Core earnings per diluted common share (6) (9)   0.24       0.59       0.50  
Core net income / Average total assets (Core ROA) (6) (12)   0.34%       0.88%       0.74%  
Core net income / Average stockholders' equity (Core ROE) (6) (13)   4.32%       11.11%       9.26%  
Core efficiency ratio (28)   60.29%       62.47%       61.34%  

__________________
(1)   Total gross loans include loans held for investment net of unamortized deferred loan origination fees and costs, as well as mortgage loans held for sale carried at fair value. As of June 30, 2023, March 31, 2023 and December 31, 2022, mortgage loans held for sale carried at fair value totaled $49.9 million, $65.3 million and $62.4 million, respectively.
(2)   Core deposits consist of total deposits excluding all time deposits.
(3)   In the fourth quarter of 2022, the Company announced that the Board of Directors authorized a new repurchase program pursuant to which the Company may purchase, from time to time, up to an aggregate amount of $25 million of its shares of Class A common stock (the “2023 Class A Common Stock Repurchase Program”). In the second and first quarters of 2023, the Company repurchased an aggregate of 95,262 shares of Class A common stock and 22,403 shares of Class A common stock, respectively, at a weighted average price of $17.42 per share and $25.25 per share, respectively, under the 2023 Class A Common Stock Repurchase Program. In the second and first quarters of 2023, the aggregate purchase price for these transactions was approximately $1.7 million and $0.6 million, respectively, including transaction costs.        
(4)   For each of the second and first quarters of 2023 and the fourth quarter of 2022, the Company’s Board of Directors declared cash dividends of $0.09 per share of the Company’s common stock. The dividend declared in the second quarter of 2023 was paid on May 31, 2023 to shareholders of record at the close of business on May 15, 2023. The dividend declared in the first quarter of 2023 was paid on February 28, 2023 to shareholders of record at the close of business on February 13, 2023. The dividend declared in the fourth quarter of 2022 was paid on November 30, 2022 to shareholders of record at the close of business on November 15, 2022. For each of the second and first quarters of 2023 and the fourth quarter of 2022, the aggregate amount paid in connection with these dividends was $3.0 million.
(5)   Assets held for clients in an agency or fiduciary capacity which are not assets of the Company and therefore are not included in the consolidated financial statements.
(6)   As previously disclosed, the Company adopted CECL in the fourth quarter of 2022, effective as of January 1, 2022. See Form 10-K for more details on the CECL adoption and related effects to quarterly results for each quarter in the year ended December 31, 2022.
(7)   In the three months ended June 30, 2023, March 31, 2023, and December 31, 2022, net income exclude losses of $0.3 million, $0.2 million and $0.2 million, respectively, attributable to a 20% minority interest of Amerant Mortgage LLC.
(8)   This presentation contains adjusted financial information determined by methods other than GAAP. This adjusted financial information is reconciled to GAAP in Exhibit 2 - Non-GAAP Financial Measures Reconciliation.
(9)   In all the periods shown, potential dilutive instruments consisted of unvested shares of restricted stock, restricted stock units and performance stock units. Potential dilutive instruments were included in the diluted earnings per share computation because, when the unamortized deferred compensation cost related to these shares was divided by the average market price per share in all the periods shown, fewer shares would have been purchased than restricted shares assumed issued. Therefore, in those periods, such awards resulted in higher diluted weighted average shares outstanding than basic weighted average shares outstanding, and had a dilutive effect in per share earnings.
(10)    Operating data for the periods presented have been annualized.
(11)    NIM is defined as NII divided by average interest-earning assets, which are loans, securities, deposits with banks and other financial assets which yield interest or similar income.
(12)   Calculated based upon the average daily balance of total assets.
(13)   Calculated based upon the average daily balance of stockholders’ equity.
(14)   Total revenue is the result of net interest income before provision for credit losses plus noninterest income.
(15)   Total stockholders’ equity divided by total risk-weighted assets, calculated according to the standardized regulatory capital ratio
calculations.
(16)   Tier 1 capital divided by total risk-weighted assets. Tier 1 capital is composed of Common Equity Tier 1 (CET1) capital plus outstanding qualifying trust preferred securities of $62.3 million at each of all the dates presented.
(17)   Tier 1 capital divided by quarter to date average assets.
(18)   CET1 capital divided by total risk-weighted assets.
(19)   Tangible common equity is calculated as the ratio of common equity less goodwill and other intangibles divided by total assets
less goodwill and other intangible assets. Other intangible assets primarily consist of mortgage servicing rights and are included in other assets in the Company’s consolidated balance sheets.
(20)   Calculated in the same manner described in footnote 19 but also includes unrealized losses on debt securities held to maturity in the balance of common equity and total assets.
(21)   Calculated as the ratio of total loans gross divided by total deposits.
(22)   Non-performing assets include all accruing loans past due by 90 days or more, all nonaccrual loans and other real estate owned (“OREO”) properties acquired through or in lieu of foreclosure, and other repossessed assets.
(23)   Non-performing loans include all accruing loans past due by 90 days or more and all nonaccrual loans
(24)   Calculated based upon the average daily balance of outstanding loan principal balance net of unamortized deferred loan origination fees and costs, excluding the allowance for credit losses. During the second and first quarters of 2023, and in the fourth quarter of 2022, there were net charge offs of $7.5 million, $10.8 million, and $9.8 million, respectively. During the second quarter of 2023, the Company charged-off $7.6 million related to multiple purchased indirect consumer loans and $1.5 million related to multiple commercial loans. During the first quarter of 2023, the Company charged-off $6.5 million in connection with a commercial loan relationship, $6.3 million related to multiple consumer loans and $1.5 million related to multiple commercial and real estate loans. During the fourth quarter of 2022, the Company charged-off $3.9 million related to a CRE loan, $5.5 million related to multiple consumer loans and $1.1 million related to multiple commercial loans.
(25)   Other operating expenses is the result of total noninterest expense less salary and employee benefits.
(26)   Efficiency ratio is the result of noninterest expense divided by the sum of noninterest income and NII.
(27)   As of June 30, 2023, March 31, 2023 and December 31, 2022, includes 93, 94 and 68 FTEs for Amerant Mortgage LLC, respectively.
(28)   Core efficiency ratio is the efficiency ratio less the effect of restructuring costs and other non-routine items, described in Exhibit 2 - Non-GAAP Financial Measures Reconciliation.


Exhibit 2- Non-GAAP Financial Measures Reconciliation

The following table sets forth selected financial information derived from the Company’s interim unaudited and annual audited consolidated financial statements, adjusted for certain costs incurred by the Company in the periods presented related to tax deductible restructuring costs, provision for (reversal of) credit losses, provision for income tax expense (benefit), the effect of non-core banking activities such as the sale of loans and securities and other repossessed assets, the valuation of securities, derivatives, loans held for sale and other real estate owned and repossessed assets, the early repayment of FHLB advances, impairment of investments and other non-routine actions intended to improve customer service and operating performance. The Company believes these adjusted numbers are useful to understand the Company’s performance absent these transactions and events.

  Three Months Ended,
(in thousands) June 30, 2023   March 31, 2023   December 31, 2022
           
Net income attributable to Amerant Bancorp Inc. (1) $ 7,308     $ 20,186     $ 21,973  
Plus: provision for credit losses (1)   29,077       11,700       16,857  
Plus: provision for income tax expense (1)   1,873       5,301       5,627  
Pre-provision net revenue (PPNR)   38,258       37,187       44,457  
Plus: non-routine noninterest expense items   13,383       3,372       2,447  
Less: non-routine noninterest income items   (12,445 )     (3,456 )     (9,066 )
Core pre-provision net revenue (Core PPNR) $ 39,196     $ 37,103     $ 37,838  
           
Total noninterest income $ 26,619     $ 19,343     $ 24,365  
Less: Non-routine noninterest income items:          
Derivatives gains, net   242       14       1,040  
Securities losses, net   (1,237 )     (9,731 )     (3,364 )
Gains on early extinguishment of FHLB advances, net   13,440       13,173       11,390  
Total non-routine noninterest income items $ 12,445     $ 3,456     $ 9,066  
Core noninterest income $ 14,174     $ 15,887     $ 15,299  
           
Total noninterest expenses $ 72,500     $ 64,733     $ 62,241  
Less: non-routine noninterest expense items          
Restructuring costs (2):          
Staff reduction costs (3)   2,184       213       1,221  
Contract termination costs (4)   1,550              
Consulting and other professional fees (5)   2,060       2,690       1,226  
Disposition of fixed assets (6)   1,419              
Branch closure expenses and related charges (7)   1,558       469        
Total restructuring costs $ 8,771     $ 3,372     $ 2,447  
Other non-routine noninterest expense items:          
Loss on sale of repossessed assets (8)   2,649              
Impairment charge on investment carried at cost   1,963              
Total non-routine noninterest expense items $ 13,383     $ 3,372     $ 2,447  
Core noninterest expenses $ 59,117     $ 61,361     $ 59,794  
           
           
           
(in thousands, except percentages and per share amounts) June 30, 2023   March 31, 2023   December 31, 2022
       
Net income attributable to Amerant Bancorp Inc. (1) $ 7,308     $ 20,186     $ 21,973  
Plus after-tax non-routine items in noninterest expense:          
Non-routine items in noninterest expense before income tax effect   13,383       3,372       2,447  
Income tax effect (9)   (2,811 )     (708 )     (460 )
Total after-tax non-routine items in noninterest expense   10,572       2,664       1,987  
Less after-tax non-routine items in noninterest income:          
Non-routine items in noninterest income before income tax effect   (12,445 )     (3,456 )     (9,066 )
Income tax effect (9)   2,613       726       1,923  
Total after-tax non-routine items in noninterest income   (9,832 )     (2,730 )     (7,143 )
Core net income (1) $ 8,048     $ 20,120     $ 16,817  
           
Basic earnings per share (1) $ 0.22     $ 0.60     $ 0.66  
Plus: after tax impact of non-routine items in noninterest expense   0.31       0.08       0.06  
Less: after tax impact of non-routine items in noninterest income   (0.29 )     (0.08 )     (0.22 )
Total core basic earnings per common share (1) $ 0.24     $ 0.60     $ 0.50  
           
Diluted earnings per share (1) (10) $ 0.22     $ 0.60     $ 0.65  
Plus: after tax impact of non-routine items in noninterest expense   0.31       0.08       0.06  
Less: after tax impact of non-routine items in noninterest income   (0.29 )     (0.09 )     (0.21 )
Total core diluted earnings per common share (1) $ 0.24     $ 0.59     $ 0.50  
           
Net income / Average total assets (ROA) (1)   0.31 %     0.88 %     0.97 %
Plus: after tax impact of non-routine items in noninterest expense   0.45 %     0.12 %     0.09 %
Less: after tax impact of non-routine items in noninterest income (0.42 )%   (0.12 )%   (0.32 )%
Core net income / Average total assets (Core ROA) (1)   0.34 %     0.88 %     0.74 %
           
Net income / Average stockholders' equity (ROE) (1)   3.92 %     11.15 %     12.10 %
Plus: after tax impact of non-routine items in noninterest expense   5.68 %     1.47 %     1.09 %
Less: after tax impact of non-routine items in noninterest income (5.28 )%   (1.51 )%   (3.93 )%
Core net income / Average stockholders' equity (Core ROE) (1)   4.32 %     11.11 %     9.26 %
           
Efficiency ratio   65.61 %     63.67 %     58.42 %
Less: impact of non-routine items in noninterest expense (12.11 )%   (3.32 )%   (2.30 )%
Plus: impact of non-routine items in noninterest income   6.79 %     2.12 %     5.22 %
Core efficiency ratio   60.29 %     62.47 %     61.34 %


  Three Months Ended,
(in thousands, except percentages, share data and per share amounts) June 30, 2023   March 31, 2023   December 31, 2022
           
Stockholders' equity $ 720,956     $ 729,056     $ 705,726  
Less: goodwill and other intangibles (11)   (24,124 )     (24,292 )     (23,161 )
Tangible common stockholders' equity $ 696,832     $ 704,764     $ 682,565  
Total assets   9,519,526       9,495,302       9,127,804  
Less: goodwill and other intangibles (11)   (24,124 )     (24,292 )     (23,161 )
Tangible assets $ 9,495,402     $ 9,471,010     $ 9,104,643  
Common shares outstanding   33,736,159       33,814,260       33,815,161  
Tangible common equity ratio   7.34 %     7.44 %     7.50 %
Stockholders' book value per common share $ 21.37     $ 21.56     $ 20.87  
Tangible stockholders' equity book value per common share $ 20.66     $ 20.84     $ 20.19  
           
           
Tangible common stockholders' equity $ 696,832     $ 704,764     $ 682,565  
Less: Net unrealized accumulated losses on debt securities held to maturity, net of tax (12)   (18,503 )     (15,542 )     (18,234 )
Tangible common stockholders' equity, adjusted for net unrealized accumulated losses on debt securities held to maturity $ 678,329     $ 689,222     $ 664,331  
Tangible assets $ 9,495,402     $ 9,471,010     $ 9,104,643  
Less: Net unrealized accumulated losses on debt securities held to maturity, net of tax (12)   (18,503 )     (15,542 )     (18,234 )
Tangible assets, adjusted for net unrealized accumulated losses on debt securities held to maturity $ 9,476,899     $ 9,455,468     $ 9,086,409  
Common shares outstanding   33,736,159       33,814,260       33,815,161  
           
Tangible common equity ratio, adjusted for net unrealized accumulated losses on debt securities held to maturity   7.16 %     7.29 %     7.31 %
Tangible stockholders' book value per common share, adjusted for net unrealized accumulated losses on debt securities held to maturity $ 20.11     $ 20.38     $ 19.65  

____________
(1)   As previously disclosed, the Company adopted CECL in the fourth quarter of 2022, effective as of January 1, 2022. See Form 10-K for more details of the CECL adoption and related effects to quarterly results for each quarter in the year ended December 31, 2022.
(2)   Expenses incurred for actions designed to implement the Company’s business strategy. These actions include, but are not limited to reductions in workforce, streamlining operational processes, rolling out the Amerant brand, implementation of new technology system applications, decommissioning of legacy technologies, enhanced sales tools and training, expanded product offerings and improved customer analytics to identify opportunities.
(3)   Staff reduction costs in the three months ended June 30, 2023, March 31, 2023 and December 31, 2022 consist of severance expenses related to organizational rationalization.
(4)   Contract termination and related costs associated with third party vendors resulting from the Company’s engagement of FIS.
(5)   Includes expenses in connection with the engagement of FIS of $2.0 million, $2.6 million and $1.1 million in the three months ended June 30, 2023, March 31, 2023 and December 31, 2022, respectively.
(6)   Include expenses in connection with the disposition of fixed assets due to the write off of in-development software in the three months ended June 30, 2023.
(7)   In the three months ended June 30, 2023, consists of expenses associated with the decision to close a branch in Miami, Florida in 2023, including $0.9 million of accelerated amortization of leasehold improvements and $0.6 million of right-of-use, or ROU asset impairment. In the three months ended March 31, 2023, includes $0.5 million of ROU asset impairment associated with the closure of a branch in Houston, Texas in 2023.
(8)   In the three months ended June 30, 2023, amount represents the loss on sale of repossessed assets in connection with our equipment-financing activities.
(9)   In the three months ended March 31, 2023, amounts were calculated based upon the effective tax rate for the period of 21.00%. For all of the other periods shown, amounts represent the difference between the prior and current period year-to-date tax effect.

(10)   In the three months ended June 30, 2023, March 31, 2023 and December 31, 2022, potential dilutive instruments consisted of unvested shares of restricted stock, restricted stock units and performance stock units. In all the periods presented, potential dilutive instruments were included in the diluted earnings per share computation because, when the unamortized deferred compensation cost related to these shares was divided by the average market price per share in those periods, fewer shares would have been purchased than restricted shares assumed issued. Therefore, in those periods, such awards resulted in higher diluted weighted average shares outstanding than basic weighted average shares outstanding, and had a dilutive effect on per share earnings.
(11)   Other intangible assets primarily consist of mortgage servicing rights (“MSRs”) of $1.3 million, $1.4 million and $1.3 million at June 30, 2023, March 31, 2023 and December 31, 2022, respectively, and are included in other assets in the Company’s consolidated balance sheets.
(12)   In the three months ended June 30, 2023, March 31, 2023 and December 31, 2022, amounts were calculated based upon the fair value on debt securities held to maturity, and assuming a tax rate of 25.46%, 25.53% and 25.55%, respectively.


Exhibit 3 - Average Balance Sheet, Interest and Yield/Rate Analysis

The following tables present average balance sheet information, interest income, interest expense and the corresponding average yields earned and rates paid for the periods presented. The average balances for loans include both performing and nonperforming balances. Interest income on loans includes the effects of discount accretion and the amortization of non-refundable loan origination fees, net of direct loan origination costs, accounted for as yield adjustments. Average balances represent the daily average balances for the periods presented.

  Three Months Ended
  June 30, 2023   March 31, 2023   June 30, 2022
(in thousands, except percentages) Average
Balances
Income/
Expense
Yield/
Rates
  Average
Balances
Income/
Expense
Yield/
Rates
  Average
Balances
Income/
Expense
Yield/
Rates
Interest-earning assets:                      
Loan portfolio, net (1)(2) $ 7,068,034   $ 119,570 6.79 %   $ 6,901,352   $ 108,501 6.38 %   $ 5,635,147   $ 61,514 4.38 %
Debt securities available for sale (3) (4)   1,041,039     10,397 4.01 %     1,058,831     10,173 3.90 %     1,113,994     7,614 2.74 %
Debt securities held to maturity (5)   236,297     1,976 3.35 %     240,627     2,112 3.56 %     177,483     981 2.22 %
Debt securities held for trading   262     3 4.59 %     18     %     101     1 3.97 %
Equity securities with readily determinable fair value not held for trading   27     %     4,886     %     12,407     %
Federal Reserve Bank and FHLB stock   52,917     857 6.50 %     57,803     1,014 7.11 %     49,476     539 4.37 %
Deposits with banks   379,123     5,694 6.02 %     302,791     3,330 4.46 %     224,751     518 0.92 %
Total interest-earning assets   8,777,699     138,497 6.33 %     8,566,308     125,130 5.92 %     7,213,359     71,167 3.96 %
Total non-interest-earning assets (6)   710,404           739,522           635,871      
Total assets $ 9,488,103         $ 9,305,830         $ 7,849,230      
                       


  Three Months Ended
  June 30, 2023   March 31, 2023   June 30, 2022
(in thousands, except percentages) Average
Balances
Income/
Expense
Yield/
Rates
  Average
Balances
Income/
Expense
Yield/
Rates
  Average
Balances
Income/
Expense
Yield/
Rates
Interest-bearing liabilities:                      
Checking and saving accounts                      
Interest bearing DDA $ 2,641,746   $ 16,678 2.53 %   $ 2,342,620   $ 12,855 2.23 %   $ 1,654,232   $ 1,034 0.25 %
Money market   1,169,047     9,401 3.23 %     1,333,465     7,881 2.40 %     1,262,566     1,351 0.43 %
Savings   287,493     36 0.05 %     299,501     46 0.06 %     318,967     14 0.02 %
Total checking and saving accounts   4,098,286     26,115 2.56 %     3,975,586     20,782 2.12 %     3,235,765     2,399 0.30 %
Time deposits   2,045,747     18,528 3.63 %     1,767,603     12,834 2.94 %     1,256,112     4,503 1.44 %
Total deposits   6,144,033     44,643 2.91 %     5,743,189     33,616 2.37 %     4,491,877     6,902 0.62 %
Securities sold under agreements to repurchase   60     1 6.68 %         %     60     %
Advances from the FHLB (7)   828,301     7,621 3.69 %     959,392     6,763 2.86 %     867,573     3,341 1.54 %
Senior notes   59,330     941 6.36 %     59,250     942 6.45 %     59,013     942 6.40 %
Subordinated notes   29,348     362 4.95 %     29,306     361 5.00 %     29,178     361 4.96 %
Junior subordinated debentures   64,178     1,052 6.57 %     64,178     1,115 7.05 %     64,178     676 4.22 %
Total interest-bearing liabilities   7,125,250     54,620 3.07 %     6,855,315     42,797 2.53 %     5,511,879     12,222 0.89 %
Non-interest-bearing liabilities:                      
Non-interest bearing demand deposits   1,332,189           1,377,966           1,309,520      
Accounts payable, accrued liabilities and other liabilities   283,653           338,351           283,721      
Total non-interest-bearing liabilities   1,615,842           1,716,317           1,593,241      
Total liabilities   8,741,092           8,571,632           7,105,120      
Stockholders’ equity   747,011           734,198           744,110      
Total liabilities and stockholders' equity $ 9,488,103         $ 9,305,830         $ 7,849,230      
Excess of average interest-earning assets over average interest-bearing liabilities $ 1,652,449         $ 1,710,993         $ 1,701,480      
Net interest income   $ 83,877       $ 82,333       $ 58,945  
Net interest rate spread     3.26 %       3.39 %       3.07 %
Net interest margin (8)     3.83 %       3.90 %       3.28 %
Cost of total deposits (9)     2.40 %       1.91 %       0.48 %
Ratio of average interest-earning assets to average interest-bearing liabilities   123.19 %         124.96 %         130.87 %    
Average non-performing loans/ Average total loans   0.54 %         0.46 %         0.56 %    


  Six Months Ended
  June 30, 2023   June 30, 2022
(in thousands, except percentages) Average
Balances
Income/
Expense
Yield/
Rates
  Average
Balances
Income/
Expense
Yield/
Rates
Interest-earning assets:              
Loan portfolio, net (1)(2) $ 6,985,153   $ 228,071 6.58 %   $ 5,564,362   $ 117,852 4.27 %
Debt securities available for sale (3)(4)   1,049,886     20,568 3.95 %     1,142,087     14,992 2.65 %
Debt securities held to maturity (5)   238,450     4,088 3.46 %     146,243     1,684 2.32 %
Debt securities held for trading   141     4 5.72 %     68     2 5.93 %
Equity securities with readily determinable fair value not held for trading   2,443     %     6,885     %
Federal Reserve Bank and FHLB stock   55,346     1,872 6.82 %     50,485     1,085 4.33 %
Deposits with banks   341,168     9,024 5.33 %     241,893     650 0.54 %
Total interest-earning assets (6)   8,672,587     263,627 6.13 %     7,152,023     136,265 3.84 %
Total non-interest-earning assets less allowance for loan losses   725,675           626,501      
Total assets $ 9,398,262         $ 7,778,524      
               
Interest-bearing liabilities:              
Checking and saving accounts -              
Interest bearing DDA $ 2,493,009   $ 29,533 2.39 %   $ 1,605,626   $ 1,324 0.17 %
Money market   1,250,801     17,281 2.79 %     1,257,955     2,084 0.33 %
Savings   293,464     83 0.06 %     322,027     26 0.02 %
Total checking and saving accounts   4,037,274     46,897 2.34 %     3,185,608     3,434 0.22 %
Time deposits   1,907,443     31,362 3.32 %     1,275,587     8,784 1.39 %
Total deposits   5,944,717     78,259 2.65 %     4,461,195     12,218 0.55 %
Securities sold under agreements to repurchase   30     1 6.72 %     30     %
Advances from the FHLB (7)   893,484     14,384 3.25 %     892,170     5,822 1.32 %
Senior notes   59,290     1,883 6.40 %     58,974     1,884 6.44 %
Subordinated notes   29,327     723 4.97 %     18,375     449 4.93 %
Junior subordinated debentures   64,178     2,167 6.81 %     64,178     1,302 4.09 %
Total interest-bearing liabilities   6,991,026     97,417 2.81 %     5,494,922     21,675 0.80 %
Non-interest-bearing liabilities:              
Non-interest bearing demand deposits   1,354,951           1,254,948      
Accounts payable, accrued liabilities and other liabilities   310,716           257,559      
Total non-interest-bearing liabilities   1,665,667           1,512,507      
Total liabilities   8,656,693           7,007,429      
Stockholders’ equity   741,569           771,095      
Total liabilities and stockholders' equity $ 9,398,262         $ 7,778,524      
Excess of average interest-earning assets over average interest-bearing liabilities $ 1,681,561         $ 1,657,101      
Net interest income   $ 166,210       $ 114,590  
Net interest rate spread     3.32 %       3.04 %
Net interest margin (8)     3.86 %       3.23 %
Cost of total deposits (9)     2.16 %       0.43 %
Ratio of average interest-earning assets to average interest-bearing liabilities   124.05 %         130.16 %    
Average non-performing loans/ Average total loans   0.50 %         0.63 %    

___________
(1)   Includes loans held for investment net of the allowance for credit losses, and mortgage loans held for sale carried at fair value. The average balance of the allowance for credit losses was $84.6 million, $81.4 million and $55.9 million in the three months ended June 30, 2023, March 31, 2023 and June 30, 2022, respectively, and $83.0 million and $61.7 million in the six months ended June 30, 2023 and June 30, 2022, respectively. The average balance of mortgage loans held for sale carried at fair value was $85.1 million, $66.4 million and $112.2 million in the three months ended June 30, 2023, March 31, 2023 and June 30, 2022, respectively, and $75.8 million and $123.6 million in the six months ended June 30, 2023 and June 30, 2022, respectively.
(2)   Includes average non-performing loans of $38.5 million, $31.8 million and $32.7 million for the three months ended June 30, 2023, March 31, 2023 and June 30, 2022, respectively, $35.2 million and $36.0 million in the six months ended June 30, 2023 and June 30, 2022, respectively.
(3)   Includes the average balance of net unrealized gains and losses in the fair value of debt securities available for sale. The average balance includes average unrealized net losses of $106.7 million, $104.9 million and $58.0 million in the three months ended June 30, 2023, March 31, 2023, and June 30, 2022, respectively, and average unrealized net losses of $105.8 million and $28.0 million in the six months ended June 30, 2023 and 2022, respectively.
(4)   Includes nontaxable securities with average balances of $19.5 million, $19.7 million and $14.8 million for the three months ended June 30, 2023, March 31, 2023 and June 30, 2022, respectively, and $19.4 million and $15.7 million in the six months ended June 30, 2023 and June 30, 2022, respectively. The tax equivalent yield for these nontaxable securities was 4.53%, 4.56% and 2.97% for the three months ended June 30, 2023, March 31, 2023 and June 30, 2022, respectively, and 4.59% and 2.85% in the six months ended June 30, 2023 and June 30, 2022. In 2023 and 2022, the tax equivalent yields were calculated assuming a 21% tax rate and dividing the actual yield by 0.79.
(5)   Includes nontaxable securities with average balances of $50.1 million, $50.7 million and $42.7 million for the three months ended June 30, 2023, March 31, 2023 and June 30, 2022, respectively, and $50.4 million and $43.4 million in the six months ended June 30, 2023 and June 30, 2022, respectively. The tax equivalent yield for these nontaxable securities was 4.16%, 4.20% and 3.31% for the three months ended June 30, 2023, March 31, 2023 and June 30, 2022, respectively, and 4.18% and 3.22% in the six months ended June 30, 2023 and June 30, 2022. In 2023 and 2022, the tax equivalent yields were calculated assuming a 21% tax rate and dividing the actual yield by 0.79.
(6)   Excludes the allowance for credit losses.
(7)   The terms of the FHLB advance agreements require the Bank to maintain certain investment securities or loans as collateral for these advances.
(8)   NIM is defined as net interest income divided by average interest-earning assets, which are loans, securities, deposits with banks and other financial assets which yield interest or similar income.
(9)   Calculated based upon the average balance of total noninterest bearing and interest bearing deposits.


Exhibit 4 - Noninterest Income

This table shows the amounts of each of the categories of noninterest income for the periods presented.

  Three Months Ended   Six Months Ended June 30,
  June 30, 2023   March 31, 2023   June 30, 2022     2023       2022  
(in thousands, except percentages) Amount %   Amount %   Amount %   Amount %   Amount %
               
Deposits and service fees $ 4,944   18.6 %   $ 4,955   25.6 %   $ 4,577   35.4 %     9,899   21.5 %   $ 9,197   34.1 %
Brokerage, advisory and fiduciary activities   4,256   16.0 %     4,182   21.6 %     4,439   34.3 %     8,438   18.4 %     9,035   33.5 %
Change in cash surrender value of bank owned life insurance (“BOLI”)(1)   1,429   5.4 %     1,412   7.3 %     1,334   10.3 %     2,841   6.2 %     2,676   9.9 %
Cards and trade finance servicing fees   562   2.1 %     533   2.8 %     508   3.9 %     1,095   2.4 %     1,098   4.1 %
Gain (loss) on early extinguishment of FHLB advances, net   13,440   50.5 %     13,173   68.1 %     2   %     26,613   57.9 %     (712 ) (2.6 )%
Securities losses, net (2)   (1,237 ) (4.7 )%     (9,731 ) (50.3 )%     (2,602 ) (20.1 )%     (10,968 ) (23.9 )%     (1,833 ) (6.8 )%
Loan-level derivative income (3)   476   1.8 %     2,071   10.7 %     1,009   7.8 %     2,547   5.5 %     4,161   15.4 %
Derivative gains (losses), net (4)   242   0.9 %     14   0.1 %     855   6.6 %     256   0.6 %     (490 ) (1.8 )%
Other noninterest income (5)   2,507   9.4 %     2,734   14.1 %     2,809   21.8 %     5,241   11.4 %     3,824   14.2 %
Total noninterest income $ 26,619   100.0 %   $ 19,343   100.0 %   $ 12,931   100.0 %   $ 45,962   100.0 %   $ 26,956   100.0 %

__________________
(1)   Changes in cash surrender value of BOLI are not taxable.
(2)   Includes net loss on sale of debt securities available for sale of $1.2 million and $9.5 million in the three months ended June 30, 2023 and March 31, 2023, respectively, and net loss and gain on the sale of debt securities available for sale of $10.8 million and $49 thousand in the six months ended June 30, 2023 and 2022, respectively. There were no gains or losses on the sale of debt securities available for sale in the three months ended June 30, 2022. In addition, includes unrealized losses of $2.6 million and $1.9 million in the three and six month periods ended June 30, 2022, respectively, related to the change in fair value of equity securities with readily available fair value not held for trading which are recorded in results of the period. There were no significant unrealized losses related to equity securities with readily available fair value not held for trading in the three and six month periods ended June 30, 2023. Also, in the three months ended March 31, 2023, the Company sold all of its equity securities with readily available fair value not held for trading, with a total fair value of $11.2 million at the time of sale, and recognized a net loss of $0.2 million in connection with this transaction.
(3)   Income from interest rate swaps and other derivative transactions with customers. The Company incurred expenses related to derivative transactions with customers of $0.1 million, $1.6 million and $2.0 million in the three months ended June 30, 2023, March 31, 2023 and June 30, 2022, respectively, and $1.7 million and $3.1 million in the six months ended June 30, 2023 and 2022, respectively, which are included as part of noninterest expenses under loan-level derivative expense.
(4)   Net unrealized gains and losses related to uncovered interest rate caps with clients.
(5)   Includes mortgage banking income of $1.6 million, $1.8 million and $2.4 million in the three months ended June 30, 2023, March 31, 2023 and June 30, 2022, respectively, and $3.4 million and $3.1 million in the six months ended June 30, 2023 and 2022, respectively, related to Amerant Mortgage. Other sources of income in the periods shown include foreign currency exchange transactions with customers and valuation income on the investment balances held in the non-qualified deferred compensation plan.


Exhibit 5 - Noninterest Expense

This table shows the amounts of each of the categories of noninterest expense for the periods presented.

  Three Months Ended   Six Months Ended June 30,
  June 30, 2023   March 31, 2023   June 30, 2022     2023       2022  
(in thousands, except percentages) Amount %   Amount %   Amount %   Amount %   Amount %
               
Salaries and employee benefits (1) $ 34,247   47.2 %   $ 34,876   53.9 %   $ 30,212   48.5 %   $ 69,123   50.4 %   $ 60,615   49.3 %
Occupancy and equipment (2)   6,737   9.3 %     6,798   10.5 %     7,760   12.5 %     13,535   9.9 %     14,485   11.8 %
Professional and other services fees (3)   7,415   10.2 %     7,628   11.8 %     4,734   7.6 %     15,043   11.0 %     10,873   8.8 %
Loan-level derivative expense (4)   110   0.2 %     1,600   2.5 %     2,012   3.2 %     1,710   1.3 %     3,055   2.5 %
Telecommunications and data processing (5)   5,027   6.9 %     3,064   4.7 %     3,214   5.2 %     8,091   5.9 %     7,252   5.9 %
Depreciation and amortization (6)   2,275   3.1 %     1,292   2.0 %     1,294   2.1 %     3,567   2.6 %     2,446   2.0 %
FDIC assessments and insurance   2,739   3.8 %     2,737   4.2 %     1,526   2.5 %     5,476   4.0 %     2,922   2.4 %
Loans held for sale valuation expense (reversal) (7)     %       %     (300 ) (0.5)%       %     159   0.1 %
Advertising expenses   4,332   6.0 %     2,586   4.0 %     3,253   5.2 %     6,918   5.0 %     6,225   5.1 %
Other real estate owned and repossessed assets expense, net (8)(9)   2,431   3.4 %       %     3,174   5.1 %     2,431   1.8 %     3,174   2.6 %
Contract termination costs (10)   1,550   2.1 %       %     2,802   4.5 %     1,550   1.1 %     6,814   5.5 %
Other operating expenses (11)   5,637   7.8 %     4,152   6.4 %     2,560   4.1 %     9,789   7.0 %     5,039   4.0 %
Total noninterest expense (12) $ 72,500   100.0 %   $ 64,733   100.0 %   $ 62,241   100.0 %   $ 137,233   100.0 %   $ 123,059   100.0 %

___
(1)   Includes staff reduction costs of $2.2 million, $0.2 million and $0.7 million in the three months ended June 30, 2023, March 31, 2023 and June 30, 2022, respectively, and $2.4 million and $1.4 million in the six months ended June 30, 2023 and 2022, respectively, which consist of severance expenses primarily related to organizational rationalization.
(2)   In the three months ended June 30, 2023, includes $0.6 million related to ROU asset impairment in connection with the decision to close a branch in Miami, Florida in 2023. In the three months ended March 31, 2023, includes $0.5 million related to ROU asset impairment in connection with the closure of a branch in Houston, Texas in 2023. In each of the three and six month periods ended June 30, 2022, includes ROU asset impairment changes of $1.6 million in connection with the closure of a branch in Pembroke Pines, Florida in 2022.
(3)   Includes additional expenses of $2.0 million and $2.6 million in the three months ended June 30, 2023 and March 31, 2023, respectively, and $4.6 million and $0.8 million in the six months ended June 30, 2023 and 2022, respectively, related to the engagement of FIS. There were no additional expenses related to the engagement of FIS in the three months ended June 30, 2022.
(4)   Includes services fees in connection with our loan-level derivative income generation activities.
(5)   Includes a charge of $1.4 million in each of the three and six month periods ended June 30, 2023 related to the disposition of fixed assets due to the write off of in-development software.
(6)   Includes a charge of $0.9 million in each of the three and six month periods ended June 30, 2023 for the accelerated depreciation of leasehold improvements in connection with decision to close a branch in Miami, Florida in 2023.
(7)   Valuation allowance as a result of changes in the fair value of loans held for sale carried at the lower of cost or fair value.
(8)   In each of the three and six month periods ended June 30, 2023, includes a loss on sale of repossessed assets in connection with our equipment-financing activities of $2.6 million. In each of the the three and six month periods ended June 30, 2022, includes $3.2 million related to the fair value adjustment of one OREO property in New York. In addition, in each of the three and six month periods ended June 30, 2023, includes OREO rental income of $0.4 million. We had no OREO rental income in the three months ended March 31, 2023 and June 30, 2022 and in the six months ended June 30, 2022.
(9)   In the three months ended June 30, 2023, other real estate owned (“OREO”) and repossessed assets expense is presented separately in the Company’s consolidated statement of operations and comprehensive (loss) income. In 2022, while OREO valuation expense was presented separately, all other OREO-related expenses were presented as part of other operating expenses in the Company’s consolidated statement of operations and comprehensive (loss) income. We had no other repossessed assets in 2022.
(10)  Contract termination and related costs associated with third party vendors resulting from the Company’s transition to our new technology provider.
(11)   In each of the three and six month periods ended June 30, 2023, includes an impairment charge of $2.0 million related to an investment carried at cost and included in other assets. In addition, in all of the periods shown, includes charitable contributions, community engagement, postage and courier expenses and debits which mirror the valuation income on the investment balances held in the non-qualified deferred compensation plan in order to adjust the liability to participants of the deferred compensation plan.
(12)   Includes $4.0 million, $3.9 million and $3.7 million in the three months ended June 30, 2023, March 31, 2023 and June 30, 2022, respectively, and $7.9 million and $7.1 million in the six months ended June 30, 2023 and 2022, respectively, related to Amerant Mortgage, primarily consisting of salaries and employee benefits, mortgage lending costs and professional and other services fees.


Exhibit 6 - Consolidated Balance Sheets

(in thousands, except share data) June 30, 2023   March 31, 2023   December 31, 2022
Assets         (audited)
Cash and due from banks $ 45,184     $ 41,489     $ 19,486  
Interest earning deposits with banks   365,673       411,747       228,955  
Restricted cash   34,204       32,541       42,160  
Cash and cash equivalents   445,061       485,777       290,601  
Securities          
Debt securities available for sale, at fair value   1,027,676       1,045,883       1,057,621  
Debt securities held to maturity, at amortized cost (estimated fair value of 209,546, 218,388 and 217,609 at June 30, 2023, March 31, 2023 and December 31, 2022, respectively)   234,369       239,258       242,101  
Trading securities   298              
Equity securities with readily determinable fair value not held for trading   2,500             11,383  
Federal Reserve Bank and Federal Home Loan Bank stock   50,460       62,556       55,575  
Securities   1,315,303       1,347,697       1,366,680  
Mortgage loans held for sale, at fair value   49,942       65,289       62,438  
Loans held for investment, gross   7,167,016       7,049,746       6,857,194  
Less: Allowance for credit losses   105,956       84,361       83,500  
Loans held for investment, net   7,061,060       6,965,385       6,773,694  
Bank owned life insurance   231,253       229,824       228,412  
Premises and equipment, net   43,714       42,380       41,772  
Deferred tax assets, net   56,779       46,112       48,703  
Operating lease right-of-use assets   116,161       119,503       139,987  
Goodwill   20,525       20,525       19,506  
Accrued interest receivable and other assets (1)   179,728       172,810       156,011  
Total assets $ 9,519,526     $ 9,495,302     $ 9,127,804  
Liabilities and Stockholders' Equity          
Deposits          
Demand          
Noninterest bearing $ 1,293,522     $ 1,360,626     $ 1,367,664  
Interest bearing   2,773,120       2,489,565       2,300,469  
Savings and money market   1,431,375       1,507,195       1,647,811  
Time   2,081,554       1,929,340       1,728,255  
Total deposits   7,579,571       7,286,726       7,044,199  
Advances from the Federal Home Loan Bank   770,000       1,052,012       906,486  
Senior notes   59,368       59,289       59,210  
Subordinated notes   29,369       29,326       29,284  
Junior subordinated debentures held by trust subsidiaries   64,178       64,178       64,178  
Operating lease liabilities (2)   119,921       122,214       140,147  
Accounts payable, accrued liabilities and other liabilities (3)   176,163       152,501       178,574  
Total liabilities   8,798,570       8,766,246       8,422,078  
           
Stockholders’ equity          
Class A common stock   3,374       3,383       3,382  
Additional paid in capital   195,275       194,782       194,694  
Retained earnings   611,829       607,544       590,375  
Accumulated other comprehensive loss   (86,926 )     (74,319 )     (80,635 )
Total stockholders' equity before noncontrolling interest   723,552       731,390       707,816  
Noncontrolling interest   (2,596 )     (2,334 )     (2,090 )
Total stockholders' equity   720,956       729,056       705,726  
Total liabilities and stockholders' equity $ 9,519,526     $ 9,495,302     $ 9,127,804  

__________
(1)   As of June 30, 2023, March 31, 2023 and December 31, 2022, include derivative assets with a total fair value of $75.8 million, $60.8 million and $78.3 million, respectively.
(2)   Consists of total long-term lease liabilities. Total short-term lease liabilities are included in other liabilities.
(3)   As of June 30, 2023, March 31, 2023 and December 31, 2022, include derivatives liabilities with a total fair value of $74.5 million, $59.5 million and $77.2 million, respectively.


Exhibit 7 - Loans
Loans by Type - Held For Investment

The loan portfolio held for investment consists of the following loan classes:

(in thousands) June 30,
2023
  March 31,
2023
  December 31,
2022
Real estate loans          
Commercial real estate          
Non-owner occupied $ 1,645,224     $ 1,630,451     $ 1,615,716  
Multi-family residential   764,712       796,125       820,023  
Land development and construction loans   314,010       303,268       273,174  
    2,723,946       2,729,844       2,708,913  
Single-family residential   1,285,857       1,189,045       1,102,845  
Owner occupied   1,063,240       1,069,491       1,046,450  
    5,073,043       4,988,380       4,858,208  
Commercial loans (1)   1,577,209       1,497,649       1,381,234  
Loans to financial institutions and acceptances   13,332       13,312       13,292  
Consumer loans and overdrafts (2)   503,432       550,405       604,460  
Total loans $ 7,167,016     $ 7,049,746     $ 6,857,194  

__________________
(1)   As of June 30, 2023, March 31, 2023 and December 31, 2022, includes approximately $47.7 million, $46.7 million and $45.3 million, respectively, in commercial loans and leases originated under a white-label equipment financing solution launched in the second quarter of 2022.
(2)   As of June 30, 2023, March 31, 2023 and December 31, 2022, includes $312.3 million, $372.2 million and $433.3 million, respectively, in consumer loans purchased under indirect lending programs. In addition, as of June 30, 2023, March 31, 2023 and December 31, 2022, includes $61.8 million, $62.1 million and $43.8 million, respectively, in consumer loans originated under a white-label program.


Loans by Type - Held For Sale

The loan portfolio held for sale consists of the following loan classes:

(in thousands) June 30,
2023
  March 31,
2023
  December 31,
2023
          (audited)
Loans held for sale at fair value          
Land development and construction loans (1)   3,726       15,527       9,424  
Single-family residential (2)   46,216       49,762       53,014  
Total loans held for sale at fair value (3)(4) $ 49,942     $ 65,289     $ 62,438  

__________________
(1)   In the second quarter of 2023, the Company transferred approximately $13 million in land development and construction loans held for sale to the loans held for investment category.
(2)   In the second quarter of 2023, the Company transferred approximately $28 million in single-family residential loans held for sale to the loans held for investment category.
(3)   Loans held for sale in connection with Amerant Mortgage ongoing business.
(4)   Remained current and in accrual status at each of the periods shown.


Non-Performing Assets

This table shows a summary of our non-performing assets by loan class, which includes non-performing loans, other real estate owned, or OREO, and other repossessed assets at the dates presented. Non-performing loans consist of (i) nonaccrual loans, and (ii) accruing loans 90 days or more contractually past due as to interest or principal.

(in thousands) June 30,
2023
  March 31,
2023
  December 31,
2022
Non-Accrual Loans(1)         (audited)
Real Estate Loans          
Commercial real estate (CRE)          
Non-owner occupied $ 1,696     $     $ 20,057  
Multi-family residential   24,306              
    26,002             20,057  
Single-family residential   1,681       1,367       1,526  
Owner occupied   6,890       7,118       6,270  
    34,573       8,485       27,853  
Commercial loans (2)   12,241       13,643       9,271  
Consumer loans and overdrafts (3)   1       1       4  
Total Non-Accrual Loans $ 46,815     $ 22,129     $ 37,128  
           
Past Due Accruing Loans(4)          
Real Estate Loans          
Commercial real estate (CRE)          
Single-family residential   302             253  
Commercial               183  
Consumer loans and overdrafts   78       53       35  
Total Past Due Accruing Loans $ 380     $ 53     $ 471  
Total Non-Performing Loans   47,195       22,182       37,599  
OREO and other repossessed assets   20,181       26,534        
Total Non-Performing Assets $ 67,376     $ 48,716     $ 37,599  

__________________
(1)   Prior to the first quarter of 2023, included loan modifications that met the definition of troubled debt restructurings, or TDR, which may be performing in accordance with their modified loan terms.
(2)   In the second quarter of 2023, we collected $2.8 million in full satisfaction of a commercial loan relationship in nonaccrual status and classified as Substandard at March 31, 2023.
(3)   In the fourth quarter of 2022, the Company changed its charge-off policy for unsecured consumer loans from 120 to 90 days past due. This change resulted in an additional $3.4 million in charge-offs for unsecured consumer loans in the fourth quarter of 2022.
(4)   Loans past due 90 days or more but still accruing.


Loans by Credit Quality Indicators

This table shows the Company’s loans by credit quality indicators. The Company has not purchased credit-impaired loans.

  June 30, 2023   March 31, 2023   December 31, 2022
                (audited)
(in thousands) Special
Mention
Sub-
standard
Doubtful Total (1)   Special
Mention
Sub-
standard
Doubtful Total (1)   Special
Mention
Sub-
standard
Doubtful Total (1)
Real Estate Loans                            
Commercial Real
Estate (CRE)
                           
Non-owner
occupied
$ 8,301 $ 1,753 $ $ 10,054   $ 8,335 $ $ $ 8,335   $ 8,378 $ 20,113 $ $ 28,491
Multi-family residential     24,306     24,306     24,348       24,348          
Land development
and
construction
loans
  6,497       6,497                    
    14,798   26,059     40,857     32,683       32,683     8,378   20,113     28,491
Single-family residential     2,154     2,154       1,514     1,514       1,930     1,930
Owner occupied   2,236   6,972     9,208       7,202     7,202       6,356     6,356
    17,034   35,185     52,219     32,683   8,716     41,399     8,378   28,399     36,777
Commercial loans (2)   13,029   13,312   3   26,344     3,240   14,891   3   18,134     1,749   10,446   3   12,198
Consumer loans and
overdrafts
    70     70       1     1       230     230
Totals $ 30,063 $ 48,567 $ 3 $ 78,633   $ 35,923 $ 23,608 $ 3 $ 59,534   $ 10,127 $ 39,075 $ 3 $ 49,205

__________
(1)   There were no loans categorized as “loss” as of the dates presented.
(2)   In the second quarter of 2023, we collected $2.8 million in full satisfaction of a commercial loan relationship in nonaccrual status and classified as Substandard at March 31, 2023.


Exhibit 8 - Deposits by Country of Domicile

This table shows the Company’s deposits by country of domicile of the depositor as of the dates presented.

(in thousands) June 30, 2023   March 31, 2023   December 31, 2022
          (audited)
Domestic $ 5,113,604     $ 4,891,873     $ 4,620,906  
Foreign:          
Venezuela   1,912,994       1,897,199       1,911,551  
Others   552,973       497,654       511,742  
Total foreign   2,465,967       2,394,853       2,423,293  
Total deposits $ 7,579,571     $ 7,286,726     $ 7,044,199  


CONTACTS:
Investors
Laura Rossi
InvestorRelations@amerantbank.com
(305) 460-8728
 
Media
Victoria Verdeja
MediaRelations@amerantbank.com
(305) 441-5541

 


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Source: Amerant Bancorp Inc.