Document


 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q
 
(Mark One)
ý QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2019

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period __________ to __________

Commission File Number: 001-38534
 
Amerant Bancorp Inc.
(Exact Name of Registrant as Specified in Its Charter)
 
Florida
(State or other jurisdiction of
incorporation or organization)
65-0032379
(I.R.S. Employer
Identification No.)
220 Alhambra Circle
Coral Gables, Florida
33134
(Address of principal executive offices)
(Zip Code)
(305) 460-4038
Registrant’s telephone number, including area code
 

Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbols
Name of exchange on which registered
Class A Common Stock
AMTB
NASDAQ
Class B Common Stock
AMTBB
NASDAQ
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.                     Yes  ý                                        No ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes ý                                         No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ¨
 
Accelerated filer ¨
 
Smaller reporting company ¨
 
Emerging growth company ý
Non-accelerated filer ý (Do not check if a smaller reporting company)
If an emerging growth company, indicate by check mark if the company has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨ 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).     Yes ¨           No ý
Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.
Class
 
Outstanding as of November 12, 2019
Class A Common Stock, $0.10 par value per share
 
28,988,579 shares of Class A Common Stock
Class B Common Stock, $0.10 par value per share
 
14,218,596 shares of Class B Common Stock

1



AMERANT BANCORP INC. AND SUBSIDIARIES
FORM 10-Q
September 30, 2019
INDEX
FINANCIAL INFORMATION
Page
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
 
 
 
 
 
 
 
 
 
 

2

Table of Contents


Part 1. FINANCIAL INFORMATION


ITEM 1. FINANCIAL STATEMENTS
Amerant Bancorp Inc. and Subsidiaries
Consolidated Balance Sheets
(in thousands, except per share data)
(Unaudited) September 30, 2019
 
December 31, 2018
Assets
 
 
 
Cash and due from banks
$
32,363

 
$
25,756

Interest earning deposits with banks
68,964

 
59,954

Cash and cash equivalents
101,327

 
85,710

Securities
 
 
 
Available for sale
1,485,202

 
1,586,051

Held to maturity
77,611

 
85,188

Federal Reserve Bank and Federal Home Loan Bank stock
70,172

 
70,189

Securities
1,632,985

 
1,741,428

Loans held for sale
1,918

 

Loans held for investment, gross
5,751,791

 
5,920,175

Less: Allowance for loan losses
53,640

 
61,762

Loans held for investment, net
5,698,151

 
5,858,413

Bank owned life insurance
210,414

 
206,142

Premises and equipment, net
126,497

 
123,503

Deferred tax assets, net
5,392

 
16,310

Goodwill
19,193

 
19,193

Accrued interest receivable and other assets
68,383

 
73,648

Total assets
$
7,864,260

 
$
8,124,347

Liabilities and Stockholders' Equity
 
 
 
Deposits
 
 
 
Demand
 
 
 
Noninterest bearing
$
805,032

 
$
768,822

Interest bearing
1,123,767

 
1,288,030

Savings and money market
1,484,336

 
1,588,703

Time
2,279,713

 
2,387,131

Total deposits
5,692,848

 
6,032,686

Advances from the Federal Home Loan Bank and other borrowings
1,170,000

 
1,166,000

Junior subordinated debentures held by trust subsidiaries
92,246

 
118,110

Accounts payable, accrued liabilities and other liabilities
83,415

 
60,133

Total liabilities
7,038,509

 
7,376,929

Commitments and contingencies (Note 13)

 

 
 
 
 
Stockholders’ equity
 
 
 
Class A common stock, $0.10 par value, 400 million shares authorized; 28,985,996 shares issued and outstanding (2018: 26,851,832 shares issued and outstanding)
2,899

 
2,686

Class B common stock, $0.10 par value, 100 million shares authorized; 17,751,053 shares issued; 14,218,596 shares outstanding (2018: 16,330,917 shares outstanding)
1,775

 
1,775

Additional paid in capital
418,821

 
385,367

Treasury stock, at cost; 3,532,457 shares of Class B common stock (2018: 1,420,136 shares of Class B common stock)
(46,373
)
 
(17,908
)
Retained earnings
431,521

 
393,662

Accumulated other comprehensive income (loss)
17,108

 
(18,164
)
Total stockholders' equity
825,751

 
747,418

Total liabilities and stockholders' equity
$
7,864,260

 
$
8,124,347


The accompanying notes are an integral part of these consolidated financial statements (unaudited).
3

Table of Contents
Amerant Bancorp Inc. and Subsidiaries
Consolidated Statements of Operations and Comprehensive Income (Unaudited)

 
Three Months Ended September 30,
 
Nine Months Ended September 30,
(in thousands, except per share data)
2019
 
2018
 
2019
 
2018
Interest income
 
 
 
 
 
 
 
Loans
$
66,118

 
$
66,776

 
$
199,641

 
$
188,894

Investment securities
11,325

 
12,183

 
35,792

 
36,633

Interest earning deposits with banks
761

 
666

 
2,304

 
1,945

Total interest income
78,204

 
79,625

 
237,737

 
227,472

 
 
 
 
 
 
 
 
Interest expense
 
 
 
 
 
 
 
Interest bearing demand deposits
191

 
211

 
766

 
413

Savings and money market deposits
4,125

 
3,477

 
11,872

 
9,165

Time deposits
13,284

 
11,531

 
38,577

 
30,403

Advances from the Federal Home Loan Bank
6,253

 
6,716

 
18,750

 
19,217

Junior subordinated debentures
1,748

 
2,057

 
5,943

 
6,017

Securities sold under agreements to repurchase
3

 

 
3

 
2

Total interest expense
25,604

 
23,992

 
75,911

 
65,217

Net interest income
52,600

 
55,633

 
161,826

 
162,255

(Reversal of) provision for loan losses
(1,500
)
 
1,600

 
(2,850
)
 
1,750

Net interest income after (reversal of) provision for loan losses
54,100

 
54,033

 
164,676

 
160,505

 
 
 
 
 
 
 
 
Noninterest income
 
 
 
 
 
 
 
Deposits and service fees
4,366

 
4,269

 
12,793

 
13,322

Brokerage, advisory and fiduciary activities
3,647

 
4,148

 
11,071

 
12,989

Change in cash surrender value of bank owned life insurance
1,449

 
1,454

 
4,272

 
4,372

Cards and trade finance servicing fees
1,034

 
1,145

 
3,368

 
3,380

Gain on early extinguishment of advances from the Federal Home Loan Bank

 

 
557

 
882

Securities gains (losses), net
906

 
(15
)
 
1,902

 
1

Data processing and fees for other services
70

 
523

 
955

 
2,017

Other noninterest income
2,364

 
1,426

 
6,221

 
4,918

Total noninterest income
13,836

 
12,950

 
41,139

 
41,881

 
 
 
 
 
 
 
 
Noninterest expense
 
 
 
 
 
 
 
Salaries and employee benefits
33,862

 
33,967

 
101,356

 
102,940

Occupancy and equipment
3,878

 
4,044

 
12,152

 
11,819

Professional and other services fees
4,295

 
4,268

 
11,693

 
16,099

Telecommunication and data processing
3,408

 
3,043

 
9,667

 
9,138

Depreciation and amortization
1,928

 
1,997

 
5,880

 
6,083

FDIC assessments and insurance
597

 
1,578

 
3,167

 
4,493

Other operating expenses
4,769

 
3,145

 
13,672

 
9,753

Total noninterest expenses
52,737

 
52,042

 
157,587

 
160,325

Net income before income tax
15,199

 
14,941

 
48,228

 
42,061

Income tax expense
(3,268
)
 
(3,390
)
 
(10,369
)
 
(10,658
)
Net income
$
11,931

 
$
11,551

 
$
37,859

 
$
31,403

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

The accompanying notes are an integral part of these consolidated financial statements (unaudited).
4

Table of Contents
Amerant Bancorp Inc. and Subsidiaries
Consolidated Statements of Operations and Comprehensive Income (Unaudited)

 
Three Months Ended September 30,
 
Nine Months Ended September 30,
(in thousands, except per share data)
2019
 
2018
 
2019
 
2018
 
 
 
 
 
 
 
 
Other comprehensive income (loss), net of tax
 
 
 
 
 
 
 
Net unrealized holding gains (losses) on securities available for sale arising during the period
$
6,866

 
$
(4,938
)
 
$
37,457

 
$
(25,369
)
Net unrealized holding gains on cash flow hedges arising during the period
68

 
1,840

 
57

 
8,209

Reclassification adjustment for net gains included in net income
(965
)
 
(160
)
 
(2,242
)
 
(18
)
Other comprehensive income (loss)
5,969

 
(3,258
)
 
35,272

 
(17,178
)
Comprehensive income
$
17,900

 
$
8,293

 
$
73,131

 
$
14,225

 
 
 
 
 
 
 
 
Earnings Per Share (Note 15):
 
 
 
 
 
 
 
Basic earnings per common share
$
0.28

 
$
0.27

 
$
0.89

 
$
0.74

Diluted earnings per common share
$
0.28

 
$
0.27

 
$
0.88

 
$
0.74


The accompanying notes are an integral part of these consolidated financial statements (unaudited).
5

Table of Contents
Amerant Bancorp Inc. and Subsidiaries
Consolidated Statements of Changes in Stockholders’ Equity (Unaudited)
Nine Months Ended September 30, 2019 and 2018


 
Common Stock
 
Additional
Paid
in Capital
 
Treasury Stock
 
Retained
Earnings
 
Accumulated Other Comprehensive (Loss) Income
 
Total
Stockholders'
Equity
(in thousands, except share data)
Shares Outstanding
 
Issued Shares - Par Value
 
 
 
 
 
Class A
 
Class B
 
Class A
 
Class B
 
 
 
 
 
Balance at
December 31, 2017
24,737,470

 
17,751,053

 
$
2,474

 
$
1,775

 
$
367,505

 
$

 
$
387,829

 
$
(6,133
)
 
$
753,450

Dividends

 

 

 

 

 

 
(40,000
)
 

 
(40,000
)
Net income

 

 

 

 

 

 
31,403

 

 
31,403

Other comprehensive loss

 

 

 

 

 

 

 
(17,178
)
 
(17,178
)
Balance at
September 30, 2018
24,737,470

 
17,751,053

 
$
2,474

 
$
1,775

 
$
367,505

 
$

 
$
379,232

 
$
(23,311
)
 
$
727,675

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at
December 31, 2018
26,851,832

 
16,330,917

 
$
2,686

 
$
1,775

 
$
385,367

 
$
(17,908
)
 
$
393,662

 
$
(18,164
)
 
$
747,418

Common stock issued
2,132,865

 

 
213

 

 
29,005

 

 

 

 
29,218

Repurchase of Class B common stock

 
(2,112,321
)
 

 

 

 
(28,465
)
 

 

 
(28,465
)
Restricted stock issued
1,299

 

 

 

 

 

 

 

 

Stock-based compensation expense

 

 

 

 
4,449

 

 

 

 
4,449

Net income

 

 

 

 

 

 
37,859

 

 
37,859

Other comprehensive income

 

 

 

 

 

 

 
35,272

 
35,272

Balance at
September 30, 2019
28,985,996

 
14,218,596

 
$
2,899

 
$
1,775

 
$
418,821

 
$
(46,373
)
 
$
431,521

 
$
17,108

 
$
825,751


The accompanying notes are an integral part of these consolidated financial statements (unaudited).
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Table of Contents
Amerant Bancorp Inc. and Subsidiaries
Consolidated Statements of Cash Flows (Unaudited)


 
Nine Months Ended September 30,
(in thousands)
2019
 
2018
Cash flows from operating activities
 
 
 
Net income
$
37,859

 
$
31,403

Adjustments to reconcile net income to net cash provided by operating activities
 
 
 
(Reversal of) provision for loan losses
(2,850
)
 
1,750

Net premium amortization on securities
10,763

 
12,855

Depreciation and amortization
5,880

 
6,083

Stock-based compensation expense
4,449

 

Change in cash surrender value of bank owned life insurance
(4,272
)
 
(4,372
)
Deferred taxes, securities net gains or losses and others
(3,394
)
 
(3,143
)
Net changes in operating assets and liabilities:
 
 
 
Accrued interest receivable and other assets
16,917

 
2,543

Accounts payable, accrued liabilities and other liabilities
10,511

 
(6,430
)
Net cash provided by operating activities
75,863

 
40,689

 
 
 
 
Cash flows from investing activities
 
 
 
Purchases of investment securities:
 
 
 
Available for sale
(290,059
)
 
(166,703
)
Federal Home Loan Bank stock
(24,319
)
 
(24,055
)
 
(314,378
)
 
(190,758
)
Maturities, sales and calls of investment securities:
 
 
 
Available for sale
430,118

 
178,981

Held to maturity
7,182

 
3,335

Federal Home Loan Bank stock
24,336

 
16,576

 
461,636

 
198,892

Net increase in loans
(98,478
)
 
(153,019
)
Proceeds from loan portfolio sales
259,754

 
60,856

Net purchases of premises and equipment, and others
(8,384
)
 
(5,556
)
Net proceeds from sale of subsidiary

 
7,500

Net cash provided by (used in) investing activities
300,150

 
(82,085
)
 
 
 
 
Cash flows from financing activities
 
 
 
Net decrease in demand, savings and money market accounts
(232,420
)
 
(266,159
)
Net (decrease) increase in time deposits
(107,418
)
 
132,689

Proceeds from Advances from the Federal Home Loan Bank and other borrowings
935,000

 
941,000

Repayments of Advances from the Federal Home Loan Bank and other borrowings
(930,447
)
 
(776,000
)
Redemption of junior subordinated debentures
(25,864
)
 

Dividend paid

 
(40,000
)
Proceeds from common stock issued - Class A
29,218

 

Repurchase of common stock - Class B
(28,465
)
 

Net cash used in financing activities
(360,396
)
 
(8,470
)
Net increase (decrease) in cash and cash equivalents
15,617

 
(49,866
)
 
 
 
 
Cash and cash equivalents
 
 
 
Beginning of period
85,710

 
153,445

End of period
$
101,327

 
$
103,579

 
 
 
 
 
 
 
 

The accompanying notes are an integral part of these consolidated financial statements (unaudited).
7

Amerant Bancorp Inc. and Subsidiaries
Consolidated Statements of Cash Flows (Unaudited) (continued)

 
 
 
 
 
Nine Months Ended September 30,
(in thousands)
2019
 
2018
Supplemental disclosures of cash flow information
 
 
 
Cash paid:
 
 
 
Interest
$
74,928

 
$
63,987

Income taxes
6,699

 
18,649


The accompanying notes are an integral part of these consolidated financial statements (unaudited).
8

Table of Contents
Amerant Bancorp Inc. and Subsidiaries
Notes to Interim Consolidated Financial Statements (Unaudited)


1.
Business, Basis of Presentation and Summary of Significant Accounting Policies
a) Business
Amerant Bancorp Inc., formerly Mercantil Bank Holding Corporation, (the “Company”), is a Florida corporation incorporated in 1985, which has operated since January 1987. The Company is a bank holding company registered under the Bank Holding Company Act of 1956, as a result of its 100% indirect ownership of Amerant Bank, N.A. (the “Bank”). The Company’s principal office is in the City of Coral Gables, Florida. The Bank is a member of the Federal Reserve Bank of Atlanta (“Federal Reserve Bank”) and the Federal Home Loan Bank of Atlanta (“FHLB”). The Bank has two principal subsidiaries, Amerant Investments, Inc., a securities broker-dealer (“Amerant Investments”), and Amerant Trust, N.A, a non-depository trust company (“Amerant Trust”).
The Company’s Class A common stock, par value $0.10 per common share, and Class B common stock, par value $0.10 per common share, are listed and trade on the Nasdaq Global Select Market under the symbols “AMTB” and “AMTBB,” respectively.
Reportable Segments
Beginning in the second quarter of 2019, the Company is managed using a single segment concept, on a consolidated basis, and management determined to that no separate current or historical reportable segment disclosures are required under generally accepted accounting principles in the United States of America (“U.S. GAAP”).
Initial Public Offering and Shares Repurchase
On December 21, 2018, the Company completed an initial public offering (the “IPO”). For more information about the IPO, see Note 15 to our audited consolidated financial statements included in the Company’s annual report on Form 10-K filed with the U.S. Securities and Exchange Commission (the “SEC”) on April 1, 2019 (the “Form 10-K”). In March 2019, following the partial exercise of the over-allotment option by the IPO’s underwriters, and completion of certain private placements of shares of the Company’s Class A common stock, the Company repurchased the remaining shares of its Class B common stock held by Mercantil Servicios Financieros, C.A., the Company’s former parent company (“MSF” or “the Former Parent”). See Note 12 to these unaudited interim consolidated financial statements for more information about the private placements and the repurchase of Class B common stock previously held by MSF. No shares have been repurchased since March 2019.
Rebranding
On June 4, 2019, the Company’s stockholders approved an amendment to the Company’s Amended and Restated Articles of Incorporation (the “Articles of Incorporation”) to change the Company’s name from “Mercantil Bank Holding Corporation” to “Amerant Bancorp Inc.” (the “Name Change”). The Name Change became effective on June 5, 2019. Each of the Company, the Bank and its principal subsidiaries now operate under the “Amerant” brand.



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Table of Contents
Amerant Bancorp Inc. and Subsidiaries
Notes to Interim Consolidated Financial Statements (Unaudited)


b) Basis of Presentation and Summary of Significant Accounting Policies
The accompanying unaudited interim consolidated financial statements have been prepared in accordance with U.S. GAAP for interim financial information and the instructions to Form 10-Q and Article 10 of SEC Regulation S-X. Accordingly, they do not include all of the information and footnotes required for a fair statement of financial position, results of operations and cash flows in conformity with U.S. GAAP. These unaudited interim consolidated financial statements reflect all adjustments that are, in the opinion of management, necessary for a fair statement of the results for the interim periods presented. These adjustments are of a normal, recurring nature. Interim period operating results may not be indicative of the operating results for a full year or any other period. These unaudited interim consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements as of December 31, 2018 and 2017 and for each of the three years in the period ended December 31, 2018 and the accompanying footnote disclosures for the Company, which are included in the Form 10-K.
For a complete summary of our significant accounting policies, please see Note 1 to the Company’s audited consolidated financial statements in the Form 10-K.
Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates made by management include: (i) the determination of the allowance for loan losses; (ii) the fair values of securities and the value assigned to goodwill during the annual goodwill impairment test; (iii) the cash surrender value of bank owned life insurance; and (iv) the determination of whether the amount of deferred tax assets will more likely than not be realized. Management believes that these estimates are appropriate. Actual results could differ from these estimates.
c) Recently Issued Accounting Pronouncements
Issued and Not Yet Adopted
Revenue from Contracts with Customers
In May 2014, the Financial Accounting Standards Board (“FASB”) issued a common revenue standard for recognizing revenue from contracts with customers. This new standard establishes principles for reporting information about the nature, amount, timing, and uncertainty of revenue and cash flows arising from an entity’s contracts with customers. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The scope of the guidance excludes net interest income and many other revenues from financial assets. Although the Company has not finalized the evaluation, we do not expect the adoption to have a material impact on its consolidated financial position or results of operations. The Company plans to adopt the new guidance during the fourth quarter of 2019.




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Table of Contents
Amerant Bancorp Inc. and Subsidiaries
Notes to Interim Consolidated Financial Statements (Unaudited)

Recognition and Measurement of Financial Instruments
In January 2016, the FASB issued changes to the guidance on the recognition and measurement of financial instruments. The changes include, among others, the removal of the available-for-sale category for equity securities and updates to certain disclosure requirements. As of September 30, 2019, the Company classifies $23.7 million as available for sale equity securities. The Company currently expects that its available for sale equity securities consisting of a mutual fund investment that qualify for Community Reinvestment Act (“CRA”) purposes will be reclassified out of the available for sale classification and presented separately on the face of the consolidated balance sheet. At adoption, the Company currently expects that the cumulative unrealized loss of these securities previously recognized in AOCL will be recorded as an adjustment to the opening balance of retained earnings. Any further changes to the fair value of equity securities, other than equity method investments, will be recorded in net income. At September 30, 2019, the cumulative unrealized gross loss on this available for sale equity investment was $0.3 million. The Company plans to adopt the new guidance during the fourth quarter of 2019.
New Guidance on Leases
In December 2018, the FASB issued amendments to new guidance issued in February 2016 for the recognition and measurement of all leases which has not yet been adopted by the Company. The amendments address certain lessor’s issues associated with: (i) sales taxes and other similar taxes collected from lessees, (ii) certain lessor costs and (iii) recognition of variable payments for contracts with lease and nonlease components. The new guidance on leases issued in February 2016 requires lessees to recognize a right-of-use asset and a lease liability for most leases within the scope of the guidance. There were no significant changes to the guidance for lessors. These amendments, and the related pending new guidance, can be adopted using a modified retrospective transition at the beginning of the earliest comparative period presented, and provides for certain practical expedients.
The amendments and related new guidance on leases are effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020, for private companies, and for fiscal periods beginning after December 15, 2018, and interim periods within those fiscal years, for public companies. Early adoption is permitted. The Company has completed the process of gathering a complete inventory of leases and migrating identified lease data onto a new system and is in the final stages of testing and evaluation. We currently expect to recognize an asset and a corresponding lease liability for an amount currently expected to be less than 1% of the Company’s total consolidated assets at adoption. The Company plans to adopt the new guidance during the first semester of 2020.
d) Subsequent Events
The effects of significant subsequent events, if any, have been recognized or disclosed in these unaudited interim consolidated financial statements.

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Table of Contents
Amerant Bancorp Inc. and Subsidiaries
Notes to Interim Consolidated Financial Statements (Unaudited)


2.
Securities
Amortized cost and approximate fair values of securities available for sale are summarized as follows:
 
September 30, 2019
 
Amortized
Cost
 
Gross Unrealized
 
Estimated
Fair Value
(in thousands)
 
Gains
 
Losses
 
U.S. government-sponsored enterprise debt securities
$
930,638

 
$
12,761

 
$
(3,139
)
 
$
940,260

Corporate debt securities
239,078

 
4,281

 
(210
)
 
243,149

U.S. government agency debt securities
228,042

 
1,382

 
(2,780
)
 
226,644

Municipal bonds
47,649

 
2,549

 

 
50,198

Mutual funds
24,270

 

 
(313
)
 
23,957

U.S. treasury securities
994

 

 

 
994

 
$
1,470,671

 
$
20,973

 
$
(6,442
)
 
$
1,485,202

 
December 31, 2018
 
Amortized
Cost
 
Gross Unrealized
 
Estimated
Fair Value
(in thousands)
 
Gains
 
Losses
 
U.S. government-sponsored enterprise debt securities
$
840,760

 
$
2,197

 
$
(22,178
)
 
$
820,779

Corporate debt securities
357,602

 
139

 
(5,186
)
 
352,555

U.S. government agency debt securities
221,682

 
187

 
(4,884
)
 
216,985

Municipal bonds
162,438

 
390

 
(2,616
)
 
160,212

Mutual funds
24,266

 

 
(1,156
)
 
23,110

Commercial paper
12,448

 

 
(38
)
 
12,410

 
$
1,619,196

 
$
2,913

 
$
(36,058
)
 
$
1,586,051

At September 30, 2019 and December 31, 2018, the Company had no foreign sovereign or foreign government agency debt securities.

12

Table of Contents
Amerant Bancorp Inc. and Subsidiaries
Notes to Interim Consolidated Financial Statements (Unaudited)


The Company’s securities available for sale with unrealized losses that are deemed temporary, aggregated by the length of time that individual securities have been in a continuous unrealized loss position, are summarized below:
 
September 30, 2019
 
Less Than 12 Months
 
12 Months or More
 
Total
(in thousands)
Estimated
Fair Value
 
Unrealized
Loss
 
Estimated
Fair Value
 
Unrealized
Loss
 
Estimated
Fair Value
 
Unrealized
Loss
U.S. government-sponsored enterprise debt securities
$
130,186

 
$
(636
)
 
$
276,102

 
$
(2,503
)
 
$
406,288

 
$
(3,139
)
Corporate debt securities
13,967

 
(101
)
 
17,110

 
(109
)
 
31,077

 
(210
)
Municipal bonds

 

 

 

 

 

U.S. government agency debt securities
15,718

 
(46
)
 
124,128

 
(2,734
)
 
139,846

 
(2,780
)
Mutual funds

 

 
23,707

 
(313
)
 
23,707

 
(313
)
Commercial paper

 

 

 

 

 

 
$
159,871

 
$
(783
)
 
$
441,047

 
$
(5,659
)
 
$
600,918

 
$
(6,442
)

 
December 31, 2018
 
Less Than 12 Months
 
12 Months or More
 
Total
(in thousands)
Estimated
Fair Value
 
Unrealized
Loss
 
Estimated
Fair Value
 
Unrealized
Loss
 
Estimated
Fair Value
 
Unrealized
Loss
U.S. government-sponsored enterprise debt securities
$
90,980

 
$
(2,995
)
 
$
608,486

 
$
(19,183
)
 
$
699,466

 
$
(22,178
)
Corporate debt securities
243,667

 
(3,800
)
 
75,762

 
(1,386
)
 
319,429

 
(5,186
)
Municipal bonds
63,580

 
(939
)
 
133,886

 
(3,945
)
 
197,466

 
(4,884
)
U.S. government agency debt securities
1,449

 
(6
)
 
94,331

 
(2,610
)
 
95,780

 
(2,616
)
Mutual funds

 

 
22,865

 
(1,156
)
 
22,865

 
(1,156
)
Commercial paper
12,410

 
(38
)
 

 

 
12,410

 
(38
)
 
$
412,086

 
$
(7,778
)
 
$
935,330

 
$
(28,280
)
 
$
1,347,416

 
$
(36,058
)
At September 30, 2019 and December 31, 2018, the Company held certain debt securities issued or guaranteed by U.S. government-sponsored entities and agencies. The Company believes these issuers to present little credit risk. The Company does not consider these securities to be other-than-temporarily impaired because the decline in fair value is attributable to changes in interest rates and investment securities markets, generally, and not credit quality. The Company does not intend to sell these debt securities and it is more likely than not that it will not be required to sell the securities before their anticipated recovery.

13

Table of Contents
Amerant Bancorp Inc. and Subsidiaries
Notes to Interim Consolidated Financial Statements (Unaudited)


Unrealized losses on corporate debt securities and mutual funds at September 30, 2019, and corporate debt securities, municipal bonds, mutual funds and commercial paper at December 31, 2018, are attributable to changes in interest rates and investment securities markets, generally, and as a result, temporary in nature. The Company does not consider these securities to be other-than-temporarily impaired because the issuers of these debt securities are considered to be high quality, and management does not intend to sell these investments and it is more likely than not that it will not be required to sell these investments before their anticipated recovery.
Amortized cost and approximate fair values of securities held to maturity, are summarized as follows:
 
September 30, 2019
 
Amortized
Cost
 
Gross Unrealized
 
Estimated
Fair Value
(in thousands)
 
Gains
 
Losses
 
Securities Held to Maturity -
 
 
 
 
 
 
 
U.S. government-sponsored enterprise debt securities
$
74,861

 
$
1,090

 
$
(124
)
 
$
75,827

U.S. Government agency debt securities
2,750

 
93

 

 
2,843

 
$
77,611

 
$
1,183

 
$
(124
)
 
$
78,670

 
December 31, 2018
 
Amortized
Cost
 
Gross Unrealized
 
Estimated
Fair Value
(in thousands)
 
Gains
 
Losses
 
Securities Held to Maturity -
 
 
 
 
 
 
 
U.S. government-sponsored enterprise debt securities
$
82,326

 
$

 
$
(3,889
)
 
$
78,437

U.S. Government agency debt securities
2,862

 

 
(49
)
 
2,813

 
$
85,188

 
$

 
$
(3,938
)
 
$
81,250


Contractual maturities of securities at September 30, 2019 are as follows:
 
Available for Sale
 
Held to Maturity
(in thousands)
Amortized
Cost
 
Estimated
Fair Value
 
Amortized
Cost
 
Estimated
Fair Value
Within 1 year
$
25,703

 
$
25,759

 
$

 
$

After 1 year through 5 years
196,322

 
198,199

 

 

After 5 years through 10 years
228,157

 
234,815

 

 

After 10 years
996,219

 
1,002,472

 
77,611

 
78,670

No contractual maturities
24,270

 
23,957

 

 

 
$
1,470,671

 
$
1,485,202

 
$
77,611

 
$
78,670


14

Table of Contents
Amerant Bancorp Inc. and Subsidiaries
Notes to Interim Consolidated Financial Statements (Unaudited)

3.
Loans
The loan portfolio consists of the following loan classes:
(in thousands)
September 30,
2019
 
December 31,
2018
Real estate loans
 
 
 
Commercial real estate
 
 
 
Nonowner occupied
$
1,933,662

 
$
1,809,356

Multi-family residential
942,851

 
909,439

Land development and construction loans
268,312

 
326,644

 
3,144,825

 
3,045,439

Single-family residential
527,468

 
533,481

Owner occupied
825,601

 
777,022

 
4,497,894

 
4,355,942

Commercial loans
1,127,484

 
1,380,428

Loans to financial institutions and acceptances
24,815

 
68,965

Consumer loans and overdrafts
101,598

 
114,840

 
$
5,751,791

 
$
5,920,175

The amounts above include loans under syndication facilities of approximately $578 million and $807 million at September 30, 2019 and December 31, 2018, respectively, which include Shared National Credit facilities and agreements to enter into credit agreements with other lenders (club deals), and other agreements.
The following tables summarize international loans by country, net of loans fully collateralized with cash of approximately $19.6 million and $19.5 million at September 30, 2019 and December 31, 2018, respectively.
 
September 30, 2019
(in thousands)
Venezuela
 
Others (1)
 
Total
Real estate loans
 
 
 
 
 
Single-family residential (2)
$
110,142

 
$
7,218

 
$
117,360

Commercial loans

 
55,264

 
55,264

Loans to financial institutions and acceptances

 
5,000

 
5,000

Consumer loans and overdrafts (3)
16,269

 
8,011

 
24,280

 
$
126,411

 
$
75,493

 
$
201,904

__________________
(1)
Loans to borrowers in 15 other countries which do not individually exceed 1% of total assets.
(2)
Corresponds to mortgage loans secured by single-family residential properties located in the U.S.
(3)
Mostly comprised of credit card extensions of credit to customers with deposits with the Bank. In April 2019, we revised our credit card program to further strengthen the Company’s credit quality. We stopped charge privileges to our riskiest cardholders and are requiring repayment of their balances by November 2019. We are closely monitoring the performance of the outstanding balance of our credit cards until it is completely repaid. At the end of October we curtailed charge privileges to the remaining cardholders and require repayment of their balances by January 2020.
(4)
Overdrafts to customers outside the United States were de minimis at September 30, 2019 and December 31, 2018.


15

Table of Contents
Amerant Bancorp Inc. and Subsidiaries
Notes to Interim Consolidated Financial Statements (Unaudited)

 
December 31, 2018
(in thousands)
 
Venezuela
 
Others (1)
 
Total
Real estate loans
 
 
 
 
 
 
Single-family residential (2)
 
$
128,971

 
$
6,467

 
$
135,438

Commercial loans
 

 
73,636

 
73,636

Loans to financial institutions and acceptances
 

 
49,000

 
49,000

Consumer loans and overdrafts (3)
 
28,191

 
13,494

 
41,685

 
 
$
157,162

 
$
142,597

 
$
299,759

__________________
(1)
Loans to borrowers in 17 other countries which do not individually exceed 1% of total assets.
(2)
Corresponds to mortgage loans secured by single-family residential properties located in the U.S.
(3)
Mostly comprised of credit card extensions of credit to customers with deposits with the Bank. Charging privileges for Venezuelan resident card holders are suspended when the cardholders’ average deposits decline below the outstanding credit balance. At the beginning of 2018, the Company changed the monitoring of such balances from quarterly to monthly.

The age analysis of the loan portfolio by class, including nonaccrual loans, as of September 30, 2019 and December 31, 2018 are summarized in the following tables:
 
September 30, 2019
 
Total Loans,
Net of
Unearned
Income
 
 
 
Past Due
 
Total Loans in
Nonaccrual
Status
 
Total Loans
90 Days or More
Past Due
and Accruing
(in thousands)
 
Current
 
30-59
Days
 
60-89
Days
 
Greater than
90 Days
 
Total Past
Due
 
 
Real estate loans
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial real estate
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Nonowner occupied
$
1,933,662

 
$
1,933,662

 
$

 
$

 
$

 
$

 
$
1,936

 
$

Multi-family residential
942,851

 
942,851

 

 

 

 

 

 

Land development and construction loans
268,312

 
268,312

 

 

 

 

 

 

 
3,144,825

 
3,144,825

 

 

 

 

 
1,936

 

Single-family residential
527,468

 
521,399

 

 
2,506

 
3,563

 
6,069

 
9,033

 

Owner occupied
825,601

 
820,430

 
4,179

 
510

 
482

 
5,171

 
11,921

 

 
4,497,894

 
4,486,654

 
4,179

 
3,016

 
4,045

 
11,240

 
22,890

 

Commercial loans
1,127,484

 
1,123,535

 
622

 
279

 
3,048

 
3,949

 
9,605

 

Loans to financial institutions and acceptances
24,815

 
24,815

 

 

 

 

 

 

Consumer loans and overdrafts
101,598

 
99,707

 
1,040

 
544

 
307

 
1,891

 
116

 
213

 
$
5,751,791

 
$
5,734,711

 
$
5,841

 
$
3,839

 
$
7,400

 
$
17,080

 
$
32,611

 
$
213




16

Table of Contents
Amerant Bancorp Inc. and Subsidiaries
Notes to Interim Consolidated Financial Statements (Unaudited)

 
December 31, 2018
 
Total Loans,
Net of
Unearned
Income
 
 
 
Past Due
 
Total Loans in
Nonaccrual
Status
 
Total Loans
90 Days or More
Past Due
and Accruing
(in thousands)
 
Current
 
30-59
Days
 
60-89
Days
 
Greater than
90 Days
 
Total Past
Due
 
 
Real estate loans
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial real estate
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Nonowner occupied
$
1,809,356

 
$
1,809,356

 
$

 
$

 
$

 
$

 
$

 
$

Multi-family residential
909,439

 
909,439

 

 

 

 

 

 

Land development and construction loans
326,644

 
326,644

 

 

 

 

 

 

 
3,045,439

 
3,045,439

 

 

 

 

 

 

Single-family residential
533,481

 
519,730

 
7,910

 
2,336

 
3,505

 
13,751

 
6,689

 
419

Owner occupied
777,022

 
773,876

 
2,800

 
160

 
186

 
3,146

 
4,983

 

 
4,355,942

 
4,339,045

 
10,710

 
2,496

 
3,691

 
16,897

 
11,672

 
419

Commercial loans
1,380,428

 
1,378,022

 
704

 
1,062

 
640

 
2,406

 
4,772

 

Loans to financial institutions and acceptances
68,965

 
68,965

 

 

 

 

 

 

Consumer loans and overdrafts
114,840

 
113,227

 
474

 
243

 
896

 
1,613

 
35

 
884

 
$
5,920,175

 
$
5,899,259

 
$
11,888

 
$
3,801

 
$
5,227

 
$
20,916

 
$
16,479

 
$
1,303

At September 30, 2019 and December 31, 2018, loans with an outstanding principal balance of $1.7 billion were pledged as collateral to secure advances from the FHLB.
4.
Allowance for Loan Losses
The analyses by loan segment of the changes in the allowance for loan losses for the three and nine month periods ended September 30, 2019 and 2018, and its allocation by impairment methodology and the related investment in loans, net as of September 30, 2019 and 2018 are summarized in the following tables:
 
Three Months Ended September 30, 2019
(in thousands)
Real Estate
 
Commercial
 
Financial
Institutions
 
Consumer
and Others
 
Total
Balances at beginning of the period
$
21,900

 
$
25,824

 
$
60

 
$
9,620

 
$
57,404

Provision for (reversal of) loan losses
487

 
(388
)
 
(2
)
 
(1,597
)
 
(1,500
)
Loans charged-off
 
 
 
 
 
 
 
 
 
Domestic

 
(907
)
 

 
(98
)
 
(1,005
)
International

 

 

 
(1,661
)
 
(1,661
)
Recoveries

 
190

 

 
212

 
402

Balances at end of the period
$
22,387

 
$
24,719

 
$
58

 
$
6,476

 
$
53,640


17

Table of Contents
Amerant Bancorp Inc. and Subsidiaries
Notes to Interim Consolidated Financial Statements (Unaudited)

 
Nine Months Ended September 30, 2019
(in thousands)
Real Estate
 
Commercial
 
Financial
Institutions
 
Consumer
and Others
 
Total
Balances at beginning of the period
$
22,778

 
$
30,018

 
$
445

 
$
8,521

 
$
61,762

 (Reversal of) provision for loan losses
(391
)
 
(3,065
)
 
(387
)
 
993

 
(2,850
)
Loans charged-off
 
 
 
 
 
 
 
 
 
Domestic

 
(2,773
)
 

 
(504
)
 
(3,277
)
International

 
(61
)
 

 
(2,961
)
 
(3,022
)
Recoveries

 
600

 

 
427

 
1,027

Balances at end of the period
$
22,387

 
$
24,719

 
$
58

 
$
6,476

 
$
53,640

 
September 30, 2019
(in thousands)
Real Estate
 
Commercial
 
Financial
Institutions
 
Consumer
and Others
 
Total
Allowance for loan losses by impairment methodology:
 
 
 
 
 
 
 
 
 
Individually evaluated
$
397

 
$
1,722

 
$

 
$
1,185

 
$
3,304

Collectively evaluated
21,990

 
22,997

 
58

 
5,291

 
50,336

 
$
22,387

 
$
24,719

 
$
58

 
$
6,476

 
$
53,640

Investment in loans, net of unearned income:
 
 
 
 
 
 
 
 
 
Individually evaluated
$
1,936

 
$
19,234

 
$

 
$
6,007

 
$
27,177

Collectively evaluated
3,137,980

 
2,036,150

 
24,815

 
525,669

 
5,724,614

 
$
3,139,916

 
$
2,055,384

 
$
24,815

 
$
531,676

 
$
5,751,791


18

Table of Contents
Amerant Bancorp Inc. and Subsidiaries
Notes to Interim Consolidated Financial Statements (Unaudited)

 
Three Months Ended September 30, 2018
(in thousands)
Real Estate
 
Commercial
 
Financial
Institutions
 
Consumer
and Others
 
Total
Balances at beginning of the period
$
28,693

 
$
29,784

 
$
3,317

 
$
8,137

 
$
69,931

Provision for (reversal of) loan losses
386

 
1,016

 
(482
)
 
680

 
1,600

Loans charged-off
 
 
 
 
 
 
 
 

Domestic

 
(526
)
 

 
(66
)
 
(592
)
International

 
(1,421
)
 

 
(283
)
 
(1,704
)
Recoveries

 
187

 

 
49

 
236

Balances at end of the period
$
29,079

 
$
29,040

 
$
2,835

 
$
8,517

 
$
69,471


 
Nine Months Ended September 30, 2018
(in thousands)
Real Estate
 
Commercial
 
Financial
Institutions
 
Consumer
and Others
 
Total
Balances at beginning of the period
$
31,290

 
$
32,687

 
$
4,362

 
$
3,661

 
$
72,000

(Reversal of) provision for loan losses
(2,249
)
 
(199
)
 
(1,527
)
 
5,725

 
1,750

Loans charged-off