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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 March 31, 2020

¨ 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
 
https://cdn.kscope.io/856797d3ea8fb1787493b45fa72759cd-amerant1q19scriptimage1a011.jpg
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
 
Former name, former address and former fiscal year, if changed since last report: N/A
 
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 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 ý
 
Smaller reporting company ¨
 
Emerging growth company ý
Non-accelerated filer ¨
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 May 6, 2020
Class A Common Stock, $0.10 par value per share
 
28,879,576 shares of Class A Common Stock
Class B Common Stock, $0.10 par value per share
 
13,286,137 shares of Class B Common Stock

1


AMERANT BANCORP INC. AND SUBSIDIARIES
FORM 10-Q
March 31, 2020
INDEX
 

Page
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 

2
Table of Contents


Part 1. FINANCIAL INFORMATION


ITEM 1. FINANCIAL STATEMENTS
Amerant Bancorp Inc. and Subsidiaries
Consolidated Balance Sheets
(in thousands, except share data)
(Unaudited) March 31, 2020
 
December 31, 2019
Assets
 
 
 
Cash and due from banks
$
22,303

 
$
28,035

Interest earning deposits with banks
248,750

 
93,289

Cash and cash equivalents
271,053

 
121,324

Securities
 
 
 
Debt securities available for sale
1,601,303

 
1,568,752

Debt securities held to maturity
70,336

 
73,876

Equity securities with readily determinable fair value not held for trading
24,225

 
23,848

Federal Reserve Bank and Federal Home Loan Bank stock
74,123

 
72,934

Securities
1,769,987

 
1,739,410

Loans held for investment, gross
5,668,327

 
5,744,339

Less: Allowance for loan losses
72,948

 
52,223

Loans held for investment, net
5,595,379

 
5,692,116

Bank owned life insurance
213,266

 
211,852

Premises and equipment, net
128,232

 
128,824

Deferred tax assets, net
4,933

 
5,480

Goodwill
19,506

 
19,506

Accrued interest receivable and other assets
96,454

 
66,887

Total assets
$
8,098,810

 
$
7,985,399

Liabilities and Stockholders' Equity
 
 
 
Deposits
 
 
 
Demand
 
 
 
Noninterest bearing
$
779,842

 
$
763,224

Interest bearing
1,088,033

 
1,098,323

Savings and money market
1,432,891

 
1,475,257

Time
2,541,446

 
2,420,339

Total deposits
5,842,212

 
5,757,143

Advances from the Federal Home Loan Bank and other borrowings
1,265,000

 
1,235,000

Junior subordinated debentures held by trust subsidiaries
64,178

 
92,246

Accounts payable, accrued liabilities and other liabilities
86,303

 
66,309

Total liabilities
7,257,693

 
7,150,698

Commitments and contingencies (Note 14)

 

 
 
 
 
Stockholders’ equity
 
 
 
Class A common stock, $0.10 par value, 400 million shares authorized; 28,879,576 shares issued and outstanding (2019 - 28,927,576 shares issued and outstanding)
2,888

 
2,893

Class B common stock, $0.10 par value, 100 million shares authorized; 13,286,137 shares issued and outstanding (2019: 17,751,053 shares issued; 14,218,596 shares outstanding)
1,329

 
1,775

Additional paid in capital
358,277

 
419,048

Treasury stock, at cost; 3,532,457 shares of Class B common stock in 2019.
—

 
(46,373
)
Retained earnings
447,506

 
444,124

Accumulated other comprehensive income
31,117

 
13,234

Total stockholders' equity
841,117

 
834,701

Total liabilities and stockholders' equity
$
8,098,810

 
$
7,985,399


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 March 31,
(in thousands)
2020
 
2019
Interest income
 
 
 
Loans
$
59,788

 
$
66,722

Investment securities
11,065

 
12,581

Interest earning deposits with banks
462

 
1,004

Total interest income
71,315

 
80,307

 
 
 
 
Interest expense
 
 
 
Interest bearing demand deposits
135

 
274

Savings and money market deposits
3,266

 
3,733

Time deposits
13,484

 
12,553

Advances from the Federal Home Loan Bank
4,412

 
6,205

Junior subordinated debentures
789

 
2,105

Total interest expense
22,086

 
24,870

Net interest income
49,229

 
55,437

Provision for loan losses
22,000

 
—

Net interest income after provision for loan losses
27,229

 
55,437

 
 
 
 
Noninterest income
 
 
 
Deposits and service fees
4,290

 
4,086

Brokerage, advisory and fiduciary activities
4,133

 
3,688

Change in cash surrender value of bank owned life insurance
1,414

 
1,404

Securities gains, net
9,620

 
4

Cards and trade finance servicing fees
395

 
915

(Loss) gain on early extinguishment of advances from the Federal Home Loan Bank, net
(7
)
 
557

Data processing and fees for other services
—

 
520

Other noninterest income
2,065

 
1,982

Total noninterest income
21,910

 
13,156

 
 
 
 
Noninterest expense
 
 
 
Salaries and employee benefits
29,326

 
33,437

Occupancy and equipment
3,803

 
4,042

Telecommunication and data processing
3,464

 
3,026

Professional and other services fees
2,954

 
3,444

Depreciation and amortization
1,959

 
1,942

FDIC assessments and insurance
1,118

 
1,393

Other operating expenses
2,243

 
4,661

Total noninterest expenses
44,867

 
51,945

 Income before income tax
4,272

 
16,648

Income tax expense
(890
)
 
(3,577
)
Net income
$
3,382

 
$
13,071

 
 
 
 
 
 
 
 
 
 
 
 

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 March 31,
(in thousands, except per share data)
2020
 
2019
 
 
 
 
Other comprehensive income, net of tax
 
 
 
Net unrealized holding gains on debt securities available for sale arising during the period
$
26,702

 
$
16,278

Net unrealized holding losses on cash flow hedges arising during the period
(1,514
)
 
(11
)
Reclassification adjustment for items included in net income
(7,305
)
 
(252
)
Other comprehensive income
17,883

 
16,015

Comprehensive income
$
21,265

 
$
29,086

 
 
 
 
Earnings Per Share (Note 16):
 
 
 
Basic earnings per common share
$
0.08

 
$
0.31

Diluted earnings per common share
$
0.08

 
$
0.30



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)
Three Months Ended March 31, 2020 and 2019


 
Common Stock
 
Additional
Paid
in Capital
 
Treasury Stock
 
Retained
Earnings
 
Accumulated Other Comprehensive Income (Loss)
 
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, 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
—

 
—

 
—

 
—

 
1,492

 
—

 
—

 
—

 
1,492

Net income
—

 
—

 
—

 
—

 
—

 
—

 
13,071

 
—

 
13,071

Other comprehensive income
—

 
—

 
—

 
—

 
—

 
—

 
—

 
16,015

 
16,015

Balance at
March 31, 2019
28,985,996

 
14,218,596

 
$
2,899

 
$
1,775

 
$
415,864

 
$
(46,373
)
 
$
406,733

 
$
(2,149
)
 
$
778,749

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at
December 31, 2019
28,927,576

 
14,218,596

 
$
2,893

 
$
1,775

 
$
419,048

 
$
(46,373
)
 
$
444,124

 
$
13,234

 
$
834,701

Repurchase of Class B common stock
—

 
(932,459
)
 
—

 
—

 
—

 
(15,239
)
 
—

 
—

 
(15,239
)
Treasury stock retired
—

 
—

 
—

 
(446
)
 
(61,166
)
 
61,612

 
—

 
—

 
—

Restricted stock issued
6,591

 
—

 
1

 
—

 
(1
)
 
—

 
—

 
—

 
—

Restricted stock surrendered
(129
)
 
—

 
—

 
—

 
(2
)
 
—

 
—

 
—

 
(2
)
Restricted stock forfeited
(54,462
)
 
—

 
(6
)
 
—

 
6

 
—

 
—

 
—

 
—

Stock-based compensation expense
—

 
—

 
—

 
—

 
392

 
—

 
—

 
—

 
392

Net income
—

 
—

 
—

 
—

 
—

 
—

 
3,382

 
—

 
3,382

Other comprehensive income
—

 
—

 
—

 
—

 
—

 
—

 
—

 
17,883

 
17,883

Balance at
March 31, 2020
28,879,576

 
13,286,137

 
$
2,888

 
$
1,329

 
$
358,277

 
$
—

 
$
447,506

 
$
31,117

 
$
841,117


The accompanying notes are an integral part of these consolidated financial statements (unaudited).
6
Table of Contents
Amerant Bancorp Inc. and Subsidiaries
Consolidated Statements of Cash Flows (Unaudited)


 
Three Months Ended March 31,
(in thousands)
2020
 
2019
Cash flows from operating activities
 
 
 
Net income
$
3,382

 
$
13,071

Adjustments to reconcile net income to net cash provided by operating activities
 
 
 
Provision for loan losses
22,000

 
—

Net premium amortization on securities
3,775

 
3,453

Depreciation and amortization
1,959

 
1,942

Stock-based compensation expense
392

 
1,492

Change in cash surrender value of bank owned life insurance
(1,414
)
 
(1,404
)
Deferred taxes, securities net gains or losses and others
(14,875
)
 
1,238

Loss (gain) on early extinguishment of advances from the FHLB
7

 
(557
)
Net changes in operating assets and liabilities:
 
 
 
Accrued interest receivable and other assets
(1,539
)
 
8,777

Accounts payable, accrued liabilities and other liabilities
(10,509
)
 
(15,431
)
Net cash provided by operating activities
3,178

 
12,581

 
 
 
 
Cash flows from investing activities
 
 
 
Purchases of investment securities:
 
 
 
Available for sale
(197,522
)
 
(110,170
)
Federal Home Loan Bank stock
(8,538
)
 
(4,888
)
 
(206,060
)
 
(115,058
)
Maturities, sales and calls of investment securities:
 
 
 
Available for sale
196,698

 
162,796

Held to maturity
3,382

 
1,205

Federal Home Loan Bank stock
7,349

 
9,248

 
207,429

 
173,249

Net decrease in loans
61,641

 
22,173

Proceeds from loan portfolio sales
13,109

 
152,177

Net purchases of premises and equipment and others
(1,321
)
 
(1,951
)
Net cash provided by investing activities
74,798

 
230,590

 
 
 
 
Cash flows from financing activities
 
 
 
Net decrease in demand, savings and money market accounts
(36,038
)
 
(116,499
)
Net increase (decrease) in time deposits
121,107

 
(27,999
)
Proceeds from Advances from the Federal Home Loan Bank and other borrowings
280,000

 
170,000

Repayments of Advances from the Federal Home Loan Bank and other borrowings
(250,007
)
 
(265,447
)
Redemption of junior subordinated debentures
(28,068
)
 
—

Proceeds from common stock issued - Class A
—

 
29,218

Repurchase of common stock - Class B
(15,239
)
 
(28,465
)
Common stock retired to cover tax withholding
(2
)
 
—

Net cash provided by (used in) financing activities
71,753

 
(239,192
)
Net increase in cash and cash equivalents
149,729

 
3,979

 
 
 
 
Cash and cash equivalents
 
 
 
Beginning of period
121,324

 
85,710

End of period
$
271,053

 
$
89,689

 
 
 
 
 
 
 
 

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)

 
 
 
 
 
Three Months Ended March 31,
(in thousands)
2020
 
2019
Supplemental disclosures of cash flow information
 
 
 
Cash paid:
 
 
 
Interest
$
21,890

 
$
24,086

Income taxes
295

 
385


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. (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 three principal subsidiaries, Amerant Investments, Inc., a securities broker-dealer (“Amerant Investments”), Amerant Trust, N.A, a non-depository trust company (“Amerant Trust”), and Elant Bank & Trust (the “Cayman Bank”), a bank and trust company domiciled in the Cayman Islands acquired in November 2019.
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.
The Company is managed using a single segment concept, on a consolidated basis, and management determined 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”). In March 2019, 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 (“the Former Parent”). For more information about the IPO and the repurchase of Class B common stock previously held by the Former Parent, 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 March 16, 2020 (the “Form 10-K”).
COVID-19 Pandemic
On March 11, 2020, the World Health Organization recognized an outbreak of a novel strain of the coronavirus, COVID-19, as a pandemic.
On March 13, 2020, the President of the Unites States of America (U.S.) declared a national state of emergency. In response to this outbreak, the governments of many states, cities and municipalities in the U.S., including the States of Florida, New York and Texas, have taken preventative or protective actions, such as imposing restrictions on business operations and advising or requiring individuals to limit or forego their time outside of their homes.
On March 16, 2020, the Company activated its Business Continuity Plan (“BCP”) to continue to provide its products and services during the COVID-19 pandemic. The Company’s BCP plan is framed within regulatory guidelines and subject to periodic testing and independent audits. All banking centers are open to the public by drive-thru and by appointment-only, under a reduced schedule (except banking centers in Texas which are operating under regular business hours), and with limited staffing. All electronic channels remain fully operational. In addition, the BCP enabled employees to work remotely.

9
Table of Contents
Amerant Bancorp Inc. and Subsidiaries
Notes to Interim Consolidated Financial Statements (Unaudited)

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”), an approximately $2.0 trillion COVID-19 response bill, to provide emergency economic relief to individuals, small businesses, mid-size companies, large corporations, hospitals and other public health facilities, and state and local governments, was enacted. The CARES Act allocated the Small Business Administration, or SBA, $350.0 billion to provide loans of up to $10.0 million per small business as defined in the CARES Act. On April 2, 2020, the Bank began participating in the SBA’s Paycheck Protection Program, or “PPP”, by providing loans to these businesses to cover payroll, rent, mortgage, healthcare, and utilities costs, among other essential expenses. On April 24, 2020, the Paycheck Protection Program and Health Care Enhancement Act, adding funding to the PPP, was enacted. As of May 1, 2020, the Company had received approval for 1,493 loan applications under the PPP totaling $197.8 million, and had funded $137.9 million.
On March 26, 2020, the Company began offering loan payment relief options to customers impacted by the COVID-19 pandemic, including interest-only and/or forbearance options. As of May 1, 2020, loans under these programs totaled $1,119 million. In accordance with accounting and regulatory guidance, loans to borrowers benefiting from these measures are not considered Troubled Debt Restructurings (“TDRs”). The Company is closely monitoring the performance of these loans under the terms of the temporary relief granted.
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, 2019 and 2018 and for each of the three years in the period ended December 31, 2019 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 periods. 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 periodic goodwill impairment tests; (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.

10
Table of Contents
Amerant Bancorp Inc. and Subsidiaries
Notes to Interim Consolidated Financial Statements (Unaudited)


The COVID-19 outbreak has severely restricted the level of economic activity in the U.S. and around the world since March 2020. In the U.S and several other countries, temporary closures of businesses have been ordered and numerous other businesses have temporarily closed voluntarily. These actions have expanded significantly since March 31, 2020 and may continue to expand.  The Company considered the impact of COVID-19 on the significant estimates management used. The Company recorded a provision for loan losses of $22.0 million during the three months ended March 31, 2020 primarily as a result of the estimated impact of the COVID-19 pandemic. Given the uncertainty regarding the spread and severity of COVID-19 and its adverse effects on the U.S. and global economies, the extent to which the COVID-19 pandemic may impact the Company’s financial condition or results of operations is uncertain and cannot be accurately predicted at this time. 
c) Recently Issued Accounting Pronouncements
Issued and Not Yet Adopted
New Guidance on Leases
In December 2018, the Financial Accounting Standards Board (“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.
In November 2019, the FASB again amended the effective date of the new guidance on leases. Previously, the amendments and related new guidance on leases were effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020, for private companies. The new guidance on leases is now effective for fiscal years beginning after December 15, 2020 and interim periods within fiscal years beginning after December 15, 2021. Early adoption is still permitted.
The Company has completed the process of gathering a complete inventory of its lease contracts, migrating identified lease data onto a new system, and is in the final stages of testing and evaluation of results. Based on these results, we currently expect to recognize an asset and a corresponding lease liability for an amount to be less than 1% of the Company’s total consolidated assets at adoption. The Company plans to adopt the new guidance in its consolidated financial statements for the year ending December 31, 2021.

11
Table of Contents
Amerant Bancorp Inc. and Subsidiaries
Notes to Interim Consolidated Financial Statements (Unaudited)


Facilitation of the Effects of Reference Rate Reform on Financial Reporting
On March 12, 2020, the FASB issued amendments to guidance applicable to contracts, hedging relationships, and other transactions affected that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. These amendments provide optional guidance for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting. The expedients and exceptions provided by the amendments do not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022, except for hedging relationships existing as of December 31, 2022, that an entity has elected certain optional expedients for and that are retained through the end of the hedging relationship. The amendments also allow entities to make a one-time election to sell, transfer, or both sell and transfer debt securities classified as held to maturity that reference a rate affected by reference rate reform and that are classified as held to maturity before January 1, 2020.  These amendments are effective for all entities as of March 12, 2020 through December 31, 2022. An entity may elect to apply these amendments to eligible hedging relationships existing as of the beginning of the interim period that includes March 12, 2020 and to new eligible hedging relationships entered into after the beginning of the interim period that includes March 12, 2020. An entity may elect to apply the amendments for contract modifications as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020, or prospectively from a date within an interim period that includes or is subsequent to March 12, 2020, up to the date that the financial statements are available to be issued. Once elected, these amendments must be applied prospectively for all eligible contract modifications and hedging relationships. The Company is in the process of evaluating the implications of these amendments to its current efforts for reference rate reform implementation.
New Guidance on Accounting for Credit Losses on Financial Instruments
In June 2016, the FASB issued the new guidance on accounting for current expected credit losses on financial instruments (“CECL.”) The new guidance introduces an approach based on expected losses to estimate credit losses on various financial instruments, including loans. It also modifies the impairment model for available-for-sale debt securities and provides for a simplified accounting model for purchased financial assets with credit deterioration since their origination.
In November 2018, the FASB issued amendments to pending new guidance on CECL to, among other things, align the implementation date for private companies’ annual financial statements with the implementation date for their interim financial statements. Prior to the issuance of these amendments, the guidance on accounting for CECL was effective for private companies for fiscal years beginning after December 15, 2020, and interim periods within fiscal years beginning after December 15, 2021. These amendments are effective for fiscal years beginning after December 15, 2021, and interim periods within those fiscal years, for private companies.
In November 2019, the FASB amended the effective date of the new guidance on CECL. Previously, the amendments and related new guidance on CECL was effective for fiscal years beginning after December 15, 2021, and interim periods within those years, for private companies. The new guidance on CECL is now effective for fiscal years beginning after December 15, 2022 and interim periods within those years. Early adoption is still permitted. The new guidance on CECL is effective for fiscal years beginning after December 15, 2019, and interim periods within those years, for public companies.
The Company is currently assessing the impact that these changes will have on its consolidated financial statements, when adopted. As an Emerging Growth Company, or EGC, the Company currently plans to adopt the new guidance on CECL in its consolidated financial statements for the year ending December 31, 2023, or earlier in the event the Company ceases to be an EGC.

12
Table of Contents
Amerant Bancorp Inc. and Subsidiaries
Notes to Interim Consolidated Financial Statements (Unaudited)


d) Subsequent Events
The effects of significant subsequent events, if any, have been recognized or disclosed in these unaudited interim consolidated financial statements.
2. Interest Earning Deposits with Banks
At March 31, 2020 and December 31, 2019 interest earning deposits with banks are mainly comprised of deposits with the Federal Reserve of approximately $248.8 million and $93 million, respectively. At March 31, 2020 and December 31, 2019, the average interest rate on these deposits was approximately 1.08% and 2.19%, respectively. These deposits mature within one year.
3.
Securities
Amortized cost and approximate fair values of debt securities available for sale are summarized as follows:
 
March 31, 2020
 
Amortized
Cost
 
Gross Unrealized
 
Estimated
Fair Value
(in thousands)
 
Gains
 
Losses
 
U.S. government-sponsored enterprise debt securities
$
844,712

 
$
31,188

 
$
(719
)
 
$
875,181

Corporate debt securities
333,359

 
2,990

 
(6,155
)
 
330,194

U.S. government agency debt securities
251,731

 
3,828

 
(2,377
)
 
253,182

U.S. treasury securities
73,636

 
3,689

 
—

 
77,325

Municipal bonds
62,203

 
3,218

 
—

 
65,421

 
$
1,565,641

 
$
44,913

 
$
(9,251
)
 
$
1,601,303

 
December 31, 2019
 
Amortized
Cost
 
Gross Unrealized
 
Estimated
Fair Value
(in thousands)
 
Gains
 
Losses
 
U.S. government sponsored enterprise debt securities
$
927,205

 
$
9,702

 
$
(3,795
)
 
$
933,112

Corporate debt securities
247,836

 
5,002

 
(2
)
 
252,836

U.S. government agency debt securities
230,384

 
895

 
(2,882
)
 
228,397

U.S. treasury securities
106,112

 
1

 
(1,877
)
 
104,236

Municipal bonds
47,652

 
2,519

 
—

 
50,171

 
$
1,559,189

 
$
18,119

 
$
(8,556
)
 
$
1,568,752

At March 31, 2020 and December 31, 2019, the Company had no foreign sovereign or foreign government agency debt securities. The Company had investments in foreign corporate debt securities of $13.4 million and $5.2 million at March 31, 2020 and December 31, 2019, respectively.

13
Table of Contents
Amerant Bancorp Inc. and Subsidiaries
Notes to Interim Consolidated Financial Statements (Unaudited)


In the three months ended March 31, 2020 and 2019, proceeds from sales, gross realized gains, gross realized losses of debt securities available for sale were as follows:
 
Three Months Ended March 31,
(in thousands)
2020
 
2019
Proceeds from sales of debt securities available for sale
$
139,072

 
$
112,529

Gross realized gains
9,266

 
448

Gross realized losses
(23
)
 
(444
)
Realized gains, net
$
9,243

 
$
4

The Company’s investment in debt 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:
 
March 31, 2020
 
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
$
24,695

 
$
(132
)
 
$
24,553

 
$
(587
)
 
$
49,248

 
$
(719
)
Corporate debt securities
127,093

 
(6,155
)
 
—

 
—

 
127,093

 
(6,155
)
U.S. government agency debt securities
18,602

 
(117
)
 
98,645

 
(2,260
)
 
117,247

 
(2,377
)
 
$
170,390

 
$
(6,404
)
 
$
123,198

 
$
(2,847
)
 
$
293,588

 
$
(9,251
)

 
December 31, 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
$
239,446

 
$
(1,740
)
 
$
180,274

 
$
(2,055
)
 
$
419,720

 
$
(3,795
)
Corporate debt securities
8,359

 
(1
)
 
300

 
(1
)
 
8,659

 
(2
)
U.S. government agency debt securities
41,300

 
(251
)
 
117,040

 
(2,631
)
 
158,340

 
(2,882
)
U.S. treasury securities
97,471

 
(1,877
)
 
—

 
—

 
97,471

 
(1,877
)
 
$
386,576

 
$
(3,869
)
 
$
297,614

 
$
(4,687
)
 
$
684,190

 
$
(8,556
)
At March 31, 2020 and December 31, 2019, the Company held certain debt securities issued or guaranteed by the U.S. government and U.S. government-sponsored entities and agencies. The Company believes these issuers to present little credit risk. The Company considers these securities are not 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.

14
Table of Contents
Amerant Bancorp Inc. and Subsidiaries
Notes to Interim Consolidated Financial Statements (Unaudited)


Unrealized losses on municipal and corporate debt securities are attributable to changes in interest rates and investment securities markets, generally, and as a result, temporary in nature. The Company considers these securities are not other-than-temporarily impaired because the issuers of these debt securities are considered to be high quality, and generally present little credit risk. The Company 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.
Contractual maturities of debt securities at March 31, 2020 are as follows:
 
Available for Sale
 
Held to Maturity
(in thousands)
Amortized
Cost
 
Estimated
Fair Value
 
Amortized
Cost
 
Estimated
Fair Value
Within 1 year
$
103,743

 
$
103,995

 
$
—

 
$
—

After 1 year through 5 years
167,055

 
166,952

 
—

 
—

After 5 years through 10 years
280,460

 
285,762

 
11,567

 
11,793

After 10 years
1,014,383

 
1,044,594

 
58,769

 
59,561

 
$
1,565,641

 
$
1,601,303

 
$
70,336

 
$
71,354

Equity securities with readily available fair value not held for trading consist of mutual funds with an original cost of $24.0 million, and fair value of $24.2 million and $23.8 million as of March 31, 2020 and December 31, 2019, respectively. These equity securities have no stated maturities. During the three months ended March 31, 2020, we recognized an unrealized gain of $0.4 million related to the change in market value of these mutual funds. No gain was recognized during the three months ended March 31, 2019.
4.
Loans
The loan portfolio consists of the following loan classes:
(in thousands)
March 31,
2020
 
December 31,
2019
Real estate loans
 
 
 
Commercial real estate
 
 
 
Non-owner occupied
$
1,875,293

 
$
1,891,802

Multi-family residential
834,016

 
801,626

Land development and construction loans
225,179

 
278,688

 
2,934,488

 
2,972,116

Single-family residential
569,340

 
539,102

Owner occupied
923,260

 
894,060

 
4,427,088

 
4,405,278

Commercial loans
1,084,751

 
1,234,043

Loans to financial institutions and acceptances
16,576

 
16,552

Consumer loans and overdrafts
139,912

 
88,466

 
$
5,668,327

 
$
5,744,339

At March 31, 2020 and December 31, 2019, loans with an outstanding principal balance of $1.5 billion and $1.6 billion, respectively, were pledged as collateral to secure advances from the FHLB.

15
Table of Contents
Amerant Bancorp Inc. and Subsidiaries
Notes to Interim Consolidated Financial Statements (Unaudited)

The amounts above include loans under syndication facilities of approximately $488 million and $562 million at March 31, 2020 and December 31, 2019, 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 $14.5 million and $15.2 million at March 31, 2020 and December 31, 2019, respectively.
 
March 31, 2020
 
December 31, 2019
(in thousands)
Venezuela
 
Others (1)
 
Total
 
Venezuela
 
Others (1)
 
Total
Real estate loans
 
 
 
 
 
 
 
 
 
 
 
Single-family residential (2)
$
97,517

 
$
7,571

 
$
105,088

 
$
103,979

 
$
7,692

 
$
111,671

Commercial loans
—

 
57,348

 
57,348

 
—

 
43,850

 
43,850

Loans to financial institutions and acceptances
—

 
8

 
8

 
—

 
5

 
5

Consumer loans and overdrafts (3)(4)
427

 
7,688

 
8,115

 
8,318

 
7,593

 
15,911

 
$
97,944

 
$
72,615

 
$
170,559

 
$
112,297

 
$
59,140

 
$
171,437

__________________
(1)
Loans to borrowers in 12 other countries which do not individually exceed 1% of total assets (14 countries at December 31, 2019)
(2)
Corresponds to mortgage loans secured by single-family residential properties located in the U.S.
(3)
At December 31, 2019, Venezuela balances are mostly comprised of credit card extensions of credit to customers with deposits with the Bank. The Company phased out its legacy credit card products to further strengthen its credit quality. During the first quarter of 2020, the remaining balances related to the credit card product were repaid, therefore, there are no outstanding credit card balances as of March 31, 2020.
(4)
Overdrafts to customers outside the United States were de minimis at March 31, 2020 and December 31, 2019.


The age analysis of the loan portfolio by class, including nonaccrual loans, as of March 31, 2020 and December 31, 2019 are summarized in the following tables:
 
March 31, 2020
 
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
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-owner occupied
$
1,875,293

 
$
1,875,293

 
$
—

 
$
—

 
$
—

 
$
—

 
$
1,936

 
$
—

Multi-family residential
834,016

 
834,016

 
—

 
—

 
—

 
—

 
—

 
—

Land development and construction loans
225,179

 
225,179

 
—

 
—

 
—

 
—

 
—

 
—

 
2,934,488

 
2,934,488

 
—

 
—

 
—

 
—

 
1,936

 
—

Single-family residential
569,340

 
557,717

 
8,438

 
—

 
3,185

 
11,623

 
7,077

 
5

Owner occupied
923,260

 
910,269

 
9,004

 
1,208

 
2,779

 
12,991

 
13,897

 
—

 
4,427,088

 
4,402,474

 
17,442

 
1,208

 
5,964

 
24,614

 
22,910

 
5

Commercial loans
1,084,751

 
1,076,834

 
5,626

 
425

 
1,866

 
7,917

 
9,993

 
—

Loans to financial institutions and acceptances
16,576

 
16,576

 
—

 
—

 
—

 
—

 
—

 
—

Consumer loans and overdrafts
139,912

 
139,682

 
170

 
29

 
31

 
230

 
467

 
12

 
$
5,668,327

 
$
5,635,566

 
$
23,238

 
$
1,662

 
$
7,861

 
$
32,761

 
$
33,370

 
$
17


16
Table of Contents
Amerant Bancorp Inc. and Subsidiaries
Notes to Interim Consolidated Financial Statements (Unaudited)

 
December 31, 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
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-owner occupied
$
1,891,802

 
$
1,891,801

 
$
1

 
$
—

 
$
—

 
$
1

 
$
1,936

 
$
—

Multi-family residential
801,626

 
801,626

 
—

 
—

 
—

 
—

 
—

 
—

Land development and construction loans
278,688

 
278,688

 
—

 
—

 
—

 
—

 
—

 
—

 
2,972,116

 
2,972,115

 
1

 
—

 
—

 
1

 
1,936

 
—

Single-family residential
539,102

 
530,399

 
4,585

 
1,248

 
2,870

 
8,703

 
7,291

 
—

Owner occupied
894,060

 
888,158

 
1,360

 
1,724

 
2,818

 
5,902

 
14,130

 
—

 
4,405,278

 
4,390,672

 
5,946

 
2,972

 
5,688

 
14,606

 
23,357

 
—

Commercial loans
1,234,043

 
1,226,320

 
4,418

 
608

 
2,697

 
7,723

 
9,149

 
—

Loans to financial institutions and acceptances
16,552

 
16,552

 
—

 
—

 
—

 
—

 
—

 
—

Consumer loans and overdrafts
88,466

 
88,030

 
215

 
176

 
45

 
436

 
416

 
5

 
$
5,744,339

 
$
5,721,574

 
$
10,579

 
$
3,756

 
$
8,430

 
$
22,765

 
$
32,922

 
$
5


17
Table of Contents
Amerant Bancorp Inc. and Subsidiaries
Notes to Interim Consolidated Financial Statements (Unaudited)


5.
Allowance for Loan Losses
The analyses by loan segment of the changes in the allowance for loan losses for the three months ended March 31, 2020 and 2019, and its allocation by impairment methodology and the related investment in loans, net as of March 31, 2020 and 2019 are summarized in the following tables:
 
Three Months Ended March 31, 2020
(in thousands)
Real Estate
 
Commercial
 
Financial
Institutions
 
Consumer
and Others
 
Total
Balances at beginning of the period
$
25,040

 
$
22,482

 
$
42

 
$
4,659

 
$
52,223

Provision for loan losses
11,390

 
7,530

 
—

 
3,080

 
22,000

Loans charged-off
 
 
 
 
 
 
 
 
 
Domestic
—

 
(1,101
)
 
—

 
(222
)
 
(1,323
)
International
—

 
(34
)
 
—

 
(251
)
 
(285
)
Recoveries
—

 
185

 
—

 
148

 
333

Balances at end of the period
$
36,430

 
$
29,062

 
$
42

 
$
7,414

 
$
72,948

 
 
 
 
 
 
 
 
 
 
Allowance for loan losses by impairment methodology:
 
 
 
 
 
 
 
 
 
Individually evaluated
$
1,157

 
$
4,038

 
$
—

 
$
1,525

 
$
6,720

Collectively evaluated
35,273

 
25,024

 
42

 
5,889

 
66,228

 
$
36,430

 
$
29,062

 
$
42

 
$
7,414

 
$
72,948

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

 
$
24,232

 
$
—

 
$
7,521

 
$
33,689

Collectively evaluated
2,931,900

 
2,104,220

 
16,576

 
581,942

 
5,634,638

 
$
2,933,836

 
$
2,128,452

 
$
16,576

 
$
589,463

 
$
5,668,327




18
Table of Contents
Amerant Bancorp Inc. and Subsidiaries
Notes to Interim Consolidated Financial Statements (Unaudited)

 
Three Months Ended March 31, 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
(322
)
 
(31
)
 
(339
)
 
692

 
—

Loans charged-off
 
 
 
 
 
 
 
 

Domestic
—

 
(992
)
 
—

 
(196
)
 
(1,188
)
International
—

 
(18
)
 
—

 
(406
)
 
(424
)
Recoveries
—

 
123

 
—

 
49

 
172

Balances at end of the period
$
22,456

 
$
29,100

 
$
106

 
$
8,660

 
$
60,322

 
 
 
 
 
 
 
 
 
 
Allowance for loan losses by impairment methodology
 
 
 
 
 
 
 
 
 
Individually evaluated
$
—

 
$
1,593

 
$
—

 
$
1,202

 
$
2,795

Collectively evaluated
22,456

 
27,507

 
106

 
7,458

 
57,527

 
$
22,456

 
$
29,100

 
$
106

 
$
8,660

 
$
60,322

Investment in loans, net of unearned income
 
 
 
 
 
 
 
 
 
Individually evaluated
$
711

 
$
12,325

 
$
—

 
$
3,392

 
$
16,428

Collectively evaluated
3,016,569

 
2,137,165

 
27,985

 
536,291

 
5,718,010

 
$
3,017,280

 
$
2,149,490

 
$
27,985

 
$
539,683

 
$
5,734,438


The following is a summary of the recorded investment amount of loan sales by portfolio segment:
Three Months Ended March 31,
(in thousands)
Real Estate
 
Commercial
 
Financial
Institutions
 
Consumer
and others
 
Total
2020
$
—

 
$
11,901

 
$
—

 
$
1,208

 
$
13,109

2019
$
23,475

 
$
126,838

 
$
—

 
$
1,864

 
$
152,177




19
Table of Contents
Amerant Bancorp Inc. and Subsidiaries
Notes to Interim Consolidated Financial Statements (Unaudited)

The following is a summary of impaired loans as of March 31, 2020 and December 31, 2019:
 
March 31, 2020
 
 Recorded Investment
 
 
 
 
(in thousands)
 With a Valuation Allowance
 
 Without a Valuation Allowance
 
 Total
 
 Year Average (1)
 
 Total Unpaid Principal Balance
 
Valuation Allowance
Real estate loans
 
 
 
 
 
 
 
 
 
 
 
Commercial real estate
 
 
 
 
 
 
 
 
 
 
 
Non-owner occupied
$
1,936

 
$
—

 
$
1,936

 
$
1,943

 
$
1,936

 
$
1,157

Multi-family residential
—

 
—

 
—

 
164

 
—

 
—

Land development and construction
loans
—

 
—

 
—

 
—

 
—

 
—

 
1,936

 
—

 
1,936

 
2,107

 
1,936

 
1,157

Single-family residential
4,499

 
2,831

 
7,330

 
6,471

 
7,610

 
1,071

Owner occupied
1,481

 
12,470

 
13,951

 
11,857

 
13,791

 
510

 
7,916

 
15,301

 
23,217

 
20,435

 
23,337

 
2,738

Commercial loans
8,139

 
1,854

 
9,993

 
9,228

 
10,039

 
3,528

Consumer loans and overdrafts
470

 
9

 
479

 
270

 
537

 
454

 
$
16,525

 
$
17,164

 
$
33,689

 
$
29,933

 
$
33,913

 
$
6,720

_______________
(1)
Average using trailing four quarter balances.

 
December 31, 2019
 
 Recorded Investment
 
 
 
 
(in thousands)
 With a Valuation Allowance
 
 Without a Valuation Allowance
 
 Total
 
 Year Average (1)
 
 Total Unpaid Principal Balance
 
 Valuation Allowance
Real estate loans
 
 
 
 
 
 
 
 
 
 
 
Commercial real estate
 
 
 
 
 
 
 
 
 
 
 
Non-owner occupied
$
1,936

 
$
—

 
$
1,936

 
$
1,459

 
$
1,936

 
$
1,161

Multi-family residential
—

 
—

 
—

 
342

 
—

 
—

Land development and construction loans
—

 
—

 
—

 
—

 
—

 
—

 
1,936

 
—

 
1,936

 
1,801

 
1,936

 
1,161

Single-family residential
4,739

 
729