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Filed pursuant to Rule 424(b)(2)
Registration No. 333-238958
CALCULATION OF REGISTRATION FEE
Title of Each Class of
Securities to be Registered
Amount
to be
registered
Proposed
maximum
offering price
per unit
Proposed
maximum
aggregate
offering price
Amount of
Registration Fee(1)(2)
5.75% Senior Notes due 2025
$14,000,000
100%
$14,000,000
$1,817.20
Guarantee of 5.75% Senior Notes due 2025
(3)
(1)
The registration fee of $1,817.20 is calculated in accordance with Rule 457 of the Securities Act of 1933, as amended.
(2)
A filing fee of $38,940.00 was previously paid by the Registrant in connection with its shelf registration statement on Form S-3 (Reg. No. 333-238958) filed on June 5, 2020.
(3)
Pursuant to Rule 457(n) under the Securities Act, no separate fee is payable with respect to the guarantee.

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PROSPECTUS SUPPLEMENT
(to Prospectus dated June 15, 2020)

$14,000,000
5.75% Senior Notes due 2025
The senior notes in the aggregate principal amount of $14,000,000 offered pursuant to this prospectus supplement and the accompanying prospectus will mature on June 30, 2025 and bear interest at 5.75% per annum, payable semi-annually in arrears on June 30 and December 30 of each year, commencing December 30, 2020 (the “Notes”). The Notes have the same terms as the $46,000,000 of 5.75% Senior Notes due 2025 that were priced on June 16, 2020 and collectively will comprise a single issuance of $60,000,000 aggregrate principal amount of 5.75% Senior Notes due 2025. The Notes will be redeemable in whole or in part by us on or after three months prior to the maturity date at 100% of the principal amount of the Notes (par), plus accrued and unpaid interest thereon to but excluding the date of redemption. We will provide 10 to 60 calendar days’ notice of the redemption to the registered holders of the Notes. There is no sinking fund for the Notes.
The Notes will be unsecured and unsubordinated, and will rank equally with all of our existing and future unsecured and unsubordinated indebtedness. The Notes will be fully and unconditionally guaranteed by our subsidiary guarantor named in this prospectus supplement.
See “Risk Factors” on page S-13 to read about important factors you should consider before buying the Notes. The Notes are not deposits of a bank and are not insured by the United States Federal Deposit Insurance Corporation or any other insurer or government agency.
Neither the Securities and Exchange Commission, any state securities commission, the FDIC, the Federal Reserve nor any other regulatory body has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus supplement or the accompanying prospectus. Any representation to the contrary is a criminal offense.
 
Price to
Public(1)
Underwriting
Discounts(1)
Proceeds to Us
Before Expenses
Per Note
100%
1.5%
98.5%
Total
$14,000,000
$210,000
$13,790,000
(1)
For certain expenses in connection with this offering. See “Underwriting (Conflicts of Interest).”
The Notes will not be listed on any national securities exchange. Currently, there is no public market for the Notes.
The underwriter expects to deliver the Notes in book-entry form on or about June 23, 2020. See “Underwriting (Conflicts of Interest).”
Sole Book-Running Manager
Raymond James

The date of this prospectus supplement is June 19, 2020.


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ABOUT THIS PROSPECTUS SUPPLEMENT
This document is comprised of two parts. The first part is this prospectus supplement, which describes the specific terms of this offering and certain other matters relating to us and our financial condition, and it updates information contained in the accompanying prospectus and the documents incorporated by reference into this prospectus supplement and the accompanying prospectus. The second part is the accompanying prospectus, dated June 15, 2020, which provides more general information about the securities that we may offer from time to time, some of which may not apply to this offering. Generally, when we refer to this prospectus, we are referring to both parts of this document combined. You should carefully read both this prospectus supplement and the accompanying prospectus in their entirety, together with additional information described under the heading “Where You Can Find More Information” before investing in the Notes.
The accompanying prospectus is part of a registration statement that we filed with the Securities and Exchange Commission (the “SEC”) using a shelf registration statement. Under the shelf registration process, from time to time, we may offer and sell debt securities, including the senior debt securities and related guarantee offered hereby, preferred stock, common stock, warrants, depositary shares, subscription rights, stock purchase contracts or units, or any combination thereof, in one or more offerings.
If the information set forth in this prospectus supplement differs in any way from the information set forth in the accompanying prospectus or any document incorporated by reference therein filed prior to the date of this prospectus supplement, you should rely on the information set forth in this prospectus supplement. If any information in one of these documents conflicts with any statement in another document having a later date, for example, a document that we have incorporated by reference herein, then you should consider only the statement in the more recent document. You should not assume that the information appearing in this prospectus supplement, the accompanying prospectus or the documents incorporated by reference into those documents is accurate as of any date other than the date of the applicable document. Our business, financial condition, results of operations and prospects may have changed since that date.
We have not, and the underwriter has not, authorized anyone to provide you with any information that is different or inconsistent with the information contained or incorporated by reference in this prospectus supplement, the accompanying prospectus or in any free writing prospectus prepared by or on our behalf to which we have referred you. Neither we nor the underwriter take any responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you.
We are not, and the underwriter is not, making an offer to sell these securities in any jurisdiction where the offer and sale is not permitted. The distribution of this prospectus supplement and the accompanying prospectus and the offering of our Notes in certain jurisdictions may be restricted by law. This prospectus does not constitute, and may not be used in connection with, any sale, offer to sell, or solicitation of any offer to purchase, any of the securities offered hereby, in any jurisdiction in which it is unlawful to make such an offer or solicitation.
Unless otherwise indicated or unless the context requires otherwise, all references in this prospectus to “Amerant,” “the Company,” “we,” “us,” “our” or similar references mean Amerant Bancorp Inc. and its consolidated subsidiaries. References to “Amerant Bank” or the “Bank” mean Amerant Bank, N.A., which is our wholly-owned bank subsidiary.
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WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports, proxy statements and other information with the SEC under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Our SEC filings are available to the public at the SEC’s website at www.sec.gov. Our SEC filings are also available free of charge at our website, investor.amerantbank.com under the “Financials-SEC Filings” tab. The information contained on our website is not incorporated by reference into this prospectus supplement or the accompanying prospectus, and you should not consider it a part of this prospectus supplement or the accompanying prospectus.
We have filed with the SEC a registration statement on Form S-3 (File No. 333-238958) under the Securities Act of 1933, as amended (the “Securities Act”), relating to the securities covered by this prospectus supplement and the accompanying prospectus. This prospectus supplement is part of the registration statement. The registration statement, including the attached exhibits and schedules included or incorporated by reference in the registration statement, contains additional relevant information about us. The rules and regulations of the SEC allow us to omit certain information included in the registration statement from this prospectus supplement.
The SEC allows us to “incorporate by reference” into this prospectus supplement and the accompanying prospectus the information in other documents we file with the SEC. This permits us to disclose important information to you by referencing these filed documents. Any information referenced this way is considered to be a part of this prospectus supplement and the accompanying prospectus and any information filed by us with the SEC subsequent to the date of this prospectus supplement automatically will be deemed to update and supersede this information.
The following documents filed with the SEC are incorporated by reference into this prospectus supplement (other than documents or information deemed, under SEC rules, to have been “furnished” and not “filed” with the SEC, as described below):
our Annual Report on Form 10-K for the year ended December 31, 2019, filed on March 16, 2020;
our Quarterly Report on Form 10-Q for the quarter ended March 31, 2020, filed on May 8, 2020;
our Current Reports on Form 8-K filed on February 24, 2020, March 4, 2020, March 20, 2020, March 20, 2020 (Form 8-K/A), May 18, 2020, June 5, 2020 and June 22, 2020;
the information specifically incorporated by reference into our Annual Report on Form 10-K for the year ended December 31, 2019 from our Definitive Proxy Statement on Schedule 14A, filed on April 24, 2020, and the supplement to our Definitive Proxy Statement on Schedule 14A, filed on May 22, 2020; and
the description of our common stock set forth in our Registration Statement on Form 10 filed on June 15, 2018, as amended on June 29, 2018, July 13, 2018 and August 2, 2018.
We incorporate by reference any filings made with the SEC in accordance with Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act on or after the date of this prospectus supplement and before the date all of the securities offered hereby are sold or the offering is otherwise terminated, with the exception of any information furnished under Item 2.02 and Item 7.01 of Form 8-K, which is not deemed filed and which is not incorporated by reference herein. Any such filings shall be deemed to be incorporated by reference and to be a part of this prospectus supplement from the respective dates of filing of those documents.
We will provide to each person, including any beneficial owner, to whom a prospectus is delivered, without charge, upon written or oral request, a copy of any or all of the documents that are incorporated by reference into this prospectus supplement but not delivered with this prospectus supplement, excluding any exhibits to those documents unless the exhibit is specifically incorporated by reference as an exhibit in this prospectus supplement. You should direct requests for documents to:
Amerant Bancorp Inc.
Attention: Investor Relations
220 Alhambra Circle
Coral Gables, Florida 33134
(305) 460-8728
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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
Various of the statements made in this prospectus supplement and the accompanying prospectus, including information incorporated herein by reference to other documents, are “forward-looking statements” within the meaning of, and subject to, the protections of the Securities Act and the Exchange Act. These forward-looking statements include, without limitation, future financial and operating results; costs and revenues; economic conditions generally and in our markets and among our customer base; the challenges and uncertainties caused by the COVID-19 pandemic; the measures we have taken in response to the COVID-19 pandemic; our participation in the Paycheck Protection Program (“PPP”); loan demand; changes in the mix of our earning assets and our deposit and wholesale liabilities; net interest income and margin; yields on earning assets; interest rates and yield curves (generally and those applicable to our assets and liabilities); credit quality, including loan performance, non-performing assets, provisions for loan losses, charge-offs, other-than-temporary impairments and collateral values; the effect of redemptions of certain fixed rate trust preferred securities and related junior subordinated debt; rebranding and staff realignment costs and expected savings; market trends; and customer preferences, as well as statements with respect to our 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” and other similar words and expressions of the future in this prospectus supplement and the accompanying prospectus. These forward-looking statements should be read together with the “Risk Factors” included in this prospectus supplement and the accompanying prospectus, our Form 10-K for the year ended December 31, 2019, our Form 10-Q for the quarter ended March 31, 2020 and our other reports filed with the SEC. Additionally, these forward-looking statements may not be realized due to a variety of factors which are, in some cases, beyond the Company’s control and which could materially affect the Company’s results of operations, financial condition, cash flows, performance or future achievements or events. Currently, one of the most significant factors, is the potential adverse effect of the COVID-19 pandemic on the financial condition, results of operations, cash flows and performance of the Company and its customers and the global economy and financial markets. The extent of the impact of the COVID-19 pandemic over the Company and its customers will depend on a number of issues and future developments, which, at this time, are extremely uncertain and cannot be accurately predicted, including the scope, severity and duration of the pandemic, the actions taken to contain or mitigate the impact of the pandemic, and the direct and indirect effects that the pandemic and related containment measures may have, among others. You should consider many of the risks listed in this prospectus supplement and the accompanying prospectus together with those risks and uncertainties described in “Risk Factors” in our Form 10-K for the year ended December 31, 2019, our Form 10-Q for the quarter ended March 31, 2020 and in our other filings with the SEC, as being heightened as a result of the ongoing COVID-19 pandemic.
Additional factors that may cause actual results to deviate significantly from current expectations include but are not limited to:
the COVID-19 pandemic has significantly impacted economic conditions globally and in the United States, could have a material adverse effect on our business, financial condition and results of operation, and the ultimate impact on our business, financial condition and results of operations, will depend on future developments and other factors that are highly uncertain and will be impacted by the scope and duration of the pandemic and actions taken by governmental authorities in response;
as a participating lender in the U.S. Small Business Administration (“SBA”) PPP, the Company and the Bank are subject to additional risks of litigation from the Bank’s customers or other parties regarding the Bank’s processing of loans for the PPP and risks that the SBA may not fund some or all PPP loan guaranties;
our strategic plan and growth strategy may not be achieved as quickly or as fully as we seek;
operational risks are inherent in our businesses;
market conditions and economic cyclicality may adversely affect our industry;
our profitability and liquidity may be affected by changes in interest rates and interest rate levels, the shape of the yield curve and economic conditions;
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our cost of funds may increase as a result of general economic conditions, interest rates, inflation and competitive pressures;
many of our loans and our obligations for borrowed money are priced based on variable interest rates tied to the London Interbank Offering Rate, or LIBOR. We are subject to risks that LIBOR will no longer be available as a result of the United Kingdom’s Financial Conduct Authority ceasing to require the submission of LIBOR quotes after 2021;
our derivative instruments may expose us to certain risks;
our valuation of securities and investments and the determination of the amount of impairments taken on our investments are subjective and, if changed, could materially adversely affect our results of operations or financial condition;
our success depends on our ability to compete effectively in highly competitive markets;
our success depends on general and local economic conditions where we operate;
severe weather, natural disasters, global pandemics, acts of war or terrorism, theft, civil unrest, government expropriation or other external events could have significant effects on our business;
defaults by or deteriorating asset quality of other financial institutions could adversely affect us;
nonperforming and similar assets take significant time to resolve and may adversely affect our results of operations and financial condition;
changes in the real estate markets, including the secondary market for residential mortgage loans, may adversely affect us;
our allowance for loan losses may prove inadequate or we may be negatively affected by credit risk exposures;
if our business does not perform well, we may be required to recognize an impairment of our goodwill or other long-lived assets or to establish a valuation allowance against the deferred income tax asset, which could adversely affect our results of operations or financial condition;
mortgage servicing rights requirements may change and require us to incur additional costs and risks;
we may be contractually obligated to repurchase mortgage loans we sold to third-parties on terms unfavorable to us;
our concentration of commercial real estate, or CRE, loans could result in further increased loan losses, and adversely affect our business, earnings, and financial condition;
liquidity risks could affect operations and jeopardize our financial condition;
certain funding sources may not be available to us and our funding sources may prove insufficient and/or costly to replace;
our Venezuelan deposit concentration may lead to conditions in Venezuela adversely affecting our operations;
our investment advisory and trust businesses could be adversely affected by conditions affecting our Venezuelan customers;
our brokered deposits and wholesale funding increases our liquidity risk, could increase our interest rate expense and potentially increase our deposit insurance costs;
technological changes affect our business including potentially impacting the revenue stream of traditional products and services, and we may have fewer resources than many competitors to invest in technological improvements;
the fair value of our investment securities can fluctuate due to market conditions out of our control;
potential gaps in our risk management policies and internal audit procedures may leave us exposed to unidentified or unanticipated risk, which could negatively affect our business;
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we may determine that our internal controls and disclosure controls could have deficiencies or weaknesses;
any failure to protect the confidentiality of customer information could adversely affect our reputation and subject us to financial sanctions and other costs that could have a material adverse effect on our business, financial condition and results of operations;
our information systems may experience interruptions and security breaches, and are exposed to cybersecurity threats;
future acquisitions and expansion activities may disrupt our business, dilute shareholder value and adversely affect our operating results;
attractive acquisition opportunities may not be available to us in the future;
certain provisions of our amended and restated articles of incorporation and amended and restated bylaws, Florida law, and U.S. banking laws could have anti-takeover effects by delaying or preventing a change of control that you may favor;
we may be unable to attract and retain key people to support our business;
our employees may take excessive risks which could negatively affect our financial condition and business;
we are subject to extensive regulation that could limit or restrict our activities and adversely affect our earnings;
litigation and regulatory investigations are increasingly common in our businesses and may result in significant financial losses and/or harm to our reputation;
we are subject to capital adequacy and liquidity standards, and if we fail to meet these standards our financial condition and operations would be adversely affected;
our operations are subject to risk of loss from unfavorable fiscal, monetary and political developments in the U.S. and other countries where we do business;
changes in accounting rules applicable to banks and financial institutions could adversely affect our financial condition and results of operations;
the Dodd-Frank Act currently restricts our future issuance of trust preferred securities and cumulative preferred securities as eligible Tier 1 risk-based capital for purposes of the regulatory capital guidelines for bank holding companies;
we may need to raise additional capital in the future, but that capital may not be available when it is needed or on favorable terms;
we will be subject to heightened regulatory requirements if our total assets grow in excess of $10 billion;
the Federal Reserve may require us to commit capital resources to support the Bank;
we may face higher risks of noncompliance with the Bank Secrecy Act and other anti-money laundering statutes and regulations than other financial institutions;
failures to comply with the fair lending laws, Consumer Financial Protection Bureau, or CFPB, regulations or the Community Reinvestment Act could adversely affect us;
Fannie Mae and Freddie Mac restructuring may adversely affect the mortgage markets;
we adopted a new accounting principle that requires immediate recognition in the statement of income of unrealized changes in the fair value of equity securities, which includes mutual funds, increasing the volatility of our results of operations;
we changed our brand from “Mercantil” to “Amerant,” which could adversely affect our business and profitability;
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we are incurring incremental costs as a separate, public company;
as a separate, public company, we spend additional time and resources to comply with rules and regulations that previously did not apply to us;
our historical consolidated financial data are not necessarily representative of the results we would have achieved as a separate company and may not be a reliable indicator of our future results;
certain of our directors may have actual or potential conflicts of interest because of their equity ownership in Mercantil Servicios Financieros, C.A., or the Former Parent, or their positions with the Former Parent and us;
if securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, the price of our common stock and trading volume could decline;
our stock price may fluctuate significantly;
a limited market exists for the Company’s shares of Class B common stock on the Nasdaq Global Select Market. An active trading market may not develop or continue for the Company’s shares of Class B common stock, which could adversely affect the market price and market volatility of those shares;
certain of our existing stockholders could exert significant control over the Company;
we have the ability to issue additional equity securities, which would lead to dilution of our issued and outstanding Company Shares;
we expect to issue more Class A common stock in the future which may dilute holders of Class A common stock;
holders of Class B common stock have limited voting rights. As a result, holders of Class B common stock will have limited ability to influence shareholder decisions;
our dual classes of common stock may limit investments by investors using index-based strategies;
we are an “emerging growth company,” and, as a result of the reduced disclosure and governance requirements applicable to emerging growth companies, our common stock may be less attractive to investors;
we do not currently intend to pay dividends on our common stock;
our ability to pay dividends to shareholders in the future is subject to profitability, capital, liquidity and regulatory requirements and these limitations may prevent us from paying dividends in the future;
we face strategic risks as an independent company and from our history as a part of the Former Parent; and
the other factors and information in our Form 10-K for the year ended December 31, 2019, our Form 10-Q for the quarter ended March 31, 2020 and other filings that we make with the SEC under the Exchange Act and Securities Act.
Forward-looking statements, including those as 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. In addition, our past results of operations are not necessarily indicative of our future results of operations. 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” beginning on page S-13 of this prospectus supplement, in our Form 10-K for the year ended December 31, 2019, in our Form 10-Q for the quarter ended March 31, 2020 and in our other filings with the SEC, which are available at the SEC’s website www.sec.gov.
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SUMMARY
This summary highlights information contained elsewhere in, or incorporated by reference into, this prospectus supplement. This summary is not complete and does not contain all of the information that may be important to you in making an investment decision. You should carefully read this entire prospectus supplement and the accompanying prospectus, as well as the information to which we refer you and the information incorporated by reference herein, before deciding whether to invest in the Notes. See “Where You Can Find More Information.” You should pay special attention to the information contained under the caption titled “Risk Factors” in this prospectus supplement and “Risk Factors” in our Form 10-K for the year ended December 31, 2019, our Form 10-Q for the quarter ended March 31, 2020 and subsequent filings with the SEC to determine whether an investment in the Notes is appropriate for you.
Amerant Bancorp Inc.
Our Business
We are a bank holding company headquartered in Coral Gables, Florida, with $8.1 billion in assets, $5.7 billion in loans held for investment, $5.8 billion in deposits, $841.1 million of shareholders’ equity, and $1.6 billion in assets under management and custody as of March 31, 2020. We provide individuals and businesses a comprehensive array of deposit, credit, investment, wealth management, retail banking and fiduciary services. We serve customers in our United States markets and select international customers. These services are offered through the Bank, which is also headquartered in Coral Gables, Florida, and its subsidiaries. We own the Bank through our wholly-owned intermediate holding company, Amerant Florida Bancorp Inc. Fiduciary, investment and wealth management services are provided by the Bank’s national trust company subsidiary, Amerant Trust, N.A. (“Amerant Trust”), the Bank’s securities broker-dealer subsidiary, Amerant Investments, Inc. (“Amerant Investments”), and the Bank’s Grand Cayman based trust company subsidiary, Elant Bank & Trust Ltd. (the “Cayman Bank”).
The Bank was founded in 1979 and is the largest community bank headquartered in Florida. We currently operate 27 banking centers where we offer personal and commercial banking services. The Bank’s three primary markets are South Florida, where we operate 19 banking centers in Miami-Dade, Broward and Palm Beach counties; the greater Houston, Texas area, where we have 8 banking centers that serve the nearby areas of Harris, Montgomery, Fort Bend and Waller counties and a loan production office (“LPO”), in Dallas, Texas, which we opened in early 2019; and the greater New York City area, where we also maintain a LPO that focuses on originating CRE loans.
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.
Our History
From 1987 through December 31, 2017, we were a wholly-owned subsidiary of Mercantil Servicios Financieros, C.A., which we refer to as the Former Parent. On March 15, 2018, the Former Parent transferred 100% of our outstanding Class A common stock and Class B common stock, together, the Company Shares, to a newly created Florida common law, non-discretionary, grantor trust, which we refer to as the Distribution Trust or the Trust.
On August 10, 2018, we completed our spin-off from the Former Parent, which we refer to as the Spin-off, through the distribution of 19,814,992 shares of our Class A common stock and 14,218,596 shares of our Class B common stock, in each case adjusted for a reverse stock split completed on October 24, 2018. The shares distributed in the Distribution, or Distributed Shares, constituted 80.1% of the total issued and outstanding Company Shares of each class. As a result of the Distribution, each holder of record of the Former Parent’s Class A common stock or Class B common stock on April 2, 2018 received one share of our Class A common stock or one share of our Class B common stock for each share of the Former Parent Class A common stock or Class B common stock, respectively.
Following the Spin-off, the Former Parent retained 19.9% of our Class A common stock, the Class A Retained Shares, and 19.9% of our Class B common stock, the Class B Retained Shares, in the Distribution Trust. We refer to the Class A Retained Shares and the Class B Retained Shares, collectively, the Retained Shares.
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The Company Shares began trading on the Nasdaq Global Select Market on August 13, 2018.
On December 21, 2018, we completed an initial public offering, the IPO, of 6,300,000 shares of Class A common stock. The Former Parent sold all 4,922,477 shares of its Class A Retained Shares in the IPO. We received no proceeds from the Former Parent’s sale of its Class A Retained Shares in the IPO. We sold 1,377,523 shares of our Class A common stock in the IPO and used all of the proceeds we received to repurchase 1,420,135.66 Class B Retained Shares from the Former Parent.
In March 2019, we completed the repurchase of the remaining Class B Retained Shares from the Former Parent. Following this repurchase, the Former Parent no longer owns any Company Shares.
Recent Events
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.
Business Continuity Plan Activated
The health and well-being of the Company’s employees, customers, and local communities remains paramount while the Company continues to provide the necessary services and products to customers with minimal disruption.
On March 16, 2020, we activated the Company’s well-established Business Continuity Plan, or BCP. The BCP has effectively ensured the Company’s resilient platform continues to operate during these extraordinary times, and has allowed us to continue providing the quality of products and services our customers have come to expect. The plan is supported and complemented by a robust business continuity governance framework, life safety program and annual enterprise-wide exercise and training program. The Company’s BCP plan is framed based on industry best practices and regulatory guidelines and is subject to periodic testing and independent audits. As of May 1, 2020, approximately 86% of the Company’s employees were working remotely. Subsequently, the Company has implemented a plan for returning to the workplace with a phased approach following the recommendations of local authorities and health experts and incorporating increased sanitation procedures, screening protocols for entry into Company facilities as well as case monitoring and contact tracing. As of June 10, 2020, all banking centers are open to the public for regular business hours while observing social distancing and other preventive measures. All electronic channels remain fully operational.
Supporting Our Communities
Beginning on March 26, 2020, we began providing an array of tangible and meaningful support measures to support our customers and communities during the COVID-19 pandemic. These measures include waiving the Bank’s ATM fees for customers and non-customers, late payment fees on all consumer and business loans, and deposit account fees on a case-by-case basis. The Bank is also refraining from reporting negative information such as past due balances to credit bureaus, and, importantly, offering individualized loan payment assistance such as interest payment deferral and forbearance options. Additionally, in April 2020, the Bank increased its mobile check deposit limits. All of these efforts align with regulatory guidance aimed at helping customers and communities, while remaining prudent and manageable, and will continue until further notice.
CARES Act
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 SBA $350.0 billion to provide loans of up to
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$10.0 million per small business as defined in the CARES Act. On April 2, 2020, the Bank began participating in the SBA’s 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 22, 2020, the Company had received approval for 1,885 loan applications under the PPP totaling $207.2 million.
Loan Loss Reserve and Mitigation Programs
The Company performed a comprehensive review of its loan exposures by industry to identify those most susceptible to increased credit risk as a result of the COVID-19 pandemic. The review estimated that approximately 30% of the outstanding loan portfolio as of March 31, 2020 is represented by loans to borrowers in industries, or with collateral values, that are potentially more vulnerable to the financial impact of the pandemic, and approximately 50% of which are secured with real estate collateral. The Company recorded a provision for loan losses of $22 million during the three months ended March 31, 2020 mainly as a result of the estimated deterioration of our loan portfolio caused by the COVID-19 pandemic.
The Company consistently reviews its existing credit approval practices to ensure that sound and prudent underwriting standards continue to drive the Company’s business relationships. As a result, the Company enhanced the monitoring of its entire loan portfolio and has proactively increased the frequency of periodic reviews and conversations with loan customers in anticipation of their future needs, which aligns with our relationship-centric banking model.
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 22, 2020, loans under these programs totaled $1,181 million or 21% of total loans, with the percentage breakdown of the relief granted to the loans under these programs consisting of the following: 55% 90-day interest only, 42% 90-day no payments, and 3% 180-day interest only. 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.
Corporate Information
Our principal executive offices are located at 220 Alhambra Circle, Coral Gables, Florida 33134. Our telephone number is (305) 460-4038. We maintain a website at the address www.amerantbank.com. On our website, you can access, free of charge, our reports on Forms 10-K, 10-Q and 8-K, as well as proxy statements on Schedule 14A and amendments to the materials. Materials are available online as soon as practicable after we file them with the SEC. Additionally, the SEC maintains a website at the address www.sec.gov that contains the information we file or furnish electronically with the SEC. The information contained on our website is not incorporated by reference in, or considered part of, this prospectus supplement or the accompanying prospectus.
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The Offering
The following summary of the offering contains summary information about this offering and about the Notes and is not intended to be complete. It does not contain all the information that may be important to you in making an investment decision. For a more complete understanding of the Notes, please see “Description of the Notes.” Unless otherwise indicated, the information contained in this prospectus supplement is as of the date set forth on the cover of this prospectus supplement.
Securities Offered:
5.75% Senior Notes due June 30, 2025
Issuer:
Amerant Bancorp Inc.
Aggregate Principal Amount:
$14,000,000
Prior Offering:
$46,000,000 of 5.75% Senior Notes due 2025 were priced on June 16, 2020.
Single Issuance:
The Notes have the same terms as the notes priced on June 16, 2020 in the prior offering and comprise a single issuance of $60,000,000 aggregate principal amount of 5.75% Senior Notes due 2025.
Issue Date:
June 23, 2020
Maturity Date:
June 30, 2025
Issue Price:
100% of the principal amount
Interest Rate:
5.75% annually
Interest Payment Dates:
Each June 30 and December 30, commencing December 30, 2020
Record Date:
The 15th calendar day immediately preceding the applicable Interest Payment Date
Form:
Fully-registered global notes in book-entry form
Denominations:
Minimum denominations of $1,000 and integral multiples of $1,000 in excess thereof
Subsidiary Guarantor:
Amerant Florida Bancorp Inc.
Guarantee:
The subsidiary guarantor will fully and unconditionally guarantee payment of principal of and premium, if any, and interest on the Notes. The guarantee will rank equally with all other existing and future unsecured and unsubordinated obligations of the subsidiary guarantor.
Further Issuance:
The Notes will be limited initially to $60,000,000 in aggregate principal amount. We may, however, “reopen” the Notes and issue an unlimited principal amount of additional Notes in the future without the consent of the holders.
Use of Proceeds:
We estimate that the net proceeds from the sale of the Notes offered hereby, after deducting the underwriting discounts and certain offering expenses, will be approximately $13,762,270. We intend to use the net proceeds from this offering for general corporate purposes, which may include working capital, providing capital to support the organic growth of the Bank, funding the opportunistic acquisition of similar or complementary financial service organizations and
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repaying outstanding indebtedness. See “Use of Proceeds” in this prospectus supplement.
Optional Redemption:
The Notes will be redeemable in whole or in part by us on or after three months prior to the maturity date at 100% of the principal amount of the Notes (par), plus accrued and unpaid interest thereon to but excluding the date of redemption. We will provide 10 to 60 calendar days’ notice of redemption to the registered holders of the Notes.
Trading:
The Notes are new issues of securities with no established trading market. We do not intend to apply for listing of the Notes on any securities exchange.
Conflicts of Interest:
Amerant Investments, the Bank’s securities broker-dealer subsidiary, will participate in the offering as a dealer with a concession from the public offering price of 50 basis points. Therefore, Amerant Investments is deemed to have a “conflict of interest” under FINRA Rule 5121 and, accordingly, the offering of the Notes will comply with the applicable requirements of FINRA Rule 5121. For further information, see “Underwriting (Conflicts of Interest).”
Risk Factors:
An investment in the Notes involves risks. You should carefully consider the information contained under “Risk Factors” beginning on page S-13 of this prospectus supplement, page 39 of our Annual Report on Form 10-K for the year ended December 31, 2019, and page 82 of our Quarterly Report on Form 10-Q for the quarter ended March 31, 2020, as well as other information included or incorporated by reference into this prospectus supplement and the accompanying prospectus, including our consolidated financial statements and the notes thereto, before making an investment decision.
Ranking:
The Notes will be our direct, unsecured and unsubordinated obligations and rank equal in priority with all of our existing and future unsecured and unsubordinated indebtedness and senior in right of payment to all of our existing and future subordinated indebtedness. The Notes will be junior to any secured indebtedness, to the extent of the value of the assets securing such indebtedness. The Notes will be structurally subordinated to all of the existing and future liabilities and obligations of our subsidiaries that do not guarantee the Notes, including deposit liabilities and claims of other creditors of the Bank.
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Summary Selected Consolidated Financial and Other Data
The following table sets forth selected consolidated financial and other data of Amerant Bancorp Inc. for the periods ended and as of the dates indicated. The selected consolidated balance sheets as of December 31, 2019 and 2018, and the related selected consolidated statements of operations and comprehensive income, of changes in stockholders’ equity and cash flows presented below for each of the three years in the period ended December 31, 2019 is derived from our audited consolidated financial statements incorporated by reference into this prospectus supplement from our Form 10-K for the year ended December 31, 2019. The summary selected consolidated financial data presented below as of and for the year ended December 31, 2016 has been derived from our audited consolidated financial statements which are not incorporated by reference into this prospectus supplement. The selected consolidated financial data presented below as of and for the three months ended March 31, 2020 and 2019 has been derived from our unaudited consolidated financial statements incorporated by reference into this prospectus supplement from our Quarterly Report on Form 10-Q for the three months ended March 31, 2020. The summary selected consolidated financial results are not indicative of our expected future operating results.
The following summary selected consolidated financial information should be read together with the sections titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Form 10-K for the year ended December 31, 2019 and our Quarterly Report on Form 10-Q for the quarter ended March 31, 2020, together with the historical consolidated financial statements and notes thereto, incorporated by reference into this prospectus supplement and the accompanying prospectus.
 
March 31,
Years Ended December 31,
(in thousands)
2020
2019
2019
2018
2017
2016
Consolidated Balance Sheets
 
 
 
 
 
 
Total assets
$8,098,810
$7,902,355
$7,985,399
$8,124,347
$8,436,767
$8,434,264
Total investments
1,769,987
1,701,328
1,739,410
1,741,428
1,846,951
2,182,737
Total gross loans held for investment(1)
5,668,327
5,734,438
5,744,339
5,920,175
6,066,225
5,764,761
Allowance for loan losses
72,948
60,322
52,223
61,762
72,000
81,751
Total deposits
5,842,212
5,888,188
5,757,143
6,032,686
6,322,973
6,577,365
Securities sold under agreements to repurchase
50,000
Junior subordinated debentures(2)
64,178
118,110
92,246
118,110
118,110
118,110
Advances from the FHLB and other borrowings
1,265,000
1,070,000
1,235,000
1,166,000
1,173,000
931,000
Stockholders' equity
841,117
778,749
834,701
747,418
753,450
704,737
Assets under management and custody(22)
1,572,322
1,693,895
1,815,848
1,592,257
1,750,535
1,870,195
 
March 31,
Years Ended December 31,
(in thousands, except per share amounts)
2020
2019
2019
2018
2017
2016
Consolidated Results of Operations
 
 
 
 
 
 
Net interest income
$49,229
$55,437
$213,088
$219,039
$209,710
$191,933
(Reversal of) provision for loan losses
22,000
(3,150)
375
(3,490)
22,110
Noninterest income
21,910
13,156
57,110
53,875
71,485
62,270
Noninterest expense
44,867
51,945
209,317
214,973
207,636
198,303
Net income
3,382
13,071
51,334
45,833
43,057
23,579
Effective income tax rate
20.83%
21.49%
19.83%
20.38%
44.12%
30.22%
Common Share Data(3)
 
 
 
 
 
 
Stockholders’ book value per common share
$19.95
$18.02
$19.35
$17.31
$17.73
$16.59
Tangible stockholders’ equity (book value) per common share(4)
19.43
17.54
18.84
16.82
17.23
16.08
Basic earnings per common share
0.08
0.31
1.21
1.08
1.01
0.55
Diluted earnings per common share
0.08
0.30
1.20
1.08
1.01
0.55
Basic weighted average shares outstanding
42,185
42,755
42,543
42,487
42,489
42,489
Diluted weighted average shares outstanding(5)
42,533
42,914
42,939
42,487
42,489
42,489
Cash dividend declared per common share(6)
0.94
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March 31,
Years Ended December 31,
(in thousands, except per share amounts, percentages, and FTEs)
2020
2019
2019
2018
2017
2016
Other Financial and Operating Data
 
 
 
 
 
Profitability Indicators (%)
 
 
 
 
 
 
Net interest income / Average total interest earning assets (NIM)(7)
2.65%
2.96%
2.85%
2.78%
2.63%
2.48%
Net income / Average total assets (ROA)(8)
0.17%
0.65%
0.65%
0.55%
0.51%
0.29%
Net income / Average stockholders’ equity (ROE)(9)
1.61%
6.87%
6.43%
6.29%
5.62%
3.29%
Capital Indicators
 
 
 
 
 
 
Total capital ratio(10)
14.54%
14.35%
14.78%
13.54%
13.31%
13.05%
Tier 1 capital ratio(11)
13.38%
13.48%
13.94%
12.69%
12.26%
11.86%
Tier 1 leverage ratio(12)
10.82%
10.83%
11.32%
10.34%
10.15%
9.62%
Common equity tier 1 capital ratio (CET1)(13)
12.42%
11.79%
12.60%
11.07%
10.68%
10.25%
Tangible common equity ratio(14)
10.14%
9.61%
10.21%
8.96%
8.70%
8.12%
Asset Quality Indicators (%)
 
 
 
 
 
 
Non-performing assets / Total assets(15)
0.41%
0.26%
0.41%
0.22%
0.32%
0.85%
Non-performing loans /Total loans(1)(16)
0.59%
0.36%
0.57%
0.30%
0.44%
1.23%
Allowance for loan losses / Total non-performing loans(17)
218.49%
294.01%
158.60%
347.33%
267.18%
115.25%
Allowance for loan losses / Total loans(1)(17)
1.29%
1.05%
0.91%
1.04%
1.19%
1.42%
Net charge-offs/ Average total loans(18)
0.09%
0.10%
0.11%
0.18%
0.11%
0.32%
Efficiency Indicators
 
 
 
 
 
 
Noninterest expense / Average total assets(8)
2.27%
2.58%
2.64%
2.57%
2.45%
2.41%
Salaries and employee benefits/ Average total assets(8)
1.48%
1.66%
1.73%
1.69%
1.55%
1.58%
Other operating expenses/ Average total assets(8)(19)
0.79%
0.92%
0.91%
0.87%
0.89%
0.84%
Efficiency ratio(20)
63.07%
75.73%
77.47%
78.77%
73.84%
78.01%
Full-Time-Equivalent Employees (FTEs)
825
889
829
911
944
955
 
March 31,
Years Ended December 31,
(in thousands, except per share amounts and percentages)
2020
2019
2019
2018
2017
Adjusted Selected Consolidated Results of Operations and Other Data(4)
 
 
 
 
 
Adjusted noninterest expense
44,513
51,012
204,271
201,911
202,391
Adjusted net income
3,662
13,803
53,138
57,923
48,403
Operating income
16,652
16,644
58,276
56,942
71,958
Adjusted basic earnings per common share
0.09
0.33
1.25
1.36
1.14
Adjusted earnings per diluted common share(5)
0.09
0.32
1.24
1.36
1.14
Adjusted net income / Average total assets (Adjusted ROA)(8)
0.19%
0.69%
0.67%
0.69%
0.57%
Adjusted net income / Average stockholders’ equity (Adjusted ROE)(9)
1.74%
7.25%
6.66%
7.95%
6.32%
Adjusted noninterest expense / Average total assets(8)
2.25%
2.53%
2.57%
2.41%
2.38%
Adjusted salaries and employee benefits/ Average total assets(8)
1.48%
1.66%
1.71%
1.62%
1.55%
Adjusted other operating expenses/ Average total assets(8)(19)
0.77%
0.87%
0.86%
0.78%
0.83%
Adjusted efficiency ratio(21)
62.57%
74.37%
76.39%
73.99%
74.76%
(1)
Total gross loans held for investment are net of deferred loan fees and costs.
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(2)
During the year ended December 31, 2019, the Company redeemed $25.0 million of its 10.60% and 10.18% trust preferred securities and related junior subordinated debentures. On January 30, 2020, the Company redeemed all $26.8 million of its outstanding 8.90% trust preferred securities and related junior subordinated debentures.
(3)
The earnings per common share reflect the reverse stock split which reduced the number of outstanding shares on a 1-for-3 basis. See Note 15 to our audited annual consolidated financial statements in the Form 10-K for the year ended December 31, 2019 for details on reverse stock splits.
(4)
This presentation contains adjusted financial information determined by methods other than GAAP. This adjusted financial information is reconciled to GAAP in “Non-GAAP Financial Measures Reconciliation” herein. No adjustments were made to the 2016 financial information.
(5)
As of March 31, 2020 and 2019 and as of December 31, 2019, potential dilutive instruments consisted of unvested shares of restricted stock and restricted stock units mainly related to the Company’s IPO in 2018, totaling 482,316, 786,213, and 530,620, respectively. These 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 at those dates, fewer shares would have been purchased than restricted shares assumed issued. Therefore, at those dates, 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 for the quarter ended March 31, 2020 and 2019 and for the year ended December 31, 2019. We had no potential dilutive instruments at any period prior to December 2018.
(6)
Special cash dividend of $40.0 million paid to the Company’s former parent in connection with the Spin-off.
(7)
Net interest margin is defined as net interest income divided by average interest-earning assets, which are loans, investment securities, deposits with banks and other financial assets which yield interest or similar income.
(8)
Calculated based upon the average daily balance of total assets.
(9)
Calculated based upon the average daily balance of stockholders’ equity.
(10)
Total stockholders’ equity divided by total risk-weighted assets, calculated according to the standardized regulatory capital ratio calculations.
(11)
Tier 1 capital divided by total risk-weighted assets.
(12)
Tier 1 capital divided by quarter to date average assets. Tier 1 capital is composed of Common Equity Tier 1 (CET 1) capital plus outstanding qualifying trust preferred securities of $62.3 million and $114.1 million at March 31, 2020 and 2019, respectively, and $89.1 million at December 31, 2019 and $114.1 million at December 31, 2018, 2017 and 2016.
(13)
Common Equity Tier 1 capital (CET 1) divided by total risk-weighted assets.
(14)
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 intangibles are included in other assets in the Company’s consolidated balance sheets.
(15)
Non-performing assets include all accruing loans past due by 90 days or more, all nonaccrual loans, restructured loans that are considered “troubled debt restructurings” or “TDRs”, and OREO properties acquired through or in lieu of foreclosure. Non-performing assets were $33.4 million and $20.5 million as of March 31, 2020 and 2019, respectively, and $33.0 million, $18.1 million, $27.3 million and $71.3 million as of December 31, 2019, 2018, 2017 and 2016, respectively.
(16)
Non-performing loans include all accruing loans past due by 90 days or more, and all nonaccrual loans and restructured loans that are considered TDRS. Non-performing loans were $33.4 million and $20.5 million as of March 31, 2020 and 2019, respectively, and $32.9 million, $17.8 million, $26.9 million and $70.9 million as of December 31, 2019, 2018, 2017 and 2016, respectively.
(17)
Allowance for loan losses was $72.9 million and $60.3 million as of March 31, 2020 and 2019, respectively, and $52.2 million, $61.8 million, $72.0 million and $81.8 million as of December 31, 2019, 2018, 2017 and 2016, respectively. See Note 5 to our audited consolidated financial statements in the Form 10-K for the year ended December 31, 2019 for more details on our impairment models.
(18)
Calculated based upon the average daily balance of outstanding loan principal balance net of deferred loan fees and costs, excluding the allowance for loan losses.
(19)
Other operating expenses is the result of total noninterest expense less salary and employee benefits.
(20)
Efficiency ratio is the result of noninterest expense divided by the sum of noninterest income and net interest income.
(21)
Adjusted efficiency ratio is the efficiency ratio less the effect of restructuring and Spin-off costs and other adjustments management believes are useful to understand the Company’s performance, described in “Non-GAAP Financial Measures Reconciliation”.
(22)
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.
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Non-GAAP Financial Measures Reconciliation
Certain financial measures and ratios contained in this prospectus supplement, including “adjusted noninterest income,” “adjusted noninterest expense”, “adjusted net income”, “adjusted net income per share (basic and diluted)”, “operating income,” “adjusted return on assets (ROA)”, “adjusted return on equity (ROE)”, and other ratios appearing in the tables below are supplemental measures that are not required by, or are not presented in accordance with, U.S. generally accepted accounting principles (“GAAP”). The Company refers to these financial measures and ratios as “non-GAAP financial measures.” The Company’s Non-GAAP financial measures are derived from the Company’s interim unaudited consolidated financial statements for the quarter ended March 31, 2020 and 2019 and the Company’s consolidated balance sheets as of December 31, 2019 and 2018, and the related consolidated statements of operations and comprehensive income, of changes in stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2019 adjusted for certain costs incurred by the Company in the periods presented related to tax deductible restructuring and non-deductible Spin-off costs. These adjustments also reflect additional costs we have incurred in connection with the Company’s restructuring activities that began in 2018 and continued into 2020, the Company’s $22 million allowance for loan losses in 2020, the after-tax gain of $2.2 million on the sale of vacant Beacon land in 2019, the after-tax gain of $7.1 million on the sale of our New York City building in 2017, and the $9.6 million charge to our deferred tax assets due to the enactment of the 2017 Tax Act in 2017.
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 into 2020, the Company’s increase of its allowance for loan losses in 2020, the one-time gain on sale of the vacant Beacon land in the fourth quarter of 2019, the after-tax gain on the sale of our New York City building in 2017, and the charge to our deferred tax assets due to the enactment of the 2017 Tax Act in 2017. 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.
The following tables sets forth the Company’s Non-GAAP financial measures.
 
March 31,
Years Ended December 31,
(in thousands)
2020
2019
2019
2018
2017
Total noninterest income
$21,910
$13,156
$57,110
$53,875
$71,485
Less: gain on sale of vacant Beacon land
(2,795)
Less: gain on sale of New York building
(10,469)
Adjusted noninterest income
$21,910
$13,156
$54,315
$53,875
$61,016
Total noninterest expenses
$44,867
$51,945
$209,317
$214,973
$207,636
Less: Restructuring costs(1):
 
 
 
 
 
Staff reduction costs(2)
54
1,471
4,709
Legal and strategy advisory costs
1,176
Rebranding costs
933
3,575
400
Other costs
300
110
Total restructuring costs
354
933
5,046
6,395
Less spin-off costs:
 
 
 
 
 
Legal fees
3,539
2,000
Additional contribution to non-qualified deferred compen-sation plan on behalf of participants to mitigate tax effects of unexpected early distribution due to spin-off(3)
1,200
Accounting and consulting fees
1,384
2,400
Other expenses
544
845
Total spin-off costs
6,667
5,245
Adjusted noninterest expenses
$44,513
$51,012
$204,271
$201,911
$202,391
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March 31,
Years Ended December 31,
(in thousands, except per share amounts)
2020
2019
2019
2018
2017
Net income
$3,382
$13,071
$51,334
$45,833
$43,057
Plus after-tax restructuring costs:
 
 
 
 
 
Restructuring costs before income tax effect
354
933
5,046
6,395
Income tax effect
(74)
(201)
(1,001)
(1,303)
Total after-tax restructuring costs
280
732
4,045
5,092
Plus after-tax total spin-off costs:
 
 
 
 
 
Total spin-off costs before income tax effect
6,667
5,245
Income tax effect(4)
331
(2,314)
Total after-tax spin-off costs
6,998
2,931
Less after-tax gain on sale of vacant Beacon land:
Gain on sale of vacant Beacon land before income tax effect
(2,795)
Income tax effect
554
Total after-tax gain on sale of vacant Beacon land
(2,241)
Less after-tax gain on sale of New York building:
 
 
 
 
 
Gain on sale of New York building before income tax effect
(10,469)
Income tax effect(5)
3,320
Total after-tax gain on sale of New York building
(7,149)
Plus impact of lower rate under the 2017 Tax Act:
 
 
 
 
 
Remeasurement of net deferred tax assets, other than balances corresponding to items in AOCI
8,470
Remeasurement of net deferred tax assets corresponding to items in AOCI
1,094
Total impact of lower rate under the 2017 Tax Act
9,564
Adjusted net income
$3,662
$13,803
$53,138
$57,923
$48,403
Net income
$3,382
$13,071
$51,334
$45,833
$43,057
Plus: income tax expense
890
3,577
12,697
11,733
33,992
Plus: provision for loan losses
22,000
(3,150)
375
(3,490)
Less: securities gains, net
9,620
4
2,605
(999)
(1,601)
Operating income
$16,652
$16,644
$58,276
$56,942
$71,958
Basic earnings per share
$0.08
$0.31
$1.21
$1.08
$1.01
Plus: after-tax impact of restructuring costs
0.01
0.02
0.09
0.12
Plus: after-tax impact of total spin-off costs
0.16
0.07
Less: after-tax gain on sale of vacant Beacon land
(0.05)
Less: after-tax gain on sale of New York building
(0.17)
Plus: effect of lower rate under the 2017 Tax Act
0.23
Adjusted basic earnings per common share
$0.09
$0.33
$1.25
$1.36
$1.14
Diluted earnings per share(6)
$0.08
$0.30
$1.20
$1.08
$1.01
Plus: after-tax impact of restructuring costs
0.01
0.02
0.09
0.12
Plus: after-tax impact of total spin-off costs
0.16
0.07
Less: after-tax gain on sale of vacant Beacon land
(0.05)
Less: after-tax gain on sale of New York building
(0.17)
Plus: effect of lower rate under the 2017 Tax Act
0.23
Adjusted diluted earnings per common share
$0.09
$0.32
$1.24
$1.36
$1.14
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March 31,
Years Ended December 31,
 
2020
2019
2019
2018
2017
Net income / Average total assets (ROA)
0.17%
0.65%
0.65%
0.55%
0.51%
Plus: after-tax impact of restructuring costs
0.02%
0.04%
0.05%
0.06%
—%
Plus: after-tax impact of total spin-off costs
—%
—%
—%
0.08%
0.03%
Less: after-tax gain on sale of vacant Beacon land
—%
—%
(0.03)%
—%
—%
Less: after-tax gain on sale of New York building
—%
—%
—%
—%
(0.08)%
Plus: effect of lower rate under the 2017 Tax Act
%
%
%
%
0.11%
Adjusted net income/Average total assets (Adjusted ROA)
0.19%
0.69%
0.67%
0.69%
0.57%
Net income / Average stockholders’ equity (ROE)
1.61%
6.87%
6.43%
6.29%
5.62%
Plus: after-tax impact of restructuring costs
0.13%
0.38%
0.51%
0.70%
—%
Plus: after-tax impact of total spin-off costs
—%
—%
—%
0.96%
0.38%
Less: after-tax gain on sale of vacant Beacon land
—%
—%
(0.28)%
—%
—%
Less: after-tax gain on sale of New York building
—%
—%
—%
—%
(0.93)%
Plus: effect of lower rate under the 2017 Tax Act
%
%
%
%
1.25%
Adjusted net income / Average stockholders’ equity (Adjusted ROE)
1.74%
7.25%
6.66%
7.95%
6.32%
Efficiency ratio
63.07%
75.73%
77.47%
78.77%
73.84%
Less: impact of restructuring costs
(0.50)%
(1.36)%
(1.89)%
(2.34)%
—%
Less: impact of total spin-off costs
—%
—%
—%
(2.44)%
(1.86)%
Plus: gain on sale of vacant Beacon land
—%
—%
0.81%
—%
—%
Plus: gain on sale of New York building
%
%
%
%
2.78%
Adjusted efficiency ratio
62.57%
74.37%
76.39%
73.99%
74.76%
Noninterest expense / Average total assets
2.27%
2.58%
2.64%
2.57%
2.45%
Less: impact of restructuring costs
(0.02)%
(0.05)%
(0.07)%
(0.08)%
—%
Less: impact of total spin-off costs
%
%
%
(0.08)%
(0.07)%
Adjusted noninterest expense / Average total assets
2.25%
2.53%
2.57%
2.41%
2.38%
Salaries and employee benefits / Average total assets
1.48%
1.66%
1.73%
1.69%
1.55%
Less: impact of restructuring costs
—%
—%
(0.02)%
(0.06)%
—%
Less: impact of total spin-off costs
%
%
%
(0.01)%
%
Adjusted salaries and employee benefits / Average total assets
1.48%
1.66%
1.71%
1.62%
1.55%
Other operating expenses / Average total assets
0.79%
0.92%
0.91%
0.87%
0.89%
Less: impact of restructuring costs
(0.02)%
(0.05)%
(0.05)%
(0.02)%
—%
Less: impact of total spin-off costs
%
%
%
(0.07)%
(0.06)%
Adjusted other operating expenses / Average total assets
0.77%
0.87%
0.86%
0.78%
0.83%
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March 31,
Years Ended December 31,
(in thousands, except per share amounts and percentages)
2020
2019
2019
2018
2017
2016
Stockholders’ equity
$841,117
$778,749
$834,701
$747,418
$753,450
$704,737
Less: goodwill and other intangibles
(21,698)
(21,005)
(21,744)
(21,042)
(21,186)
(21,337)
Tangible common stockholders’ equity
$819,419
$757,744
$812,957
$726,376
$732,264
$683,400
Total assets
8,098,810
7,902,355
7,985,399
$8,124,347
$8,436,767
$8,434,264
Less: goodwill and other intangibles
(21,698)
(21,005)
(21,744)
(21,042)
(21,186)
(21,337)
Tangible assets
$8,077,112
$7,881,350
$7,963,655
$8,103,305
$8,415,581
$8,412,927
Common shares outstanding
42,166
43,205
43,146
43,183
42,489
42,489
Tangible common equity ratio
10.14%
9.61%
10.21%
8.96%
8.70%
8.12%
Stockholders’ book value per common share
$19.95
$18.02
$19.35
$17.31
$17.73
$16.59
Tangible stockholders’ book value per common share
$19.43
$17.54
$18.84
$16.82
$17.23
$16.08
(1)
Expenses incurred for actions designed to implement the Company’s strategy as a new independent company. 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, enhanced sales tools and training, expanded product offerings and improved customer analytics to identify opportunities.
(2)
On October 30, 2018, the Board of Directors of the Company adopted a voluntary early retirement plan (the “Voluntary Plan”) for certain eligible long-term employees and an involuntary severance plan (the “Involuntary Plan”) for certain other positions. The Company incurred approximately $4.2 million of expenses in 2018 in connection with the Voluntary Plan, substantially all of which will be paid over time in the form of installment payments until January 2021. The Company incurred approximately $0.5 million of expenses in 2018 in connection with the Involuntary Plan, substantially all of which will be paid over time in the form of installment payments until December 2019.
(3)
The Spin-off caused an unexpected early distribution for U.S. federal income tax purposes from our deferred compensation plan. This distribution was taxable to plan participants as ordinary income during 2018. We partially compensated plan participants, in the aggregate amount of $1.2 million, for the higher tax expense they incurred as a result of the distribution increasing the plan participants’ estimated effective federal income tax rates by recording a contribution to the plan on behalf of its participants. The after tax net effect of this $1.2 million contribution for the year ended December 31, 2018, was approximately $952,000. As a result of the early taxable distribution to plan participants, we have expensed and deducted for federal income tax purposes, previously deferred compensation of approximately $8.1 million, resulting in an estimated tax credit of $1.7 million, which exceeded the amount of the tax gross-up paid to plan participants.
(4)
Calculated based upon the estimated annual effective tax rate for the periods, which excludes the tax effect of discrete items, and the amounts that resulted from the difference between permanent Spin-off costs that are non-deductible for Federal and state income tax purposes, and total Spin-off costs recognized in the consolidated financial statements. The estimated annual effective rate applied for the calculation differs from the reported effective tax rate since it is based on a different mix of statutory rates applicable to these expenses and to the rates applicable to the Company and its subsidiaries.
(5)
Calculated based upon an estimated annual effective rate of 31.71%.
(6)
As of March 31, 2020 and 2019 and as of December 31, 2019, potential dilutive instruments consisted of unvested shares of restricted stock and restricted stock units mainly related to the Company’s IPO in 2018. As of March 31, 2020 and 2019 and as of December 31, 2019 unvested shares of restricted stock and restricted stock units totaled 482,316, 786,213 and 530,620, respectively. These 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 at those dates, fewer shares would have been purchased than restricted shares assumed issued. Therefore, at those dates, 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 for the year ended December 31, 2019. We had no potential dilutive instruments at any period prior to December 2018.
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RISK FACTORS
An investment in our Notes involves a number of risks. This prospectus supplement does not describe all of those risks. Before you decide whether an investment in the Notes is suitable for you, you should carefully consider the risks described below relating to the offering as well as the risk factors concerning our business included in our Annual Report on Form 10-K for the year ended December 31, 2019 and our Quarterly Report on Form 10-Q for the quarter ended March 31, 2020, as well as the other information included or incorporated by reference in this prospectus supplement and the accompanying prospectus. Our business, financial condition or results of operations could be materially adversely affected by any of these risks. The risks and uncertainties we describe are not the only ones facing us. Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also impair our business or operations. Any adverse effect on our business, financial condition or operating results could result in a decline in the value of the Notes and the loss of all or part of your investment.
Risks Related to an Investment in Our Notes and This Offering
We and the subsidiary guarantor are each a holding company with limited operations and depend on our subsidiaries for the funds required to make payments of principal and interest on the Notes.
We and the subsidiary guarantor are each a separate and distinct legal entity from the Bank and our other subsidiaries. Our and our subsidiary guarantor’s primary source of funds to make payments of principal and interest on the Notes and to satisfy any obligations under the guarantee, respectively, and to satisfy any other financial obligations are dividends from the Bank. Our and the subsidiary guarantor’s ability to receive dividends from the Bank is contingent on a number of factors, including the Bank’s ability to meet applicable regulatory capital requirements, the Bank’s profitability and earnings, and the general strength of its balance sheet. Various federal and state regulatory provisions limit the amount of dividends bank subsidiaries are permitted to pay to their holding companies without regulatory approval. In general, the Bank may only pay dividends either out of its net income after any required transfers to surplus or reserves have been made or out of its retained earnings. In addition, the Federal Reserve and the FDIC have issued policy statements stating that insured banks and bank holding companies generally should pay dividends only out of current operating earnings.
Banks and their holding companies are required to maintain a capital conservation buffer of 2.5% in addition to satisfying other applicable regulatory capital ratios. Banking institutions that do not maintain capital in excess of the capital conservation buffer may face constraints on dividends, equity repurchases and executive compensation based on the amount of the shortfall. Accordingly, if the Bank fails to maintain the applicable minimum capital ratios and the capital conservation buffer, dividends to us or the subsidiary guarantor from the Bank may be prohibited or limited, and there may be insufficient funds to make principal and interest payments on the Notes or to satisfy any obligation under the guarantee.
In addition, state or federal banking regulators have broad authority to restrict the payment of dividends, including in circumstances where a bank under such regulator’s jurisdiction engages in (or is about to engage in) unsafe or unsound practices. Such regulators have the authority to require that a bank cease and desist from unsafe and unsound practices and to prevent a bank from paying a dividend if its financial condition is such that the regulator views the payment of a dividend to constitute an unsafe or unsound practice.
Accordingly, we can provide no assurance that we or the subsidiary guarantor will receive dividends from the Bank in an amount sufficient to pay the principal of, or interest on, the Notes or to satisfy any obligations under the guarantee. In addition, our right and the rights of our creditors, including holders of the Notes, to participate in the assets of any non-guarantor subsidiary upon its liquidation or reorganization would be subject to the prior claims of such non-guarantor subsidiary’s creditors, except to the extent that we or the subsidiary guarantor may ourselves be a creditor with recognized claims against such non-guarantor subsidiary. The Notes will be guaranteed only by Amerant Florida Bancorp Inc.
The guarantee may be challenged as fraudulent conveyances.
Federal, state and foreign bankruptcy, fraudulent conveyance, fraudulent transfer or similar laws could limit the enforceability of a guarantee. For example, creditors of the subsidiary guarantor could claim that, since the guarantee was incurred for the benefit of Amerant Bancorp Inc. (and only indirectly for the benefit of the subsidiary guarantor), the obligation of a subsidiary guarantor was incurred for less than reasonably equivalent
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value or fair consideration. If Amerant Florida Bancorp Inc. is deemed to have received less than reasonably equivalent value or fair consideration for its guarantee and, at the time it gave the guarantee, it:
was insolvent or rendered insolvent by giving its guarantee;
was engaged in a business or transaction for which its remaining assets constituted unreasonably small capital; or
intended to incur debts beyond its ability to pay such debts as they mature, then the obligations of the subsidiary guarantor under its guarantee could be voided. If a court voided a guarantee as a result of a fraudulent transfer or conveyance, then the holders of the Notes would cease to have a claim against the subsidiary guarantor. In this regard, in an attempt to limit the applicability of fraudulent transfer or conveyance laws, the Indenture limits the amount of the guarantee to the amount that will result in it not constituting a fraudulent transfer or conveyance. However, we cannot assure you as to what standard a court would apply in making a determination regarding whether reasonably equivalent value or fair consideration was received or as to what would be the maximum liability of the guarantor or whether this limitation would be effective in protecting a guarantee from being voided under fraudulent transfer or conveyance laws.
The Notes will not be obligations of, or insured or guaranteed by, the FDIC, any other governmental agency.
Neither the Notes nor the guarantee are bank deposits and will be the respective obligations of Amerant Bancorp Inc. and Amerant Florida Bancorp Inc. only. They will not be obligations of, or guaranteed or insured by, the FDIC, or any other governmental agency.
We may incur a substantial level of debt that could materially adversely affect our ability to generate sufficient cash to fulfill our obligations under the Notes.
Neither we, nor any of our subsidiaries, are subject to any limitations under the terms of the Indenture from issuing, accepting or incurring any amount of additional debt, deposits or other liabilities, including Senior Indebtedness or other obligations ranking equally with the Notes. We expect that we and our subsidiaries will incur additional debt and other liabilities from time to time, and our level of debt and the risks related thereto could increase.
A substantial level of debt could have important consequences to holders of the Notes, including the following:
making it more difficult for us to satisfy our obligations with respect to our debt, including the Notes;
requiring us to dedicate a substantial portion of our cash flow from operations to payments on our debt, thereby reducing funds available for other purposes;
increasing our vulnerability to adverse economic and industry conditions, which could place us at a disadvantage relative to our competitors that have less debt;
limiting our flexibility in planning for, or reacting to, changes in our business and the industries in which we operate; and
limiting our ability to borrow additional funds, or to dispose of assets to raise funds, if needed, for working capital, capital expenditures, acquisitions and other corporate purposes.
We may not be able to generate sufficient cash to service all of our debt, including the Notes.
Our ability to make scheduled payments of principal and interest or to satisfy our obligations in respect of our debt or to refinance our debt will depend on our future operating performance. Prevailing economic conditions (including low interest rates and reduced economic activity due to COVID-19), regulatory constraints, including, among other things, limitations on distributions to us from our subsidiaries and required capital levels with respect to certain of our subsidiary banks and nonbanking subsidiaries, and financial, business and other factors, many of which are beyond our control, will also affect our ability to meet these needs. We may not be able to generate sufficient cash flows from operations, or obtain future borrowings in an amount sufficient to enable us to pay our debt, or to fund our other liquidity needs. We may need to refinance all or a portion of our debt on or before maturity. We may not be able to refinance any of our debt when needed on commercially reasonable terms or at all.
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The price at which you will sell your Notes prior to maturity will depend on a number of factors and may be substantially less than the amount you originally invest.
Many factors affect the trading market for, and the trading value of, the Notes. These factors include: the method of calculating the principal, premium, if any, interest or other amounts payable, if any, on the Notes; the time remaining to the maturity of the Notes; the ranking of the Notes; the redemption features of the Notes; the outstanding amount of senior notes with terms identical to the Notes offered hereby; the prevailing interest rates being paid by other companies similar to us; our financial condition, financial performance and future prospects; the level, direction and volatility of market interest rates generally; general economic conditions of the capital markets in the United States; and public health outbreaks (including COVID-19) and geopolitical conditions and other financial, political, regulatory, and judicial events that affect the capital markets generally. The condition of the financial markets and prevailing interest rates have fluctuated significantly in the past and are likely to fluctuate in the future. Such fluctuations could adversely affect the trading market (if any) for, and the market price of, the Notes.
Because the Notes may be redeemed at our option under certain circumstances prior to their maturity, you may be subject to reinvestment risk.
Subject to the prior approval of the Federal Reserve (or, as and if applicable, the rules of any appropriate successor bank regulatory agency), to the extent that such approval is then required under applicable laws or regulations, including capital regulations, we may redeem all or a portion of the Notes on or after three months prior to the stated maturity date. In the event that we redeem the Notes, holders of the Notes will receive only the principal amount of the Notes plus any accrued and unpaid interest to, but excluding, such earlier redemption date. If any redemption occurs, holders of the Notes will not have the opportunity to continue to accrue and be paid interest to the stated maturity date. Any such redemption may have the effect of reducing the income or return that you may expect to receive on an investment in the Notes by reducing the term of the investment. If this occurs, you may not be able to reinvest the proceeds at an interest rate comparable to the rate paid on the Notes. See “Description of the Notes—Optional Redemption” in this prospectus supplement.
Ratings of the Notes could be lowered in the future.
We expect that the Notes will be rated “investment grade” by one or more nationally recognized statistical rating organizations. A rating is not a recommendation to purchase, hold or sell the Notes, since a rating does not predict the market price of a particular security or its suitability for a particular investor. A rating organization may lower our rating, or change our ratings’ outlook, or decide not to rate our securities, temporarily or permanently, in its sole discretion. The rating of the Notes will be based primarily on the rating organization’s assessment of the likelihood of timely payment of interest when due on the Notes and the ultimate payment of principal of the Notes on the final maturity date. The reduction, suspension or withdrawal of the ratings of the Notes will not, in and of itself, constitute an event of default under the Indenture.
Your ability to transfer the Notes may be limited by the absence of an active trading market, and there is no assurance that any active trading market will develop for the Notes.
The Notes are a new issue of securities for which there is no established trading market, and we do not intend to apply for listing of the Notes on any securities exchange or for quotation of the Notes on a quotation system. The underwriter has advised us that they intend to make a market in the Notes, as permitted by applicable laws and regulations; however, the underwriter is not obligated to make a market in the Notes and may discontinue its market-making activities at any time without notice. In addition, the liquidity of the trading market for the Notes, if any, will depend upon, among other things, the number of holders of the Notes, our performance and prospects, the market for similar securities, the interest of securities dealers in making a market in the Notes and other factors. As a result, we cannot provide you with any assurance regarding whether a trading market for the Notes will develop or the ability of holders of the Notes to sell their Notes.
The market value of the Notes may be less than the principal amount of the Notes.
If a market develops for the Notes, the prices at which holders may be able to sell their Notes may be affected, potentially adversely, by a number of factors. These factors include: the method of calculating the principal, premium, if any, interest or other amounts payable, if any, on the Notes; the time remaining to maturity of the Notes; the ranking of the Notes; the aggregate amount outstanding of the Notes; any redemption or
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repayment features of the Notes; any changes in the ratings on the Notes provided by any rating agency; the prevailing interest rates being paid by other companies similar to us; the level, direction, and volatility of market interest rates generally; general economic conditions of the capital markets in the United States; geopolitical conditions and other financial, political, regulatory, and judicial events that affect the capital markets generally; the extent of any market-making activities with respect to the Notes; and the operating performance of the Bank. Often, the only way to liquidate your investment in the Notes prior to maturity will be to sell the Notes. At that time, there may be a very illiquid market for the Notes or no market at all.
USE OF PROCEEDS
We estimate that the net proceeds from the sale of the Notes offered hereby, after deducting the underwriting discounts and certain offering expenses, will be approximately $13,762,270. We intend to use the net proceeds from this offering for general corporate purposes, which may include working capital, providing capital to support the organic growth of the Bank, funding the opportunistic acquisition of similar or complementary financial service organizations and repaying outstanding indebtedness. Although our management actively evaluates acquisition opportunities, we do not have any definitive plans relating to material acquisitions at this time.
Our management will have broad discretion in the use of the net proceeds from the sale of the Notes. Pending the use of the net proceeds of this offering as described above, we may invest such proceeds in highly liquid, short-term securities or in deposit accounts at the Bank.
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CAPITALIZATION
The following table sets forth our consolidated capitalization, including regulatory capital ratios, as of March 31, 2020:
on an actual basis; and
on an as adjusted basis after giving effect to the sale of the Notes offered hereby and the $46,000,000 of 5.75% Senior Notes due 2025 that were priced on June 16, 2020 for total net proceeds of approximately $58,524,770 after deducting the underwriting discounts and estimated offering expenses.
The table should be read together with the financial and other data in this prospectus supplement as well as the unaudited consolidated financial statements and related notes and Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2020, which is incorporated by reference into this prospectus supplement.
 
As of March 31, 2020
(Unaudited, dollars in thousands)
Actual
As adjusted
Cash and cash equivalents
$271,053
$329,578
Liabilities
 
 
Deposits
$5,842,212
$5,842,212
Advances from the Federal Home Loan Bank and other borrowings
1,265,000
1,265,000
Junior subordinated debentures held by trust subsidiaries
64,178
64,178
Accounts payable, accrued liabilities and other liabilities
86,303
86,303
Notes offered hereby and notes previously offered(1)
$
$58,525
Total liabilities
$7,257,693
$7,316,218
Stockholders’ equity
 
 
Class A common stock, $0.10 par value, 400 million shares authorized, 28,879,576 shares issued and outstanding
$2,888
$2,888
Class B common stock, $0.10 par value, 100 million shares authorized, 13,286,137 shares issued and outstanding
1,329
1,329
Additional paid-in capital
358,277
358,277
Retained earnings
447,506
447,506
Accumulated other comprehensive income
31,117
31,117
Total stockholders’ equity
$841,117
$841,117
Total liabilities and stockholders’ equity
$8,098,810
$8,157,335
Regulatory Capital Ratios: (consolidated)
 
 
Total capital ratio
14.54%
14.54%
Tier 1 capital ratio
13.38%
13.38%
Tier 1 leverage ratio
10.82%
10.82%
Common equity tier 1 capital ratio (CET 1)
12.42%
12.42%
Tangible common equity ratio
10.14%
10.07%
(1)
Presented net of issuance cost.
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DESCRIPTION OF THE NOTES
The Notes offered by this prospectus supplement will be issued by Amerant Bancorp Inc. under an indenture to be dated as of June 23, 2020 (the “Base Indenture”), as supplemented by a first supplemental indenture to be dated as of June 23, 2020, between us, the subsidiary guarantor party thereto and The Bank of New York Mellon, as trustee (the “Trustee”). We refer to the Base Indenture, together with the first supplemental indenture, as the “Indenture.” The following description of the Notes and the Indenture may not be complete and is subject to and qualified in its entirety by reference to all of the provisions of the Notes and the Indenture. Wherever we refer to particular sections or defined terms of the Indenture, it is our intent that those sections or defined terms will be incorporated by reference in this prospectus supplement. We urge you to read these documents because they, and not this description, define your rights as a holder of the Notes. For purposes of this section, references to “Amerant Bancorp Inc.,” “we,” “us” or “our” include only Amerant Bancorp Inc. and not any of its subsidiaries.
General
The Notes issued in this offering combined with the $46,000,000 of 5.75% Senior Notes due 2025 offered in a prior offering that priced on June 16, 2020 will initially be limited to $60,000,000 principal amount. The Notes will mature on June 30, 2025. The Notes will not be subject to repayment at the option of the holder at any time prior to maturity and will not be entitled to any sinking fund. The Notes are not convertible into, or exchangeable for, equity securities of Amerant. The Notes will be issued in fully registered book-entry form without coupons and in minimum denominations of $1,000 and integral multiples of $1,000 in excess thereof. We do not intend to apply for the listing of the Notes on any securities exchange.
The Notes will be unsecured and unsubordinated and will rank equally in priority among themselves and with all of our other existing and future unsecured and unsubordinated indebtedness and senior in right of payment to all of our existing and future subordinated indebtedness. The Notes will be fully guaranteed by Amerant Florida Bancorp Inc., a subsidiary of Amerant Bancorp Inc. Amerant and the subsidiary guarantor may from time to time, without notice or consent of the holders of the Notes, incur additional secured or unsecured senior indebtedness ranking equally with the Notes, as well as additional subordinated indebtedness ranking junior to the Notes. Our non-guarantor subsidiaries may also, without notice or consent of the holders of the Notes, incur additional debt or liabilities in the future, all of which would rank structurally senior to the Notes.
We and the subsidiary guarantor are corporations separate and apart from Amerant Bank N.A. and, therefore, must provide for our own liquidity. Our and the subsidiary guarantor’s main source of funding to pay the interest on our debt obligations is dividends declared and paid to us by Amerant Bank N.A. together with our own cash position. Our subsidiaries incurred interest expenses of $22.1 million and $24.9 million for the three months ended March 31, 2020 and March 31, 2019, respectively, and $99.9 million and $90.3 million for the year ended December 31, 2019 and 2018, respectively. At March 31, 2020, we had no unsecured senior or secured debt. In addition, our subsidiary guarantor, Amerant Florida Bancorp Inc., an intermediate bank holding company, had $64.1 million of junior subordinated debt outstanding on March 31, 2020 and incurred interest expense of $0.79 million and $2.11 million for the three months ended March 31, 2020 and March 31, 2019, respectively, and $7.18 million and $8.09 million for the year ended December 31, 2019 and 2018, respectively (intermediate holding company only). The subsidiary guarantor has no secured debt and no senior debt.
There are statutory and regulatory limitations that affect the ability of Amerant Bank N.A. to pay dividends. Accordingly, we may not have access to sufficient cash to make payments on the Notes or satisfy obligations under the guarantee. See the sections entitled “Risk Factors” in this prospectus, our Annual Report on Form 10-K for the fiscal year ended December 31, 2019 and our Quarterly Report on Form 10-Q for the period ended March 31, 2020, and the section entitled “Supervision and Regulations” in our Annual Report on Form 10-K.
The Notes will be our exclusive obligation and not the obligations of our subsidiaries, except to the extent of the guarantee provided by our subsidiary guarantor. Our subsidiaries are separate and distinct legal entities. The Notes will not be guaranteed by any of our subsidiaries other than Amerant Florida Bancorp Inc.
The Notes will be subject to defeasance under the conditions described below in “—Discharge, Defeasance and Covenant Defeasance.”
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The Notes are not savings accounts, deposits or other obligations of any of our bank or non-bank subsidiaries and are not insured by the Federal Deposit Insurance Corporation, the Federal Reserve or any other governmental agency or instrumentality.
We may, without the consent of the holders of the Notes, increase the principal amount of the Notes by issuing additional Notes in the future with the same terms and conditions, except for any differences in the issue date, the issue price and interest accrued prior to the date of issuance of the additional Notes, and with the same CUSIP number as the Notes offered by this prospectus supplement; provided that if any additional Notes are not fungible with the Notes offered by this prospectus supplement for U.S. federal income tax purposes, such additional Notes will be issued under a separate CUSIP number. The Notes offered by this prospectus supplement and any additional Notes would rank equally and ratably and would be treated as a single series for all purposes under the Indenture.
The Indenture contains no financial covenants and does not restrict us from paying dividends, selling assets, making investments or issuing or repurchasing or redeeming other securities, and does not contain any provision that would provide protection to the holders of the Notes against a sudden and dramatic decline in credit quality resulting from a merger, takeover, recapitalization or similar restricting or any other event involving us or our subsidiaries that may adversely affect our credit quality, except to the extent described under “Description of the Notes— Consolidation, Merger, Conveyance or Transfer of Assets” and “—Certain Covenants” included in this prospectus supplement. No recourse will be available for the payment of principal or, or interest on, any Note, for any claim based thereon, or otherwise in respect thereof, against any shareholder, employee, officer or director, as such past, present or future, of Amerant Bancorp Inc. or any successor entity.
Payments of principal and interest to owners of the book-entry interests described below are expected to be made in accordance with the procedures of The Depository Trust Company and its participants, including Clearstream Banking, société anonyme, and Euroclear Bank S.A./N.V., as operator of the Euroclear System.
Interest
The Notes will bear interest at the rate of 5.75% per annum. Interest on the Notes will accrue from and including June 23, 2020 and will be payable semi-annually in arrears on June 30 and December 30 of each year (each an “interest payment date”), commencing on December 30, 2020. Interest will be computed on the basis of a 360-day year consisting of twelve 30-day months.
Interest on the Notes will accrue from and including June 23, 2020 to, but excluding, the first interest payment date and then from, and including, the immediately preceding interest payment date to which interest has been paid or duly provided for to, but excluding, the next interest payment date or the maturity date, as the case may be. Each of these periods is referred to as an “interest period” for the Notes. If an interest payment date or the maturity date for the Notes falls on a day that is not a business day, Amerant will postpone the interest payment or the payment of principal and interest at maturity to the next succeeding business day, but the payments made on such dates will be treated as being made on the date that the payment was first due and the holders of the Notes will not be entitled to any further interest or other payments with respect to such postponements.
When we use the term “business day”, we mean each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which banking institutions or trust companies in a place of payment for the Notes, or the city in which the corporate trust office of the Trustee is located, are authorized or obligated by law or executive order to close. The interest payable on the Notes on any interest payment date, subject to certain exceptions, will be paid to the person in whose name the Notes are registered at the close of business on the 15th calendar day immediately preceding the applicable interest payment date, whether or not a business day, immediately preceding the interest payment date. However, interest that Amerant pays on the maturity date will be paid to the person to whom the principal will be payable. Interest will be payable by wire transfer in immediately available funds in U.S. dollars at the office of the paying agent for the Notes or, at Amerant’s option in the event the Notes are not represented by global notes (as described below), by check mailed to the address of the person specified for payment in the preceding sentences.
Ranking
The Notes will be unsecured and unsubordinated and will rank equally in priority among themselves and with all of our other existing and future unsecured and unsubordinated indebtedness, and senior in right of
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payment to all of our existing and future subordinated indebtedness. The Notes will be effectively subordinated to our existing and future secured indebtedness, to the extent of the value of the collateral securing such indebtedness, and structurally subordinated to the existing and future indebtedness of our subsidiaries that are not the subsidiary guarantor.
The subsidiary guarantee of the Notes will be the unsecured senior obligation of the subsidiary guarantor and will rank equally in right of payment with all of the existing and future unsubordinated senior indebtedness of the subsidiary guarantor, and senior in right of payment to all of the existing and future subordinated indebtedness of the subsidiary guarantor. The Notes guarantee will be effectively subordinated to all of the existing and future secured indebtedness of the subsidiary guarantor, to the extent of the value of the collateral securing such indebtedness, and structurally subordinated to the existing and future indebtedness of any subsidiary of the subsidiary guarantor that is not also a subsidiary guarantor.
Because we are a holding company, our right to participate in any distribution of the assets of our banking or non-banking subsidiaries, upon a subsidiary’s dissolution, winding-up, liquidation or reorganization or otherwise, and thus the ability of a holder of Notes to benefit indirectly from such distribution, is subject to prior claims of creditors of any such subsidiary, except to the extent that we may be a creditor of that subsidiary and our claims are recognized. Claims on our subsidiaries by creditors other than us may include claims with respect to long-term debt and substantial obligations with respect to deposit liabilities, federal funds purchased, securities sold under repurchase agreements, other short-term borrowings and various other financial obligations. There are legal limitations on the extent to which some of our subsidiaries may extend credit, pay dividends or otherwise supply funds to, or engage in transactions with, us or some of our other subsidiaries. Our subsidiaries are separate and distinct legal entities and have no obligation to pay any amounts due on the notes or to provide us with funds to pay our obligations on the Notes, whether by dividends, distributions, loans or other payments. Our subsidiaries may, without notice or consent of the holders of the Notes, incur additional debt and liabilities in the future, all of which would rank structurally senior to the Notes, although any such debt of the subsidiary guarantor would rank equally with the subsidiary guarantee. As of March 31, 2020, Amerant Bank N.A. had $5.8 billion of deposits and $1.27 billion of FHLB advances, including advances with an original maturity term of less than one year. In addition, as of March 31, 2020, the subsidiary guarantor had $62.25 million in subordinated indebtedness to the nonconsolidated issuers of our trust preferred securities outstanding.
Optional Redemption
The Notes will be redeemable in whole or in part by us on or after three months prior to the maturity date at 100% of the principal amount of the Notes (par), plus accrued and unpaid interest thereon to but excluding the date of redemption. We will provide 10 to 60 calendar days’ notice of the redemption to the registered holders of the Notes. Other than as set forth in this paragraph, the Notes are not redeemable prior to maturity.
Subsidiary Guarantee
The Notes will be guaranteed by the subsidiary guarantor. The subsidiary guarantor will fully and unconditionally guarantee, the due and punctual payment of principal of and any premium and interest on the Notes, and the due and punctual payment of any sinking fund payments, when the same shall become due and payable, whether at maturity, by declaration of acceleration, by call for redemption or otherwise. The subsidiary guarantee will be an unsecured obligation of the subsidiary guarantor and will rank equally with all of its other unsecured and unsubordinated indebtedness. The subsidiary guarantee does not contain any restrictions on the ability of the subsidiary guarantor to pay dividends or distributions on, or redeem, purchase, acquire, or make a liquidation payment with respect to, the subsidiary guarantor's capital stock or make any payment of principal, interest or premium, if any, on or repay, repurchase or redeem any debt securities, if any, of the subsidiary guarantor.
The obligations of the subsidiary guarantor under its subsidiary guarantee are designed to be limited as necessary to prevent the subsidiary guarantee from constituting a fraudulent conveyance under applicable law, and, therefore, the subsidiary guarantee is specifically limited to an amount that the subsidiary guarantor could guarantee without the subsidiary guarantee constituting a fraudulent conveyance.
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Consolidation, Merger, Conveyance or Transfer of Assets
We may consolidate with, or sell, lease or otherwise transfer all or substantially all of our assets to, or merge with or into, any other corporation, trust or other entity, provided that:
we are the survivor in the merger, or the survivor, if not us, (1) is a corporation organized and validly existing under the laws of the United States, any state of the United States or the District of Columbia and (2) expressly assumes by supplemental indenture the due and punctual payment of the principal of and interest on all of the outstanding Notes and the due and punctual performance and observance of all of the covenants and conditions to be performed by us contained in the Indenture;
immediately after giving effect to the transaction and treating any indebtedness that becomes an obligation of ours or one of our subsidiaries as a result of the transaction, as having been incurred by us or the subsidiary at the time of the transaction, no Event of Default (as defined below) under the Indenture, and no event which, after notice or the lapse of time, or both, would become an Event of Default, shall have occurred and be continuing;
if, as a result of the transaction, our property or assets would be subject to a mortgage, pledge, lien, security interest or other encumbrance that would not be permitted under the Indenture, we or such successor person, as the case may be, shall take steps to secure the Notes equally and ratably with all indebtedness secured in the transaction; and
we deliver to the Trustee an officer’s certificate and an opinion of counsel, each stating that such consolidation, merger or transfer of our properties and assets complies with the Indenture and that all conditions precedent to such consolidation, merger or transfer of properties and assets have been complied with.
Upon any such consolidation, merger, or sale, the successor corporation formed, or into which we are merged or to which we are sold, shall succeed to, and be substituted for, us under the Indenture.
This covenant would not apply to any recapitalization transaction, change of control of us or a transaction in which we incur a large amount of additional debt unless the transactions or change of control included a merger or consolidation or transfer of all or substantially all of our assets. There are no covenants or other provisions in the Indenture providing for a put or increased interest or that would otherwise afford holders of the Notes additional protection in the event of a recapitalization transaction, a change of control of us or a transaction in which we incur or acquire a large amount of additional debt.
Although there is a limited body of case law interpreting the phrase “substantially all,” there is no precise established definition of the phrase under applicable law. Accordingly, in certain circumstances there may be a degree of uncertainty as to whether a particular transaction would involve “all or substantially all” of the property or assets of a person.
Certain Covenants
Maintenance of Properties. We will cause all of our material properties used or useful in the conduct of our business or the business of any of our subsidiaries to be maintained and kept in good condition, repair, and working order and supplied with all necessary equipment and we will cause to be made all necessary repairs, renewals, replacements, betterments, and improvements for those properties, as we in our judgment believe is necessary so that we may carry on the business related to those properties properly and advantageously, although we will not be prevented from discontinuing the operation or maintenance of any of such properties if such discontinuance is, in our judgment, desirable in the conduct of our business or the business of any of our subsidiaries and not disadvantageous in any material respect to the holders of the Notes.
Payment of Taxes and Other Claims. We will pay or discharge, or cause to be paid or discharged, before they become delinquent,
all taxes, assessments, and governmental charges levied or imposed upon us or any subsidiary of ours or upon our income, profits or property or any subsidiary of ours; and
all lawful claims for labor, materials, and supplies which, if unpaid, might by law become a lien upon our property or any subsidiary of ours.
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However, we will not be required to pay or discharge or cause to be paid or discharged any tax, assessment, charge or claim the amount, applicability or validity of which is being contested in good faith by appropriate proceedings and for which adequate provision is made.
Sale or Issuance of Capital Stock in Principal Subsidiary Bank or Intermediate Bank Holding Company. We will not be permitted, pursuant to the covenants in the Indenture, directly or indirectly sell, assign, pledge, transfer, or otherwise dispose of, or permit to be issued, including by means of a dividend, any shares of capital stock of a principal subsidiary bank or intermediate bank holding company or any securities convertible into or rights to subscribe to such capital stock.
The term “principal subsidiary bank” means any subsidiary bank, the consolidated assets of which constitute 50% or more of our consolidated assets. Any of our subsidiaries that owns more than 50% of the share capital of such a principal subsidiary bank is an "intermediate bank holding company". As of the date of this prospectus supplement, our only principal subsidiary bank is Amerant Bank, N.A and the only such intermediate bank holding company is Amerant Florida Bancorp Inc. The Indenture does not restrict the ability of the principal subsidiary bank or intermediate bank holding company to sell or dispose of assets other than the shares of capital stock or securities convertible into or rights to subscribe to such capital stock of a principal subsidiary bank or intermediate bank holding company.
The foregoing covenant in the Indenture, however, does not prohibit any of the following:
any payment of a dividend in a class of capital stock that is solely paid pro-rata to all holders of such class of capital stock;
any dispositions or dividends made by us or any principal subsidiary bank or intermediate bank holding company acting in a fiduciary capacity for any person or entity other than us or any principal subsidiary bank or intermediate bank holding company or to us or any of our wholly-owned subsidiaries;
the merger or consolidation of a principal subsidiary bank with and into another principal subsidiary bank or us;
the merger or consolidation of an intermediate bank holding company with and into a principal subsidiary bank or us;
the sale, assignment, pledge, transfer or other disposition or issuance of shares of voting stock of a principal subsidiary bank or intermediate bank-holding company made by us or any subsidiary where:
the sale, assignment, pledge, transfer or other disposition or issuance is made, in the minimum amount required by law, to any person for the purpose of the qualification of such person to serve as a director;
the sale, assignment, pledge, transfer or other disposition or issuance is made in compliance with an order of a court or regulatory authority of competent jurisdiction or as a condition imposed by any such court or regulatory authority to the acquisition by us or any principal subsidiary bank or intermediate bank holding company, directly or indirectly, of any other corporation, trust or other entity;
the sale, assignment, pledge, transfer or other disposition or issuance of voting stock or any other securities convertible into or rights to subscribe to voting stock of a principal subsidiary bank or intermediate bank holding company, so long as:
any such transaction is made for fair market value as determined by our board of directors and the board of directors of the principal subsidiary bank or intermediate bank holding company disposing of such voting stock or other securities or rights; and
after giving effect to such transaction and to any potential dilution and the shares to be issued upon conversion of such securities or exercise of such rights into that capital stock, we and our directly or indirectly wholly owned subsidiaries will own, directly or indirectly, at least 80% of the voting stock of such principal subsidiary bank or intermediate bank holding company;
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any of our principal subsidiary banks or intermediate bank holding company selling additional shares of voting stock to its stockholders at any price, so long as immediately after such sale, we own, directly or indirectly, at least as great a percentage of the voting stock of such subsidiary bank as we owned prior to such sale of additional shares; or
a pledge made or a lien created to secure loans or other extensions of credit by a principal subsidiary bank subject to Section 23A of the Federal Reserve Act.
Waiver of Certain Covenants. We may choose not to comply with any term, provision or condition of certain covenants contained in the Indenture, or with certain other terms, provisions or conditions with respect to the Notes (except any such term, provision or condition which could not be amended without the consent of all holders of the Notes), if before the time for compliance with the covenant, term, provision or condition, the holders of at least a majority in principal amount of the Notes either waive compliance in that instance or generally waive compliance with that covenant, provision or condition. Until the waiver has become effective, our obligations in respect of the term, provision, or condition will remain in full force and effect.
Events of Default; Notice and Waiver
Each of the following “Events of Default” set forth in the Indenture will be applicable to the Notes:
we fail for 30 days to pay any installment of interest payable on the Notes;
we fail to pay the principal of (or premium, if any, on) the Notes when due;
we or the subsidiary guarantor default in the performance of or breach any other covenant or agreement we or the subsidiary guarantor made in the Indenture with respect to the Notes or any guarantee relating thereto which default or breach has continued for 60 days after written notice as provided for in accordance with the Indenture by the Trustee or by the holders of at least 25% in principal amount of the Notes;
we, the subsidiary guarantor or any principal subsidiary bank default under a bond, debenture, note or other evidence of indebtedness for money borrowed by us that has a principal amount outstanding that is more than $25 million (other than non-recourse indebtedness) under the terms of the instrument under which the indebtedness is issued or secured, which default has caused the indebtedness to become due and payable earlier than it would otherwise have become due and payable, and the acceleration has not been rescinded or annulled, or the indebtedness has not been discharged, or there has not been deposited in trust enough money to discharge the indebtedness, within 30 days after written notice was provided to us by the Trustee or the holders of at least 25% in principal amount of the Notes in accordance with the Indenture; or
certain events of bankruptcy, insolvency or reorganization of us or by any principal subsidiary bank occur.
If there is a continuing Event of Default under the Indenture with respect to the Notes, then the Trustee or the holders of not less than 25% of the total principal amount of the Notes may declare immediately due and payable the principal amount of the Notes.
If an Event of Default occurs as a result of our bankruptcy, insolvency or reorganization, the principal amount of the Notes shall become immediately due and payable automatically, and without any declaration or other action on the part of the Trustee or any holder.
However, at any time after a declaration of acceleration with respect to the Notes has been made, but before a judgment or decree for payment of the money due has been obtained by the Trustee, the holders of a majority in principal amount of the Notes may rescind and annul such declaration and its consequences if:
we deposit with the Trustee all required payments of the principal of, and interest of the Notes (and, to the extent lawful, interest on overdue installments of interest) plus certain fees, expenses, disbursements and advances of the Trustee; and
all Events of Default, other than the non-payment of accelerated principal of the Notes, have been cured or waived as provided in the Indenture.
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The Indenture also provides that the holders of not less than a majority in principal amount of the Notes may waive any past default with respect to the Notes and its consequences, except a default consisting of:
our failure to pay the principal of or interest on the Notes; or
a default relating to a covenant or provision contained in the Indenture that cannot be modified or amended without the consent of the holders of each outstanding Note.
The Trustee is generally required to give notice to the holders of the Notes of a default of which a responsible officer of the Trustee has actual knowledge under the Indenture unless the default has been cured or waived.
The Indenture provides that no holder of the Notes may institute a proceeding with respect to the Indenture or for any remedy under the Indenture, unless such holder has previously given notice to the Trustee of an Event of Default and the Trustee fails to act for 60 days after:
it has received a written request to institute proceedings in respect of an Event of Default from the holders of not less than 25% in principal amount of the Notes, as well as an offer of indemnity satisfactory to the Trustee; and
no direction inconsistent with such written request has been given to the Trustee during that 60-day period by the holders of a majority in principal amount of the Notes.
The Trustee is not under an obligation to exercise any of its rights or powers under the Indenture at the request or direction of any holders of the Notes, unless the holders of the Notes have offered to the Trustee reasonable security or indemnity. Subject to these provisions for the indemnification of the Trustee, the holders of not less than a majority in principal amount of the Notes will have the right to direct the time, method, and place of conducting any proceeding for any remedy available to the Trustee, or of exercising any trust or power conferred upon the Trustee. However, the Trustee may refuse to follow any direction which is in conflict with any law or the Indenture or which may involve the trustee in personal liability.
Within 120 days after the close of each fiscal year, we must deliver to the Trustee a certificate, signed by one of several specified officers, stating such officer’s knowledge of our compliance with all the conditions and covenants under the Indenture and, in the event of any non-compliance, specifying such non-compliance and the nature and status of the non-compliance.
Modification of the Indenture
Modification and amendment of the Indenture may be made only with the consent of the holders of not less than a majority in principal amount of the Notes. However, no modification or amendment may, without the consent of each holder affected thereby, do any of the following:
change the stated maturity or due date of the principal of, or interest payable on, the Notes or change any place of payment where, or the currency in which, such principal and interest is payable;
reduce the principal amount of, or the rate or amount of interest on, the Notes;
impair the right to institute suit for the enforcement of any payment on, or with respect to, the Notes;
modify the subsidiary guarantee in any manner materially adverse to the holders of the Notes (but, for the avoidance of doubt, not including modifications to any of the provisions set forth in the last paragraph under “––Subsidiary Guarantee”);