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

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

Commission File Number: 001-38534
 
Amerant Bancorp Inc.
(Exact Name of Registrant as Specified in Its Charter)
 
Florida
(State or other jurisdiction of
incorporation or organization)
65-0032379
(I.R.S. Employer
Identification No.)
220 Alhambra Circle
Coral Gables, Florida
33134
(Address of principal executive offices)
(Zip Code)
(305) 460-4038
Registrant’s telephone number, including area code
 
Former Name, as listed on the last report:
Mercantil Bank Holding Corporation
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbols
Name of exchange on which registered
Class A Common Stock
AMTB
NASDAQ
Class B Common Stock
AMTBB
NASDAQ
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.                     Yes  ý                                        No ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes ý                                         No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ¨
 
Accelerated filer ¨
 
Smaller reporting company ¨
 
Emerging growth company ý
Non-accelerated filer ý (Do not check if a smaller reporting company)
If an emerging growth company, indicate by check mark if the company has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨ 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).     Yes ¨           No ý
Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.
Class
 
Outstanding as of August 12, 2019
Class A Common Stock, $0.10 par value per share
 
28,985,996 shares of Class A Common Stock
Class B Common Stock, $0.10 par value per share
 
14,218,596 shares of Class B Common Stock

1


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

 
 
 
 
 
 
 
 
 
 
 
 


2
Table of Contents


Part 1. FINANCIAL INFORMATION


ITEM 1. FINANCIAL STATEMENTS
Amerant Bancorp Inc. and Subsidiaries
Consolidated Balance Sheets
(in thousands, except per share data)
(Unaudited) June 30, 2019
 
December 31, 2018
Assets
 
 
 
Cash and due from banks
$
25,813

 
$
25,756

Interest earning deposits with banks
64,504

 
59,954

Cash and cash equivalents
90,317

 
85,710

Securities
 
 
 
Available for sale
1,501,222

 
1,586,051

Held to maturity
81,240

 
85,188

Federal Reserve Bank and Federal Home Loan Bank stock
68,170

 
70,189

Securities
1,650,632

 
1,741,428

Loans held for investment, gross
5,812,755

 
5,920,175

Less: Allowance for loan losses
57,404

 
61,762

Loans held for investment, net
5,755,351

 
5,858,413

Bank owned life insurance
208,965

 
206,142

Premises and equipment, net
124,456

 
123,503

Deferred tax assets, net
7,014

 
16,310

Goodwill
19,193

 
19,193

Accrued interest receivable and other assets
70,898

 
73,648

Total assets
$
7,926,826

 
$
8,124,347

Liabilities and Stockholders' Equity
 
 
 
Deposits
 
 
 
Demand
 
 
 
Noninterest bearing
$
785,727

 
$
768,822

Interest bearing
1,183,051

 
1,288,030

Savings and money market
1,510,832

 
1,588,703

Time
2,339,771

 
2,387,131

Total deposits
5,819,381

 
6,032,686

Advances from the Federal Home Loan Bank and other borrowings
1,125,000

 
1,166,000

Junior subordinated debentures held by trust subsidiaries
118,110

 
118,110

Accounts payable, accrued liabilities and other liabilities
57,967

 
60,133

Total liabilities
7,120,458

 
7,376,929

Commitments and contingencies (Note 12)

 

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

 
2,686

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

 
1,775

Additional paid in capital
417,338

 
385,367

Treasury stock, at cost; 3,532,457 shares of Class B common stock (2018: 1,420,136 shares of Class B common stock)
(46,373
)
 
(17,908
)
Retained earnings
419,590

 
393,662

Accumulated other comprehensive income (loss)
11,139

 
(18,164
)
Total stockholders' equity
806,368

 
747,418

Total liabilities and stockholders' equity
$
7,926,826

 
$
8,124,347


The accompanying notes are an integral part of these consolidated financial statements (unaudited).
3
Table of Contents
Amerant Bancorp Inc. and Subsidiaries
Consolidated Statements of Operations and Comprehensive Income (Unaudited)

 
Three Months Ended June 30,
 
Six Months Ended June 30,
(in thousands, except per share data)
2019
 
2018
 
2019
 
2018
Interest income
 
 
 
 
 
 
 
Loans
$
66,801

 
$
62,448

 
$
133,523

 
$
122,118

Investment securities
11,886

 
12,709

 
24,467

 
24,450

Interest earning deposits with banks
539

 
759

 
1,543

 
1,279

Total interest income
79,226

 
75,916

 
159,533

 
147,847

 
 
 
 
 
 
 
 
Interest expense
 
 
 
 
 
 
 
Interest bearing demand deposits
301

 
113

 
575

 
202

Savings and money market deposits
4,014

 
3,104

 
7,747

 
5,688

Time deposits
12,740

 
10,172

 
25,293

 
18,872

Advances from the Federal Home Loan Bank
6,292

 
6,511

 
12,497

 
12,501

Junior subordinated debentures
2,090

 
2,025

 
4,195

 
3,960

Securities sold under agreements to repurchase
—

 
2

 
—

 
2

Total interest expense
25,437

 
21,927

 
50,307

 
41,225

Net interest income
53,789

 
53,989

 
109,226

 
106,622

(Reversal of) provision for loan losses
(1,350
)
 
150

 
(1,350
)
 
150

Net interest income after (reversal of) provision for loan losses
55,139

 
53,839

 
110,576

 
106,472

 
 
 
 
 
 
 
 
Noninterest income
 
 
 
 
 
 
 
Deposits and service fees
4,341

 
4,471

 
8,427

 
9,053

Brokerage, advisory and fiduciary activities
3,736

 
4,426

 
7,424

 
8,841

Change in cash surrender value of bank owned life insurance
1,419

 
1,474

 
2,823

 
2,918

Cards and trade finance servicing fees
1,419

 
1,173

 
2,334

 
2,235

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

 
882

 
557

 
882

Securities gains, net
992

 
16

 
996

 
16

Data processing and fees for other services
365

 
613

 
885

 
1,494

Other noninterest income
1,875

 
1,931

 
3,857

 
3,492

Total noninterest income
14,147

 
14,986

 
27,303

 
28,931

 
 
 
 
 
 
 
 
Noninterest expense
 
 
 
 
 
 
 
Salaries and employee benefits
34,057

 
34,932

 
67,494

 
68,973

Occupancy and equipment
4,232

 
4,060

 
8,274

 
7,775

Professional and other services fees
3,954

 
5,387

 
7,398

 
11,831

Telecommunication and data processing
3,233

 
3,011

 
6,259

 
6,095

Depreciation and amortization
2,010

 
1,945

 
3,952

 
4,086

FDIC assessments and insurance
1,177

 
1,468

 
2,570

 
2,915

Other operating expenses
4,242

 
1,835

 
8,903

 
6,608

Total noninterest expenses
52,905

 
52,638

 
104,850

 
108,283

Net income before income tax
16,381

 
16,187

 
33,029

 
27,120

Income tax expense
(3,524
)
 
(5,764
)
 
(7,101
)
 
(7,268
)
Net income
$
12,857

 
$
10,423

 
$
25,928

 
$
19,852

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

The accompanying notes are an integral part of these consolidated financial statements (unaudited).
4
Table of Contents
Amerant Bancorp Inc. and Subsidiaries
Consolidated Statements of Operations and Comprehensive Income (Unaudited)

 
Three Months Ended June 30,
 
Six Months Ended June 30,
(in thousands, except per share data)
2019
 
2018
 
2019
 
2018
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other comprehensive income (loss), net of tax
 
 
 
 
 
 
 
Net unrealized holding gains (losses) on securities available for sale arising during the period
$
14,313

 
$
(5,454
)
 
$
30,591

 
$
(20,431
)
Net unrealized holding gains (losses) on cash flow hedges arising during the period
—

 
2,139

 
(11
)
 
6,352

Reclassification adjustment for net (gains) losses included in net income
(1,025
)
 
2

 
(1,277
)
 
159

Other comprehensive income (loss)
13,288

 
(3,313
)
 
29,303

 
(13,920
)
Comprehensive income
$
26,145

 
$
7,110

 
$
55,231

 
$
5,932

 
 
 
 
 
 
 
 
Earnings Per Share (Note 14):
 
 
 
 
 
 
 
Basic earnings per common share
$
0.30

 
$
0.25

 
$
0.61

 
$
0.47

Diluted earnings per common share
$
0.30

 
$
0.25

 
$
0.60

 
$
0.47


The accompanying notes are an integral part of these consolidated financial statements (unaudited).
5
Table of Contents
Amerant Bancorp Inc. and Subsidiaries
Consolidated Statements of Changes in Stockholders’ Equity (Unaudited)
Six Months Ended June 30, 2019 and 2018


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

 
17,751,053

 
$
2,474

 
$
1,775

 
$
367,505

 
$
—

 
$
387,829

 
$
(6,133
)
 
$
753,450

Dividends
—

 
—

 
—

 
—

 
—

 
—

 
(40,000
)
 
—

 
(40,000
)
Net income
—

 
—

 
—

 
—

 
—

 
—

 
19,852

 
—

 
19,852

Other comprehensive loss
—

 
—

 
—

 
—

 
—

 
—

 
—

 
(13,920
)
 
(13,920
)
Balance at
June 30, 2018
24,737,470

 
17,751,053

 
$
2,474

 
$
1,775

 
$
367,505

 
$
—

 
$
367,681

 
$
(20,053
)
 
$
719,382

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at
December 31, 2018
26,851,832

 
16,330,917

 
$
2,686

 
$
1,775

 
$
385,367

 
$
(17,908
)
 
$
393,662

 
$
(18,164
)
 
$
747,418

Common stock issued
2,132,865

 
—

 
213

 
—

 
29,005

 
—

 
—

 
—

 
29,218

Repurchase of Class B common stock
—

 
(2,112,321
)
 
—

 
—

 
—

 
(28,465
)
 
—

 
—

 
(28,465
)
Restricted stock issued
1,299

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

Stock-based compensation expense
—

 
—

 
—

 
—

 
2,966

 
—

 
—

 
—

 
2,966

Net income
—

 
—

 
—

 
—

 
—

 
—

 
25,928

 
—

 
25,928

Other comprehensive income
—

 
—

 
—

 
—

 
—

 
—

 
—

 
29,303

 
29,303

Balance at
June 30, 2019
28,985,996

 
14,218,596

 
$
2,899

 
$
1,775

 
$
417,338

 
$
(46,373
)
 
$
419,590

 
$
11,139

 
$
806,368


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


 
Six Months Ended June 30,
(in thousands)
2019
 
2018
Cash flows from operating activities
 
 
 
Net income
$
25,928

 
$
19,852

Adjustments to reconcile net income to net cash provided by operating activities
 
 
 
(Reversal of) provision for loan losses
(1,350
)
 
150

Net premium amortization on securities
7,164

 
8,447

Depreciation and amortization
3,952

 
4,086

Stock-based compensation expense
2,966

 
—

Change in cash surrender value of bank owned life insurance
(2,823
)
 
(2,918
)
Deferred taxes, securities net gains or losses and others
(2,150
)
 
(4,374
)
Net changes in operating assets and liabilities:
 
 
 
Accrued interest receivable and other assets
9,518

 
(2,075
)
Accounts payable, accrued liabilities and other liabilities
(9,736
)
 
3,071

Net cash provided by operating activities
33,469

 
26,239

 
 
 
 
Cash flows from investing activities
 
 
 
Purchases of investment securities:
 
 
 
Available for sale
(195,390
)
 
(121,245
)
Federal Home Loan Bank stock
(12,968
)
 
(13,642
)
 
(208,358
)
 
(134,887
)
Maturities, sales and calls of investment securities:
 
 
 
Available for sale
313,757

 
122,805

Held to maturity
3,737

 
1,338

Federal Home Loan Bank stock
14,987

 
9,563

 
332,481

 
133,706

Net decrease in loans
(109,951
)
 
(174,197
)
Proceeds from loan portfolio sales
214,416

 
23,781

Net purchases of premises and equipment, and others
(4,451
)
 
(3,522
)
Net proceeds from sale of subsidiary
—

 
7,500

Net cash provided by (used in) investing activities
224,137

 
(147,619
)
 
 
 
 
Cash flows from financing activities
 
 
 
Net decrease in demand, savings and money market accounts
(165,945
)
 
(165,745
)
Net (decrease) increase in time deposits
(47,360
)
 
205,910

Proceeds from Advances from the Federal Home Loan Bank and other borrowings
590,000

 
656,000

Repayments of Advances from the Federal Home Loan Bank and other borrowings
(630,447
)
 
(571,000
)
Dividend paid
—

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

 
—

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

Net cash (used in) provided by financing activities
(252,999
)
 
85,165

Net increase (decrease) in cash and cash equivalents
4,607

 
(36,215
)
 
 
 
 
Cash and cash equivalents
 
 
 
Beginning of period
85,710

 
153,445

End of period
$
90,317

 
$
117,230

 
 
 
 
 
 
 
 
 
 
 
 

The accompanying notes are an integral part of these consolidated financial statements (unaudited).
7
Amerant Bancorp Inc. and Subsidiaries
Consolidated Statements of Cash Flows (Unaudited) (continued)

 
Six Months Ended June 30,
(in thousands)
2019
 
2018
Supplemental disclosures of cash flow information
 
 
 
Cash paid:
 
 
 
Interest
$
49,868

 
$
40,491

Income taxes
3,424

 
15,203


The accompanying notes are an integral part of these consolidated financial statements (unaudited).
8
Table of Contents
Amerant Bancorp Inc. and Subsidiaries
Notes to Interim Consolidated Financial Statements (Unaudited)


1.
Business, Basis of Presentation and Summary of Significant Accounting Policies
a) Business
Amerant Bancorp Inc., formerly Mercantil Bank Holding Corporation, (the “Company”), is a Florida corporation incorporated in 1985, which has operated since January 1987. The Company is a bank holding company registered under the Bank Holding Company Act of 1956, as a result of its 100% indirect ownership of Amerant Bank, N.A. (the “Bank”). The Company’s principal office is in the City of Coral Gables, Florida. The Bank is a member of the Federal Reserve Bank of Atlanta (“Federal Reserve Bank”) and the Federal Home Loan Bank of Atlanta (“FHLB”). The Bank has two principal subsidiaries, Amerant Investments, Inc., a securities broker-dealer (“Amerant Investments”), and Amerant Trust, N.A, a non-depository trust company (“Amerant Trust”).
Beginning in the second quarter of 2019, the Company is managed using a single segment concept, on a consolidated basis, and management determined to discontinue its separate disclosures of operating segments. See “Reportable Segments” within “Basis of Presentation and Summary of Significant Accounting Policies” in this footnote for further details.
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.
Initial Public Offering and Shares Repurchase
On December 21, 2018, the Company completed an initial public offering (the “IPO”). For more information about the IPO, see Note 15 to our audited consolidated financial statements included in the Company’s annual report on Form 10-K filed with the U.S. Securities and Exchange Commission (the “SEC”) on April 1, 2019 (the “Form 10-K”). In March 2019, following the partial exercise of the over-allotment option by the IPO’s underwriters, and completion of certain private placements of shares of the Company’s Class A common stock, the Company repurchased the remaining shares of its Class B common stock held by Mercantil Servicios Financieros, C.A., the Company’s former parent company (“MSF” or “the Former Parent”). See Note 11 to these unaudited interim consolidated financial statements for more information about the private placements and the repurchase of Class B common stock previously held by MSF.
Rebranding
On June 4, 2019, the Company’s stockholders approved an amendment to the Company’s Amended and Restated Articles of Incorporation (the “Articles of Incorporation”) to change the Company’s name from “Mercantil Bank Holding Corporation” to “Amerant Bancorp Inc.” (the “Name Change”). The Name Change became effective on June 5, 2019. Each of the Company, the Bank and its principal subsidiaries now operate under the “Amerant” brand.

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


b) Basis of Presentation and Summary of Significant Accounting Policies
The accompanying unaudited interim consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) for interim financial information and the instructions to Form 10-Q and Article 10 of SEC Regulation S-X. Accordingly, they do not include all of the information and footnotes required for a fair statement of financial position, results of operations and cash flows in conformity with U.S. GAAP. These unaudited interim consolidated financial statements reflect all adjustments that are, in the opinion of management, necessary for a fair statement of the results for the interim periods presented. These adjustments are of a normal, recurring nature. Interim period operating results may not be indicative of the operating results for a full year or any other period. These unaudited interim consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements as of December 31, 2018 and 2017 and for each of the three years in the period ended December 31, 2018 and the accompanying footnote disclosures for the Company, which are included in the Form 10-K.
For a complete summary of our significant accounting policies, please see Note 1 to the Company’s audited consolidated financial statements in the Form 10-K.
Reportable Segments
Prior to the second quarter of 2019, the Company had four reportable segments: Personal and Commercial Banking (“PAC”), Corporate LATAM, Treasury, and Institutional. Results of these segments were presented on a managed basis. This structure was driven, among other things, by how the Company previously managed the business, how internal reporting was prepared and analyzed, and how management made decisions.
Beginning in the second quarter of 2019, all decisions, including those relating to loan growth and concentrations, deposit and other funding, market risk, credit risk, operational risk and pricing are made after assessing their effects on the Company as a whole, using a single segment concept. This change is consistent with the Company’s strategic shift to focus on community banking after the spin-off from its Former Parent in August 2018, and the rebranding of the Company launched in April 2019. As part of this strategic shift, the Company has significantly reduced its international lending activities, which had been largely allocated to the Corporate LATAM segment. As a result, management reassessed the Company’s remaining international business activities as well as the remaining three segments to determine whether the Company would continue to manage these businesses as separate operating segments, or consolidated as one single segment. In performing its assessment, management noted a similarity in the nature of products and services, processes, type of customers, distribution methods, and regulatory environment of its businesses. Further, management determined that it will no longer review discrete financial information related to the remaining operating segments for purposes of assessing performance or to allocate resources.
As a result of the above referenced strategic shift, assessments and determination, the Company is now managed as a single operating segment, on a consolidated basis. Therefore, beginning with the quarter ended June 30, 2019, the Company determined that no separate current or historical reportable segment disclosures are required under U.S. GAAP.
    

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

Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates made by management include: (i) the determination of the allowance for loan losses; (ii) the fair values of securities and the value assigned to goodwill during the annual goodwill impairment test; (iii) the cash surrender value of bank owned life insurance; and (iv) the determination of whether the amount of deferred tax assets will more likely than not be realized. Management believes that these estimates are appropriate. Actual results could differ from these estimates.
c) Subsequent Events
On July 10, 2019 the Company announced the redemption of all $15.0 million of its outstanding 10.60% trust preferred securities issued by its Commercebank Statutory Trust II (“Statutory Trust II”), and all $10.0 million of its outstanding 10.18% trust preferred securities issued by its Commercebank Capital Trust III (“Capital Trust III”). The Capital Trust III securities were redeemed on July 31, 2019 at the contractual call price of 101.018% and the Statutory Trust II securities will be redeemed on September 7, 2019, the earliest call date, at the contractual call price of 100.53%. The Company will simultaneously redeem all $15.5 million and $10.4 million junior subordinated debentures held by its Statutory Trust II and Capital Trust III, respectively, as part of these redemption transactions. These redemptions together will reduce total cash and cash equivalents by approximately $23.8 million, financial liabilities by approximately $25.9 million and other assets by approximately $2.4 million. In addition, third quarter 2019 results will include a total charge of $0.3 million for the premiums paid to security holders from these redemptions. The redemption of these legacy Tier 1 capital instruments will reduce the Company’s Tier 1 equity capital by a total of $23.5 million.
The Company’s regulatory capital ratios will continue to exceed regulatory minimums to be well-capitalized, upon these redemptions.
In August 2019, the Company entered into interest rate swaps that were designated as cash flow hedges to manage exposure of floating rate interest payments on all of the Company’s outstanding variable-rate junior subordinated debentures. See Note 7 to our unaudited interim consolidated financial statements in this Form 10-Q for details on the interest rate swap transaction.
All significant subsequent events have been recognized or disclosed in these unaudited interim consolidated financial statements.


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

2.
Securities
Amortized cost and approximate fair values of securities available for sale are summarized as follows:
 
June 30, 2019
 
Amortized
Cost
 
Gross Unrealized
 
Estimated
Fair Value
(in thousands)
 
Gains
 
Losses
 
U.S. government sponsored enterprise debt securities
$
930,137

 
$
9,440

 
$
(5,907
)
 
$
933,670

Corporate debt securities
268,724

 
3,186

 
(204
)
 
271,706

U.S. government agency debt securities
201,074

 
576

 
(2,910
)
 
198,740

Municipal bonds
70,668

 
2,659

 
—

 
73,327

Mutual funds
24,269

 
—

 
(490
)
 
23,779

Commercial paper
—

 
—

 
—

 
—

 
$
1,494,872

 
$
15,861

 
$
(9,511
)
 
$
1,501,222

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

 
$
2,197

 
$
(22,178
)
 
$
820,779

Corporate debt securities
357,602

 
139

 
(5,186
)
 
352,555

U.S. government agency debt securities
221,682

 
187

 
(4,884
)
 
216,985

Municipal bonds
162,438

 
390

 
(2,616
)
 
160,212

Mutual funds
24,266

 
—

 
(1,156
)
 
23,110

Commercial paper
12,448

 
—

 
(38
)
 
12,410

 
$
1,619,196

 
$
2,913

 
$
(36,058
)
 
$
1,586,051

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

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


The Company’s securities available for sale with unrealized losses that are deemed temporary, aggregated by the length of time that individual securities have been in a continuous unrealized loss position, are summarized below:
 
June 30, 2019
 
Less Than 12 Months
 
12 Months or More
 
Total
(in thousands)
Estimated
Fair Value
 
Unrealized
Loss
 
Estimated
Fair Value
 
Unrealized
Loss
 
Estimated
Fair Value
 
Unrealized
Loss
U.S. government sponsored enterprise debt securities
$
41,500

 
$
(307
)
 
$
436,675

 
$
(5,600
)
 
$
478,175

 
$
(5,907
)
Corporate debt securities
305

 
(1
)
 
48,637

 
(203
)
 
48,942

 
(204
)
Municipal bonds
—

 
—

 
—

 
—

 
—

 
—

U.S. government agency debt securities
6,402

 
(42
)
 
141,248

 
(2,868
)
 
147,650

 
(2,910
)
Mutual funds
—

 
—

 
23,530

 
(490
)
 
23,530

 
(490
)
Commercial paper
—

 
—

 
—

 
—

 
—

 
—

 
$
48,207

 
$
(350
)
 
$
650,090

 
$
(9,161
)
 
$
698,297

 
$
(9,511
)

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

 
$
(2,995
)
 
$
608,486

 
$
(19,183
)
 
$
699,466

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

 
(3,800
)
 
75,762

 
(1,386
)
 
319,429

 
(5,186
)
Municipal bonds
63,580

 
(939
)
 
133,886

 
(3,945
)
 
197,466

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

 
(6
)
 
94,331

 
(2,610
)
 
95,780

 
(2,616
)
Mutual funds
—

 
—

 
22,865

 
(1,156
)
 
22,865

 
(1,156
)
Commercial paper
12,410

 
(38
)
 
—

 
—

 
12,410

 
(38
)
 
$
412,086

 
$
(7,778
)
 
$
935,330

 
$
(28,280
)
 
$
1,347,416

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

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


Unrealized losses on corporate debt securities at June 30, 2019, and municipal and corporate debt securities at December 31, 2018, are attributable to changes in interest rates and investment securities markets, generally, and as a result, temporary in nature. The Company does not consider these securities to be other-than-temporarily impaired because the issuers of these debt securities are considered to be high quality, and management does not intend to sell these investments and it is more likely than not that it will not be required to sell these investments before their anticipated recovery.
Amortized cost and approximate fair values of securities held to maturity, are summarized as follows:
 
June 30, 2019
 
Amortized
Cost
 
Gross Unrealized
 
Estimated
Fair Value
(in thousands)
 
Gains
 
Losses
 
Securities Held to Maturity -
 
 
 
 
 
 
 
U.S. government sponsored enterprise debt securities
$
78,448

 
$
497

 
$
(382
)
 
$
78,563

U.S. Government agency debt securities
2,792

 
54

 
—

 
2,846

 
$
81,240

 
$
551

 
$
(382
)
 
$
81,409

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

 
$
—

 
$
(3,889
)
 
$
78,437

U.S. Government agency debt securities
2,862

 
—

 
(49
)
 
2,813

 
$
85,188

 
$
—

 
$
(3,938
)
 
$
81,250


Contractual maturities of securities at June 30, 2019 are as follows:
 
Available for Sale
 
Held to Maturity
(in thousands)
Amortized
Cost
 
Estimated
Fair Value
 
Amortized
Cost
 
Estimated
Fair Value
Within 1 year
$
44,267

 
$
44,283

 
$
—

 
$
—

After 1 year through 5 years
217,122

 
218,528

 
—

 
—

After 5 years through 10 years
175,701

 
179,155

 
—

 
—

After 10 years
1,033,513

 
1,035,477

 
81,240

 
81,409

No contractual maturities
24,269

 
23,779

 
—

 
—

 
$
1,494,872

 
$
1,501,222

 
$
81,240

 
$
81,409


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


3.
Loans
The loan portfolio consists of the following loan classes:
(in thousands)
June 30,
2019
 
December 31,
2018
Real estate loans
 
 
 
Commercial real estate
 
 
 
Nonowner occupied
$
1,872,493

 
$
1,809,356

Multi-family residential
968,080

 
909,439

Land development and construction loans
291,304

 
326,644

 
3,131,877

 
3,045,439

Single-family residential
535,563

 
533,481

Owner occupied
836,334

 
777,022

 
4,503,774

 
4,355,942

Commercial loans
1,180,736

 
1,380,428

Loans to financial institutions and acceptances
25,006

 
68,965

Consumer loans and overdrafts
103,239

 
114,840

 
$
5,812,755

 
$
5,920,175

The amounts above include loans under syndication facilities of approximately $609 million and $807 million at June 30, 2019 and December 31, 2018, respectively, which include Shared National Credit facilities and agreements to enter into credit agreements among other lenders (club deals), and other agreements.
The following tables summarize international loans by country, net of loans fully collateralized with cash of approximately $20.6 million and $19.5 million at June 30, 2019 and December 31, 2018, respectively.
 
June 30, 2019
(in thousands)
Venezuela
 
Others (1)
 
Total
Real estate loans
 
 
 
 
 
Single-family residential (2)
$
116,218

 
$
6,636

 
$
122,854

Commercial loans
—

 
57,374

 
57,374

Loans to financial institutions and acceptances
—

 
5,000

 
5,000

Consumer loans and overdrafts (3)
21,197

 
8,368

 
29,565

 
$
137,415

 
$
77,378

 
$
214,793

__________________
(1)
Loans to borrowers in 15 other countries which do not individually exceed 1% of total assets.
(2)
Corresponds to mortgage loans secured by single-family residential properties located in the U.S.
(3)
Mostly comprised of credit card extensions of credit to customers with deposits with the Bank. In April 2019, the Company revised its credit card program to further strengthen credit quality. The Company stopped the charging privileges of its smallest and riskiest cardholders and required repayment of their balances by November 2019. Other cardholders’ charging privileges will end in October 2019 and they will be required to repay all balances by January 2020. Overdrafts to customers outside the United States were de minimis at June 30, 2019 and December 31, 2018.


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

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

 
$
6,467

 
$
135,438

Commercial loans
 
—

 
73,636

 
73,636

Loans to financial institutions and acceptances
 
—

 
49,000

 
49,000

Consumer loans and overdrafts (3)
 
28,191

 
13,494

 
41,685

 
 
$
157,162

 
$
142,597

 
$
299,759

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

The age analysis of the loan portfolio by class, including nonaccrual loans, as of June 30, 2019 and December 31, 2018 are summarized in the following tables:
 
June 30, 2019
 
Total Loans,
Net of
Unearned
Income
 
 
 
Past Due
 
Total Loans in
Nonaccrual
Status
 
Total Loans
90 Days or More
Past Due
and Accruing
(in thousands)
 
Current
 
30-59
Days
 
60-89
Days
 
Greater than
90 Days
 
Total Past
Due
 
 
Real estate loans
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial real estate
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Nonowner occupied
$
1,872,493

 
$
1,870,529

 
$
1,964

 
$
—

 
$
—

 
$
1,964

 
$
1,964

 
$
—

Multi-family residential
968,080

 
967,423

 
—

 
—

 
657

 
657

 
657

 
—

Land development and construction loans
291,304

 
291,304

 
—

 
—

 
—

 
—

 
—

 
—

 
3,131,877

 
3,129,256

 
1,964

 
—

 
657

 
2,621

 
2,621

 
—

Single-family residential
535,563

 
528,921

 
916

 
1,573

 
4,153

 
6,642

 
9,432

 
—

Owner occupied
836,334

 
832,924

 
2,715

 
—

 
695

 
3,410

 
10,528

 
—

 
4,503,774

 
4,491,101

 
5,595

 
1,573

 
5,505

 
12,673

 
22,581

 
—

Commercial loans
1,180,736

 
1,176,688

 
872

 
80

 
3,096

 
4,048

 
10,032

 
—

Loans to financial institutions and acceptances
25,006

 
25,006

 
—

 
—

 
—

 
—

 
—

 
—

Consumer loans and overdrafts
103,239

 
102,464

 
419

 
250

 
106

 
775

 
114

 
23

 
$
5,812,755

 
$
5,795,259

 
$
6,886

 
$
1,903

 
$
8,707

 
$
17,496

 
$
32,727

 
$
23




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

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

 
$
1,809,356

 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

Multi-family residential
909,439

 
909,439

 
—

 
—

 
—

 
—

 
—

 
—

Land development and construction loans
326,644

 
326,644

 
—

 
—

 
—

 
—

 
—

 
—

 
3,045,439

 
3,045,439

 
—

 
—

 
—

 
—

 
—

 
—

Single-family residential
533,481

 
519,730

 
7,910

 
2,336

 
3,505

 
13,751

 
6,689

 
419

Owner occupied
777,022

 
773,876

 
2,800

 
160

 
186

 
3,146

 
4,983

 
—

 
4,355,942

 
4,339,045

 
10,710

 
2,496

 
3,691

 
16,897

 
11,672

 
419

Commercial loans
1,380,428

 
1,378,022

 
704

 
1,062

 
640

 
2,406

 
4,772

 
—

Loans to financial institutions and acceptances
68,965

 
68,965

 
—

 
—

 
—

 
—

 
—

 
—

Consumer loans and overdrafts
114,840

 
113,227

 
474

 
243

 
896

 
1,613

 
35

 
884

 
$
5,920,175

 
$
5,899,259

 
$
11,888

 
$
3,801

 
$
5,227

 
$
20,916

 
$
16,479

 
$
1,303

At June 30, 2019 and December 31, 2018, loans with an outstanding principal balance of $1.7 billion were pledged as collateral to secure advances from the FHLB.
4.
Allowance for Loan Losses
The analyses by loan segment of the changes in the allowance for loan losses for the three and six month periods ended June 30, 2019 and 2018, and its allocation by impairment methodology and the related investment in loans, net as of June 30, 2019 and 2018 are summarized in the following tables:
 
Three Months Ended June 30, 2019
(in thousands)
Real Estate
 
Commercial
 
Financial
Institutions
 
Consumer
and Others
 
Total
Balances at beginning of the period
$
22,456

 
$
29,100

 
$
106

 
$
8,660

 
$
60,322

(Reversal of) provision for loan losses
(556
)
 
(2,646
)
 
(46
)
 
1,898

 
(1,350
)
Loans charged-off
 
 
 
 
 
 
 
 
 
Domestic
—

 
(874
)
 
—

 
(210
)
 
(1,084
)
International
—

 
(43
)
 
—

 
(894
)
 
(937
)
Recoveries
—

 
287

 
—

 
166

 
453

Balances at end of the period
$
21,900

 
$
25,824

 
$
60

 
$
9,620

 
$
57,404


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

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

 
$
30,018

 
$
445

 
$
8,521

 
$
61,762

(Reversal of) provision for loan losses
(878
)
 
(2,677
)
 
(385
)
 
2,590

 
(1,350
)
Loans charged-off
 
 
 
 
 
 
 
 
 
Domestic
—

 
(1,866
)
 
—

 
(406
)
 
(2,272
)
International
—

 
(61
)
 
—

 
(1,300
)
 
(1,361
)
Recoveries
—

 
410

 
—

 
215

 
625

Balances at end of the period
$
21,900

 
$
25,824

 
$
60

 
$
9,620

 
$
57,404

 
June 30, 2019
(in thousands)
Real Estate
 
Commercial
 
Financial
Institutions
 
Consumer
and Others
 
Total
Allowance for loan losses by impairment methodology
 
 
 
 
 
 
 
 
 
Individually evaluated
$
527

 
$
2,608

 
$
—

 
$
1,390

 
$
4,525

Collectively evaluated
21,373

 
23,216

 
60

 
8,230

 
52,879

 
$
21,900

 
$
25,824

 
$
60

 
$
9,620

 
$
57,404

Investment in loans, net of unearned income
 
 
 
 
 
 
 
 
 
Individually evaluated
$
2,621

 
$
19,298

 
$
—

 
$
6,633

 
$
28,552

Collectively evaluated
3,123,437

 
2,104,143

 
25,006

 
531,617

 
5,784,203

 
$
3,126,058

 
$
2,123,441

 
$
25,006

 
$
538,250

 
$
5,812,755


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

 
Three Months Ended June 30, 2018
(in thousands)
Real Estate
 
Commercial
 
Financial
Institutions
 
Consumer
and Others
 
Total
Balances at beginning of the period
$
30,503

 
$
33,672

 
$
3,671

 
$
4,272

 
$
72,118

(Reversal of) provision for loan losses
(1,814
)
 
(1,750
)
 
(354
)
 
4,068

 
150

Loans charged-off
 
 
 
 
 
 
 
 

Domestic
—

 
(2,355
)
 
—

 
(98
)
 
(2,453
)
International
—

 
(52
)
 
—

 
(230
)
 
(282
)
Recoveries
4

 
269

 
—

 
125

 
398

Balances at end of the period
$
28,693

 
$
29,784

 
$
3,317

 
$
8,137

 
$
69,931


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

 
32,687

 
4,362

 
3,661

 
72,000

(Reversal of) provision for loan losses
(2,635
)
 
(1,215
)
 
(1,045
)
 
5,045

 
150

Loans charged-off
 
 
 
 
 
 
 
 
 
Domestic
—

 
(2,737
)
 
—

 
(117
)
 
(2,854
)
International
—

 
(52
)
 
—

 
(630
)
 
(682
)
Recoveries
38

 
1,101