---

---

---

---

---

---

---

---

---

•	Certain limited existing business and transitional service relationships existing in December 2018;

•	The acquisition by the Bank of the Cayman Bank, an indirect MSF subsidiary, subject to any required regulatory approvals; and

•	The lease of space at market rates by the Company to MSF to house certain MSF employees who perform treasury services.

---

---

•	charter a national bank;

•	establish new branch offices (banking centers) that accept deposits;

•	relocate an office;

•	merge or consolidate with, or acquire the assets or assume the liabilities of, a federally regulated financial institution; or

•	obtain deposit insurance coverage for a newly chartered institution.

---

---

---

•	the development of internal policies, procedures, and controls;

•	the designation of a compliance officer;

•	an ongoing employee training program;

•	an independent audit function to test the programs; and

•	ongoing customer due diligence and monitoring.

---

•	its net income available to shareholders for the past four quarters, net of dividends previously paid during that period, is not sufficient to fully fund the dividends;

•	its prospective rate of earnings retention is not consistent with its capital needs and overall current and prospective financial condition; or

•	it will not meet, or is in danger of not meeting, its minimum regulatory capital adequacy ratios.

---

•

Well-capitalized if it has a total risk-based capital ratio of 10% or greater, a Tier 1 risk-based capital ratio of 8% or greater, a CET1 capital ratio of 6.5% or greater, a leverage capital ratio of 5% or greater and is not subject to any written agreement, order, capital directive or prompt corrective action directive by a federal bank regulatory agency to maintain a specific capital level for any capital measure;

•	“Adequately capitalized” if it has a total risk-based capital ratio of 8% or greater, a Tier 1 risk-based capital ratio of 6% or greater, a CET1 capital ratio of 4.5% or greater, and generally has a leverage capital ratio of 4% or greater;

---

•	“Undercapitalized” if it has a total risk-based capital ratio of less than 8%, a Tier 1 risk-based capital ratio of less than 6%, a CET1 capital ratio of less than 4.5% or generally has a leverage capital ratio of less than 2%;

•	“Significantly undercapitalized” if it has a total risk-based capital ratio of less than 6%, a Tier 1 risk-based capital ratio of less than 4%, a CET1 capital ratio of less than 3%, or a leverage capital ratio of less than 3%; or

•	“Critically undercapitalized” if its tangible equity is equal to or less than 2% to total assets.

•	The generally applicable prompt corrective action leverage and risk-based capital standards, or generally applicable standards, including the types of instruments that may be counted as Tier 1 capital, will be applicable on a consolidated basis to depository institution holding companies, as well as their bank and thrift subsidiaries.

•	The generally applicable standards in effect prior to the Dodd-Frank Act will be “floors” for the standards to be set by the regulators.

•

Bank and thrift holding companies with assets of less than $15 billion as of December 31, 2009, will be permitted to include trust preferred securities that were issued before May 19, 2010, as Tier 1 capital, but trust preferred securities issued by a bank holding company after May 19, 2010 will no longer count as Tier 1 capital. Our trust preferred securities outstanding at December 31, 2018 were issued before May 19, 2010, and are included in our Tier 1 capital.

---

•	Goodwill and other intangibles, other than mortgage servicing assets, which are treated separately, net of associated deferred tax losses (“DTLs”);

•	Deferred tax assets (“DTAs”) arising from operating losses and tax credit carryforwards net of allowances and DTLs;

•	Gains on sale from any securitization exposure; and

•	Defined benefit pension fund net assets (i.e., excess plan assets), net of associated DTLs.

•	Mortgage service assets, net of associated DTLs;

•	DTAs arising from temporary differences that could not be realized through net operating loss carrybacks, net of any valuation allowances and DTLs;

•	significant common stock investments in unconsolidated financial institutions, net of associated DTLs; and

•

Noncumulative perpetual preferred stock, Tier 1 minority interest not included in CET1, subject to limits, and current Tier 1 capital instruments issued to the U.S. Treasury, including shares issued pursuant to the TARP or SBLF programs, will qualify as additional Tier 1 capital (all other qualifying preferred stock, subordinated debt and qualifying minority interests will be included in Tier 2 capital).

---

•	the banking organization’s CET1 capital ratio minus 4.5%;

•	the banking organization’s Tier 1 risk-based capital ratio minus 6.0%; and

•	the banking organization’s total risk-based capital ratio minus 8.0%.

---

•	Assign a 250% risk-weight to MSRs;

•	Assign up to a 1,250% risk-weight to structured securities, including private label mortgage securities and asset backed securities;

•	Retain existing risk-weights for residential mortgages, but assign a 100% risk-weight to most CRE loans and a 150% risk-weight for “high volatility” CRE loans, which we refer to as HVCRE;

•	Assign a 150% risk-weight to past due exposures (other than sovereign exposures and residential mortgages);

•	Assign a 250% risk-weight to DTAs, to the extent not deducted from capital (subject to certain maximums);

•	Retain the existing 100% risk-weight for corporate and retail loans; and

•	Increase the risk-weight for exposures to qualifying securities firms from 20% to 100%.

---

---

---

---

•	Total reported loans for construction, land development, and other land of 100% or more of a bank’s total risk-based capital; or

•	Total reported loans secured by multifamily and nonfarm nonresidential properties and loans for construction, land development, and other land are 300% or more of a bank’s total risk-based capital.

---

---

•	provide employees incentives that appropriately balance risk and reward;

•	be compatible with effective controls and risk-management; and

•	be supported by strong corporate governance, including active and effective oversight by the organization’s board of directors.

---

---

•	consumer credit and mortgage lending;

•	capital requirements;

•	Volcker Rule compliance;

•	stress testing and enhanced prudential standards; and

•	capital formation.

•	“qualifying community banks,” defined as institutions with total consolidated assets of less than $10 billion, which meet a “community bank leverage ratio” of 8.00% to 10.00%, may be deemed to have satisfied applicable risk based capital requirements as well as the capital ratio requirements;

•	section 13(h) of the BHC Act, or the “Volcker Rule,” is amended to exempt from the Volcker Rule, banks with total consolidated assets valued at less than $10 billion, and trading assets and liabilities comprising not more than 5.00% of total assets;

•	“reciprocal deposits” will not be considered “brokered deposits” for FDIC purposes, provided such deposits do not exceed the lesser of $5 billion or 20% of the bank’s total liabilities; and

•	the consolidated asset threshold at which company-run stress tests are required increased from $10 billion to $250 billion, and the consolidated asset threshold for mandatory risk committees increased from $10 billion to $50 billion.

---

---

•	Our focus on domestic lending in highly competitive markets may not meet our objectives, and may pose additional or other risks than low margin loans to foreign financial institutions.

•	Our funding has depended on foreign deposits and we may not be able to replace lost low cost foreign deposits with domestic deposits with similar costs and long-term customer relationships.

•	Our profitability objectives have been revised and now assume two 25 basis point increases in short-term interest rates through 2020, which may not occur, especially as a result of the Federal Reserve’s pause in its Normalization Policy (as defined below) announced in early 2019.

•	The benefits from our technology investments may take longer than expected and may not be as large as expected, or may require additional investments.

•	If we are unable to reduce our cost structure, including through reductions in FTEs, as we anticipate, we may not be able to meet our profitability objectives.

•	Our strategic plan may take longer than anticipated and may be more expensive to implement than is currently anticipated, and otherwise may achieve less than we expect, any of which could adversely affect our business growth, results of operations and financial conditions.

•	Our wealth management business currently relies almost entirely on our Venezuelan customers. Our strategic plan for expanding our wealth management business to U.S.-based customers, in this highly competitive business, may not be as successful as we seek.

---

•	Any significant unanticipated or unusual charges, provisions or impairments, including as a result of any legal proceedings or industry regulatory changes, could adversely affect our ability to implement or realize the expected results of the strategic plan.

---

•

We expect to face continued high levels of regulation of our industry as a result of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, or the Dodd-Frank Act, related rulemaking and other initiatives by the U.S. government and its regulatory agencies, including the Consumer Financial Protection Bureau, or the CFPB. Compliance with such laws and regulations may increase our costs, reduce our profitability, and limit our ability to pursue business opportunities and serve customers’ needs. The Economic Growth, Regulatory Relief, and Consumer Protection Act of 2018, or the 2018 Growth Act, various pending bills in Congress and statements by our regulators may offer some regulatory relief for banking organizations of our size. We believe that comprehensive regulatory relief will be slow and contentious. We are uncertain about the scope, nature and timing of any regulatory relief, and its effect on us, if any.

•

Although unemployment nationally is low, the economy is growing relatively slowly. The Federal Reserve adopted in September 2014 a normalization of monetary policy, or the Federal Reserve Normalization Policy, which includes gradually raising the Federal Reserve’s target range for the Federal Funds rate to more normal levels and gradually reducing the Federal Reserve’s holdings of U.S. government and agency securities. The Federal Reserve’s target Federal Funds rate has increased nine times since December 2015 in 25 basis point increments from 0.25% to 2.50% on December 20, 2018. Although the Federal Reserve considers the target Federal Funds rate its primary means of monetary policy normalization, in September 2017, it also began reducing its securities holdings by not reinvesting the principal of maturing securities, subject to certain monthly caps on amounts not reinvested. Such reduction may also push interest rates higher and reduce liquidity in the financial system. Since its last rate hike in December 2018, the Federal Reserve paused its increases in interest rates and in March 2019 announced that it was reducing its sales of Treasury securities 50% to $15 billion per month and ending such sales at the end of September 2019, and reducing its holdings of MBS by reinvesting $20 billion per month of MBS principal repayments in Treasury securities, while reserving the flexibility to sell MBS over the longer run. This will leave the Federal Reserve’s securities portfolio at a higher level than earlier expected. The Federal Reserve also suggested that it would not raise market interest rates in 2019. The nature and timing of any changes in monetary policies and their effect on us and the Bank cannot be predicted. See “Supervision and Regulation—Fiscal and Monetary Policy.”

•

Market developments, including employment and price levels, stock market volatility and declines, and tax changes, such as the Tax Cuts and Jobs Act of 2017, or the 2017 Tax Act, signed into law by the President on December 22, 2017, may affect consumer confidence levels from time to time in different directions, and may cause adverse changes in payment behaviors and payment rates, causing increases in delinquencies and default rates, which could affect our charge-offs and provisions for credit losses.

•

Our ability to assess the creditworthiness of our customers and those we do business with, and to estimate the values of our assets and collateral for loans may be impaired if the models and approaches we use become less predictive of future behaviors and valuations. The process we use to estimate losses inherent in our credit exposure, or estimate the value of certain assets, requires difficult, subjective, and complex judgments, including forecasts of economic conditions and how those economic predictions might affect the ability of our borrowers to repay their loans or the value of assets.

---

•

The 2017 Tax Act substantially limits the deductibility of all state and local taxes for U.S. taxpayers, including property taxes, and lowers the cap on the amount of primary and secondary residential mortgage indebtedness for which U.S. taxpayers may deduct interest. These changes, with or without increases in interest rates, generally, could have adverse effects on home sales, the volume of new mortgage and home equity loans and the values and salability of residences held as collateral for loans.

•	Our ability to borrow from and engage in other business with other financial institutions on favorable terms, or at all, could be adversely affected by disruptions in the capital markets or other events, including, among other things, investor expectations and changes in regulations in the U.S. and foreign markets.

•	Failures of other financial institutions in our markets and increasing consolidation of financial services companies as a result of market conditions could increase our deposits and assets and necessitate additional capital, and could have unexpected adverse effects upon us and our business.

•

The “Volcker Rule,” including final regulations adopted in December 2013, may affect us adversely by reducing market liquidity and securities inventories at those institutions where we buy and sell securities for our portfolio and increasing the bid-ask spreads on securities we purchase or sell. These rules have decreased the range of permissible investments, such as certain collateralized loan obligation interests, which we could otherwise use to diversify our assets and for asset/liability management. The 2018 Growth Act removed Volcker Rule restrictions on banks under $10 billion in assets, and the federal banking agencies have asked for public comment on a proposal that would simplify and tailor compliance requirements relating to the Volcker Rule. See “Supervision and Regulation-Other Legislative and Regulatory Changes.”

---

---

---

---

---

---

---

---

---

---

---

---

•	risks of unknown or contingent liabilities;

•	unanticipated costs and delays;

•	risks that acquired new businesses will not perform consistent with our growth and profitability expectations;

•	risks of entering new markets (domestic and international) or product areas where we have limited experience;

•	risks that growth will strain our infrastructure, staff, internal controls and management, which may require additional personnel, time and expenditures;

•	exposure to potential asset quality issues with acquired institutions;

•	difficulties, expenses and delays in integrating the operations and personnel of acquired institutions;

•	potential disruptions to our business;

•	possible loss of key employees and customers of acquired institutions;

•	potential short-term decreases in profitability; and

•	diversion of our management’s time and attention from our existing operations and business.

---

•	the exclusive right of our board to fill any director vacancy;

•	advance notice requirements for shareholder proposals and director nominations;

•	provisions limiting the shareholders’ ability to call special meetings of shareholders or to take action by written consent; and

•	the ability of our board to designate the terms of and issue new series of preferred stock without shareholder approval, which could be used, among other things, to institute a rights plan that would have the effect of significantly diluting the stock ownership of a potential hostile acquirer, likely preventing acquisitions that have not been approved by our board.

---

---

•	losses and/or increases in our and the Bank’s credit risk assets and expected losses resulting from the deterioration in the creditworthiness of borrowers and the issuers of equity and debt securities;

•	difficulty in refinancing or issuing instruments upon redemption or at maturity of such instruments to raise capital under acceptable terms and conditions;

•	declines in the value of our securities or loan portfolios;

•	adverse changes in foreign currency exchange rates;

•	revisions to the regulations or their application by our regulators that increase our capital requirements;

•	reductions in the value of our DTAs and other adverse developments; and

•	unexpected growth and an inability to increase capital timely.

---

•	ability to grow;

•	costs of and availability of funds;

•	FDIC deposit insurance premiums;

•	ability to raise, rollover or replace brokered deposits;

•	ability to make acquisitions or engage in new activities;

•	flexibility if we become subject to prompt corrective action restrictions;

•	ability to make discretionary bonuses to attract and retain quality personnel;

•	ability to make payments of principal and interest on our capital instruments; and

•	ability to pay dividends on our capital stock.

---

•	residential mortgage interest;

•	state and local taxes, including property taxes; and

•	business interest expenses.

---

•	examined directly by the CFPB with respect to various federal consumer financial laws;

•	subject to reduced dividends on the Bank’s holdings of Federal Reserve Bank of Atlanta common stock;

•	subject to limits on interchange fees pursuant to the “Durbin Amendment” to the Dodd-Frank Act which are not applicable to us beginning in 2019;

•	subject to enhanced prudential regulation, to the extent not reduced or eliminated as a result of the 2018 Growth Act;

•	subject to annual Dodd-Frank Act self-administered stress testing, or DFAST, or similar stress testing, to the extent not reduced or eliminated by the 2018 Growth Act and our regulators;and

•	no longer treated as a “small institution” for FDIC deposit insurance assessment purposes.

---

---

---

---

---

•	actual or anticipated fluctuations in our operating results due to factors related to our business;

•	the success or failure of our business strategies;

•	quarterly or annual earnings and earnings expectations for our industry, and for us;

•	our ability to obtain financing as needed;

•	our announcements or our competitors’ announcements regarding new products or services, enhancements, significant contracts, acquisitions or strategic investments;

•	changes in accounting standards, policies, guidance, interpretations or principles;

•	changes in tax laws, including the 2017 Tax Act;

•	the failure of securities analysts to cover our Company Shares;

•	changes in earnings estimates by securities analysts;

---

•	the operating and stock price performance of other comparable companies;

•	investor perceptions of the Company and the banking industry;

•	our profile, dividend policy or market capitalization may not fit the investment objectives of our current shareholders, many of whom are Venezuelans who became shareholders as a result of the Spin-off;

•	events affecting our shareholders in Venezuela, including hyperinflation and currency controls;

•	the intent of our shareholders to hold or sell their Company Shares;

•	fluctuations in the stock markets or in the values of financial institution stocks, generally;

•	changes in laws and regulations, including banking laws and regulations, affecting our business; and

•	general economic conditions and other external factors.

---

---

---

•	our ability to successfully execute our strategic plan, manage our growth and achieve our performance targets which assume, among other things, continued growth in our domestic loans, increased domestic deposits, increased cross-selling of services, increased efficiency and cost savings;

•	the effects of future economic, business, and market conditions and changes, domestic and foreign, especially those affecting our Venezuela depositors, including seasonality;

•	business and economic conditions, generally and especially in our primary market areas;

•	operational risks inherent to our business;

•	our ability to successfully manage our credit risks and the sufficiency of our allowance for possible loan losses;

•	the failure of assumptions and estimates, as well as differences in, and changes to, economic, market, interest rate, and credit conditions, including changes in borrowers’ credit risks and payment behaviors;

•	compliance with governmental and regulatory requirements, including the Dodd-Frank Act and others relating to banking, consumer protection, securities and tax matters, and our ability to maintain licenses required in connection with mortgage origination, sale and servicing operations;

•	compliance with the Bank Secrecy Act, OFAC rules and anti-money laundering laws and regulations, especially given our exposure to Venezuela customers;

•	governmental monetary and fiscal policies, including market interest rates;

•	the effectiveness of our enterprise risk management framework, including internal controls and disclosure controls;

•	fluctuations in the values of the securities held in our securities portfolio;

•	the risks of changes in interest rates on the levels, composition and costs of deposits, loan demand, and the values and liquidity of loan collateral, securities, and interest-sensitive assets and liabilities, and the risks and uncertainty of the amounts realizable;

---

•	changes in the availability and cost of credit and capital in the financial markets, and the types of instruments that may be included as capital for regulatory purposes;

•	changes in the prices, values and sales volumes of residential real estate and CRE;

•	the effects of competition from a wide variety of local, regional, national and other providers of financial, investment, trust and other wealth management services and insurance services, including the disruptive effects of financial technology companies and other competitors who are not subject to the same regulations as the Company and the Bank;

•	defaults by or deteriorating asset quality of other financial institutions;

•	the failure of assumptions and estimates underlying the establishment of allowances for possible loan losses and other asset impairments, losses, valuations of assets and liabilities and other estimates, including the timing and effects of the implementation of CECL;

•	the risks of mergers, acquisitions and divestitures, including, without limitation, the related time and costs of implementing such transactions, integrating operations as part of these transactions and possible failures to achieve expected gains, revenue growth and/or expense savings from such transactions;

•	changes in technology or products that may be more difficult, costly, or less effective than anticipated;

•	the effects of war, civil unrest, or other conflicts, acts of terrorism, hurricanes or other catastrophic events that may affect general economic conditions, including in countries where we have depositors and other customers;

•	the effects of recent and future legislative and regulatory changes, including changes in banking, securities, tax, trade and finance laws, rules and regulations (such as the potential cessation of LIBOR), and their application by our regulators;

•	our ability to continue to increase our core domestic deposits, and reduce the percentage of foreign deposits;

•	the occurrence of fraudulent activity, data breaches or failures of our information security controls or cybersecurity-related incidents that may compromise our systems or customers’ information;

•	interruptions involving our information technology and telecommunications systems or third-party servicers;

•	changes in our senior management team and our ability to attract, motivate and retain qualified personnel consistent with our strategic plan;

•	the costs and obligations associated with being a newly public company;

•	our ability to maintain our strong reputation, particularly in light of our ongoing rebranding effort;

•	claims or legal actions to which we may be subject; and

•	the other factors and information in this Annual Report on Form 10-K and other filings that we make with the SEC under the Exchange Act and Securities Act. See “Risk Factors” in this Annual Report on Form 10-K.

---

---

---

---

---

•	Increase domestic core deposits by bundling products and improving customer and market data to improve deposit offerings and pricing, as well as gain a greater share of each customer’s business;

•	Enhance retail and commercial sales approaches with better data and customer relationship management, or CRM, tools, improved banking centers of the future, and a consultative approach to identify and meet customer needs, while reducing banking center occupancy and staffing costs;

•	Replace approximately $49.0 million of low yielding foreign loans outstanding at December 31, 2018 as these are scheduled to mature in the first quarter of 2019, with higher margin domestic loans;

•	Focus on domestic lending opportunities, especially relationship-driven consumer loans (including residential first mortgages and home equity loans), retail lending (including personal and small business loans) and C&I and CRE loans, which may improve our returns at lower risks than various types of credit we have made historically;

•	Improve cross-selling among all business lines, with a focus on attracting core deposits, fee income and loans, while building broader, more profitable customer relationships, including wealth management;

•	Increase non-interest fee income through our cash management products, interest rate swaps, private banking and wealth management services;

•	Build our scalable wealth management business with more domestic, as well as international customers;

•	Expand by four new banking centers of the future in South Florida through 2020, reconfigure banking centers to smaller banking center of the future facilities, and relocate certain banking centers to better locations as existing leases expire;

•	Improve the customer experience by:

◦	improving online and mobile banking for retail and commercial customers;

◦	transforming our banking centers to provide a seamless retail banking experience with staff focused on consultative customer service across the full range of products we offer with less emphasis on routine transactions;

◦	streamlining and speeding product applications, transactions and customer processes compliant with regulatory requirements, such as data privacy and anti-money laundering; and

◦	providing quicker decisions on customer requests while maintaining accountability and appropriate credit and compliance standards;

•	Reduce the number of our computer applications and programs and streamline our processes to increase efficiency through approximately $10.0 to $15.0 million of technology investments made from 2019 to 2021, which are expected to be amortized over three years from the beginning of service;

•	Reduce staffing generally, including as a result of more automated and better integrated systems, and reduced staffing in the banking centers of the future;

•	Improve the quality and reduce the costs of our capital by redeeming high cost, fixed rate trust preferred securities, subject to available cash and earnings and Federal Reserve approval;

---

•	Reduce and reorganize the space we occupy in our main office to increase the amount and attractiveness of space available for lease to third parties;

•	Expand and improve the capabilities of our online bank to offer deposit accounts nationwide; and

•	Align responsibilities and incentives to achieve these goals.

•	Net income for the year ended December 31, 2018 was $45.8 million, up 6.45% compared to $43.1 million in 2017, reflecting improved net interest margin and the lower tax rate in 2018.

•	Adjusted net income was $57.9 million in 2018, up 19.67% compared to $48.4 million in 2017.

•	Net interest income was $219.0 million in 2018, up 4.45% compared to $209.7 million in 2017. Net interest margin improved to 2.78% in 2018, compared to 2.63% in 2017. These results are reflective of an improved interest-earning assets mix.

•	We made progress transitioning to a domestic-focused community bank in 2018. Domestic loans and deposits increased 5.83% and 6.33%, respectively, in 2018 compared to 2017. International loans and deposits decreased 60.31% and 13.40%, respectively, in the same period.

•	Credit quality remains strong. The ratio of non-performing assets to total assets was 0.22% at year-end 2018, compared to 0.32% at year-end 2017. The Company only added $0.4 million in additional loan loss reserves in 2018, while in 2017 it released $3.5 million from the allowance for loan losses.

•	Noninterest expense was $215.0 million in 2018, up 3.53% compared to $207.6 million in 2017. After excluding expenses for the Spin-off and restructuring activities, mainly professional and service fees and staff reduction costs, adjusted noninterest expense was $201.9 million in 2018, down 0.24% compared to $202.4 million in 2017.

•

Return on average assets (“ROA”) and return on average equity (“ROE”) increased to 0.55% and 6.29% in 2018, respectively, from 0.51% and 5.62% from the prior year. ROA and ROE excluding expenses for the Spin-off in 2018 and 2017 and restructuring activities in 2018, and excluding the 2017 gain on sale of our New York City office, increased to 0.69% and 7.95%, respectively, from the 2017 adjusted ROA and ROE of 0.57% and 6.32%, respectively.

•	The Company’s efficiency ratio increased to 78.77% in 2018, compared to 73.84% in 2017 due to higher noninterest expenses mainly as a result of the Spin-off. On an adjusted basis, the efficiency ratio improved to 73.99% in 2018 compared to 74.76% in 2017.

•	Capital ratios remained above regulatory minimums to be considered “well capitalized”, and continue to support our growth and strategic plans.

---

(1)

We had no outstanding dilutive instruments issued as of December 31, 2018 and 2017. Consequently, the basic and diluted earnings per share are equal in each of the periods presented. As of December 31, 2018, 736,839 unvested shares of restricted stock were excluded from the diluted earnings per share computation because when these share awards are multiplied by the average market price per share at that date, more shares would have been issued than restricted shares awarded. Therefore, such awards would have an anti-dilutive effect. As of December 31, 2017 and 2016, the Company had no other outstanding or potentially dilutive instruments.

---

---

---

---

(1)	Average non-performing loans of $30.8 million, $46.1 million and $63.5 million for the years ended December 31, 2018, 2017 and 2016, respectively, are included in the average loan portfolio, net balance.

(2)

Includes nontaxable securities with average balances of $172.3 million, $163.9 million and $136.0 million for the years ended December 31, 2018, 2017 and 2016, respectively. The tax equivalent yield for these nontaxable securities was 4.11%, 3.86% and 3.66% for the years ended December 31, 2018, 2017 and 2016, respectively. In 2018, the tax equivalent yield was calculated by assuming a 21% tax rate and dividing the actual yield by 0.79. In 2017 and 2016, the tax equivalent yields were calculated by assuming a 35% tax rate and dividing the actual yields by 0.65.

(3)

Includes nontaxable securities with average balances of $87.8 million and $24.6 million for the years ended December 31, 2018 and 2017, respectively. The tax equivalent yield for these nontaxable securities was 2.28% and 3.61% for the years ended December 31, 2018 and 2017, respectively. In 2018, the tax equivalent yield was calculated assuming a 21% tax rate and dividing the actual yield by 0.79. In 2017, the tax equivalent yield was calculated assuming a 35% tax rate and dividing the actual yield by 0.65.

(4)	The terms of the advance agreement require the Bank to maintain certain investment securities or loans as collateral for these advances.

(5)	Net interest margin is defined as net interest income divided by average interest-earning assets, which are loans, securities available for sale and held to maturity, deposits with banks and other financial assets, which yield interest or similar income.

---

---

---

---

---

---

---

(1)	Changes in cash surrender value are not taxable.

(2)	Includes rental income, income from derivative and foreign currency exchange transactions with customers, net gains on the disposition of bank properties, and valuation income on the investment balances held in the non-qualified deferred compensation plan.

N/M	Not meaningful

---

---

---

---

---

---

---

(1)	Outstanding loan principal balance net of deferred loan fees and costs, excluding the allowance for loan losses.

(2)	See Note 5 to our audited consolidated financial statements for more details on our impairment models.

(1)	Includes loans generally granted to finance the acquisition or operation of non-owner occupied properties such as retail shopping centers, free-standing single-tenant properties, and mixed-use properties with a primary retail component, where the primary source of repayment is derived from the rental income generated from the use of the property by its tenants.

---

(1)	Secured by real estate properties located in the U.S.

(2)	Secured by cash or U.S. Government securities

(3)	Includes customers’ overdraft balances totaling $1.0 million, $1.8 million, $1.7 million , $0.7 million and $0.8 million at each of the dates presented.

(4)	There were no significant international customers’ overdraft balances at each of the dates presented.

---

---

---

(1)

Includes a total of approximately $174.7 million of fixed-rate loans (50% single-family residential and 48% owner occupied), and $313.9 million of variable-rate loans (93% single-family residential and 6% owner occupied), maturing in 10 years or more. Fixed-rate and variable-rate loans maturing in 15 years or more represent 45% of total fixed-rate and 94% of total variable-rate loans maturing in 10 years or more, respectively, and correspond primarily to single-family residential loans.

(2)	Secured by cash or U.S. Government securities

---

(1)	Consists of outstanding principal amounts, net of collateral of cash, cash equivalents or other financial instruments totaling $19.5 million,$31.9 million and $63.2 million as of December 31, 2018, 2017 and 2016, respectively.

(2)	Includes mortgage loans for single-family residential properties located in the U.S. totaling $129.0 million, $145.1 million and $147.0 million as of December 31, 2018, 2017 and 2016, respectively.

(1)	Includes mortgage loans for single-family residential properties located in the U.S. totaling $129.0 million.

(3)	Consists of outstanding principal amounts, net of collateral of cash, cash equivalents or other financial instruments totaling $19.5 million.

(4)	The country’s local currency is pegged to the U.S. Dollar at a fixed exchange rate of 1:1.

---

(1)	Consists mainly of trade finance facilities granted to Latin American banks.

(2)	Comprised mostly of CRE loans throughout South Florida, greater Houston, Texas area, and New York.

(4)	Gasoline stations represented approximately 66%, 63% and 54% of the retail trade sector at year-end 2018, 2017 and 2016, respectively.

---

---

---

(1)	Includes mortgage loans for and secured by single-family residential properties located in the U.S.

(2)	Includes transactions in which the debtor or customer is domiciled outside the U.S. and all collateral is located in the U.S.

---

---

(1)	Includes loan modifications that met the definition of TDRs, which may be performing in accordance with their modified loan terms.

(2)	Includes transactions in which the debtor or customer is domiciled outside the U.S., but where all collateral is located in the U.S.

(3)	Loans past due 90 days or more but still accruing.

---

---

---

---

•	investment quality;

•	liquidity requirements;

•	interest-rate risk sensitivity; and

•	potential returns on investment.

---

(1)

December 31, 2018 includes $36.2 million in “investment-grade” quality securities issued by corporate entities from Europe and Japan in three different sectors. December 31, 2017 and 2016 include $24.3 million and 26.2 million, respectively, in obligations issued by corporate entities from Panama, Europe and others in three different sectors. The Company limits exposure to foreign investments based on cross border exposure by country, risk appetite and policy. All foreign investments are denominated in Dollars.

(2)	December 31, 2016 includes debt securities issued or guaranteed by the governments of Latin American countries. This balance does not represent a significant exposure with respect to our total assets at the reported date.

(3)	Amounts correspond to original cost at the date presented. Original cost approximates fair value because of the nature of these investments.

(4)	Includes a publicly offered investment company which seeks current income and makes investments that qualify for CRA purposes.

---

---

---

---

---

(1)	See “Non-GAAP Financial Measures Reconciliation” for an explanation of certain non-GAAP measures.

---

---

---

(1)	We have designated certain interest rate swaps as cash flow hedges to manage this variable interest rate exposure. Subsequently in 2019, we terminated these hedges at a gain because we expect the pace of future rate increases to decline and negatively impact the value of these contracts.

---

---

---

(1)	Includes approximately $10.0 million of credit card facilities to international customers which had been temporarily suspended at December 31, 2018.

---

(1)	Calculated assuming a constant interest rate as of December 31, 2018.

•	maintains a comprehensive market risk and ALM framework;

•	measures and monitors market risk and ALM across the organization to ensure that they are within approved risk limits and reports to the Bank’s asset-liability committee (“ALCO”) and to the board of directors; and

•	recommends changes to risk limits to the board of directors.

---

•	earnings sensitivity;

•	economic value of equity, or EVE; and

•	investment portfolio mark-to-market exposure (both available for sale and held to maturity).

(2)	This scenario was discontinued in 2018.

---

(3)	This scenario was first modeled in 2018.

(2)	This scenario was discontinued in 2018.

(3)	This scenario was first modeled in 2018.

---

(2)	This scenario was discontinued in 2018.

(3)	This scenario was first modeled in 2018.

---

(1)	“Loan portfolio-performing” excludes $17.8 million of non-performing loans.

N/M	Not meaningful

---

---

---

---

---

---

---

---

---

1.	Business, Basis of Presentation and Summary of Significant Accounting Policies

---

---

---

---

---

---

---

---

---

---

---

---

3.	Securities

---

---

---

---

4.	Loans

---

(1)	Loans to borrowers in seventeen 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 residents 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.

(1)	Loans to borrowers in eighteen 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 secured to customers with deposits with the Bank. Charging privileges are suspended, if the deposits decline below the outstanding credit balance.

---

---

5.	Allowance for Loan Losses

---

---

---

---

(1)	In the fourth quarter of 2018, the Company sold one non-performing loan in the Houston area with a carrying value of $10.2 million, and charged off $5.8 million against the allowance for loan losses. This loan had been modified and met the definition of a TDR during the second quarter of 2018.

(2)	During 2018 and 2017, the Company charged off a total of approximately $6.9 million and $6.0 million, respectively, against the allowance for loan losses as a result of these TDR loans.

(3)

At December 31, 2018, 2017 and 2016, all TDR loans were primarily real estate and commercial loans under modified terms, including interest payment deferments and others, that did not substantially impact the allowance for loan losses since the recorded investment in these impaired loans corresponded to their realizable value, which approximated their fair values, or higher, prior to their designation as TDR.

---

---

---

---

---

---

8.	Advances From the Federal Home Loan Bank and Other Borrowings

---

9.	Derivative Instruments

---

10.	Junior Subordinated Debentures Held by Trust Subsidiaries

---

11.	Incentive Compensation and Benefit Plans

---

12.	Income Taxes

---

---

13.	Accumulated Other Comprehensive Loss (“AOCL”):

---

---

14.	Related Party Transactions

---

---

15.	Stockholders’ Equity

---

---

---

16.	Commitments and Contingencies

---

17.	Fair Value Measurements

---

•	Similar securities actively traded which are selected from recent market transactions;

•	Observable market data which includes spreads in relationship to LIBOR, swap curve, and prepayment speed rates, as applicable.

•	The captured spread and prepayment speed is used to obtain the fair value for each related security.

---

---

18.	Fair Value of Financial Instruments

•	Because of their nature and short-term maturities, the carrying values of the following financial instruments were used as a reasonable estimate of their fair value: cash and cash equivalents, interest earning deposits with banks, variable-rate loans with re-pricing terms shorter than twelve months, demand and savings deposits, short-term time deposits and other borrowings.

•	The fair value of loans held for sale, securities, bank owned life insurance and derivative instruments, are based on quoted market prices, when available. If quoted market prices are unavailable, fair value is estimated using the pricing process described in Note 17.

•	The fair value of commitments and letters of credit is based on the assumption that the Company will be required to perform on all such instruments. The commitment amount approximates estimated fair value.

•	The fair value of fixed-rate loans, advances from the FHLB, and junior subordinated debentures are estimated using a present value technique by discounting the future expected contractual cash flows using the current rates at which similar instruments would be issued with comparable credit ratings and terms at the measurement date.

•	The fair value of long-term time deposits, including certificates of deposit, is determined using a present value technique by discounting the future expected contractual cash flows using current rates at which similar instruments would be issued at the measurement date.

---

19.	Regulatory Matters

---

---

22.	Condensed Unconsolidated Holding Companies’ Financial Statements

---

---

---

---