Earnings call transcript: Amerant Bancorp Q1 2025 misses EPS forecast, shares drop

Amerant Bancorp Inc (AMTB) reported its first-quarter 2025 earnings, revealing a miss in earnings per share (EPS) compared to analyst expectations. The company posted an EPS of $0.28, falling short of the forecasted $0.40. Despite exceeding revenue expectations with $105.43 million against a forecast of $101.91 million, the stock experienced an 11.5% decline in after-hours trading, closing at $17.24, down from the previous close of $19.48.

Key Takeaways

• Amerant Bancorp’s EPS fell short of expectations by 30%.
• Revenue exceeded forecasts, coming in at $105.43 million.
• Stock price dropped by 11.5% in after-hours trading.
• Strategic shift to focus on Florida mortgage market.
• Strengthened risk management with new executive hires.

Company Performance

Amerant Bancorp reported mixed results for Q1 2025, with a notable increase in total assets to $10.2 billion, up from $9.9 billion in the previous quarter. The company saw a rise in total investments and deposits, though gross loans decreased slightly. The bank maintained a flat net interest margin at 3.75% and improved its pre-provision net revenue, highlighting its operational efficiency despite challenges in the earnings sector. InvestingPro analysis reveals that while the company wasn’t profitable over the last twelve months, analysts expect net income growth this year. Get access to 12 additional InvestingPro Tips and comprehensive financial metrics with an InvestingPro subscription.

Financial Highlights

• Revenue: $105.43 million, up from $101.91 million forecasted.
• Earnings per share: $0.28, down from the forecasted $0.40.
• Total assets: $10.2 billion, up from $9.9 billion in Q4.
• Total gross loans: $7.2 billion, down $52 million from Q4.
• Total deposits: $8.2 billion, an increase of $300 million from Q4.

Earnings vs. Forecast

Amerant Bancorp’s EPS of $0.28 missed the forecast by $0.12, marking a significant shortfall of 30%. This miss contrasts with the revenue beat, which exceeded expectations by approximately 3.4%. Historically, the company has shown variability in meeting earnings expectations, and this quarter’s miss was larger than previous discrepancies.

Market Reaction

Following the earnings report, Amerant Bancorp’s stock dropped by 11.5%, reflecting investor disappointment in the EPS miss despite the revenue beat. With a beta of 1.05, the stock shows slightly higher volatility than the broader market. The stock’s decline places it closer to its 52-week low of $16.55, indicating a significant negative market sentiment. This movement contrasts with broader market trends, where financial stocks have shown stability. InvestingPro’s Fair Value analysis suggests the stock is currently fairly valued, with a comprehensive financial health score indicating fair overall conditions.

Outlook & Guidance

Amerant Bancorp remains optimistic about future growth, targeting a 1% return on assets in the latter half of 2025. The company projects a net interest margin in the mid-360s for Q2 and anticipates maintaining assets above $10 billion. The strategic shift to focus on the Florida mortgage market is expected to impact non-interest income and expenses positively. InvestingPro data shows analysts maintain a moderate buy consensus, with revenue growth forecast at 57% for fiscal year 2025. Discover detailed growth projections and comprehensive analysis in the exclusive InvestingPro Research Report.

Executive Commentary

CEO Jerry Plasch emphasized the company’s cautious approach: "We’re going to be very selective," highlighting Amerant’s focus on sustainable growth. CFO Charimar Calderon reiterated the company’s commitment to a relationship-focused banking model: "We want to make sure we stay focused on the relationship approach."

Risks and Challenges

• Macroeconomic uncertainty could impact loan production and asset growth.
• Potential tariff impacts may affect financial performance.
• Strategic shift in mortgage business poses execution risks.
• Credit risk management remains a priority amid market volatility.
• Maintaining deposit growth targets in a competitive environment.

Q&A

During the earnings call, analysts probed into the company’s loan growth challenges and credit quality adjustments. Executives addressed the strategic shift in the mortgage business and clarified expectations for net interest margins and deposit strategies, underscoring a cautious yet optimistic outlook for the remainder of 2025.

Full transcript - Amerant Bancorp Inc Class A (AMTB) Q1 2025:

Brock, Conference Operator: Greetings and welcome to the Ameren Bancorp’s First Quarter twenty twenty five Results. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. Is now my pleasure to introduce your host, Laura Rossi, Head of Investor Relations at Amaranth Bancorp.

You may begin.

Laura Rossi, Head of Investor Relations, Ameren Bancorp: Thank you, Brock. Good morning, everyone, and thank you for joining us to review Amaranth Bancorp’s first quarter twenty twenty one-twenty twenty five results. On today’s call are Jerry Plasch, our Chairman and CEO and Charimar Calderon, our Senior Executive Vice President and CFO. As we begin, please note that discussions on today’s call contain forward looking statements within the meaning of the Securities Exchange Act. In addition, references will also be made to non GAAP financial measures.

Please refer to the company’s earnings release for a statement regarding forward looking statements as well as for information and reconciliation of non GAAP financial measures to GAAP measures. I will now turn it over to our Chairman and CEO, Jerry Blush.

Jerry Plasch, Chairman and CEO, Ameren Bancorp: Thank you, Laura. Good morning, everyone, and thank you for joining us today to discuss Amarin’s first quarter twenty twenty five results. We’re implementing a change in our approach this quarter. This change is the result of our seeking investor and analyst feedback on the last several quarters’ reports. So while the deck continues to include all the slides we’ve consistently supplied, we’ll be commenting on significantly fewer slides than in the past.

We’re going to focus on results on asset quality and certain strategic updates as well, including changes to our mortgage business and on some significant personnel initiatives. But before we dive into the details, want to take a moment to acknowledge both challenges and significant achievements we delivered this quarter. Despite the uncertainty in this environment, we outperformed expectations in several key areas. Our net interest income and net interest margin were stronger than projected driving a robust PPNR. We also saw excellent deposit growth underscoring the continued drive clients placed in us.

For more importantly, we made a prudent decision to reserve for bispecific loans and also to adjust our generic reserves reflecting our commitment to transparency and risk management. Taking decisive action is essential as we remain focused on the longer term and we believe the steps we’ve taken this quarter best positions us for the future. So let’s turn now to slide three and here you’ll see that our core business demonstrated solid deposit growth. Our total assets reached $10,200,000,000 as we closed in the first quarter, an increase from $9,900,000 in the fourth quarter. We expect to now stay above the $10,000,000,000 level and grow from there in 2025.

We’ve been building out our infrastructure to support being a regional bank and so we intend to keep moving in that direction. Total investments were $1,760,000,000 up compared to $1,500,000,000 in the fourth quarter as we opted to purchase securities to protect the net interest margin while our loan pipeline continues to grow. Of note, at least half of these securities have fixed rates protecting against a potential downward rate scenario. Our total gross loans were down by $52,000,000 to $7,200,000,000 down from $7,300,000,000 in the fourth quarter, primarily driven by increased prepayments which offset loan production in the quarter as well as some loan closings sliding into the second. Our total deposits were up by $300,000,000 to $8,200,000 compared to $7,900,000 in the fourth quarter driven by growth in core deposits.

In this period, it’s important to note that we manage the balance sheet to not only achieve strong PPNR results and protect our NIM, but also to hedge the risk of a downward rate scenario. Looking at the income statement on slide four, you’ll see we had strong pre provision net revenue driven by higher than previously projected net interest income and net interest margin. Our diluted income per share for the first quarter was $0.28 compared to $0.40 in diluted income per share in the fourth quarter with the primary difference being the higher level of provision expense we recorded this quarter in comparison to last. We’re going to cover those details in just a few slides. Our net interest margin was flat at 3.75% on Q compared to Q4, significantly better than projected.

The NIM in the first quarter reflects these positive impacts due to a full quarter back of the Houston franchise sale, which had a relatively higher cost of funds than our core Florida market. A lower cost of deposits resulting from a full quarter effect of repricing deposits down after the rate cuts in late quarter Q. Lower promo rates for new deposits and the timing difference between maturities of brokered CDs and renewals at quarter end. And there’s also a full period of higher yielding securities in the investment portfolio after the repositioning that we did in the portfolio within late 3Q and early 4Q twenty twenty one. Net interest margin increases were somewhat offset by the downward repricing of floating rate loans and the impact of securities that we purchased this quarter as the average yield on securities is clearly lower than it is in comparison to our loan production.

Our net interest income was $85,900,000 down $1,700,000 from the $87,600,000 in Q2, primarily driven by lower average balances and yields on loans and higher average balances on costs. Again, as I noted previously, we’re originating at higher yields on new production than the loans mature. Provision for credit losses was $18,400,000 up $8,500,000 from the $9,900,000 in the fourth quarter. This increase was primarily driven by specific reserves we put in portfolio and continue to evaluate specific reserves and also for macroeconomic updates. Sherry is going to cover this more shortly.

Non interest income was $19,500,000 which included a net gain of $2,800,000 primarily from the low milk sale that was previously charged off. While non interest expense was $71,500,000 when you exclude the OREO valuation we reported of 500,000 would have been $71,000,000 even. Pre provision net revenue otherwise known as PPNR was higher at $33,900,000 in 1Q compared to $27,900,000 in 4Q and in comparison with consensus 1Q 25,000,000 to $31,320,000 Let’s turn to slide five. I’m going cover a couple of other key items for the quarter. We paid our quarterly cash dividend of $0.09 per common share on 02/28/2025 and our Board just approved the quarterly dividend of $09 per share payable on 05/30/2025.

Our assets under management increased $42,000,000 to $2,930,000,000 primarily driven by net new assets, although this was partially offset by market volatility which resulted in lower market valuation. We continue to see this as an area of opportunity for us to grow the momentum going forward. And as we previously announced on 04/01/2025, the company redeemed $60,000,000 in aggregate principal amount of its 5.75% senior notes due this year. So we’ll move down to slide six and here I want to provide an update on our residential mortgage business. We’re implementing a strategic change in our operating model and here is that this is what we’re going to be doing.

While the mortgage business was built to create reduced source of fee income in 2021 between sale of conforming mortgage originations and could then be sold into the secondary market. This is required continued investment in hiring business development personnel and technology to fulfill earnings stance. Given our strategic decision made last year to build out of our focus on Florida and given the required capital that would be needed to scale the national and British business that could otherwise be deployed to Ford Bank’s strategic growth initiatives, we’ve elected to transition from being a national reserve to a Florida focus on. So we’re moving forward with a change to the operating model where Emera will continue to offer mortgage products one of the primary focus of originations for any footprint customers. It’s important to know while we still follow input from customers outside the 200 they choose to buy additional properties But you can see as part of this downsizing, we expect our variable costs to be lower and it will result in a reduction in operating costs in the third and fourth quarters this year.

We expect both non interest income and non $6 to be low by approximately 2,500,000 per quarter starting in 3Q. This should improve our operating efficiency by nearly 1% once all restructuring is completed. We’ll transition this over the next one hundred and twenty days which will result in a reduced level of FTEs in the mortgage business. This will allow for the early completion of the current pipeline. So at this point, I’ll turn it over to Sherry to our cover metrics and get into credit quality greater detail.

Laura Rossi, Head of Investor Relations, Ameren Bancorp: Thank you, Jerry, and good morning, everyone. I’ll begin today by discussing our key performance metrics and the changes compared to last quarter on Slide seven. Starting with the ratio of non interest bearing deposits to total deposits, you can see that in the first quarter, It increased to 20.4% from 19.2% in the fourth quarter. As a result from our relationship focused strategy, which contributes to non interest bearing deposit growth. Our efficiency ratio was 67.87% in the first quarter compared to 74.91% in the fourth quarter.

4Q included a loss on securities and loans sold and lower core expenses than 1Q. Our ROA and ROE this quarter were 0.485.32% compared to 0.677.38% respectively in the fourth quarter. The decrease in these metrics was primarily related to the increase in provision for credit losses and the net effect of the non routine items each quarter. Lastly, the coverage of the allowance for credit losses to total loans increased to 1.37% compared to 1.18% in the fourth quarter, primarily due to the specific reserves for credit evaluated individually and certain impact of macroeconomic factors. Now moving on to Slide eight, which shows the drivers of the $13,300,000 increase in the allowance for credit loss.

The provision for credit losses was $18,400,000 in the first quarter. Excluding reserve per commitment, the provision was $17,200,000 and was comprised of $13,900,000 for Pacific reserves, 3,800,000.0 to cover net charge offs, 4,700,000.0 due to model adjustments for macroeconomic factors, offset by releases of $4,400,000 due to credit quality and other macroeconomic updates and $900,000 due to loan growth. During the first quarter of twenty twenty five, there were gross charge offs of $5,300,000 related to $2,100,000 purchased consumer loans and $3,200,000 were related to certain retail and business banking loans. This was offset by $1,500,000 in recoveries. Please note in April 2025, we sold a $6,900,000 participation in a QSR related credit with a $4,800,000 charge off.

This was fully reserved as of March 31 and will be reported in the 2Q charge off. The provision recorded this quarter and the later reserve and its coverage over loans reflect robust analysis in light of macroeconomic and geopolitical conditions. Turning to Slide nine, you can see the roll forward of classified loans from the fourth quarter to the first quarter, showing a net increase of $39,600,000 or 24% to 206,100,000.0 primarily due to one CRE loan totaling $21,000,000 downgraded to substandard accrual due to the loss of a large tenant and five loans totaling $33,700,000 downgraded to NPL based on receipt of year end 2024 financials. Classified loans include three loans totaling $83,500,000 that remain in accruing status. Now on Slide 10, we show the roll forward of non performing loans from the fourth quarter to the first quarter of twenty twenty five, as well as a reconciliation to what we previously disclosed in our investor update in February.

And I will provide color on the main drivers of these changes. The divergence in actual results versus original estimates previously disclosed resulted from downgrades classified in NPL primarily based on receipt of year end 2024 financials. Additionally, an expected payoff was delayed to 2Q. Please note that two of our older properties are under letter of intent to sell. Of note, the non risk classified in NPLs were primarily in the healthcare and restaurant industries.

Turning to Slide 11, we show the pull forward of special mentioned loans from the fourth quarter to the first quarter and provide color on the main drivers of these changes. Special mention loans increased by $97,000,000 primarily driven by three CRE New York City loans totaling $48,800,000 While certain milestones were made by the borrowers, there are acceptable mitigants in place such as adequate loan to value, interest reserves or other structural enhancements. The increase in special mentioned loans was also due to five commercial loans in multiple industries totaling $48,500,000 generated based on receipt of year end 2024 financials. Financials. These increases were partially offset by $3,000,000 in payoffs.

Turning now to the slide 12, I’d like to provide some color on our expectations for the second quarter of twenty twenty five. Starting with the deposit side. As evidenced in the first quarter, we achieved net annualized growth in our core deposits aligned with previous guidance of approximately 15%. This growth was net of the $185,000,000 reduction in higher self deposits from unit to carousel. This demonstrates the strength of our core deposit growth capabilities.

Also, as mentioned, post core conversion, we anticipate that our new treasury management platform and our recently implemented digital account opening tool will be key drivers in achieving this. Also important to note is that we recently awarded a new Head of Treasury Management, which Jerry will comment on shortly. We continue to expect 15% annual growth by year end 2025. On the lending side, we continue to see borrower interest through strong pipeline, primarily for real estate secured loans. Commercial borrowers seem to be more cautious until market and tariff uncertainty diminishes.

Therefore, while we expect loan production and growth in the 10% to 15% range by year end, we could also see a temporary asset mix change through purchases of assets such as mortgage backed securities purchases to offset any temporary shortfalls in funding due to the uncertainty in the macroeconomic environment and tariffs. Looking at profitability, we project our net interest margin to be in the mid three sixty for the second quarter. Regarding expenses, we are projecting a comparable level to 1Q in the second quarter. This reflects our continued strategic investment and expansion initiatives being offset by cost reductions due to the strategic update in the mortgage business. While we expect the efficiency ratio to be slightly higher than 50% given the investment growth, we are prioritizing ROA and continue to expect to reach 1% in the second half, confident on any significant macroeconomic updates to be captured by the APL model in the last quarter of twenty twenty five.

Finally, with respect to capital management, our intention remains to execute a prudent approach. This involves carefully balancing the need to retain capital to support our growth objectives with buybacks and dividends to enhance returns, especially in light of the current uncertain environment. And with that, I pass it back to Jerry for additional comments and strategic outlook.

Jerry Plasch, Chairman and CEO, Ameren Bancorp: Thank you, Sharon. Before we move to Q and A, I’d like to cover a few slides on additions to our team and then we’ll cover strategic outlook. So first on slide 13, here you can see the significant strengthening we’ve done in our leadership team, particularly our risk management function. These strategic additions underscore our commitment to a robust and proactive risk management framework, which we believe is imperative to long term success. This particular slide details the strong talent we’ve recently brought on board.

So first, we’re delighted to welcome Jeff Tichler as our new Chief Credit Officer. He recently started in March 2025. Jeff also joins our Executive Management Committee reflecting the critical importance of the credit function as a direct report to me as the CEO of our organization. He brings an impressive twenty four years of experience in his role most recently serving as the EVP and Chief Credit Officer of City National Bank in California, an RBC company. His extensive background also includes nineteen years as third bank and two years Conway McKenzie.

Jeff’s deep expertise has already proven invaluable as we navigate the current economic landscape and continue to grow our business responsibly. Since joining us, he hit the ground running leading a focused assessment of our current credit quality overall. His experience from working at much larger regional banks has been invaluable in identifying key areas for optimization. We’re already seeing opportunities emerge from this work and we’re in the process of implementing changes and capturing early links to enhance both the efficiency and effectiveness of all of our credit processes. In addition, we’re actively uplifting our special assets group to enhance our focus on effective asset management.

This includes both rehabilitating and returning assets where appropriate while ensuring a more efficient effective process to the exit and capital preservation of any problem asset. We intend to add to our special asset resources with personnel with deep experience to help our team expeditiously, prudently and proactively address credit spreads. Our overarching objective is to ensure Hemmert remains strong through this economic cycle with the ultimate aim of making credit risk a true competitive advantage for our institution. We’ve also recently significantly bolstered our credit review capabilities with the appointment of Cory Valdez, our new Head of Credit Review. He joined us in November of last year.

Cory brings over twenty five years of experience in credit risk management most recently as a credit risk team manager at City National Bank of California. His solid track record ensuring rigorous credit quality review is already proving to be an asset to us. And finally, we’re very pleased to have Kavita Singh join us as our Head of Enterprise Risk Management starting in September of last year. She brings over twenty years of experience in risk management most recently as a Director of Operational at Risk Bank United and prior to that with PWC. Her expertise in developing and implementing comprehensive enterprise risk management strategies are crucial as we continue to enhance our overall risk management framework.

We’re confident that Jeff, Cory and Kavita’s leadership and experience will be instrumental in supporting our strategic objectives and delivering sustainable value. So we’ll turn now to slide 14. Here we highlight some recent additions to our business development team. We’re excited to welcome two seasoned leaders who will be instrumental in driving our growth initiatives. First, we’re pleased to announce the appointment of Braden Smith as our new Chief Consumer Banking Officer.

Braden brings an exceptional thirty years of experience to this role. Many of you will recall Braden initially joined us in November of last year in a new role here as our Chief Business Development Officer and his impact in already bringing in numerous new business opportunities has been significant. Prior to joining us, Brady served as Vice Chairman and Head of Private Banking for WinTrust Financial Corp demonstrating a proven track record of building and leading successful consumer focused businesses and fostering deep client relationships. In this new and expanded role, Brady will leverage his extensive business development, private banking and wealth management experience to further elevate our consumer banking strategy. Also, we’re delighted to welcome Stephen Putnam as our new Head of Treasury Management also effective earlier this month.

Steve brings twenty one years of experience in treasury management, most recently serving as SVP and Regional Sales Team Leader at Valley National Bank. His deep understanding of the treasury management space, his proven ability to build and lead high performing teams will be critical as we look to expand our treasury management services, grow core deposit relationships and provide even greater value to our commercial clients. These strategic additions to business development underscore our strong commitment to prudent growth and deepening client relationships across all our lines of business. We’re confident that their expertise and leadership will be significant drivers for our future success. And so now finally, we’ll turn to our final slide on slide 15.

Here you can see our commitment to continuing to expand our presence in the broader market. We continue to gain momentum. So just this month in mid April, we opened our new regional headquarters office and our new banking center in West Palm Beach. Looking ahead, we’re excited to open in other key markets with two planned openings in Miami Beach later this year and a second location in Downtown Tampa in the coming months. We also remain actively engaged in identifying additional strategic locations in line with our growth objectives and we’ll hopefully be announcing another location or two here in the coming months.

To support this expansion, our hiring strategy remains focused on strategically adding to our business development teams within these key markets of Miami Beach, West Palm Beach and Tampa, St. Pete. We’re actively seeking talent and individuals who can help us build and deepen client relationships in these important areas. And you can also anticipate that we’ll make further select additions to our credit functions. These additions will ensure we remain or maintain a robust and scalable infrastructure as we continue to prudently grow the business and support initiatives led by our leadership team.

So before we open up for Q and A, I also want to acknowledge the ongoing discussions and potential shifts in the macroeconomic and geopolitical landscape stemming from the current administration’s tariffs negotiations. While we do not know if unpredictability will go away in the short term, we’re closely monitoring these developments and how the broader economy responds to any resulting changes. The ability and capability to plan through scenario building is key. Our team is actively analyzing different scenarios to have visibility for possible outcomes from changes in rates, demand for loans and macroeconomic factors such as consumer spending. And we will adapt as appropriate to best position our bank for the evolving economic reality.

Our priority remains delivering prudent sustained growth and value for our shareholders even with this macroeconomic backdrop. So with that I’ll stop here and share an outlook to answer any questions. Please open the line for Q

Steven Scootin, Analyst, Piper Sandler: and A.

Brock, Conference Operator: Thank Our first question today is from Russell Gunther of Stephens. Please proceed with your question.

Russell Gunther, Analyst, Stephens: Hi, good morning guys.

Jerry Plasch, Chairman and CEO, Ameren Bancorp: Good morning,

Russell Gunther, Analyst, Stephens: Maybe just to start on the loan growth outlook, if you guys could touch on the puts and takes of the lowered guide. Just how you’re thinking about the impact of continued paydown headwinds and then balancing the tailwinds from recent commercial lender hires with headwinds from macro volatility and uncertainty, really just trying to get to the puts and takes of the growth guiding confidence in hitting double digits this year?

Jerry Plasch, Chairman and CEO, Ameren Bancorp: Yes. Russell, I’ll start. I’m sure Sherry will add some color. I think the prudent thing right now is again we saw some pullback obviously from commercial customers in the first quarter. So what we’ve adjusted when you refer to the pullback on guidance is that given uncertainty as we’re here in second quarter, our belief is it’s better to say we’re going to take a very prudent approach, right.

We’re going to be very selective. But as we said, loan demand remains pretty strong right now. So we still believe that as we see some volatility here, we still believe that you’re going to see as things work their way through. The sec I’ll call it maybe more late in the second quarter, the 3Q, 4Q that we can still get back to the higher loan average balances that we expect originally expected.

Laura Rossi, Head of Investor Relations, Ameren Bancorp: Hi, Jerry. And aligned to what you’re saying, we continuously monitor the pipeline. We see interest on the commercial and CRE side. But also we want to be cautious, right, because when we looked at the prepayment behavior that occurred in the first quarter, we saw some behavior as to repayments of lines, and that’s representative of a combination of the still high rate environment, but also the uncertainty in terms of the macro factor. So we want to make sure we’re disciplined, we’re selective as we move towards the pipeline that we have at hand.

So that’s the driver of the guidance we shared today.

Jerry Plasch, Chairman and CEO, Ameren Bancorp: Yes. And Russell, I guess the other comment I’d make, I think between comments that I made and Sherry made is our belief is we’ve got the deposit machine, still cranking away and frankly with a new head of treasury management with the efforts that we see across the board in all our lines of business. Our view is that’s why we said we’re not going to back down off the go back below the $10,000,000,000 We’re going to continue to grow. And if temporarily we need to add that cash into as it comes in into investment securities, we’re fine with doing that. So I mean in terms of yes, it will be at a lower yield than some of the loan production, but our view is that you’re also seeing a greater proportion of the deposit production coming through in non interest bearing and in core deposits.

Russell Gunther, Analyst, Stephens: Okay. Got it. Understood. I appreciate the color. And then last one for me just switching gears to asset quality and overall profitability.

Given the inflow of the potential problem assets this quarter, what visibility do you guys think you have in terms of migration of these levels and potential realized losses? I think prior guide was charge offs in the 3035 basis point range. I’d like to get a sense that there’s any change to that guide there. And then if you could just folding it all together from a P and L perspective, I think, Shari, I caught you say 1% ROA in the back half of the year, but if you could just confirm that is the expectation and the main drivers would be helpful. Thank you, guys.

Laura Rossi, Head of Investor Relations, Ameren Bancorp: Sure. Russell, let me first cover the question on the charge off side. As you can see, this quarter we had close to 22 to 25 basis points on the charge off level. We do expect that level to go slightly up in the second quarter as we announced that we had a loan with specific reserves that we charged off the April after a sale of that asset. So that level should be closer to the 55, I would say.

After that, we do expect to see a normalized level as we had in the first quarter and it’s reflective of both still a portion of indirect consumer and small balance retail and business banking loans. So that’s on the charge off side. In terms of the 1% ROA, there are a couple of things that were built into reaching that 1% ROA and I think contribution to that would be also the reduction in expenses that we expect in the second half of the year related to the mortgage business. So something that’s important to clarify is that from the income perspective, when we say that we expect a drop of $2,500,000 it’s related to the original projections that we had for the year. However, when we look at the first quarter and then the volume that we had on the mortgage business, we believe it’s representative of what we’re going to see from an income perspective for the rest of the year.

However, the upside is from the expense side where we expect a drop after we complete the plan that we have built into phases and we get the benefit out of that expense reduction in the full second half of the year.

Russell Gunther, Analyst, Stephens: Okay. Very helpful. Thanks for clarifying. Thanks guys.

Jerry Plasch, Chairman and CEO, Ameren Bancorp: Sure.

Brock, Conference Operator: The next question is from Woody Lay of KBW. Please proceed with your question.

Woody Lay, Analyst, KBW: Hey, good morning guys.

Jerry Plasch, Chairman and CEO, Ameren Bancorp: Good morning. A

Woody Lay, Analyst, KBW: quick follow-up on the mortgage expense outlook. Do you expect those expense savings to drop to the bottom line or are they going

Jerry Plasch, Chairman and CEO, Ameren Bancorp: to be

Woody Lay, Analyst, KBW: reinvested into some of these other initiatives?

Jerry Plasch, Chairman and CEO, Ameren Bancorp: No. Our expectation is that it should be dropping to the bottom line.

Woody Lay, Analyst, KBW: Got it. And then just thinking about all the macro uncertainty and who knows how long it could last, but you’ve got that throughout the year. Does there come a point where if the macro uncertainty persists, it might impact the timeline of some of these initiatives?

Jerry Plasch, Chairman and CEO, Ameren Bancorp: Yes. I think, what we’re doing Woody is when you refer to these initiatives, our commitment to completing those three additional branch locations and hiring the personnel, We’re already way down the path on all of that. So I mean, we’re definitely going to go through and complete. We think those three markets plus obviously what we just opened in West Palm are going to be very, very significant contributors on the business development side, particularly on the deposit gathering side. So we see those as strong positives.

We haven’t disclosed it this quarter like we did in our investor update, but our branch downtown in Downtown Miami is approaching $150,000,000 in deposits. Our location in Fort Lauderdale is well north of $100,000,000 already. We’ve had really, really good success in terms of incremental deposit generation from the locations. And again, we’ve been really selective. We’re getting great people coming in, wanting to work with the organization.

And we’ve been able to attract some really nice additions from a business development perspective. So but that’s when we talk about commitments that additional that we’ll make, they would be things that wouldn’t be you wouldn’t see that flowing through in 2025. They’re commitments that would probably be for the first to second quarter that you see any incremental expense from and obviously additional business coming from if we opened any additional locations.

Woody Lay, Analyst, KBW: Got it. That’s helpful. And then last for me, I wanted to touch on credit and the increase in special mentions in the quarter. Just any color you can share on those five commercial loans that were downgraded?

Jerry Plasch, Chairman and CEO, Ameren Bancorp: Yes. No. Well, big thing I think in regards to all of those was updated financial information, right? There’s no one industry. They’re fairly spread.

I don’t think that you can say that it’s a one size fits all. It’s really I think the pressure of 20 excuse me, of continued high interest rates, high costs, but it’s all different industries. This was on the five. On the three in New York City, again, think they’re just there’s an individual case with each of those. Well, I think the commentary that we’ve made though is with each of those, these are all transitory, right?

This is in and out potentially of

Laura Rossi, Head of Investor Relations, Ameren Bancorp: Were some delays on some implementation of plans that they had shared as part of the process. And while we wait for those to pick up, then we’re placing them on special mention to make sure we closely monitor.

Jerry Plasch, Chairman and CEO, Ameren Bancorp: Yes. Hey, Woody, I think it’s really important to note too, and I think a lot of this comes back around you heard me talk about the emphasis we’re placing on significant upgrades in risk management. I think what you saw this quarter is really reflective of us being very proactive timely identification of any type of blips. So again, I mean if you read the regulatory guidelines on what happens with a special mention it does not necessarily mean it’s going to translate into a problem asset. It means you’ve identified a weakness that in a lot of cases can get remediated or it can be an early warning sign of something that is going to need extra attention.

And so I think you’ll see and again particularly with Jeff’s guidance coming in from the experience that he’s had, I think that you’ll see probably a lot of in and out in this category on a go forward basis. But frankly we’re following what I think is the regulatory risk rating guidelines pretty appropriately at this point.

Woody Lay, Analyst, KBW: All right. Thanks for taking my questions.

Laura Rossi, Head of Investor Relations, Ameren Bancorp: Sure. Thank you.

Brock, Conference Operator: The next question is from Michael Rose of Raymond James. Please proceed with your question.

Michael Rose, Analyst, Raymond James: Hey, good morning, guys. Thanks for taking my questions. Wanted to start on the buybacks. So you guys bought a little bit of stock this quarter. Just wanted to get a sense for the appetite here given you trade below tangible book.

I know you still have some left in the maybe the optionality of increasing that at this point. Thanks.

Jerry Plasch, Chairman and CEO, Ameren Bancorp: Yes. Hey, Michael, it’s Sherri. We were under a 10b5-one in the first quarter. We remained under one. And here in the second quarter, we’ve bought back, I would say, Sherry, probably at a limit of about 10,000 shares depending on what happened with trading in a given day.

And I think up through yesterday, probably in total, we bought maybe 375,000 shares. You’ve got a pretty wide range of pricing obviously. You saw the volatility of what’s happened in pricing. But the really important thing about that is we and we’ve talked about this with you guys and investors in the past, we did not want to introduce additional shares into the average outstanding share category. And so we had about $8,000,000 left and I think we pretty much have used all of that at this point.

Laura Rossi, Head of Investor Relations, Ameren Bancorp: Michael to add to that, we worked under the 10b5-one in the two quarters, so the first quarter and a portion now in 2Q, But the amount that we set for these purchases was aligned with the expectation of stock rents during the year to avoid dilution and that’s the purpose of the buyback for this year.

Michael Rose, Analyst, Raymond James: Okay, great. I appreciate the color. Maybe just on the margin outlook. Can you just talk about kind of where new loan production yields are? And then on the deposit side, any sort of maturities over the next couple of quarters?

And how much flexibility do you have to bring deposit costs down while you’re still growing deposits? And I know some of that’s going be a treasury,

Jerry Plasch, Chairman and CEO, Ameren Bancorp: so there should be lower costs.

Michael Rose, Analyst, Raymond James: But just trying to better appreciate the puts and takes as it relates to the margin outlook from here. Thanks.

Jerry Plasch, Chairman and CEO, Ameren Bancorp: Yes. I think the disclosure in the release was we dropped 16 basis points on the loan yield side and 17 on the deposit side. I think when Sherry’s given guidance in the mid-360s our expectations are that we can price down to continue to manage that sort of in that range and I think that that’s a fairly conservative approach that we’ve taken to this at this stage.

Laura Rossi, Head of Investor Relations, Ameren Bancorp: And Michael to walk you through expectations of the NIM, I think it’s important to talk about the NIM in the first quarter because there are items in there that are recurring and there are items that are new in terms of the forecast. So if we think about the impact of the Houston franchise versus the fourth quarter, it’s something that we expect to be recurring on a go forward basis. The securities portfolio repositioning provided a contribution to the margin because we now had a full quarter of a higher yield portfolio. And then as Jerry was mentioning, we did reprice our deposits pretty similar to how we saw the repricing of the loans, but we also had the impact of the asset mix change for a portion of the quarter related to the securities portfolio. So if we use that as a baseline and move towards the second quarter, we now expect to see in the second quarter, the full quarter effect of the change in the asset mix.

And then as you may recall, we’re asset sensitive. So to the extent that we have rate changes, we expect the asset size to reprice faster than the deposit side. Although we are trying to make that closer to a beta one, but as you can imagine with time deposits, the beta is lower than that. So from a yield perspective, I think you asked the question of the production. Yields during the first quarter were closer to 7%, but from a go forward basis, we expect yields to be from six twenty five to six fifty.

And I think you also asked the yield of the securities portfolio. Yes, you’re right. Yields on the AFS are slightly lower than the lending side, but we still got very good yields in the purchases we made in the first quarter closer to five forty nine or five forty six, if I recall correctly.

Michael Rose, Analyst, Raymond James: Okay. So six twenty five

Jerry Plasch, Chairman and CEO, Ameren Bancorp: to six fifty on the

Michael Rose, Analyst, Raymond James: loan side. Is that just because competition started to pick up? I think we’ve heard that.

Laura Rossi, Head of Investor Relations, Ameren Bancorp: I think there’s a component of competition, but I think there’s also expectation from the borrower side of forward looking rate environment. So they’re building that in terms of expectation of pricing discussions.

Michael Rose, Analyst, Raymond James: Okay, helpful.

Jerry Plasch, Chairman and CEO, Ameren Bancorp: Yes. Michael, Michael, just let me add something though. Think what the key takeaway though of the way we’re looking at things and I and Sherry is absolutely right. Obviously, the loan change if there’s a rate cut is instantaneous. And but one of the things we’ve been very, very actively doing is keeping what we’ve been raising on the deposit side short.

So if you look at our ability to generate new deposits, a lot coming from core, right? And if you’re looking at what we’re adding in time deposits, the only area that we’ve really emphasized is six months. So we’ve been very, I’ll call it proactively managing our ability to downward reprice our liabilities. Obviously not thinking that we’re I should say preparing for what we think is going to be eventual rate cuts.

Laura Rossi, Head of Investor Relations, Ameren Bancorp: And even with the drops in rates, Jerry, the retention rates over time deposits have been very strong. So we’re confident that on the deposit side, we’re able to retain those deposits of favorite price.

Michael Rose, Analyst, Raymond James: Very helpful. Maybe just one final one for me. Appreciate the slide on the additions to the credit side of the house and the risk side of the house. When you guys raised capital back in September to kind of accelerate the cleanup, are you today where you thought you were going to be? And I guess just holistically speaking, think from the outside looking in, there’s probably some frustration on where metrics are on a relative basis.

But is this where you wanted to be at this point? And then how long do you think it will be? I know it’s hard to tell the future and what inflows could look like and the volatile backdrop and everything. But is this where you expected to be at this point? Are you behind?

Are you ahead? Just trying to get a better sense of when we can get back to maybe some peer level credit metrics. Thanks.

Jerry Plasch, Chairman and CEO, Ameren Bancorp: Yes. Look, I think in my opening remarks, I think we are continuing to be proactive and aggressively go and rate risk rate credits reserve where we feel that we need to do so and doing that is far more prudent to be upfront transparent in comparison with and obviously obviously there is no alternative in my mind. So Michael to be very blunt, I wish that we could be reporting here today even more accelerated asset resolution. Some of this stuff takes more time than we would like it to. But our view is still that we’ve got a great team that we’re being very proactive in trying to move things along.

There is obviously some real volatility in the marketplace that and a couple of things that extended into the next quarter, but our view remains the same. I did reference that we’re going to add more firepower here in mid quarter to our special asset team. And obviously with Jeff on board with some of the other additions that we’ve made during not only just the quarter, but continue to make. We’re going to continue to be very, very proactive and aggressively look for resolution in as many of these issues as we can.

Michael Rose, Analyst, Raymond James: I appreciate all the color. Thanks for taking my questions.

Laura Rossi, Head of Investor Relations, Ameren Bancorp: Thanks.

Brock, Conference Operator: The next question is from Steven Scootin of Piper Sandler. Please proceed with your question.

Steven Scootin, Analyst, Piper Sandler: Hey, good morning everyone. So Jerry, I appreciated your comments about the risk rating changes and kind of feeling like you’re being proactive. I guess one of my questions is with Jeff coming on here mid March, I mean, you feel like some of these changes were a result of having new eyes on the portfolio and maybe a change in, I don’t know, strategy or perception of how these things need to be rated, whether that conveys that they should have been downgraded earlier or not? Guess, how much

Jerry Plasch, Chairman and CEO, Ameren Bancorp: of that do you think is the change

Steven Scootin, Analyst, Piper Sandler: in kind of ideology around the credit review process?

Jerry Plasch, Chairman and CEO, Ameren Bancorp: Yes. No, I think we’ve talked about this Steve in the comments that we made today that a lot of this is we received updated 2024 financial information. And so if you kind of drop back to and one of the things we wanted to do in the walk across in the NPL page that Sherry covered was, look we got a lot of updates in the month of March. And so you might call it the sixty days versus ninety day timeframe post year end. And the specifics that we’re looking at is, hey, in one case there was a loss of a tenant and another case they’ve missed some milestones, that information happens to coincide with him coming on board.

So I hear you with that, but the reality is that a lot of it is really just the timing of when things get receipt of information post year end.

Steven Scootin, Analyst, Piper Sandler: Got it. And how frequently normally do you get updated financial statements from your customers? And do in light of these updates, do you change those the timing of those requests to customers? Or is that even feasible to get more frequent updates from them in light of all the uncertainty?

Jerry Plasch, Chairman and CEO, Ameren Bancorp: Yes. Look, I think it varies. Some are quarterly, some are semiannual, some are full year. I think a lot of this comes back to being very proactive and know your customers, visiting your customers, getting the updates. Some of it is obviously exposure driven.

The bigger the exposures, the more time that we’re making sure that we’re proactively out and getting updates. I think it’s a combination of things.

Steven Scootin, Analyst, Piper Sandler: Got it. And on the shift kind of in what you guys thought was possible kind of mid quarter with your mid quarter update versus what actually transpired around loan growth. And you noted pay downs and repayments, but were there any specific large loans that pay down or any specific drivers as a pretty big delta there? And kind of within that, do you feel like the tariffs impact the South Florida market maybe more than other parts of the country given its international flavor? Or is that not really as significant to your book of business there?

Jerry Plasch, Chairman and CEO, Ameren Bancorp: No. I think it’s a to be honest I think it’s a combination of people looking at uncertainty and pulling back. I think it’s also continued high costs right, what you can earn on your cash versus do you repay your debt. Again, I don’t think we have a one size fits all on this one. But I think it’s we haven’t really said in any one of these cases though.

I also think to be candid there’s also some pruning that we did in the portfolio. I think being proactive in making sure that we want customers in our portfolio that have their full relationship with our organization and we want to make sure that that’s our primary focus. As you know, I’m not a we’re not looking to be a financing arm only. And I think that that’s also a result of what I refer to pruning that renewals on someone who’s not bringing the totality of banking to us or at least our fair share of it. We no longer have an interest in maintaining those kind of relationships.

Steven Scootin, Analyst, Piper Sandler: Got it. Makes sense. And then just last thing for me. I’m curious from a strategic perspective how the experience with the mortgage expansion, maybe how that affects your ideology around future expansions, if you want to just be more focused on the core bank and adding lenders versus other verticals and just kind of, I don’t know, just get a high level how that makes you think about business expansion and additional verticals from here?

Laura Rossi, Head of Investor Relations, Ameren Bancorp: Yes. I think from the mortgage business perspective, we definitely see it’s complementary as we build the relationship approach. And rather than focusing on an approach of originations to sell and have that fee income, we want to make sure we already have the infrastructure to provide that complementary product for private banking or any other retail customers, but we want to make sure we stay focused on the relationship approach.

Steven Scootin, Analyst, Piper Sandler: Yes. I guess, I mean, the decision to create mortgage, the mortgage division a couple of years ago and obviously kind of paring back from there, which seems like the right financial decision. But does it make you think differently about the strategy moving forward in terms of business expansion versus just maybe core commercial lending? I guess, I mean, obviously, it didn’t go how you wanted it to go with the national footprint. So how does that make you think about your business?

Yes.

Jerry Plasch, Chairman and CEO, Ameren Bancorp: Stephen, I think and again I’ll emphasize I have made a comment on this. I think the decision really is more around what is a better return for our organization and shareholders is to deploy capital to really build up the scale necessary to make a national platform origination platform worthwhile versus us pulling back focusing solely on footprint, primarily on private banking, but of course we will do retail in footprint originations. You can see it’s a substantial reduction in expense for us as an organization and the decision was it’s a very high efficiency business. You need a lot of scale. And I think for us with the double down on Florida, this is kind of more of a natural follow on to the decision we made to just focus on Tampa, St.

Pete, focus on the three counties here, focus on Florida only expansion. And I think this ties in very nicely with that, because I do think that we could add more people into these other areas and accomplish the mission that we’ve got set out, which is to be the bank of choice in the markets that we’re in, right? And I think that that fits better. In order to be a national player, I just think what we would have had to deploy to really scale that up, would have just taken away from our focus of what we needed to be we to be focused on as sort of job one.

Steven Scootin, Analyst, Piper Sandler: Got it. That makes sense. I appreciate all the time and the color here. Thanks guys.

Jerry Plasch, Chairman and CEO, Ameren Bancorp: Thanks, Truman.

Brock, Conference Operator: This now concludes our question and answer session. I would like to turn the floor back over to Mr. Plush for closing comments.

Jerry Plasch, Chairman and CEO, Ameren Bancorp: Thank you everyone for joining our first quarter earnings call. We appreciate your interest in Amarin and your continued support. Hope you all have a great day.

Brock, Conference Operator: Ladies and gentlemen, thank you for your participation. This does conclude today’s teleconference.

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