Earnings call transcript: Amerant Bancorp Q2 2025 beats earnings expectations

Amerant Bancorp Inc. (AMTB) reported its Q2 2025 financial results, surpassing Wall Street expectations with an EPS of $0.55 against a forecast of $0.39, marking a 41.03% surprise. The company also outperformed revenue forecasts, reporting $110.26 million compared to the expected $103.51 million. Following the earnings announcement, Amerant’s stock price increased by 2.73%, closing at $20.12.

Key Takeaways

• Amerant Bancorp exceeded EPS and revenue forecasts for Q2 2025.
• The stock price rose by 2.73% in response to the earnings report.
• The company is focusing on expanding its presence in Florida.
• Net interest margin and return on equity showed significant improvement.

Company Performance

Amerant Bancorp demonstrated robust performance in Q2 2025, with total assets reaching $10.3 billion. The company’s net interest margin was 3.81%, surpassing projections, and net interest income totaled $90.5 million, an increase of $4.6 million. Return on assets (ROA) improved to 0.90%, while return on equity (ROE) rose to 10.1%, signaling strong financial health and effective management strategies.

Financial Highlights

• Revenue: $110.26 million, up from the forecast of $103.51 million.
• Earnings per share: $0.55, compared to the forecast of $0.39.
• Net interest income: $90.5 million, an increase of $4.6 million.
• ROA: 0.90%, up from 0.485%.
• ROE: 10.1%, up from 5.3%.

Earnings vs. Forecast

Amerant Bancorp’s actual EPS of $0.55 significantly exceeded the forecast of $0.39, resulting in a 41.03% earnings surprise. The revenue of $110.26 million also surpassed expectations by 6.52%. This strong performance highlights the company’s ability to effectively manage its operations and capitalize on market opportunities.

Market Reaction

In response to the positive earnings report, Amerant Bancorp’s stock price increased by 2.73%, closing at $20.12. The stock is currently trading between its 52-week high of $26.24 and low of $16.21, reflecting investor confidence in the company’s growth prospects.

Outlook & Guidance

Looking ahead, Amerant Bancorp projects a net interest margin of 3.75% for Q3 2025 and expects non-interest income to range between $17.5 million and $18.5 million. The company aims for a 1% ROA in the second half of 2025 and anticipates an annual deposit growth rate of 14-15%. InvestingPro data suggests net income is expected to grow this year, with analysts projecting a return to profitability despite recent challenges. For detailed analysis and forecasts, investors can access the comprehensive Pro Research Report, part of InvestingPro’s coverage of over 1,400 US stocks.

Executive Commentary

Jerry Posh, CEO of Amerant Bancorp, emphasized the company’s strategic focus, stating, "We want to make sure that we’re putting the right growth on." He also highlighted Amerant’s efforts to rebuild its pipeline and achieve a 1% ROA, along with an 11.5% to 12% ROE.

Risks and Challenges

• Economic fluctuations could impact loan growth and asset quality.
• The transition from a community to a regional bank may pose operational challenges.
• Interest rate volatility could affect net interest margin and profitability.

Q&A

During the earnings call, analysts inquired about Amerant’s loan growth prospects and asset quality management. The company expects loan growth to return to double digits and is actively managing its loan loss reserves, which are projected to be around $120-$125 million.

Full transcript - Amerant Bancorp Inc Class A (AMTB) Q2 2025:

Daryl, Conference Operator: Greetings. Welcome to Amarit’s Second Quarter twenty twenty five Earnings Conference Call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. Please note this conference is being recorded.

I will now turn the conference over to Laura Rossi, SVP, Head of Investor Relations. Thank you. You may begin.

Laura Rossi, SVP, Head of Investor Relations, Amerant Bancorp: Thank you, Daryl. Good morning, everyone, and thank you for joining us to review Amerant Bancorp’s second quarter twenty twenty five results. On today’s call are Jerry Posh, Chairman and CEO and Charimara Calderon, 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 statements 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, Gerry Buff.

Jerry Posh, Chairman and CEO, Amerant Bancorp: Thank you, Laura, and good morning, everyone, and thank you for joining us today to discuss Amarin’s second quarter twenty twenty five results. You’ll notice we continue to evolve our approach to these calls, including refining the slides we will cover today. So Sherry is going to take the lead in commenting on results and asset quality, and I’ll wrap up our prepared remarks with some strategic updates in order to allow ample time for Q and A. As I noted in our press release, we are pleased to be reporting improved results this quarter, which were driven by higher quarter pre provision net revenue along with a lower provision for credit losses. A lot of time and effort this quarter was focused on asset quality and that will continue to be a top priority for us.

Loan growth in 2Q was offset by payoffs and paydowns and a number of deals we closed in 2Q have yet to fund. We saw solid customer deposit growth in light of stiff competition for market share, which we utilized to grow our investment portfolio this quarter. Our new banking centers continue to grow nicely and we’ve included the details by banking center in the supplemental slides. And we continue to selectively add key personnel to our team, which I’ll comment on later in this presentation. So with that, let me turn it over to Sherry now to cover 2Q results in detail.

Laura Rossi, SVP, Head of Investor Relations, Amerant Bancorp: Thank you, Jerry, and good morning, everyone. Let’s turn to Slide three. Here, you will see the highlights of our balance sheet. Total assets reached $10,300,000,000 as of the close of the second quarter. As we guided in the first quarter, we temporarily supplemented loan originations with purchases of investment securities.

Total investment securities were $2,000,000,000 up by 209,200,000.0 Of note, 120,000,000 of these securities are mortgage backed securities, which the company classified as trailing securities and $87,000,000 are available for sale. The growth loans were down by $30,000,000 to $7,200,000,000 primarily driven by increased prepayments, which offset loan production in the quarter, as well as some loans originated earlier this month. On the deposit side, total deposits were up by $151,600,000 to 8,300,000,000.0 driven by growth in core deposits. Customer deposits grew by $202,300,000 partially offset by a planned reduction of $51,000,000 in broker deposits. Our assets under management increased 132,420,000.00 to $3,100,000,000 primarily driven by higher market valuations and net new assets.

We continue to see this as an area of opportunity for us to grow fee income going forward. Looking at the income statement on Slide four, you will see that we have strong pre provision net revenue, driven by higher than previously projected net interest income and net interest margin. Our NIM was higher than projected at 3.81% due to recovery of interest on commercial loans, including a non approval loan that was fully paid off and another loan that had been fully charged off. Lower cost of time deposits resulting from lower average balances and repricing rates and lower costs on senior notes as these were fully repaid in April 2025. The NIM increases were partially offset by higher average balances of interest bearing demand and money market deposits by prepayments, which offset loan production in 2Q twenty twenty five as well as higher average balances in the investment securities portfolio.

Net interest income was 90,500,000 up 4,600,000.0 primarily driven by higher average balances of securities and lower average balances and rates on time deposits. Provision for credit losses was $6,100,000 down $12,400,000 from $18,400,000 in the first quarter. Non interest income was $19,800,000 while non interest expense was $74,400,000 Looking back at the guidance provided for non interest expense for the second quarter, we have guided to 71,500,000.0 The variance to actual results was primarily driven by non core expenses of $1,200,000 Additionally, we incurred $1,100,000 in expenses on customer derivatives, an increase of $700,000 when compared to the prior quarter. Pre provision net revenue was higher at $35,900,000 in 2Q twenty twenty five compared to $33,900,000 in 1Q twenty twenty five and core PPNR was $37,100,000 an increase of $5,600,000 or 17.7% compared to $31,500,000 in 1Q twenty twenty five. A reconciliation of core PPNR and the impact on key ratio is shown in Appendix one included in this presentation.

Turning to Slide five, you can see improvement across all capital metrics. We paid our quarterly cash dividend of $09 per share of common stock on 05/30/2025. And our Board of Directors just approved a quarterly dividend of $09 per share payable on August 30. During the second quarter, we also repurchased 275,666 shares at a weighted average price of $80.14 per share. Jerry will cover some additional notes on buybacks and cover his remarks later in this call.

Next up in Slide six, you can see we made significant improvement in our ROA and ROE this quarter at zero point nine zero percent and ten point one percent compared to 0.485.3% respectively. Both of these metrics reflect the improved profitability this quarter. This quarter, we had $1,200,000 in non routine non interest expenses, which included an $800,000 net loss on the sale of two older properties and approximately $400,000 in salaries and employee benefit expenses in connection with the downsizing of Ameren mortgage. Our core efficiency ratio was 66.35%, core ROA was 0.94 and core ROE was 10.49%. Turning to Slide eight.

Here you can see the roll forward of classified loans from the first quarter to the second quarter, showing a net increase of $9,300,000 or 4.5% to 215,400,000 primarily due two CRE loans totaling $21,000,000 downgraded to substandard due to the loss of a tenant and delays in requisition funds, as well as two commercial loans totaling $16,800,000 downgraded from special mention and two commercial loans totaling $18,300,000 downgraded from past. These downgrades were based on receipts of year end 2024 and 1Q twenty twenty five financials. These increases were partially offset by approximately $50,000,000 in charge offs, pay offs and loans sold. Classified loans include nine loans totaling $134,000,000 that remains in accruing debt. Let’s move on to Slide nine, where we included the roll forward of non performing loans from the first quarter to the second quarter of twenty twenty five, showing a significant net decrease of 41,000,000 mainly driven by the combination of payoffs, loans sold, pay downs and charge offs.

It is important to note that the charge offs included three commercial loans totaling $16,000,000 with $12,000,000 previously in specific reserves. From an NPA standpoint, in addition to the reduction in NPLs, two out of four other properties were sold during the quarter, therefore reducing our order balance to $15,000,000 Turning to Slide 10, we show the go forward of special mentioned loans from the first quarter to the second quarter and provide color on the main drivers of these changes. Special mentioned loans increased by $33,000,000 primarily driven by three CRE loans totaling $36,000,000 that missed certain milestones. However, there are acceptable mitigants in place such as adequate loan to value, interest reserves, personal guarantees or other structural enhancements. The increase in special mention loans was also due to four commercial loans in multiple industries totaling $57,000,000 of weighted base and receipts of year end 2024 and first quarter twenty twenty five financials.

These increases were partially offset by $22,000,000 in payoffs and further downgrades the classifieds previously mentioned. Now moving on to Slide 11, which shows the drivers of the $11,700,000 decrease in the allowance for credit losses. The provision for credit losses was $6,100,000 in the second quarter. Excluding reserves for commitments, the provision was $3,600,000 and was comprised of $6,000,000 with covenant charge offs, 2,200,000.0 due to macroeconomic factors, offset by releases of $1,400,000 due to loan growth and $3,300,000 due to recovery. During the second quarter of twenty twenty five, there were gross charge offs of $18,600,000 related to three commercial loans totaling 16,000,000 with $12,000,000 previously anticipated reserves, dollars 1,700,000.0 related to purchased consumer loans and $1,100,000 related to certain smaller retail and business banking loans.

This was offset by $3,300,000 in recovery, primarily due to the recovery of $1,900,000 related to a commercial loan previously charged off. Lastly, the coverage of the allowance for credit losses to total loans decreased to 1.2% compared to 1.37% in the first quarter, primarily due to the charge offs in specific reserves. Otherwise, net of specific reserves, the ratio remained unchanged at 1.17%. Turning now to Slide 12. I’d like to provide some details on our expectations for the third quarter of twenty twenty five.

Starting with the deposit side. We continue to expect 14% to 15% annual growth by year end 2025, even if this is not linear during the third and fourth quarters. Also note that we plan to further reduce broker deposits by at least $100,000,000 and replace with either FHLB advances or incremental organic deposit. On the lending side, we expect to evidence loan production and growth of approximately 5% annualized by year. In 3Q, we project an increase in investment securities similar to what we saw in 2Q.

Looking at profitability, we project our net interest margin to be approximately 3.75% for the third quarter. We project non interest income to be at $17,500,000 in 3Q and $18,500,000 in 4Q. Regarding expenses, we expect them to be in line with what we reported as core non interest expenses for 2Q of $73,000,000 based on recent key additions to the team and investment in continued expansion in Florida. This is expected to be partially offset by cost reductions in average mortgage. We expect the efficiency ratio to be in the mid-sixty given the investment in growth.

And as previously stated, we are prioritizing ROA over all other metrics and continue to expect to reach 1% in the second half of twenty twenty five, confident of any significant macroeconomic updates to be captured by the allowance model in the last quarter of twenty twenty five. And with that, I pass it back to Gerry for additional comments and closing remarks.

Jerry Posh, Chairman and CEO, Amerant Bancorp: Thanks, Sherri. Finally, turning to the final slide we’ll cover, I’m going to provide some color on the topics that we’ve listed here. So first, regarding Ameren Mortgage, as we reported last quarter, we’ve been executing on a plan to reduce the size and scope of our mortgage business, transitioning from being a national mortgage originator to focusing solely on in footprint mortgage lending to support our retail and private banking customer base. We’ve been progressively reducing the FTE count toward our stated goal of under 20, and we’re in process of transferring loans platform. And We expect everything to be completed no later than early 4Q.

Next, regarding where we stand with the opening of new banking centers, we anticipate opening the first of our two new Miami Beach offices in the third quarter with the second office in Miami Beach plus our Downtown Tampa banking center to be opened in the fourth quarter. Please note we’ve also recently entered into an agreement on a highly visible location in St. Petersburg and we anticipate a second quarter twenty twenty six opening there. While we continue to look for opportunities in the Greater Tampa marketplace, you should note this new St. Pete location gives us three of the original six offices that we initially contemplated.

But at this point, we’re now looking at a longer time horizon than trying to complete the rest of this expansion in 2026. Let’s talk a little bit about new people that we added in the quarter to risk and business development. So on our first quarter call, we announced several key additions to our leadership team, both in risk and business development. And we noted we were going to continue to add talented individuals in both areas again in the coming months. So in the second quarter, we’ve added a new Head of Special Assets.

And just this week, our new Head of Credit for C and I started. And both of these talented individuals have strong experience from larger commercial organizations. And on the business development side, we recently announced the addition of Elliot Shafer, who joined us from Huntington to head of our business development efforts out of our recently opened West Palm Beach Regional Office. And joining us in August is our new Head of Loan Syndications and Sales, who has a demonstrated proven track record of success at several well known institutions. He will definitely assist us immediately with our loan growth agenda as we continue to see new large relationship opportunities that recruit risk management, we need to participate in these deals with other banks.

But wrapping up my comments on talent additions, we have and will continue to selectively look for additions to build to our team or add to our team, I should say. Our loan strategy going forward. So on our first quarter call, we noted that reduced loan growth may result in temporary increases in mortgage backed securities to offset any shortfall. And we saw that happen in the second quarter. So for the second quarter in a row, we’re basically flat in loans outstanding quarter over quarter, despite the fact there was a significant amount of activity.

A couple of things are happening here. Please note that asset quality is our top focus, booking a number of construction deals year to date that have not funded yet and higher paydowns in a projected have all contributed basically to having flat numbers quarter over quarter. So it’s fair to say that rebuilding our momentum will need to come in the second half of twenty twenty five. And a big part of that will be boosted from recent talent additions we’ve made, like I mentioned, and there are more in almost all of our regions. So the new Head of Business Development, the new Head of Loan Syndications and Sales, along with other additions, RMs, each of our locations will continue to help rebuild and boost our pipeline.

Let’s talk about the continued assets we’re putting on improving asset quality and reducing non performing assets. So regarding asset quality, I think needless to say further NPL reductions are a top priority for us right now and the need to continue to proactively address credit quality is paramount. It’s important to recognize that work is also underway on further strengthening our risk culture now that we’re a regional bank with the heightened scrutiny that comes with that. The new additions to our team are already contributing and having an impact there. And last, on prudent capital management and specifically on buybacks.

So with respect to capital management, our intention remains the same as we previously stated. We’re going to take a prudent approach, which involves carefully balancing the need between retaining capital to support our growth objectives compared with buybacks and dividends to enhance returns. As Sherry mentioned in the second quarter, we utilized the 10b5-one plan to purchase shares up to $5,000,000 in the quarter. We expect to continue to prudently repurchase shares depending on trading volume and the price in the third quarter under the current remaining amount authorized. Any conclusion, please note that we continue to be steadfast in our focus and continue to execute on our strategy to be the bank of choice in the markets we serve.

So with that, I’ll stop all our prepared remarks, and we’ll look forward to Sherry and I look forward to answering any questions you have. So operator, if you would, please open the line.

Daryl, Conference Operator: Thank you. We will now be conducting a question and answer session. Our first questions come from the line of Russell Gunther with Stephens. Please proceed with your question.

Russell Gunther, Analyst, Stephens: Hey, good morning, guys. Thanks for taking the question. I wanted to start on the loan growth discussion. I appreciate the color you shared in the prepared remarks. Maybe just bigger picture, I’m thinking maybe into 2020, should we be thinking about you guys more in the mid single digit growth range going forward?

And is this reflective of a strategic refocus or is it more just market driven?

Jerry Posh, Chairman and CEO, Amerant Bancorp: Yes. Russell, thanks for the question. No, I think you should expect us to be back in double digit growth. We’ve talked about very consistently that our deposits first focus is our number one I want to continue to emphasize the quality of the organic growth that we’re seeing on the deposit side and I think as Sherry referenced, we’re well into the mid teens on that side. And so that’s enabling us to be able or I should say affording us the opportunity to also grow equally on the loan side.

Our expectation is a rebuild of the pipeline and with some of the new additions and again I’m not going to elaborate on the number of additions on the RM level that we’ve made. But I think our focus and I said this on the call right now our focus has been solely as a top priority on asset quality. But our expectations are there are significant growth opportunities in the markets we serve and we should be back into higher loan growth in coming quarters and certainly in 2026. But we’re going to continue to be very prudent and selective in the additions that we’re going to make on loan side.

Russell Gunther, Analyst, Stephens: Okay, great. Thank you, Jerry. And then just one more for me. Switching gears on to the asset quality discussion. So nice to see the NPAs come down this quarter.

Charge offs were a bit higher than at least I was expecting. So we also saw a build back in classified and special mention. Would just be helpful to get a sense for how you guys are thinking about realized losses in the back half of this year? I think we’ve kind of talked about a 30 to 40 basis point range prior. And I guess just what’s embedded in that 1% ROA expectation in the back half of twenty twenty five?

Jerry Posh, Chairman and CEO, Amerant Bancorp: Yes. Ralph, so I think the key thing and Sherry referenced it a couple of times in her remarks, had already provisioned for the uptick that we took this quarter in charge offs. So again, the 12,000,000 of the $18,000,000 was already in specific reserves. So if you subtract that and then do the comparison from a charge off rate, we were relatively flat quarter over quarter. I think we were probably in the 5.5 range last quarter to roughly six and change this quarter.

And that’s still the core of, again, continuing to see the consumer, the indirect consumer charge offs and some of the business banking charge offs is primarily the key drivers there.

Laura Rossi, SVP, Head of Investor Relations, Amerant Bancorp: And Jerry, add to that, Russell, in the 1% ROA that includes the provision number, we do still expect some loan growth early in the second half of the year. So that is still within the provision expectation because we would have to set up reserves on day one.

Russell Gunther, Analyst, Stephens: Thank you guys for taking my questions.

Laura Rossi, SVP, Head of Investor Relations, Amerant Bancorp: Thanks, Russell.

Daryl, Conference Operator: Thank you. Our next questions come from the line of Stephen Scoutman with Piper Sandler. Please proceed with your questions.

Stephen Scoutman, Analyst, Piper Sandler: Great. Thanks. Good morning, you all. Extending on that conversation with, as you mentioned, the lump sum of loan cut charge off already having specific reserves. Would this 120,000,000 loan loss reserve kind of be the right way to think about how you need to reserve for the loan book currently?

Jerry Posh, Chairman and CEO, Amerant Bancorp: Yes. Look, Stephen, great question. I think that’s right in the range. Allowance is always going to depend on what asset classes you’re growing it, right? And so I think thinking around the 120,000,000 125,000,000 range is probably a good way to think about us level forward basis.

But we’ll we’ll record and we’ll certainly be talking about where we’re growing and what the reserve requirements are. I mean, part of this quarter with growth coming from the quarter definitely benefited when you think about flat from a loan growth standpoint. That obviously is actually a positive and the growth that we did book came into the investment side, right. But as Sherry just referenced, the way we look at it is you book the provision along side with when you record the growth. So our expectation is, and as she’s mentioned, the provisional will tick up a little bit because we expect the loan growth to start to come

Laura Rossi, SVP, Head of Investor Relations, Amerant Bancorp: And then one thing also to add is that we have as you were able to see, the provision doesn’t have a component of a funding commitment. So as we move into funding those loans, you will see a read off it’s not only for provision, but you’re going to see a read off into the funded portion. So that will impact Q2.

Stephen Scoutman, Analyst, Piper Sandler: Sure. That makes sense. Yes. And then as you guys in the third quarter outlook, looks like the margin is projected to be down a touch. Can you walk me through some of the dynamics there?

I mean, given where the loan to deposit ratio has moved down and the expectation for growth to kind of resume, I would actually kind of theoretically thought there’d be incremental upside to the NIM on a positive remix. But maybe you can help me think through those dynamics or where you think the NIM will trend beyond third quarter?

Laura Rossi, SVP, Head of Investor Relations, Amerant Bancorp: Sure. So I think the first step, Stephen, is to normalize the NIM because this quarter we had a component related to our recovery and we also had a component related to collection of an NPL. So if we normalize the NIM and we think about what would be different in the third quarter, the first thing I would say is we’re expecting to have slightly higher average balances on the wholesale side based on the timing of the maturities within the quarter, and the replenishing of that wholesale funding. But the second thing is related to the securities portfolio where we’re going to see a full quarter effect of a higher securities balance that while it definitely is a contribution to NII, it’s slightly lower than the average of the NIM. So once we see that full effect in the third quarter, it takes us to the $375,000,000 With that said, we’re also working in terms of NPL resolution.

So if we do see collection of those items then it will certainly impact NIM like it did this quarter. So the $375,000,000 is guidance towards a normalized NIM.

Stephen Scoutman, Analyst, Piper Sandler: Okay. And what does that compare to this quarter? Forgive me if I missed that, but relative to the $381,000,000 what’s the kind of normalized NIM would have been this quarter?

Laura Rossi, SVP, Head of Investor Relations, Amerant Bancorp: I would say four basis points less, more or less.

Stephen Scoutman, Analyst, Piper Sandler: Okay, great. And then lastly for me, Jerry, you noted a higher around loan syndications and sales head. I’m kind of curious how you guys are thinking about that component moving forward. Is that something where you’re desiring to move up market and do some larger loans? And kind of if there’s maybe a limit of where you’d say, hey, at this dollar amount we want to syndicate everything out above this dollar amount or just kind of how we can think about that from a business perspective?

Jerry Posh, Chairman and CEO, Amerant Bancorp: Yes. No, I really appreciate that question so we can clarify. I think the sense Stephen and one of the nice things I think that we see in terms of opportunities is we’re getting a chance at a lot of significant size deals. And to me, I think that you have to look at this as number one, it’s really prudent risk management if we go to look at a larger size credit. Let’s just use for illustration.

If you get a $50,000,000 opportunity, it’s a great credit, it’s really good, really well underwritten. We want to hold 25,000,000 of that, right? And that’s kind of where I want to make sure people understand. We’re not really looking at this by having this position and eventually building probably some support around earning higher as a growth objective where you’ll start to see we’re going to bigger and bigger and bigger. It’s just our ability to do more transactions and participate in more transactions gets exponential for us.

And again, from a risk management standpoint, it is very prudent for us to be participating in these deals with a second or even a third bank, right? And so I think this is part of it, I’ll call it, natural evolution of being becoming a true regional bank. We’ve had in the past, and I know we’ve talked about this on calls, have had several large exposures in the portfolio. And our view is just we’ve got customers that are growing. It’s just another opportunity for us to continue to grow with them as opposed to they outgrow us, right?

So while we’re both growing, this just gives us that lever of where we can continue to maintain great relationships that we’ve seen from the very beginning. And I just think it’s like I said, I’ll emphasize it one more time. It’s just really prudent from a risk management standpoint for a bank our size. When you look at things from a capital perspective, it’s still true to us.

Stephen Scoutman, Analyst, Piper Sandler: Yes. Appreciate that. That’s great color. Yes. Allowing you to grow and still managing the risk and the concentration.

Okay. Appreciate all the time.

Jerry Posh, Chairman and CEO, Amerant Bancorp: Okay. Thank you.

Daryl, Conference Operator: You. Our next questions come from the line of Michael Rose with Raymond James.

Michael Rose, Analyst, Raymond James: Maybe I’ll just kind of ask the same question that I asked last quarter. Jerry, where do you think you are in terms of the evolution asset quality? Maybe we’ll use hockey analogy this time since the Panthers just won, but what period do think we’re in? And do you think I know it’s hard to make definitive statements, but do you think we’ve kind of already reached the peak in criticized classified and we should expect continued progression from here, just given what seems to be an improving macro backdrop, just from trade deals being struck, everything macro that’s seemingly off the worst case. Just wanted to get your view on where we are and how this plays out over the next year or so?

Thanks.

Jerry Posh, Chairman and CEO, Amerant Bancorp: Yes. No, Mike. Thanks for the question. Look, I think we put ourselves in a position with the talent we’ve added to the organization and the approach. And I referenced this around heightened scrutiny that you go through as a regional.

I think from our perspective, I wouldn’t refer to it as innings or periods as much as I think this is just part of the natural transition for us as an organization. Our credit quality, we are recognizing any concerns that are out there as proactively as we can and addressing them. And I think when you hire and have the talent around special assets that we’ve talked about the additions in terms of leadership on the credit side. We’re working on this on both sides, right? We’re looking to always look at ways to strengthen credit culture, the risk culture in the organization at the same point in time.

We’re we recognize that it’s critically important to make sure that we can get consistency from the results, and we don’t want the credit bumps So I’m not really ready to tell you one way or another where we are on something. I would take it that the good news is the non performing loans continue to come down. We’ve put the right people in the right seats. And I think that we’re proactively and transparently.

We’re in a better position today than we were the last quarter and where we’ve been in And I think that’s the really important takeaway it should have with this.

Michael Rose, Analyst, Raymond James: Okay, helpful. And then just maybe tagging on to that, I mean, you obviously brought in some people from some larger organizations last quarter. It’s been ninety days. I know then it was kind of too early to lessons learned and maybe some policies, procedures put into place. But if you can just share with us anything that has kind of materially changed from an underwriting or grading or just new production standpoint, that would be helpful just to get more comfortable on the go forward and what you’re putting on the books today?

Thanks.

Jerry Posh, Chairman and CEO, Amerant Bancorp: Yes. I mean, we are looking I would call it sort of a anything that’s coming on the books today and I’ll give you a great example. We’re making sure that comes back to the syndication’s comments from the last series of questions, making sure that we don’t get into a situation where we can’t retain credits, or that we’re in a position where taking such a forward look on our underwriting. I think we’re in a better place than we were in the past there. But I also would tell you that look I think the key asset quality ratios that everyone be looking at with us are non performing loans, because if we dictate that a loan has to go on non accrual in NPL, I think that’s the leading indicator.

And I would also say that one of the things we did not talk about and highlight, and I know in past quarters people were concerned, right? I think we do think that the allowance as it relates to non performers is a really critical ratio, and we’re happy to be back over 100% coverage there. So look, early identification, really, I would say the strengthening and by the way, we just talked about adding a new head of C and I to the team comes from a larger organization, larger organizations in her background. We’re excited for continuing to build. We don’t want the growth for growth’s sake.

We want to make sure that we’re putting the right growth on. And we think these are all been prudent steps to do at this point, again, because of the transition we’re making from being a community organization to being a regional bank.

Michael Rose, Analyst, Raymond James: I appreciate the color, Jerry. Maybe just one more, switching gears. The last couple of quarters have been fairly heavy in terms of hiring. Do you expect the pace to kind of slow at least on some of the back office revenue producing efforts as we move into the fourth quarter? And as we think about kind of the intermediate terms, where do you think from an efficiency standpoint you guys can operate?

And I’m not trying to ask for kind of longer term targets necessarily, but I think everyone wants to obviously see these revenue hires be accretive to the efficiency ratio. But kind of intermediate term, where do you think the company should and can continue to run just with obviously a pickup in growth, obviously continue to support revenue growth efforts with additional hires. So just wanted to get a sense for kind of where we’re going and kind of what the efficiency could look like intermediate to longer term? Thanks.

Jerry Posh, Chairman and CEO, Amerant Bancorp: Yes. Look, I think, no, it’s a very fair question. Our projections are from, let’s call it from an earning asset perspective, if you would look at it sort of on a total asset side, we know that with the hires that we’ve made, we want to be in the $11,000,000,000 plus range, right. So I mean 11,000,000,000 pretty much gets us from an earning asset standpoint much closer to being a 60% efficiency organization. So our expectations and Sherry referenced in her comments, right?

We’re focused on getting to a one ROA, getting to 11.5%, 12% ROE type of numbers. The efficiency is going to come with that with just increased size. So I want to go back and address it head on though. Specific question is, we think that the selective hires that we’ve made are absolutely going to be accretive to us as part of getting to that 11,000,000,000 plus, right? And so I think the other thing Michael I’d take away from the comments that we made this morning really important is we’re looking at ways to adopt artificial intelligence to make ourselves more efficient.

I also signaled to everyone that we’re going to have a slowdown as it relates to the physical expansion here because we’ve added a lot and that’s already reflected in the numbers that Sherry likes to remind me every day. The second we signed a new lease, we’re incurring the expense. It’s only the incremental expense. It’s actually the expense of the people who run-in the office. And so we’re sort of doing a balancing act here of, hey, it’s we expect more deposit growth, more loan opportunities, more relationship opportunities from these new locations.

Our expansion is pretty significant, right? What we’ve done so far and by the way, I highly encourage people to look into the supplemental slides and see the growth that’s coming from these new locations. They are already not only meeting but exceeding expectations all of them and we’re really excited about that. And our expectations are that’s going to come from these what I referenced is the four additions, the three that will come this year between the third and the fourth quarter and the one that we expect to open in the first quarter of twenty twenty six. But if you take a combination of all my remarks there, we’re looking at ways to become more efficient.

We’re scrutinizing expenses to get that efficiency ratio to the 60 and the expectations are a combination of incremental asset growth. The hires we’ve already made opening the locations we have, we feel confident that that is something that is going to be easily achieved with those components all coming together.

Michael Rose, Analyst, Raymond James: Jerry, I appreciate all the color. Thanks for taking my questions. I’ll step back.

Jerry Posh, Chairman and CEO, Amerant Bancorp: Absolutely. Thanks, Michael.

Daryl, Conference Operator: Thank you. Our next questions come from the line of Will Jones with KBW. Please proceed with your questions.

Will Jones, Analyst, KBW: Hey, Good morning.

Laura Rossi, SVP, Head of Investor Relations, Amerant Bancorp: Good morning. Good morning.

Will Jones, Analyst, KBW: Sherry, I wanted to circle back on the margin discussion. I know you called out some interest recoveries that happened in the quarter. Just to help us normalize that margin. Did you have that dollar amount of recoveries? And then just a follow on to that, I appreciate all the helpful color around the guidance and where the margin could be ahead in the third quarter.

But could you just remind us from an asset sensitivity standpoint, where do you guys kind of stand today? And what maybe a cut or two would do to the margin as we think about an exit rate for 2025? Thanks.

Laura Rossi, SVP, Head of Investor Relations, Amerant Bancorp: Sure. So in terms of the normalization of the NIM, I think we should be close to $1,200,000 adding both the recovery and the collection from the NPL, so between 1,200,000.0 and $1,300,000 And then in regards to the second question about the NIM for the third quarter, I guess the question would be the components towards the $375,000,000 just to make sure I addressed the question?

Will Jones, Analyst, KBW: Or it was really just help us sensitize the margin. If we do get a few cuts in the back half of the year, what does that do to the margin? Just any general commentary on your assets? Sure.

Laura Rossi, SVP, Head of Investor Relations, Amerant Bancorp: So at least for forecast purposes, we’re modeling one cut occurring in September and one in December. So third quarter wouldn’t receive much of an impact from that cut. It would be more seen in the fourth quarter. Typically, rate cut assuming a full quarter impact would be around 1,400,000 to 1,500,000 to NII.

Will Jones, Analyst, KBW: Okay. That’s great. That’s helpful. And then just could you maybe talk us a little bit through the decision to kind of see the securities balances build here? And how you weigh that decision as opposed to maybe paying down some of your broker deposits or wholesale borrowings?

Just the decision, I guess, to build the balance sheet as opposed to shrinking and make it

Russell Gunther, Analyst, Stephens: a little more efficient? Yes.

Laura Rossi, SVP, Head of Investor Relations, Amerant Bancorp: I think it’s not an eitheror. I think we’re looking at multiple options. We are considering in the third quarter a reduction of broker deposits depending on the timing of the loan fundings we would either replace with some wholesale funding or we would actually pay it down and not renew. So it is a possibility. However, we do see that through the investment portfolio, we’re getting a very decent yield from the portfolio still from a risk weighted asset perspective, it’s helpful as well.

And you can see that through metrics like CET1. So I do believe that we’re getting optionality through the securities portfolio. We have cash flow optionality so that we can fund the portfolio as the pipeline materializes.

Jerry Posh, Chairman and CEO, Amerant Bancorp: Yes. Well, I think it’s not an either or. I think Sherry just described it perfectly. Options there. I think we signaled that our intent is to reduce brokered and we’re going to continue to look at that as whether that gets replaced with organic, whether we need to take advantage just given where we are of options around taking additional advances to offset.

I mean, we have a lot of collateral, I mean, billions of dollars obviously at this point. But I think we’ve signaled again that we view the increases in investments as temporary. Obviously, we want to run the company in the 90 plus range on loans to deposits. We’ve been very consistent about saying 95% is sort of the optimal target. We’re running in the, I’ll call it, the mid to upper 80s right now.

I think right at around 86% or so. And we obviously strongly prefer to be funding loan growth right now. And that’s our expectation is that we’ll continue to build back up as we move forward.

Will Jones, Analyst, KBW: Okay. That’s great color. I appreciate that your answer. And then, Jerry, just high level for you. I know that you’re very much an organic focus story right now.

You’re very much focused on building density in the state of Florida. But at the same time, there’s quite a bit of optimism out there regarding just M and A and what’s happened and maybe more of a deregulatory environment. Could you just help us recall where M and A stands in terms of your priority list and whether you feel like that could be an opportunity for you guys down the road here and maybe whether you consider either upstream or downstream M and A?

Jerry Posh, Chairman and CEO, Amerant Bancorp: Yes. Look, I think that we’ve said and as you just referenced organic growth is sort of the top priority and focus for the company. And I think that will continue to be, but that doesn’t mean that as our currency improves, I think that’s probably been and again, we’ve had so many significant projects, right, between system conversions, the additions, the expansion. That’s kind of been the focus. But certainly, as we look at the playing field, everything you just referenced, the regulatory environment, our hope towards there ’s higher returns from us that our currency gets better.

Of course, we’ll look at it as an option. But that is not the top focus. Our top focus is continuing to grow and continuing to be the bank of choice in the markets that we serve, right? So if you think about the opportunities we believe we have in Greater Tampa Bay, St. Pete, if you look at the expansion we’ve done in Palm Beach, our view in Palm Beach County, I should say, I think there’s just lots of opportunities for us.

Will Jones, Analyst, KBW: Yes, Drew. That’s very helpful. Thanks for all the color, guys. Okay.

Russell Gunther, Analyst, Stephens: Thank you.

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

Jerry Posh, Chairman and CEO, Amerant Bancorp: First of all, let me just say thank you to everyone for joining today. We appreciate it given the opportunity to share some of our comments and provide some color on second quarter results. Greatly appreciate everyone’s interest in Amarin and your continued support. Have a great day and thanks again.

Daryl, Conference Operator: Thank you. This does now conclude today’s teleconference. We appreciate your participation. You may disconnect your lines at this time. Enjoy the rest of your day.

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