AMTB,AMTBB - Earnings call transcript Q2 2021

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Operator

Good day and thank you for standing by. Welcome to the Amerant Second Quarter 2021 Earnings Conference Call. [Operator Instructions] I would now like to hand the conference over to your speaker today, Ms. Laura Rossi, Head of Investor Relations. Thank you and please go ahead.

Laura Rossi

Myra. you, Thank and Amerant everyone for us joining Good second thank quarter review Bancorp’s XXXX to morning, you results.

Iafigliola, Executive Joining me Plush, and Chief Chief Jerry call today’s President Carlos Financial Officer Officer. this morning Vice to Chairman lead Executive and Vice are and

call which of please results forward-looking from expressed to today’s statements. many which to and are our earnings we its Amerant’s discussion begin, actual presentation. press a our your subject risks that business or note forward-looking As responses beyond refer release – and consequently, regarding and company’s are variety company’s may control, Please to the in release, notices differ those on and the the contain and statements materially uncertainties, of cautionary implied. questions operations

of a and and on report December the other XX-K complete For risks, the SEC. to please company’s XX, other description our ended these year annual more refer with XXXX for the Form filings in possible

to release financial measures. over turn call non-GAAP most comparable presentation, access by can references earnings to each forward-looking financial and Appendix will to or reflect revisions note except today’s measure. Jerry. or X SEC’s any these changes events, its Exhibit measures, reconciliation has to company’s release subsequent the in and release, also I required publicly in now non-GAAP to Amerant a You order or press include no as the commitment new as and earnings press and makes to statements no law. circumstances of also measure update presentation certain obligation adjusted GAAP Please filings on information that expectations, respectively, website. it company’s known financial financial of X contain the

Jerry Plush

implemented second we made earnings quarter Laura and shared the new I call. earnings I happy regarding the their to Amerant’s Amerant’s progress strategic have team call. fully on and the we initiatives I Amerant update to you XXXX members pleased would job depending onsite this office for either this second last for I that profitable a growth. during and looking you, to forward Amerant’s and have function. ahead note hybrid earnings entire year am to on you or quarter’s and also for with where good opportunity an to that quarter to schedule, past on objectives report their like am Thank joining to provide thank recently we and and everyone have morning team take Amerant the dedication focusing note are all thank in effort moving return plans

in Let brief overview second provide performance our details. hand then a to over the me I the Carlos to and of will into get now quarter it

of a can turning summary here Slide see So, X, you second to highlights. quarter our

report deposits improved a total and higher in to $X.X funding. as deposits as bearing we our prioritize income efforts down to company non-interest QX. to XX.X% last from Nonetheless, of pleased $XX million by to interest of core billion of $X.X from type were to increased quarter. were growth loans happy a including both Total losses. report loan deposits, billion, of result allowance slightly non-interest this net driven $X further quarter-over-quarter results the compared the million as up of it’s are primarily Of note, and and release well We income income net attributable is are

Our July of total for over of XXX,XXX progress continues, as $X.X a having shares Class repurchased B million repurchases on XX. share

helpful PPNR million, to compared this for core the charges, PPNR, excluding restructuring the that severance each FHLB costs and all in and gains of core X, happy such slide Turning one-time the non-recurring Slide show quarter. the increase other report X% would the are now of show to last to as adding prepayment quarter. an $XX growth, We to revenue core net we felt penalties, be

and the We have Slide at key actions, will which here outlined the quarter. we X second look now turn for to

lower that $X.X future in gain of these We note and lower will recorded loans. expenses. a PPP You number of sale operating million focused on on strategic the were a $XX.X costs funding measures million driving

in We have given end at acquiring of macroeconomic credit we reduced at million taking million million actions license by $X.X improved additional We We access these us paid in the conditions an for savings. a the the Both $X.X May allowance to on losses and enabled Amerant nationally. $X to and a off rate $XXX of represent loan after which operate Mortgage modified charge indicators operations FHLB markets. million, annualized business, $XXX advances our the million launched QX. of in

deposits, result continued strategic outsourced X time savings our loan by will customer further function, re-pricing approximately expect with also recording approximately annualized the funding XXXX. City York of $X.X in translates of in savings basis annually into in there. We closing the lowering of charges we $X.X office the audit points, which cost production of million starting proceeded which We internal million. million of We New $X in

making with former development, in and improve Amerant reductions third-party additions a launched Mortgage. City layers spans production in the New customer down, and additional In the and a And select primarily our stepping on to to initiative review loan improvement COO President closing experience and efficiency. well-known York the we based addition workforce business office, drive while process we of executed still

quickly for with businesses Marstone significantly It’s confident fin-techs, will enable will growth customers. Additionally, Inc. with we our loan award-winning Numerated’s partnership and leading Numerated about small our technologies needs are new and both faster efficiently. recent account platform opening it numerated making process, the existing us and to new customer and partnerships business and at meet improve financing financing are that employees excited that bank will easier we clear need

management the is management Regarding Marstone, understand benefiting help relationship Amerant plans platform investment for. while wealth to Amerant high-touch fully position, their empower will outlooks, customers their online known financial and from

affluent we with capacities agreement, a as the sub-advisor and two Through segment are As planning our our we all technological Marstone mass Amerant a and the our expand as Last of be position fully business launch able much have partner. will by do to capabilities its a to offering, leverage financial scale one the we part lower record. the Investments customers. to reach a technological capabilities will they partnership bring to announced drive offering in Amerant with Zimmerman be the experience savings of week, Advertising excited Through to to year partnership, goal us is digital in sub-advisor Zimmerman recently than later of main we and new existing top agencies in Amerant digitalize elevate the tools and to today. going in as advisory greater marketing business leverage agency help our offering U.S. in able to can growth. of and and will be minimums advisory even brand the new are our additional the

As that the I just with experience, have us the noted goal drive of previously, all with X-week we efficiency banking a and making with process enhance begun to well-known customer additional firm easier.

that will the growth and confident these profitable partnerships recognition coming improved, an us results greater toward with drive quarters. brand in help are We all and enhanced eye initiatives new

on metrics So, Slide we the key turn to X. will

the position quarter Here, the board with we cost improvement across just quarter, efficiency York operating We capital severance to office results of all maintaining have we core past this the robust reflective others. this the while which the associated a production exception non-recurring outlined key ratio with metrics, show during actions coverage. focus increase key attribute deposits on of ratio. higher loan closure, in covered as efficiency These the performance profitability, such in and the the are among our New and credit

So I detail. walk will for through over turn with quarter results in the will that things to who said, Carlos more the

Carlos Iafigliola

you Jerry us to you today. of all and thank join you, Thank

begin Turning our to will portfolio. investment by Slide X, I discussing

in and investment Our from portfolio $X.X balance rates. changes interest duration second of drop the due the to from The investment quarter XXXX. previous billion, of $X.X second to the quarter quarter unchanged continues reflect in down securities billion was

recorded speeds as we in duration expected a years quarter, X.X decrease this of prepayment increased. During

select of to portfolio. the continue to We over investments risk prepayment impact mitigate the

our portfolio portion XX, represented floating XX%. the June only As of of investment

see Moving loans, loan to forgiveness. PPP to received of prepayments down of and intensified. competition the $XXX million CRE Total down the were overview of $X.X sale outstanding pricing continues primarily indirect both quarter, the to $XX of previously as I loan loan $XX to of which provide end we $XXX PPP were The second not All million second that end outstanding the Slide to and QX. of at and quarter, our It’s an offset last loans was quarter. in to strong loan due C&I in compared PPP billion, able $XX loans our to and the the important the significantly of this loans. demand yet continue We processed end decline portfolio. mentioned. portfolio, sold X.X% million, consumer the loans in of processing million applications as performance while we of the to PPP in higher compared At X, the yielding total May of note recover, including prepayments end million forgiveness loans

quarter, $XX purchased of this these loans. we million an During additional

let’s notified end the credit million the at one totaling small coverage quarter-over-quarter X% were from under was which for quarter a estate for reserve the economies indicators, quarter. will losses for to note primarily Florida million, X, $XX loan last loans, increase commercial million as allowance Texas New in in primarily be week, the million, and of retail in that York and The second down that The $X.X released of spaces take York, loan the Slide credit mainly by increased as loan. downgrade of $XX Important These to this to early QX end the were million in $XXX real was strong. of quality. quality XXXX. transferred quarter as of loan macroeconomic upgrades closer million the $XX look recover. $X loans the property at the New first three due million. Classified a result million $XXX in close and partially a of driven the of to remains at by to we was guaranteeing losses to vacancies non-performing compared commercial offset a increases Orion. improving sound QX, conditions Turning and the allowance We continue $XXX Overall, from

the closed loan, million exposure well out a food to as credit million. loans $XX multifamily million downgrades million $XX two loan As will wholesaler an in well which to million previous just off now, downgrades $XX of of quarter. a just charge-off as of loans XXXX. primarily the $XX totaling was as $X.X CRE year-over-year previously $XX were The loans balance of loan coffee with trader the outstanding quarter as of charged included as the of increase specific million mentioned result, in due I third reserved These and

Regarding the trader the have process we on with coffee collection liquidation case, agent distribution. the in contact close been prospective regarding

cash far, Timing objection of by liquidation $XX defined proceeds distribution approximately million. from allocation lenders. for collected are pending as is agent to subject to So maybe be

totaled as explained. attributed We report and to quarter-over-quarter as monitor QX, needed. change XX% of so process by Non-performing the the will increases up continue was end this assets million just of and $XXX I

of XX% that third-party company pandemic during to of programs. almost the end the when most only of provision. quarter and XXXX, of significantly down the from loans forbearance under mention, still were our collateral of the valuations second the from X.X% of loan the During quarter supported which we on of loan non-performing mitigation started independent these obtained down loss level as and X% QX XXXX, loans, the second Worth the the

XXX% a deferral the of real loans accommodations estate were forbearance As loans. under collateral annual reminder,

went of that regularly. payments have resumed As of loans now, out the forbearance all

went of by second were first deposits the by Our of QX, down the Continue from the billion, in quarter million of the CD rates committed foreign end X.X% the of during product performance deposits CDs. This lower deposits to under million customer customer $X.X run-off compared broker quarter, were XX% our $XX by previous terms to in closely focus monitor the at up on instead slightly of while portfolio. emphasize and core $XXX CDs temporary deposits Deposits considering team excluding relief domestic to XX, deposits, reduction increased quarter encouraging partially continue offset relationship keep this CDs is the prior remains the $XX end total Slide down to deferral high-cost which the we of million, single as and and remaining the to multi-product loans an increase quarter. granted. compared rates

combined accounts in money X%, time the the $XXX These deposits. bearing decreased second basis. deposits, deposits definition. previous in excluding or our deposits Broker recorded core by interest-bearing on deposit billion by During XX% increase $XX deposits X% million this a million interest-bearing year, $X of quarter, the an deposits as compared market and $XXX second XX% million are total brokered of consist of deposits This quarter. all-time or included prior $XXX Core includes end increase broker of a non-interest decreased million, which the deposits, second of offset from to figures were quarter the which or broker of the end total as of on increased of the of $X billion also amount the one. were quarter,

average composition attributed interest time previously quarter-over-quarter improved second lower and lower the modifications in of discuss on non-interest-bearing accounts to advances cost a Next, due loan an as amortization margin. and Slide time interest I CDs; the million, year-over-year. increase consumer part as of core increase repayment result be favoring yields and key net yielding on deposits quarter-over-quarter origination primarily and quarter average following FHLB was XXXX net PPP X% XX, between factors: balances The higher loans; deposits, of will net deferred loan lower X% and up and and the costs higher broker to income discussed. $XX can loans

QX Moving basis points interest up was XX quarter-over-quarter to basis and margin, XX net up our points attention X.XX%, year-over-year. margin

of in loan continue as market NIM composition decrease second sold improving securities focused XX, increase offsetting driven spreads in was quarter $X.X Slide under the to XX% from a value. other $XXX or management growing million by $XX $X.X the focus in of pressures a sale predominantly million, origination. X% to an quarters, net deposit asset the end this QX increase end increase of in million million and of to last million borrowing proactively primarily non-interest was up firmly billion Continuing We $X.X extinguishment from on income of due of in As $X.X repaid in quarter, previous Amerant’s the QX. compared million June, assets $XX up million increasing loss totaled remain on up the The the QX. under during by leading digital to we technology million derivative our quarter Jerry income. in by its we cover as internationally. management income partnered partially from an loans expand as during fee-driven In and resulting the advances second effort further our offset ongoing the The both early the of Marstone, in detail franchise, XXXX, $X.X domestically and of in and and company’s was PPP management FHLB $XXX to firm, and announced Amerant will with shortly. business build previously wealth more by

result primarily million XX% escalated Jerry incurred million, in events of Turning in non-interest was by activities driven quarter XX, covered. employee QX a $XX up increase benefit to salaries Slide with restructuring quarter expenses as costs, $X previously or and first expense million, up higher second from that and $XX was connection mostly The the and quarter-over-quarter year-over-year. severance

from to was events absence in the restructuring be in reported the $XX X% was reported that of second previous million activities Mortgage connection quarter in expenses second quarter deferred in first quarter, quarter-over-quarter with of ratios, XXXX. recruitment the compensation of of incurred increase expenses fees, expenses, Core was to the up XX.X% quarter from $XX year. PPP the our connection XXXX XX% and million XX% mentioned adjust HELOC million $X quarter $X.X $XX.X employee the The second in that and higher of origination lines non-recurring non-interest initiative future quarter loans XXXX increase from quarter originated by we we in items, by items, the and XX% second for second during million the the the compared which business efficiency Core like the related majority of increased were salaries the XX% of ratio the in and profitability. campaign we attributed Efficiency second XXXX. non-recurring to The the had in up due advertising previously. quarter Additionally, $XX the up the primarily second and the had in of primarily adjusted the and support of quarter expenses, of driven which growing for in just awareness efficiency second in year-over-year million brand was Amerant in last QX the in can XX.X% $X.X the XXXX, or from or in greater we million XXXX, I in of directly million for quarter first ratio $XX the XXXX. of up quarter we XXXX severance and with million of

of Lastly, completed third Wellington, quarter better and branch with our we our be in banking announced network with desired the center of our closure strategic Florida to footprint the objectives. in align optimizing goal the

to open in currently banking other base are markets. We access untapped locations centers with customer evaluating to our

includes actively our loan durations. and Moving Slide margin, capitalizing be and rate floor loans have financial to sensitive. over we year. higher either or And as continues loans to implementation into To and mature – of our in manage mitigate end the on impact the interest longer of this continue structure of of within half XX, securities manage a sensitivity portfolios. on sensitivity our rates of business floating yielding our and our our This rate investment asset June,

the progress and to long-term back Jerry it Turning activities. to Amerant about near talk on

Jerry Plush

Carlos. you, Thank

to some specific outlined a update we initiatives the of QX. like regarding I’d Now brief in provide

ease for of reference. XX them We here Slide have included on

customers which is communities profitable of best and and profitability employees, As in the with growth drive we operate. our interest this do responsibly a the sustainable, reminder, improve our and investors, simple: goal

first, have previously deposits a increase cost Loan regarding in first, on business noted, lower markets brokered of commercial Bank small deposits we to core and the serve funds of Home like sources, cost lower of share other to as reliance reduce consumer, achieve So, our opportunities Federal funds, a our and we and achieve advances.

have continued We implementing on completely work platform. onboarding a digital and enhancing

added in We have key management we to and to support capabilities, three all QX our seen force team compared treasury have and in sales treasury improvement when have quarter and management added measures the we talent QX. additional

we XXX.X% total recall, of to deposits versus is ratio versus set the target increased XX.X% quarter. Please deposits of loan-to-deposit of We XX.X% non-interest-bearing last percentage now Our last XX%. XX.X% a quarter.

reminder, XX% a of of quarter, as a deposits total Here of our X.X% target to target X%. we set deposits level is brokered a and prior reduced X.X% to to

improvement further of continue brokered year continue as see over mature relationships. second a will see to we the We add customer the CDs And half NIM to we and and as result, expansion. should CDs new

the in Regarding digital partnerships outlined this with customers quarter Numerated to we our power transformation, experience announced several earlier with lending to wealth our automate call, digital and a platform. deliver Inc. and we small that business our superior key Marstone for

both areas with other partnerships work We expect the of the fin-techs opportunities we announce additional and expect There in quarters. in for as more QX. to to full coming implementation by are bank, BSA/AML such

just that, recent agency after just relations importantly, Many engagement place and record. media we QX new of are branding items Marketing Officer, brand dramatically as items noted brand call, relations. the ATM marketing and signage, on or improving public awareness, Zimmerman hire taken the announced of Advertising importance such awareness. improved Regarding of as of easy-to-implement Most our we underway, increased improvements new and our branch significantly have the Chief Amerant’s our and

accomplished about the past us. upside We seeing business incremental of are are into over we these for are days translating the the – what efforts from and opportunities all was we XX excited seeing and

to and in Carlos determined rationalizing relocated be we as addition New be of and did branch need location. others York closing referenced, Regarding business will the another a we branch to X X loan the have a and and lines refreshed geographies, that this we higher City to closing October profile office, production assessment

months all We doing over achieve locations. next a XX common to and to to look XX be feel are across going this the all

is I noted, management our underway. As treasury build-out

members added is Amerant out to have Mortgage teams We in build Florida the sales team there, to team and which both and May they at now service Texas. continue XX and in commenced members. the operations

opportunities the half believe to that we’re and adding our Florida We in in makes both to XXXX so. and second looking and sense, of continue our see do I’m to Texas loan the finance for capabilities to specialty excited actively outlook beyond. build pipeline at and the

to the quarters. the stated improve Regarding call, the evaluating to efficiencies to a cost XX% Amerant’s next ways goal target business to we new with on drive the we’ve path within efficiency, across X last efficiency ratio XX% been

down improved here’s was the and advances, We during So Federal from reductions deposit pricing. in quarter. Loan what continued significantly advances accomplished time Home the restructuring margin paying Bank

$X other in customer roles, certain risks will off and to kicked side, process we our including to City decision the starting reductions improvement in staff, with not expected a is function, the experience. of the annual expense QX, replace approximately savings initiative internal audit $X X-week are transition and the We On in million firm, an reduction million of the designed Personnel just the all outsourced process COO improve well-known savings XXXX. position, annual York in estimated result. New

drive be launching base expense to XXXX in more will initiative QX the a We savings even review. procurement from annual

to come on reviews. office need. continuous to is focused critical will We that as of closure be continue a through New I previously commercial a As finding looking call part by number We’ve the continuously of we’re People the actively with transformation in us City Wellington engaged part next firm branch we York we and branch improvement mid-October make rationalization to a announced ways space, to real work business This established function. we’ve the assessment there the banking the estate and market. of as more easier, something sublease closing, referenced. additional to

I noted, million share as XXXX, continue us to $X.X are as July I holding billion note we as buyback the regarding shares of to our of capital our evaluate program. flexibility repurchase that Regarding we capital structure. XX, XXX,XXX Class the of continue to B and structure, to voted shares yesterday and optimization to And capacity $XX going Board up more our dividend alternatives company, giving part update yesterday, and framework we responsibility, approved and working there. and Board program, we And will the ESG been strategy our brief use regarding corporate finally, to an diligently a develop have going ESG We and forward. forward material the are in of to look we formally each tenets social sharing going of forward. as program progress responsibility corporate an the the annual report area, making part

last won’t As We calls. shareholders. that’s our you anything and us there quarter, we to on make drive our customers, providing and banking clearly share you I can provide, members as to to as to see I for stated look look results the isn’t would and we of our our we easier our consider And all communities forward with the said upcoming And to increased we to well. to serve continuing team we better we you: progress our investors, forward that on to transparency update continuing our hope we are strategy. execute commitment

your So we happy with questions. the Myra, for line take open will Q&A. that, please to be

Operator

Instructions] Thank Jones our the from comes We Will of from KBW. first you. [Operator have line question

ahead. Please go line Your is open.

Will Jones

Hey, morning. questions. taking my for Good great. Thanks

Jerry Plush

Good morning.

Carlos Iafigliola

Good morning.

Will Jones

million out of to classified front. the guys on just you loans $XX the I New start to York So I wanted moved the called CRE bucket in quarter. this know credit

just reserves those those any loans, for guys around have LCDs, you specific terms Just or set aside of more at collateral hoping context loans to whether this and not in time? get little a

Carlos Iafigliola

Yes, give some morning. we on good loans. those Hi, you Yes. color will

into So appraisal the They had we recent there had are the and we were level four confirmed loss estate. already. that that they had are obtained appraisal two total – – were commercial loan that them, recent leases. non-performing from the added a in we New The on real provision York of

in on loans about great loss there were it’s between the They $XX location. – those were that to loans. those good million properties loan there two close million have So provision added, and $XX is two very combining we

that the already to is million have them for we one baked be of that the that $X I transferred mentioned value one, book One million provision – that to will in. loss close specific about it and on in $XX loan OREO

the we So, the that of all values have. with were already we that provisions consistent level obtained

like of they are as now. we provisioned well So feel very

Will Jones

up Okay, just very other you this on York that time? maybe come could that on all the horizon in concern kind topic New any of bucket the market great. then that like It’s give helpful. with made do of specifically mix at you that the credit. And maybe credits credits there quarter? any feel guys Or or you see were really this you moves Are

Carlos Iafigliola

of We of level provision analyzing time on on and level the as We different keep the or monitoring portfolio significant very good in feel started the of at tenants, we now, in is there into health see interest the loans sufficient the level we side, case provision, which signs on in our million, still New institutional on keep properties. the loss to the all each and Also, looking and is And loan the cover the to is which any potential keep general. $XX no York new activity individual we issue. like COVID-related primarily and of checking the on projects performance of particular city, positive are concern the etcetera. of portfolio,

are positive now. signs of So as

Will Jones

on plan continue gears, kind chipping really confirm away program. I the taking to is awesome. start to wanted buyback. see It’s That’s the at And great. switching just that program. Class you then share of just B through that guys that to working Okay, And good

update give Your many I really outstanding? And there. appetite guys was hasn’t how B on us shares changed just could are an curious you if still

Carlos Iafigliola

side million X.X $X.X – of that are outstanding. are the million about Yes. There shares on B still

the very – of mentioned, so if point. it already could series XXX,XXX time by imagine. bought trades executed. $X.X your as you you very we It’s look liquid, As a It’s into roughly Bloomberg. very almost far, million Jerry And It’s liquid.

So we far and keep until pretty much alive it. the that’s now, so program

– going. we it’s So keep

Jerry Plush

it’s Jerry. Will, Yes.

And has so. with is is Carlos is and of progress going away as thousand typically, think think it’s purchases of referenced, we’ve and the I or the think, I function shares there occasional couple there, block. really issue, more though we’ve a there a the he a been be I just here liquidity those only to referencing, been But chipping that then date. shares to as made

it we B. is, our immediately, pleased just to that were we out A knew class actually the versus obviously, in everything going wasn’t the trying where liquidity there there and that because something wasn’t be We’re get

Will Jones

get longer longer out that. mean that’s authorization maybe no, totally share And maybe But consider steer continue could that of no, the as No, just term, while, wind whole class you I thus I working you have totally through the the realize a fully B a understandable. structure whole, you outstanding take Yes. way term down collapsing your about thinking it then far? would to there. some I as just

Jerry Plush

Will, Yes. again, it’s Jerry.

we looking Certainly, I do will stack everything say optimizing the something additional capital should that evaluating, providing I that’s been we’re at have and in clarity. also can think evaluating we and be

Will Jones

queue. will me. questions. my Great. it hop back for Thanks taking for I in That’s

Jerry Plush

you. Thank

Carlos Iafigliola

Thank you, one. have a good

Operator

from next our line Raymond from James. of We question the comes have Michael Rose

open. is Your Please ahead. line go

Michael Rose

questions. my Hi, good for morning taking Thanks everyone.

are Just so start wanted on here. to guys lot things of clearly, expense side, you doing the a

You’ve really here announced with. a initiatives lot and to begin of in come

come can over the ratio. that obviously, a XX% of I base couple and quarters guess think as think that you all what you to takes rate? the just we some of the – for a I you base a efficiency rate one-time you expense can things in to puts just So on run as costs maybe the the timing just the some might run into trying get term, come might what about think be? nearer next when that are us nice to walk we’re just start to But Can through the come that out or give things of based out to off would going sense through, good Thanks. figure

Jerry Plush

Yes, it’s Jerry. Michael,

one. Let at me take crack first that

I commented substantially is that be on end the two And in investing in XX fair can by this Mortgage, quarters, probably the of quarter-over-quarter. that see it’s say headcount to – last been is and last to and year. up somewhere team, be that in think the range there XX the I additions Carlos that to sure. we’ve over the you the believe continued number, additions headcount we’d for Amerant call, in And expectation, which the will

expect continue perspective there can into what So really we’re going as that a you to generate the we believe revenue invest heavily fee to on in will we team XXXX. and looking

the support I can that’s management like I’ve that our absolutely Miguel his – to sales areas quality team smart Florida you’re for continuously what tell look We’ve top market, folks here in and given quality to light additions, can added make added we the when you going it. people we’re treasury the green we’re in And side. to think people We’ve force. probably think on the team. a investing do or marketplace top whether already in the I here. add team is Houston to in also

right, we additional that reviews doing, we’ve actions and going been that we’ve see this back to the The dollars with And hear ins support business of NIM, one I immediate to generation. continuation out to finishing transformation think we So process doing reductions things is Hopefully, of out trying taking to sort that of because been I we’ve be through our see quarter the said think improvement as that you people, I think there the start a towards it’s add the will in – see some a pick around some of we I all from you expect you’re the of – I this up to quarter, the going you’re XXXX, the going put we’re immediately. of just been going this we outs go in third the that things the is and can reflected will the and more see add changes. the takes. would taking Most look was lot on into I we’ve and a around of actions what we’re can at and office think wise. standpoint, continue results. taken, of areas know way you be to puts out had

noise. would the you granular an as directionally, be but goal answer the I that love, So to not is you’d end might for tell us as

we we’ve net be investing core quarter actually have into business. through think last NIM I expenses quarter through you what would able a think that growth, expansion transition non-interest and growth through to the – had as the this we’re about now, that I certainly and PPNR in showed continue continue little to bit that But expansion. income for say, right

see quarter-over-quarter and of this to asked, to we for we as QX what are you’re QX. add is to the we that is which will and can company. continue go million continue we started us – on in did And a you to to going we put right, do to dollars know brand of answer long market, so we spent and in absolutely continue revenue a actively being that. because you’ll optimize not out do which we the marketing, push of producers where couple books to And do to going infrastructure And see we side that’s our

expect would I all quarter, that third able QX. picture clearer you’ll this much completed and into to going be So a is work that, see through

Michael Rose

investments, can out I as of initiatives ROTCE? the of really Because any again, you and that a the shape way the think, year is we more we think and about terms But targets that the begs Jerry, Obviously, horizon, to measurable talked on is we’re is the it’s ROA XXXX would broadly just see materially plus higher? that. what I yield of a that progress those guess X% ratio, those Is to there that drive to impact forward? where get efficiency minimum trying that’s the holistically going improvement curve be plus XX% is, tech of question. you figure Thanks. whether helpful should the thinking outside return what process about you move large-scale all in I color. dollars

Jerry Plush

that’s Mike, a question. Yes. great

goal of really initial I a get ours. call of that’s us I’d to gave the give important I guidance the, when is think sort it, to really the of – XX% horizon six-quarter

much those period I in XX, shorter to time. think of the we’re in of the closer the going attainment a X to be

absent is the my to been continued laid our making really improvement our working couple the to toward we the maintain the full you NIM, kicked of off non-interest that the grow think base will important And as what asset we’ve saw investments, going these process greater the is a out. on etcetera. right here, just is into quarters. I project expectation And project here systems-wise, ability making Our the the I do to we’ve review all have income. literally on end expect just right about procurement think off. side. that’s QX we’re it’s have the continued size we thing growth people-wise, improvement that’s initiatives in should expectations going initiative, QX. towards That in would of that same from are or revenue even kick I that force note looking next said, adjustments And into and in I going – improvement in it, that for we if

coming initiatives see you’ll start more the probably in through likely the – XXXX. but those that later results So of year, of to

Michael Rose

just thanks. Okay, maybe last me. for one And

a New strong coming restructure parts with going like looks it York through the as of balance point, That that’s looks build the the other capital like very impact ROTCE. profile have continue portfolio. off the loans guys So just and to growing goes will a obviously and you to at this sheet

my and of Thanks. guess acquisitions, a would some capital? that excess I you would other know consider I investors, deployment options question is, obviously, non-bank, to look dividend, deploy to capital which So strategic like is any you then important that some

Jerry Plush

absolutely. No, Yes.

table. is on that think I kind of goes the everything into

reference different to and the there of capital. holding plenty the look that kind that the bank deploy company, We’re sure liquidity be of few going we able up to approving Obviously, make a the of execute I that made the give things. that is to Board, to to have from to dividend us ways optionality to

actively at the capabilities, finance if we’re looking absolutely find those I could our, I’ll that add us area, stage, deals, doing sense specialty our something it, now. made we right in think for call at arsenal, this our to

Michael Rose

Okay, thanks all for taking my questions.

Jerry Plush

one. Sure. you. Have Thank a good

Operator

next the Feddie our comes of from question Strickland have from We Montgomery. Janney line

ahead. Your line Please is go open.

Feddie Strickland

Hi, good morning.

Jerry Plush

good Feddie. Hi, morning,

Feddie Strickland

to yields. it’s the rising with to So dynamics see positive quarter, especially the the this margin all great loan respect

a consumer is prepared the on loans coming in remarks getting right of purchased, yield that or a kind organically? clarification result point, loans some higher the heard in the that’s more new a I guys Just think indirect you of I and there reduction at books are PPP

Carlos Iafigliola

that’s Yes, question. a good

you of we there weak quarter in originated in the into recall, – XXXX. XXXX a carries the PPP first sheet if So was that balance the

the those about you of costs. a had previous from the And origination. we the of there loans recall these So deferral expenses the the fee origination defer loans cases, and as origination between amortized. on mismatch year, from probably was a some $X.X being million we In

or of first during year. the all of under majority forgiveness So, were the them those the quarter

cleanup the the much story those carry QX longer of the balance into has pretty So, sheet. all we loans that no

of reasons the that’s increase. one So, of

very have we compared in we that very spread is floating fact of attractive have and the floors origination to also the CRE we been to the now at other adding indirect million have portfolio. in C&I – compared The seeing one lending keep the in $XXX that discipline been transactions that second market, and we rest the a transactions, to of at yield very the attractive a

So, items the in for quarter. the those increase much the loan have critical the to yield been of pretty portfolio explain

Feddie Strickland

side, a of liability side, path of asset Got of And the expansion or that more from line, mix is along further the the it both? to is it. kind same kind

Carlos Iafigliola

the to lot a this contributed has liability quarter. NIM So,

to to of expenses. in funds, cost got items. was the the assets reduce biggest and interest liabilities of the definitely the significantly The quarter. drop break the between down the liabilities, If of key the us it were impact you this help That factor a one

were time this same think – down, was accounts. increasing time, the it it at So, from coming was deposits and transactional way, we coming

So improved performance when overall of quarter-over-quarter, that blended by XX sheet. event the cost points funds basis about has of improved balance the happens, your significantly which

Jerry Plush

it’s Jerry. Feddie, Hey Yes.

add. just me Let

will to brokered look greater nice the and maturing pretty acquisition, that and non-interest not the at to on side, and try but at lower a is critical trying ability here CDs, is, bearing maturing part about, much obviously, greater consumer much the as in on also opportunity think balance shift I right, us you on company, the just small is the time the business of the customers broker, the apparent see to, the much the either us. case, cost that’s corporate things. those side deposits focus retain And were we the focus talking for not that, but renew for

expansion will going lot very nice equal I And where QX. and it’s say, there all a QX That’s it is for be being you see to of continue opportunity us. to NIM driven side. liability think in the things us, for just – fair it’s to is great from

Carlos Iafigliola

the NIM to it came of for want quarter the between you a the the the improve two-thirds good assets third asset break explanation That from the the NIM quarter-over-quarter if about came And and specifically of liability. was impact improvement. liability from Yes. would a what or in down be to the

Feddie Strickland

more as from are Florida kind of of I footprint me, in just well return footprint customers from Texas to the as normalcy, hearing you hotel all there? color your retail curious And with guys. Appreciate Got out some what of and was it. kind the your core reopening the one more just

Jerry Plush

Yes.

operate it’s spike like we but occupancy both mean of that board, across in cases, have I that open. this slight we the are the in seeing safe to very across we seeing slight. notwithstanding think say are that spike markets we are all the COVID that increased been seeing I

portfolio. call I in that across even closer to are numbers and of will kind the XX% occupancy we range plus seeing, so XX And it,

Feddie Strickland

on it. Thanks a congrats taking quarter. great guys for and Got questions my all

Jerry Plush

Thank you.

Carlos Iafigliola

you. Thank

Operator

comes the We of line from have our next question Stephens. from Preston Brody

open. Your Please line ahead. is go

Brody Preston

Hi, good morning everyone.

Jerry Plush

morning. Good

Brody Preston

that those Bill’s New the retail on follow-up the ask But couple real earlier, City from I questions two on $XX the quick. Were million to of wanted maybe Jerry. of out Slide reserves. updated called gave point clarification, XX, those loans got specific a Hi, I a regarding were just just on the included wanted got the I those York detail you that appreciate loans to in appraisals?

Carlos Iafigliola

Those the are those Yes. list updated yes, in appraisals. – of That’s right. included are

Brody Preston

And to value? change what relative the the Carlos, you in the newly appraised to happen appraised was know percentage do value

Carlos Iafigliola

they the in and LTV XX%, were up or they to much that. approximately, like XXX% XX% pretty something went So,

Brody Preston

how Okay. given And are via two? the that. about deployment, weigh you trade-offs the how of shares kind illiquid, little business tender just do another meaningful think B more saving do those drive versus of a EPS sort of, upside kind and improvements, Alright. capital ratios kind you drypowder make something for of you how bit then, deploying do that are the on that mind, you capital Thank that on your maybe – Jerry, just between Dutch capital or I Class to to like the drive weigh bottom strong investments understanding guess in the – that actual how line and in

Jerry Plush

a that’s you right would that we what tell now. exactly I And great on are question. that’s working No,

we be I strategy add we to in to I that here us. need to on the there. had I a I to do need Board come think deploy for conversation us to capital. I during to going think we literally And one with are it either deploy I back the we what are stay able is think need options yesterday And we hope around opportunity to our that are other thing right. return add table think add and all say, arsenal to to capabilities see. it, I the there or we QX on But strategically on I is the think definitive really referenced some called it for do that’s And as would an focus to tuned obviously our meeting. is

Brody Preston

prepayments. think specific in industry? that. more multifamily CRE appreciate and have And for been as we activity I relates I some portfolio, particularly the across anything looking Texas drove seeing just the that the consistent or buckets, is what there Awesome. with then it that some that were was within Was Florida the color just on there prepayment – kind of

Carlos Iafigliola

million sectors. a were the general. came There have all we They from pretty was in in and prepayments, the in significant quarter, competition, $XXX almost – the they during much

I customer So, been just refi spreads at were front of has from have been pretty LIBOR that of refi basis that deals plus there as came be now. will the at XXX able us, XXX the taking and has like you points much that have There in size a points, wouldn’t been in couple been examples a we play. just us we front that look give basis participate a and we to of spreads. the cannot of

Brody Preston

did in just question. modeling Okay. it off million. pay I have FHLB a you think I And those At then advances? quarter what $XXX point was the

Carlos Iafigliola

They were done during the…

Jerry Plush

was It mid-quarter.

Carlos Iafigliola

May. around Yes. Yes,

complete the be savings perspective. the quarter. a That effect of see the picture clean from the expense third will in You interest would

Brody Preston

on sense of fee items operation a And some know going through Okay, and income then Is I for below for give made the last the revenues great. Just Amerant details effectively will And how going through the how minority going? be to for guess to then the all me a could one flow a trying or expenses those structured? you a the it it for quickly just to are you is kind items want the the side? interest? get hires, but sense to you is model. more revenue how line is – you ramp is on and just build-out expense get I able of Mortgage to secondly,

Carlos Iafigliola

question. good Yes,

taking So it was to being May the XX. ready it’s the installed up. very core on pace infrastructure the set at company, had We company a fast started The because go. company. engine of – we applications It’s novo the of de a

So at good it pace. very, very swiftly very and came up

have of has and have good received as been far. very hired. mortgage, it So people we They already so for applications close XX to a approximately now, XX experience

the on breakdown you our of and a bank headcount, there when is the see slides, one So, between on we you Mortgage itself. that a did Amerant see combination and

we end positive and be will full territory quarter, the the our quarter of and for breakeven So, fourth company. the the in towards expectation third is

lot two As was was formation this phase. a of hiring. you There quarters a lot of can were systems, There first imagine, etcetera.

the driver cost. buildup So, the infrastructure was of definitely the

are your consolidation. question, We company. line-by-line XX% second we the own of Going to doing

the expense the you selected flowing towards that then income of treatment and company. for with you have that’s non-interest doesn’t minority So, bank, will the will impact impact non-interest portion on belong see the company. And the we interest bottom line accounting the the that the see from to the

mortgage So, company income, you will the of when will see run we numbers. the be of and run speak the the into baked about rate of in those expenses assumptions the rate order the

Brody Preston

very question my appreciate everyone. Awesome. I for it. taking you Thank much

Carlos Iafigliola

Sure.

Operator

Our last from Michael Truist the from question Securities. of Young comes line

open. is go ahead. line Your Please

Michael Young

am be growth and that the been the preference. to for as you of But marketing balance you talk maybe just forward. the kind balance I campaign? scale etcetera, and Thank achieve that’s playing just kind start I wanted see latter shifts sheet the to growth, and you shrink the Hi. relative profitability about you kind sure of Obviously, questions. have size of targets personnel, the dynamics kind just taking there. kind or on, moving the pandemic everything out can with going especially how you maybe and kind of to would of sheet of to can on given of hills got deposit those in grow this But out internal

Jerry Plush

Yes.

look to I transition more business right, to finance, to you to important capabilities going more are note composition big to quarters. it’s focus the this start next do sort equipment change a of example, banking think place, over treasury on to as an we expand to take begin see that couple of management, as

with York We focused be to begins trying offsetting with down are on pay capabilities these to offset really as production more coupled current to markets in position really that. new New our additional in

begin think be have about X.X plenty quarters of back question that. couple support the to and payoffs to happening quarter, any we a were to next quarters seen portfolio of this York and If going transition stay certainly to to do sheet are New balance size fourth capital and in in think sort are quarters, I now, right I – really portfolio expand taking I there. I we sure, that, that range would think to trying we would in phase opportunities But the the targeting. having quarter, we for probably to this I of to significant we in see past Because but because quarter. where in that, the X.X we in is over that with if what’s in will of place say that transformation, So, hadn’t

Michael Young

Texas payoffs point? CRE Okay. have maybe Florida maybe talk had you then Could of we rate and how the guys this the about here higher production at significantly reopened, that kind with etcetera. again pretty payoffs, of you down And treasury last additional dropped kind see CRE increased XX-year just the seen demand York, pipeline outside compares Are that week. New you seeing to maybe fully pretty of you over in outlook and

Carlos Iafigliola

Yes.

particularly and a on there Florida competition, mentioned previous lot question, a Texas. I was of As

most As the just we restrictions. of the haven’t It year of you actually two last know, they completely. closed was had that months – we been

the to been on, year, rest for further to of these go has which there into going lenders So, creates the incentives economic areas. activity

pricing competition. coming foresee we we have we mentioned for that to in may us we – seen the participate had our wouldn’t have as prepayments a And before, way. So, have significant I given coming that front low able we deals of more be We spread.

and However, impacts to offset in we granular of future. loans those the to on the C&I type working more try a are lot side

and be we fast And the looks able may So, perspective, New our it how loans will pipeline pretty evolve looks mark be potential question over prepaying. York up how that offset to those like will fine, much time and from prepayments. does end that

Jerry Plush

Yes.

I us, have the that in up that were entering opportunities ago. terms we I were what the pipeline think, size of quarter think a that note opened really it’s things are twice just for of to important the

team efforts opportunities there and of And the that think the that so I out in the the reflects market. are

strong So loan think that in be demand it the to very as is with where factor time. good a size marketplace. again, we Florida comments really in the portfolio York in I feel at point see relates the and our South Houston the But made, New X will both I Carlos

Michael Young

kind the got and been guess, them everyone’s has last up side. question, Obviously, deposit large you maybe generally, But And higher washing got the domestically, plenty I growing have Okay. writ the my on international and just CDs of fairly they deposits. industry quickly. runoff still some of deposits and are

So, on is along there any while front of cheap get deposits are readily loan and and to of side obviously, desire available? ahead move in the out pivot just kind and growth go deposit the very

Jerry Plush

that’s No, the the year. for of actually second Yes. us here in half the focus

running effort a see the re-pricing relationship deposits want just run time downward marketing turn new us, as And us that first But shift from a of we sort of of a we the interaction, with customers. customers as CDs you we CMO, focus many the concerted going will as And a off. single-product from customer as to to think every the the with that’s deposits, very a company. the from the I want in organization. relationship want the making think teams on full in mentality. What’s agency, are where were broker It’s broader possible. new people – to past continue away head So, benefit that focus from having I not just

Carlos Iafigliola

it’s – point, from situation compared liquidity with been relative Jerry, on is Federal have the market. institutions improve than the just a I important to composition in general liquidity believe to of the sheet that few that complement level Reserve to the available the opportunity we that to such market and liquidity balance it’s $XXX that mention perspective, quarters, deposits. over that of for do size other with I the believe carry and us very that million composition the past the us great also re-composition we To compared the low overall remarkable of less was have allow of

Michael Young

for all It’s Thanks. Okay. me.

Jerry Plush

Thank Okay. you.

Operator

at our to turn Jerry call Plush. the time. will phone no CEO, questions I are this There over

Jerry Plush

We joining appreciate that. to would for just the everyone I quarter Myra. call. you, Thank like thank earnings second

are, all have and too, very future I that for ahead great We are excited a you about Amerant. you the hope of bright day.

Operator

This concludes today’s all conference participating. call. Thank for you

now great a may You Have disconnect. day.

Amerant Bancorp (AMTB) 22 Jul 212021 Q2 Earnings call transcript