AMTB - Earnings call 4 2023 | Amerant Bancorp Inc.

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Operator

Greetings. Welcome to the Amerant Bancorp Fourth Quarter 2023 Earnings Conference Call. [Operator Instructions]. Please note, this conference is being recorded. I would now like to turn the conference over to Laura Rossi, Head of Investor Relations Sustainability. you. Thank

begin. may You

Laura Rossi

our Good Chief review and and Amerant On Executive Gerald XXXX Daryl. and Executive joining Yepez, Officer. Sharymar Full you us Results. our Plush, are call to Bancorp's President today's and morning, you, Chief thank Officer; and everyone, Vice for Year Chairman Financial Thank Fourth Quarter

the today's statements within forward-looking we please Securities Act. As Exchange contain begin, note call that meaning discussions of on the

Please made statements measures. In the non-GAAP refer Plush. for addition, measures. also over non-GAAP a to forward-looking to be I earnings regarding to information turn Gerald it references as to for release GAAP of now financial measures company's financial Chairman will our CEO, will as and statement reconciliation well and

Gerald Plush

project, completed This new more team a areas enhancements undertaking up that way. everyone, know the our the this, to you challenge. a as work call. thank to Laura. would planning Thank and quarter for the required our for effort morning, do you, this effort we quarter Please core acknowledge to Today, conversion number huge and thank colleagues amount full systems. in continues was a was of we the Good and we I post-conversion dedication today's and significant before performance my as their fourth cover Amerant will all for of like and But joining which year. of are and on

of interest took to estate our sale for significant an moving the real on, of a XXXX, touch on in position call. rates. number items including decline So today's There are we what number best additional clearly this a on expected to company cover we will commercial given quarter actions and to

we XX, it's today's which XXXX, For covering reference, to on additional some on filed X-K important call, do. but context will give a January these Form we

that XXXX this also While us added a number cover want to execute detail or in credit our these covering I be with shortly. mentioned, best position note to will will more expect detail, us here we to on this charges credit Shary to for we be and gains components, actions as of slides nonroutine behind presentation which on the new quarter, strategy. created I and growth we've additional

turn we'll place we've took in X, cover now a of to So key quarter. Slide fourth outlined that and the number items here

total deposits $XXX First, grew reflective loans $XXX organic of by million. deposits while relationship-based our million, first approach, grew

recorded held decision reported, month. we and sale, reclassify to This sometime $XXX we charge is the expected of to $XX before fourth million for multifamily million As a sale made quarter. be this loans completed previously the non-cash in as of Houston-based taxes

assets, to nonrelationship create an X.X%. positive and earning strategic the $XXX reduce of in projected this increase plan expected declining to we the rate of projected these the after an sale to average institutional As transaction move, proceeds is the on loans with a cost million average first in as margin at higher-cost this company X.X%, liability asset protects at quarter variable deposits use of Also, environment. a rate together of yield were net our

to also that rightsizes Houston, note exceeded It's also to our Finally, this the sale loans operations CRE repositioning reduces this where important in deposits. prior exposure. sale

portfolio. York call, third City exited we sale remaining reduced turn And on York we higher-risk CRE City now and exposure, York our the New part of the all assets in we here, it's discussed exit the New quarter New of the our City York. we loan relationship nonperforming highest strategy and we'll So as loan to New to completed

is ownership which Alan million Cayman performing wrote the being And is and of one XX and relationships. components million $X we interest properties have Landbank Amerant portfolio, subsidiary. in remains current and annualized in We Speaking what consists credit, our We from that do XX is of cost totals organizational small intangibles the $XXX related in repaid as under of the rate advances, remaining plan the environment. staffing the off to provides related going a savings mortgage repayment a Home the $XXX,XXX Mortgage Elant. certain million goodwill given closing company from rationalized replacement We rightsized $X.X lower $XXX,XXX We Bank & Trust, $XXX goodwill funding the funds million approved and and watched. and for for Federal expected the of to for million such early acquiring the dissolution of recording gain forward. Loan with $X.X

multiple quarter We also final $X of having savings core in we of related software and conversion conversion noted, and actively recruited annual we're million. items. expenses as in FIS million And severance 'XX. in $X resulting rationalized fourth after expenses post-conversion We the units, managing expected costs across of recorded completed headcount million the $X.X to system

XXXX more to approximately expenses insurance provide bank team now plan This a million. $X.X totaling resulted include yield remarks. the details. regarding and charges for me turn We year, and an years. Shary provide my an with other then X as income current it to the then period and position I'll in to on to and closing part earn-back in overview in fourth turn also brief of the financial restructured forward to She'll go our of of life comments enhanced quarter some back for members going it over tax

for let's to Slide highlights X for now quarter. So fourth the turn financial

the which is interest we just I items to we quarter, in been Exclusive at recovery, go of a the the principal this from in along few with even X.XX% impact Shary detail non-routine with have recovery, the the diluted to increased includes X.XX% loan net was further statement, Looking into third those of a collected quarter. would will during interest period margin loss This relatively which net The that third minutes. due recorded per for covered. share the income fourth quarter primarily $X.XX.

we a in to with of along quality inflection levels challenges focus this area of reached an and continue coverage. compression. result like provide to events sustained Credit carefully the monitored of margin of experience be cost are environment reserve rate higher competition, high-interest to an point we, quarter, sufficient the market continue as a and funds, Although others,

down income up I've Total already reached losses this shortly. that commented million be record noninterest provision the the compared noninterest in noninterest up was up quarter. as quarter. from $XX.X of Total for high million, $X.X assets Both increased on. Our $XX.X again, items quarter. and in the was million components billion third $X contained detail also the Noninterest third $X.X to $X.X $X.X $XX.X to mentioned, credit from the quarter, the a billion, will million credit $XX.X third $XXX.X million, expense million the in Shary quarter. deposits And third million was income while billion million, expense of of $X.X from in third I close as nonroutine quarter the from covering

for While $XXX actually billion gross the million loans from $X.X to held total increased decreased investments loans XQ. million, $X.X in

portfolio capital. ALM securities given the were purchased our and rates while And up $X.X cash fixed fourth total additional XXXX. decline quarter, in of end expected to increased The now an all securities rates, moving million in they actions quarter. million the million to equivalents from of part third at were and on $XXX Our that's cash the and $XXX $XX was million,

XX.XX% ended as as CETX XX.X% Our compared our to of total XQ, XQ was capital to and ratio at compared X.XX% of XX.X%.

that portfolio ratio investment the was AOCI which 'XX. and tangible valuation AFS in fourth saw million we resulting third equity improved $XX.X after-tax change Our the includes of X.XX%, quarter the quarter our $XX in in which million in from from the of substantially

XX, as to of note our And quarter, XX.X% compared Board that was also Directors a XXXX. share on worthy payable of our Lastly, ratio of capital $X.XX on Tier January fourth XX.XX% it's of approved to as per dividend XQ. X XX, February

and we'll regarding I'll move Slide X, an now overview So base. provide deposit our to

As million, in deposits quarter while mainly million declined billion, I $XXX of earlier, third increase were by fourth quarter. deposits $XX by the up the million. an mentioned increase relationship at This deposits driven institutional from $X.X was of $XXX total end the

deposits, by be this funds cost Speaking briefly mentioned of of of higher institutional balance off XXXX. to source earlier, quarter I the we run mid-first anticipate as nonrelationship

loans of this decreased to quarter deposits XX.X%. ratio and Our

to referenced goal our to calls, As prior XX% is of it target and in a manage we've exceed XXX%. to not

domestic the to pipeline We and quarter, we composed deposit we well-diversified a to back in be strong mix in X, Slide this first of now loan customers. a international so here turn have expect soon. We'll show and range

reflects $X.X compared deposit now end XX% to of average account compared deposits billion quarter. of quarter. have granularity balance of as average or domestic have of That's accounts for million $XXX quarter, X.X% the and balance and of to deposit the deposits totaling stability of an international $X.X for slightly, while of XXX,XXX, down total million, the third totaled our and this source. third accounts of the deposit account international funding Our which Domestic deposits that the up an the base total fourth X.X% deposits, $XX,XXX, XX%

intend as As add of emphasize given diversification to continuing base. and and to previous of pricing going in a gathering international favorable take funds funding I've advantage source shared calls, capabilities infrastructure begin forward we to further our deposit to our while

million XX.X% the $X.X $X.X primarily million demand the million billion and rate Our end deposits, fourth money total the X.X% were and as an in are deposits quarter, quarter, versus the total deposits, excuse up deposits, versus $X.X products X% or of billion demand, quarter. or defined noninterest-bearing all-time to third $XXX $XXX core $XXX $X.X continued deposits, as all-time up quarter. billion third third or up result in the savings million market and X.X% interest-bearing the the that's Included for third compared higher of in million deposits, excluding excluding deposits, core or versus customer me, increase quarter, of of in $XX

So at detail. items, in turn she'll go in some sheet over things the quarter to going Shary metrics, credit key this over and more third to I'm quality, results the balance other point,

Sharymar Yepez

you, morning, and everyone. Thank good Gerry,

of more and on will presentation, I today's share As financial color position part our performance.

by metrics I'll market deposit building discussing to key to our X, Noninterest-bearing deposits the we XX.X%. accounts total Slide competition, to of turning deposits demand in challenges seeking Despite work markets. and relationships continue to interest on and So quarter. focus our decreased by deposits rates our from the hard the first higher for increasing XX.X% customers begin

While the X.XX% in interest X.XX% although margin loan a total to interest-bearing the one-time in quarter. compared third with points slightly recovery. Net fact, This ratio XX connection not same noninterest-bearing basis speed at the deposits. of in improved decreased, increased, to balance, includes

of will We shortly. quarter-over-quarter name cover details changes

X.XX% as expense items noninterest the losses nonroutine covered. and million in during was negative efficiency a XXX.X% one-time result and in credit of result of charges compared the as XX.X% negative the respectively, Jerry and Our were period. ratio ROE the in for a X.XX%, higher third to fourth the quarter just at $XX quarter ROA provision

we metrics performance For nonroutine consistency see you quarter. excluding core and transparency, our ROE, fourth the efficiency, show ROA, of operating can X and underlying items, better the so for

to for compared which As third nonroutine the an quarter XX.X% example, fourth XX.X% in the was core efficiency charges. quarter, excludes

also of with This previous applications As used XXXX and I these the the quarter, applications therefore, in until we being last new of after applications these certain reduce first results in in commission of place. quarter applications use services conversion include parallel parallel will mentioned and occur complete costs costs. the

Slide discuss our investment portfolio. Moving X, on I'll to

years last and balance prior fourth the portfolio up to quarter investment the represents portfolio expected show investment the income investment of When was slightly higher compared and year. for chart added billion, Our decreasing support $X.X new to maturities interest-earning from the repayments duration our quarter, third the which rates assets. growth decreased fixed the both during a X from same We quarter. period quarter market due the liquidity to available to to XXXX, the of and

and rate composition to portfolio. a the the third achieve that of decreasing environment duration floating you of decreased a right quarter. efforts between see position sheet maintaining balance and to can the portfolio, balance in portion quality to XX% while compared This XX% our on our the credit yield rate high for the to Moving the reflects

have available impact I the of quarters, interest done we debt sale. reference As securities in would like rates previous on to the for the of valuation

Continuing tangible compared move improved As the in quarter-over-quarter value rate consistent interest improvement down loan the billion, by third end a million land is the Note million our X.X% primarily to million Consumer It in the of The rated periods. on increase total move as XQ third in the The after portfolio the X, yields the of portfolio. in $X.X of of fourth had first the the valuation primarily increase is in of that as end of XX% the of end quarter. loans. million that million loans an of common We quarter, tax up peptic a the to million of to This our in of with analysis to At talk indirect had of loans XXX portfolio which solid million, the decrease loans the Slide of the our of government sensitivity compared $X.X were comment XXXX. decrease to for of basis X.X% equity after-tax AFS guarantee, a as 'XX includes ratio investment rate end for quarter, quarter. higher-yielding consumer driven construction increases market was single-family us by portfolio. a total grade. also at is changes $XXX full remainder were impact while $XXX point $XX this residential compared considering about $XXX shock. $XX $XX loans the driven after X.X% prior has well let's market our increases were and were gross third important year to commercial loans, development, quarter, ended for or quarter-over-quarter.

have quarter, XXXX. production last growth We not this the focusing of by current organic and XXXX. portfolio end mentioned prepayment the off that purchasing first speed, at we new we any As run since quarter estimate on will are the of been

a reported paid New $X quarter, sale sale of City on part the in of in the sale to the and we 'XX XQ exited loan of New highest in remaining fourth mentioned, nonperforming and York modified off. its both the completed approximately strategy the relationships during The was closure the Gerry loan loan CRE loan York portfolio. As CRE and loss million nonperforming as exit company's

during portfolio provide loan the recovery includes loan Our a this To recorded was excluding yield 'XX. the This X.X% figure, loan the comparable recovery more of a of X.XX%. had in yield XQ period. the portfolio,

on Moving to Slide XX.

we Here, our detail. in portfolio further theory show

profile X.Xx have years XX% a We sponsorship and of average debt loan-to-value sponsor. coverage AUM, service each tier based well a experience strong of and as as weighted conservative on of for network,

As of XX% top-tier end had XQ the we our of and of borrowers. 'XX, CRE portfolio

tenants portfolio stores, national the of concentration tenant XX as our pharmacy, food top in clothing represent include retail tenants significant banks. recognized no grocery retailers, and and CRE have the loan XX% We total. regional Major and

risk over ratio, Our CRE impact underwriting like methodology for includes their sensitivity analysis and retention. interest service coverage vacancy, tenant multiple factors debt for and rates

basis equity to As Gerry later had common day and The loans tangible our of and million we is Houston improvement to in expected common of Tier mentioned, approximately $XXX equity during approximately points. held XX multifamily the of reduction pursue. impact of fourth by classified an close month an transaction on XX as points a to this basis quarter, X X

nonrelationship X.X% to expect invest we of sale, the earning and million $XXX reduce rate in of remaining institutional proceeds at of fixed-rate an proceeds assets. in the average funding With the XXX higher-cost

Now XX. turning Slide to

sound total fourth by with reserve the million, loan the compared $X.X is The million a specific due XXXX. points quarters. quarter take series of Overall, fourth $XX.X which totaling million from basis the quarter of in allocated X was The to from totaling closer primarily basis $X strong reserves, third in of to of commercial exit was to compared million at $XX.X X million, credit points, Let's of in Nonperforming associated fourth downgrades of loan increase million quarter of the was reserves, credit remains reserves the of look third $XX.X the million increase previous charge-offs assets X Florida with XX commercial in of quarter. of $X.X totaling increase basis charge-off allocated the $XX totaled with ratio an million an offset an in Texas million million quality. quarter nonaccrual and during and assets $X.X and XXXX fourth of XX $XX.X point reported to up nonperforming and quarter assets down the coverage loans quarter $X.X XXXX. to at despite XXXX, of the end the quality

Xx nonperforming in increase quarter third are Our the compared XXXX, basis end of total the coverage third of to basis the quarter. to loans of fourth loans at the of reserves the closed an from XX points points Xx XXXX. XX consistent In of close loan loans fourth the nonperforming ratio the at quarter Xx, to at quarter, with

$X.X to of $X.X in million and smaller and is losses. $XX.X million new the million drivers quality of offset business third charges show a charge-offs, loans the and of to on compared the a million are better In fourth released the X.X% in look loan a that a quarter the a the this for some credit the contingency. included in million loans or impact decrease growth, allowance portfolio, $XX.X recorded and XX, to loan. New primarily allowance charged related on the the Slide $XX.X at quarter. movement this in this moving net losses due LATAM XX $XX.X of million in York the for macroeconomic we in to were, to related the multifamily recoveries, due of illustrate to million recorded the the The We $XX.X These and charge-offs reserves $X $XX.X was commercial off charges for XQ. for the the $X.X to quarter. loan, in to XXXX. fourth what $X.X are compared Now incremental million, allowance in quarter held related million drivers line, the we provision for loan quarter quarter was previously specific nonperforming back this reserved factor consumer in items. quarter of exited incremental new primarily $X.X slide is $X.X million this quarter end that the million of and the provision Therefore, to Houston added sale. of which in to the we credit nonperforming XQ, quarter, million City expenses million CRE provision million to by loans which $XX.X excluding the Slide At had York closer million were of reserves topic The exit balance also only $X.X the update, provides in New included close $X.X to related that third for indirect from additional million of an are for was provision which credit out transfer

higher to X totaling million charged by the balance to during increases owner-occupied downgraded primarily Additionally, commercial million million these the charge-offs offset totaling assets mentioned banking loan $XX.X Consisting increase provide quarter. special interest there and and that advances. loan down increase Net to The banks, quarter X% average million, was loans X ABL $XX.X quarter, $X.X We rate totaling loans due indirect loans million. deposits balances in income as in $X further income quarter and rates previous mention million, year-over-year. was and due million downgraded no unsecured $XX totaling primarily population consumer during primarily by there NPL balances, in commercial impact the lower discussion.Next, XX.X%. The discuss increased is was commercial more this $X.X up official Slide XX. rates total XX average commercial loan CDs increase average the multiple is offset were loans. X to lower interest market $XX.X given million, fourth this were as net The I'll quarter-over-quarter or this and The $XX.X attributed $XX Texas quarter market loans income was totaling to X of on million with Florida net and one color million increased provision we interest-earning during interest loans increases off as partially criticized mention were $XX.X due quarter-over-quarter introduced and for Special smaller average customer for average The on loans. interest no balance loans, the to quarter. higher related to purchase Slide incremental regarding X.X% period. well nonaccrual balances beta and in net margin the by deposits to to

a However, result cumulative higher of of as a basis of market the XX interest deposits the we higher had rates deposits, time deposits at higher that rates. effect repricing approximately rate a of beta combined not repriced on basis and the observed beginning well points transactional rate as since as at increases in of CIF balances of

components. interest net the to Slide from this We contribution margin. quarter to added of XX to the on Moving NIM show each its

in with NIM is fourth for points quarter-over-quarter. of quarter. quarter million previously of points Jerry the the connection in which compared the XX at driven was short-shock, XX the includes portfolio, for our by mentioned, recovery an now yield mentioned up The to primarily in NIM by was I change the 'XX As XQ the loan basis Interest increase X.XX%, basis as earlier. third X.XX%, income $X.X increase loan

reflects would XQ X.XX%. the our positive cost Excluding number NIM at impact compared the higher when The this earning with the is of higher of by the 'XX assets, the yield funds. at X.XX%, which NIM be stable of loan, offset

to We second the closing be expect in through quarter, remarks. more on margin the my NIM stable

interest to on rate on Slide sensitivity Moving XX.

our loans having floating within year. rate our You sheet can XX% and with see balance asset of XX% structures the repricing of sensitivity a

rate strategies, we also interest XXXX. execute interest ALM in starting as trend We rates expect to in downward a risk continue including hedging

floors rate previous our of in We said originating we in explore XX% have we change currently cycle continue a for have by adjustable loan calls, rate position loans. when portfolio adjustable our to As incorporating portfolio rates.

variable within to rate loans, indexed XX% here see that can SOFR. you Additionally, are the

quarter. sensitivity stable the third compared interest net income Our to profile remained

following the benefit in rate to the to like this We this I've past in case, also our change ALCL, cycle, include to the I calls, rate-down XXXX. interest would sensitivity our the from of easing mention scenario.As positioning improvement policy in during a in monetary expectations done AFS for showcase portfolio

million to cards as in third income the to the assets of noninterest management of million noninterest increase we the quarter trade rally million fees. primarily the nonrecurring billion third $X.X in We actively quarter. consider balance in X.X% the as million, third on derivative the sheet income, adjustment financing, servicing $X.X million We with in quarter. income of XX. in quarter. fourth finance noninterest BOLI end decrease or contracts gains from trade a our fees the the will due manage in and in income termination million compared Continuing conversion, XXXX of in mortgage from position of the reduction the connection the saw Slide $X.X continue million a bank during the $XX quarter of and of to items, by income deposits Amerant's fourth our $X.X lower the under market for was fourth customer banking decrease quarter. the valuations Noninterest new of was our in with million success following primarily $XXX to enhancement the early Offsetting FHLB $XX.X during to third on to was swap advances the beyond. best totaled fourth lower $XX the FIS market quarter in income compared driven were decrease connection lower higher and end due the Core quarter. This custody increased less and $X.X quarter, level up lower loan quarter, to fourth quarter,

nonroutine noninterest previously mentioned. increase held connection expenses or as sale. was closures transfer Turning consider included expenses the restructuring the for to whereas Fourth activities. recurring quarter, to of in to was fourth $XX restructuring of of and previously and were Peri XX% professional from fees the well discussed investments and expenses third million MRAM year-over-year. the expense fresh expense in in Slide charge loan lines at Higher noninterest the for expenses as portfolio $XXX.X with of primarily occupancy equipment quarter and expenses The for due of included XX. for no following: loans Bank other We Higher this $XX other FIS impairment $XX million, in mortgage Houston Bulliestructure. quarter plan as September. only from lower Trust during to Hemen quarter-over-quarter The million million up quarter a full by partially expenses items, and our the connection due the quarter. quarter expense up expenses to dissolution the severance increase Goodwill and associated was XQ there XX salaries business portion offset expenses driven of as Velan consolidation by the since with

our In we the XX terms of following quarter the AMR strategic out in from mortgage, in of which third across FTEs the team, had are we ended quarter XXX with reductions lower in XXX headcount multiple units.

a fourth share million. impacted We of $XX.X of benefit, per quarter our EPS diluted negative net loss Moving Slide income recorded diluted on $X.XX reported tax We XX. on an loss which to favorably.

first items the As net earlier, which overall. higher XXXX resulted of on quarter now XXXX the expense give noninterest non-retin impact color outlook we mentioned during was and significant quarter, the to some have for first I'll EPS. overall of

slide, say So financial regarding the summary, would expectations. next in we on following the

loan annual of expect growth approximately XX%. We

Our projected regard. growth. account annual digital Having growth to loan new opening total the this in treasury noninterest-bearing We deposit new on deposits. will match ratio and of should tools platform management intend focus help our to improving

year. $X.XX $X.XX of will level XQ in target of to the be the stable at normalized the interest improved XXXX expected the to to loan-to-deposit XX%. and is results second remain The compared 'XX half Our margin half first net at over the

half efficiency the of grow. to achieve projecting XX% half first higher given expenses intend investment continued expect We XXXX, in to we expansion, XXXX We of the as continue in in second on that, capital capital with and prudent Jerry for between closing retaining buybacks dividends and I overview for to And management, XXXX to balancing pass remarks. enhance growth back returns. it executing and

Gerald Plush

Shary. Thanks,

our on how So some going on last see to XXXX. slide give we today, I'm comments

to over what we off, significant year very as a this phase we been starting execution transition So and as has transformation profitable growth. from view multiyear

business infrastructure FIS for people to place, considerable the we of lot will serve, X about the the increased now much team. our consumer and nearly a incremental this to are quarters quality XXXX along executive to join of primary first complete, interest both physical conversion markets from growth banks. relationship with of execution.The our the in and we're the commercial leadership allows in team be all seeing development solid personnel for and in There opportunities in reflect drive With changes focus wanting investment growth

decommissioned incremental And The first half part board of transformation the efforts, now be the our asset update reflect to this throughout will our everyone on something we shifts post-conversion we the as the from of of year. we'll from on as also great and have utilization a expense accelerating digital the driving previous AI XXXX team efforts, will conversion systems.

efficiencies our top Fort XXXX, offices also We new are as and our of as Miami, Tampa and sales quarter in well first finally priorities. the we're new physical focused on distribution, as as as And on opening improved regional efficiencies and far Tampa in an front Lauderdale, downtown update back-office our in locations implantation.

XXXX. a about and of So talk the now second bit we'll little half shift

in our growth the plan. choice commitment be show closing, execution we reaffirming the to results to And we're the and from markets of of our expect in bank profitability We that the serve.

our building comes show how this something all very retooling have and is here, been special have to time we to and together. it believe We year for some

Shary and line you Gary, stop, the I open Q&A. please I'll answer for look any that, and with to have. will So questions

Operator

Instructions]. Thank you. [Operator

Michael first Raymond Rose come from questions Our line with James. of the

Michael Rose

Maybe we in start loan Houston. could sale with the just

York the just in sense this market for what that a we've thoughts. to when point? you be the of is. seen I at South get operations in to kind was there. focus pretty what think New that Texas terms overarching love to of Florida on strategy Is Would announced, of large just a to do in? Or out pulling given it continue you're I was of is core going market, was just to it be just wanted going And focus percentage what for this look to some a

Gerald Plush

Yes.

-- really we Houston associated of were makes full that call it noncore. broad that of remaining and relationships felt we'll loans I right with all covered mean that of recognition Houston And great don't Clearly, also that serve. us in entire of not emphasized terms far we South make we in Florida. we've They steps that the that because to were we So portfolio we the now operations opportunities there. taken not I doesn't it we're brand of there. operations all sense But the much the rightsizing Michael, the think, And across more sort this looking the have Look, terms portfolio sponsors gets do have we that opportunities, loans deposits, self-funding. closer us was relationship-based. We really that's in versus get of again, the we footprint. earlier, for markets we the believe remark that have would at not with we is. in think this solid

Michael Rose

quarter that think lot given And appreciate a a given quarter, Certainly, expense moving in us down first of run just of in how efficiency kind looks I the or a to then we some XX% the using That's modeling many at Shary, color was you have question. of maybe about should can by a to closer kind year-end. helpful. what least ratio next for just you like guys to be year, expenses it the rate first But parts should there get help additional of in investments, perspective a over slides parts, so on just the half the X? moving base? the as and from side, And that just the we

Sharymar Yepez

Sure.

this costs of of in every some technology composition drop-off that in work on either higher or So is you're people what the is and be, we see driven stable later the the on closer higher, investments going would quarters the even growth terms as I should or -- for to say, in year. side to we of the slightly XX% the XXXX year. seeing we're And forecast few first of some expenses towards

good So the range XX% year. in half be XX% first should I think using for a the expectations a to of

Michael Rose

amount you once moves just over year, year Okay. think couple A, years stepping the of it couple took back the have of done beginning since just the we pretty expectations guys you operating And to for past really like get half into your balance start get sheet a of the Very year? when reins. be of leverage we positive helpful. I the of cleaner lot results past into in given to both just fair really the kind what finally mean going And back, together, strong and of quarters for looks could a as growth I the first large me, I the done you're have majority loans, put we pieces of Are this XXXX. then Jerry, deposits, with we some shaping this see to is are up maybe

but for returns. earnings here, with the get guidance, X% path some like to looks So especially and wanted then thoughts efficiency driving like just sub-XX% to kind an the get you it once and from of drive where forward comment you Not just of be seem you. wanted pretty is pretty those color ratio ROA XXXX you should from and think perspective, above does asking to powerful are able get explicit into efforts. kind it And good we

Gerald Plush

near the the Also regional anywhere behind retail in again, additions No. and over. have you, executive it that leadership Yes. as respond place. in majority. Michael. physical Thank different just do would be of got by the significant Yes, some here we'll saying, and the won't having there, I vast hubs the went right amount of We've distribution, but facilities terms conversion we us.

safe about to that's and the we going I else growth trying days got more plan. terms incremental It's there all side, going nonroutine say drive think to executing shake the that think we've anything profitability. people be certainly our adding of in to believe to that out, and even We are we're think on our best it's all ahead. right We quality is people.

excited. we're So

full a we've here, we phase, really execute. ahead and go transformation it's our journey think growth think believe that got do do I of out quite to been on that and I it's steam this just important to say

Operator

Feddie Scott. Our next Montgomery Strickland with of the Janney from line questions come

Feddie Strickland

to real Just again quick. discussion step expense back wanted to the

question expenses of the in are to Or understand to XX% that half of of quarter? second the year turn stay get the just trying -- of flat do I a my relatively these $XX efficiency. do the they I that of second single go the down half systems million back as guess, Just flat the they some back just in Or systems? dual from Is towards part like it we come year? back is, does level? as guess

Sharymar Yepez

will year, to we And expect flat that earlier stay what year. the in Yes. in do expenses we're of pretty half the seeing second the

the of you're will what on think growth the driven going efficiency the to improvement by I be component. terms ratio in see

Feddie Strickland

Got it.

So That then sense. piece. moving it will to the over makes be on And the charge-off side. revenue

quarters? I any of most by and step heard this I York in down the from that think driven And New items the there. say we come here consumer movement of getting out quarter might up NPL kind bit of couple other mean was Does you of in be a that primarily next that by that portfolio? driven the expect to that portfolio, then should on charge-offs that one-off

Sharymar Yepez

perspective, right. the consumer were of nonperforming to charge-offs The charge had portfolio. near From quarter loan, you're we related a some drivers charge-off also Yes. and the indirect this the

New charge-offs next a not the of expecting portfolio similar coming York in quarters. We the are level from

Gerald Plush

payment to left. that place and because already to that we've the why as some the NPA, sponsors. would way, in in making that's And credit history. that had, the it performing. terms moved, that's tell the got a think able hopefully progress size still did by around a It's on big we've the of $XX We've it I on all that lot open issues our making just properties, in either watch you of have, that, based I to able list the add relates one. But got We XX what's thing happen issues, on that's of to in we've accessibility got XX being portfolio a there The comment. small here REO million those going gave that Yes. is we're to the I get XXXX. to a better be get little we We're just that one which, permits there. to comments

Feddie Strickland

guide down first that, I the say step because that One sure correct. helpful. of know $X.XX That's down $X.XX thing. was to going range to Did NIM you to of the and XXXX I want in loan heard I just that I back it write year piece. actually I half heard the But the flat recovery make to the outlook. that think correctly? last I says

Sharymar Yepez

Yes.

XXX to year. and in the the XXX within the expecting are We first of stay half range

Gerald Plush

until a look Yes. the real which out Ted, you we that's of inflection hit the think made, bunch point, XXXX. positives I with originally were of actually we We we we've fourth one And the right? obviously, now quicker. if quarter. think of got moves there come thinking at wouldn't different

Operator

Our of next questions the Gunther Stephens. Russell from with come line

Russell Elliott Gunther

margin are discussion. guide? that rate are the on you underlying follow-up quick a Just that Can what interest assumptions guys share your

Sharymar Yepez

the the the standpoint, at higher to level. for to loan current flat to overall expense or So seeing expecting, rate half least is we're that's stay much the coming first we're from year in production got the pretty what portfolio a loan point end. of on be where the in from -- NIM the perspective, the has to And we everything reset the portfolio that pretty to

going of Russell, pretty So funds cost in you're quarter, the that What we're timing expecting first is stay have to to component. a flat. see, we

funds timing of the portfolio. from related the multifamily We have component come a that the to reallocation

will into quarter. end in will assets we be end us be of that loan liquid of to portfolio, provided second we're the the the by range higher the as take redeploy the able those guidance which placed them able of to to on some So

Russell Elliott Gunther

cuts terms staying what just in guess, I 'XX? margin Fed guide then into And or rate baked for Okay. your expectations stable, of is for the

Sharymar Yepez

stable. half we pretty the first rates the of have For year,

We in are of the cuts year. second incorporating the half some rate

haircut from some quarter. through the rates, We sorry, have the end modeled fourth of

Russell Elliott Gunther

the guide Fed cuts? includes So margin X rate

Gerald Plush

none up given What many. a has you, sensitivity to Sherry to at of we've that Russell, is looked

year. of be the there'll the half in several that second is projection Our

Sharymar Yepez

was shared the is quarter, end was our which no the through for assumption that cut. guidance the second of But

Russell Elliott Gunther

Yes. Correct.

Okay. would on the ask beta Understood. I guess I then assumption.

up. the in cuts are of guys you the the those down you back that on half XX% cumulative X trend to How So on expect the way do way about year? thinking as

Sharymar Yepez

Right.

points. maturities your So let's about, about and interest-bearing products to say, We're portfolio our we with think be think about if we beta average and customer a closer thinking of We a XX%. should we XX think thinking cut deposits, on faster. basis our of current resetting

Russell Elliott Gunther

final switching for just That's me, strong really question gears, And great, then Jerry. guys. The expectations.

related in expectations share Just mix you cost additional then mentioned terms as that drivers, Sary think, loan in loan any comments, and folks, hiring is any growth around well. if expense to could you of your I color

Gerald Plush

corporate, of Yes. Look, I additions think in in consumer as on make both we'll -- it's to I've sides continue said, private banking. as and I and to consumer, predominantly our it referred

interest strong lot have us. and that's people team an as already job, we with believe We a -- of done mentioned, working strong that a great we have have and I a in

growth the the trajectory, building the we've the of corporate performance strong and people company, solid people, the a downs in The reputation branding that great results, we I side. interest team. doing, of some for even getting we team sure, to underlying ups financial an of of a had already been same folks good have through in us of a all true I on community, lot the and being are think We've the in with very we've had interest strong part our is team. seeing some added the mean, the thing there.

right? in just be add about, here to further put Florida. we great put in headquarters now presence can Broward as we a markets Beach, team strong there's So -- of regional in to alone got folks And that the we've So it's opportunities that personnel already talked basically, even built last know we layer opening. even where incrementally year, new And and build more we we've got and throughout you're in think in. going a remember, will Palm we've We South a throughout Miami-Dade. to to combination year, where more great

Tampa, facility, new first the We also to branch There's additional going have be there. our well. facility there as in going

of of talking recognition of So and quality in a we both sides. us to -- see lot advantage lot we're just taking a add folks about market people

Operator

come Our line next from with the KBW. questions Will Jones of

William Jones

that growth outlook grow side. wanted But really kind new the strong, second, know year? discussion able on for upcoming to deposit pace. particularly to deposits to the have of peers your stick do really a deposits attract Jerry, on be that of I to lot at the pay a growth I just is on would what in you this

Gerald Plush

Yes. to deposits. No, for that much It's asking don't pay the it's know as the on I business.

where the really We think ago I in emphasized culturally the her it actually we've about think the numbers. quarters been previous change an company, a in and company incredible I just almost. I've talking And this shift think business, for comments years in cultural is asking coming -- Shary I that got almost our we've observation it's not opportunity, through been a first a great siloed in about from right? shift, had in job the deposits approach is very made the one.

much account on process where out a private we're side, or growth I'm consumer can we're to issuing be, where We noninterest with the of the treasury money excited because it's really to management hey, opening deposits opposed see a in have the I we make smoother market. change, as think having new opportunity to high-rate it incredible growing bank an steps. platform, coupled because only of couple time

William Jones

I Yes. maybe an excited any that of guidance the been the sense. And shoots of trying and growth know that point growth international are in see about really to have base? inflection deposits total base? you factoring makes deposit guys you in international seeing the deposit green there. Is No, any

Gerald Plush

from probably we're we've is I'll going intel It's give more more season, got right call guys strategy an we come how the you on more -- where developing, think we investor to I'll as details marketing, into, it, area it, we're evolving. the evolving. that's that and We and the conference call presentations, right the

hard. the are tell would you, I business. So is new definitely it's working an area team getting where They

we to where want on. it, We some call focus areas I'll of, fine-tune and have sort

we'll would that's later about for first where able even give And to say that's out one be quarter, color maybe more so how to XXXX. mid-February I by going play

William Jones

Yes.

And technical. me. for is Okay. one then That's last great. more maybe This

give -- answer might credit-related took I could that you with the mostly the related break... loan piece sale have all but a the just some the within there charge I'm was assuming loan rate with think I multifamily Or $XX have was kind sale? off us to charged guys in that million of that you may an slides, you not

Gerald Plush

were to those, low performing. all they values There's properties. high well, on They on No, were all Yes. no loan quality. issues those

William Jones

Yes.

really larger other the of or portfolio to just strategy kind Any do similar look with opportunistic... of you a it Okay. may just one-time that was pieces a

Gerald Plush

us, want this one-time may a identified this evaluating. a hammer and take others biggest we sponsors that having relationship portfolio a as exit that's with opportunistic much it of knowing particular one broader hammer lot, one a to we basically relationship-based that Again, the as replace we in us with Yes, is made this around not that the I approach same that while to definitely and think those kind for be there's that home sponsors. of And organization. of why drivers to sense

Operator

Piper the with from Our line Stephen of next Sandler. come Scouten questions

Stephen Scouten

I deck don't was of balances. if on that first, the an saw you consumer think update slide I I the consumer. curious anymore had Just indirect the in

pace of think is where from Just runoff what you kind and of falls that curious here. the

Gerald Plush

Yes, to the around you're the talking about just Right. interest. consumer? Stephen, clarify indirect

Stephen Scouten

Yes.

Gerald Plush

current say commented, it the the million. maybe 'XX. end of will quarter expectation way a off residual be -- best the to Shary about payment the first by as I I little And think rates, is bit after it the into is It's the $XXX over 'XX, based on of books guess

Stephen Scouten

from you net with kind here? of bit know obviously, clearing elevated book a charge-offs you sense, charge-offs that you What this charge-offs been kind a for the think the couple of Okay. decks of was last after a normalized book but of kind of I level with in kind have years. is And there do a question in around of the have environment today guys

Sharymar Yepez

points. indirect these Yes. from charge-off look charge-offs and the If remove a we XX consumer to basis at more close we we're it level, normalized seeing

Stephen Scouten

that years, runs Okay. indirect off? just consumer XX over that peak kind of bps the then meal and that as X ex book will be

Sharymar Yepez

Yes.

Gerald Plush

that are one not It's Look, consolidation consumer I think and debt in pretty I It's remember in concentrated on reflects pressure think portfolio what's debt the But do happening, a is the it Stephen, these consumer. portfolio. state. load granular any you that's loans. the

And that. so we're seeing

charge-off I improving, levels think one show of I is because portfolio to starting should different say, signs of I the declining. vintages actually guess, the

we're continue that. we'll see hopeful So to that

Stephen Scouten

Yes.

just question around of then kind And last the NIM. Okay.

of So million, the expand if to basis the even kind the with take -- with it not in a kind loan would taking But how from ability from perspective. down expected sounds have we think I of you then cut could to $X.XX you guess, Fed so recoveries NIM starting sensitivity about -- $XXX you there? what we repeat from with the do then there the and like it I And we're flattish asset showed XXX points, think if there. down just have X.X%. I minus

out the we wondering moving So rate in of we see think how plays kind that that down environment forward. might

Sharymar Yepez

Right.

right? So to portion of going because use to think funds. of the back a institutional lower side are up we from what's end we're of guidance when to we XXXX, of the pipeline the first the that's materializing, That on the quarter the of the go So see range the second higher the provided quarter. we expecting continue a through average pick us going question, slight reduction NIM we make proceeds the once should of off end for pay first sheet to the the loan with about the part balance going to to

more about. and couple of rate managing As there things downward protecting balance from we trend, are think sheet how prospectively NIM thinking we're or the the about a a the we're

made and a from fixed-rate level those the securities, we also first would looking from the is of characteristics portfolio, but the that have of looking we down an we're that and prepayments at that on prepayment one on downward the quality are slowed trend. the typical expectation securities in forward purchases environment speed have investment a So

That, looking the The mentioned production comments, side, floor reset I are in spot second of for using an increase my our products side and rate loan trend. I it's are positioning the interest-bearing loan a and something for we rate loan piece into is that production of on sheet CDs as liability our versus think and in well. together downward with fixed balance a also seeing this variable the in better

Stephen Scouten

helpful. Okay. kind we are seeing just where what That's is extremely the thing, loan coming on spread you of growth And last looks this, seeing new spread of kind core maybe XX% loan what guess, that production next I today, core are deposits deposit you're about as on? like? and versus guess think I year, new

Sharymar Yepez

in we're pretty think to the I quarter what similar the fourth is spread production. seeing

as deposit think the the point and level where rate production is the I well. side loan already the got to a at level we maxed high already

versus I of a if the half, I would So to projections think fourth quarter first stable XXXX. about see pretty we're think going the level for

Operator

you. Thank

the Jerry question-and-answer turn would have reached back to remarks. our I any Plush the end for to session. Mr. We floor of over now closing like

Gerald Plush

throughout earlier, we're you how stronger, becoming for toward a Yes. now noted progress and comes and day. your strategy in continued on And focused call. together. show executing Thank it our you, I great foundational full-year as We're excited our Amerant, a all everyone, the for again we Thank about XXXX interest made bank. and higher-performing fourth-quarter earnings support joining have to on

Operator

We conclude This today's appreciate you. teleconference. your does participation. Thank

this of your time. the Enjoy You may rest disconnect your day. lines at

Amerant Bancorp (AMTB) 25 Jan 242023 Q4 Earnings call transcript