CORAL GABLES, FLORIDA, October 19, 2023. Amerant Bancorp Inc. (NYSE: AMTB) (the “Company” or “Amerant”) today reported net income attributable to the Company of $22.1 million in the third quarter of 2023, or $0.66 per diluted share, compared to net income attributable to the Company of $7.3 million, or $0.22 per diluted share, in the second quarter of 2023.

“We are pleased to report significantly improved operating results this quarter” stated Jerry Plush, Chairman and CEO. “Our team members continued to focus on “deposits first” as the top strategic priority, and by originating strong organic deposit growth again this quarter, that enabled us to further reduce higher cost institutional deposits. In the fourth quarter, we look forward to completing the long-awaited systems conversion and then being able to fully focus our efforts on business development and customer service.”

•Total assets were $9.3 billion, a decrease of $173.8 million, or 1.8%, compared to 2Q23.

•Total gross loans were $7.14 billion, a decrease of $74.4 million, or 1.0%, compared to $7.22 billion in 2Q23. Total gross loans includes $69.2 million in held for sale loans out of which $43.3 million are related to a NYC commercial real estate loan transferred in 3Q23 from loans held for investment at the lower of its estimated fair value or cost, and mortgage loans at their estimated fair value totaling $26.0 million.

•Cash and cash equivalents were $309.0 million, down $136.1 million, or 30.6%, compared to $445.1 million in 2Q23.

•Total deposits were $7.55 billion, down $32.7 million, or 0.4%, compared to $7.58 billion in 2Q23. Organic deposit growth was $208 million, which helped enable reductions in higher-cost institutional deposits of $292 million. Time deposits increased $221.3 million as customers continued to seek higher returns on deposits. This includes an increase in brokered time deposits in the amount of $92.4 million, a strategic move to obtain 2 to 5 year funding, as part of asset/liability management.

•Total advances from Federal Home Loan Bank (“FHLB”) were $595.0 million, down $175.0 million, or 22.7%, compared to $770.0 million in 2Q23, the result of early repayment of $225.0 million during the quarter. The Bank had an additional $2.3 billion in availability from the FHLB as of September 30, 2023.

•Average yield on loans decreased to 6.77% in 3Q23, compared to 6.79% in 2Q23.

•Total non-performing assets decreased to $53.4 million, down $14.0 million, or 20.8%, compared to $67.4 million as of 2Q23.

•The allowance for credit losses ("ACL") was $98.8 million, a decrease of $7.2 million, or 6.8%, compared to $106.0 million as of 2Q23.

•Core deposits were $5.24 billion, down $254.0 million, or 4.6%, compared to $5.50 billion in 2Q23. Non-interest bearing deposits increased $76.6 million, or 5.9%, to $1.37 billion in 3Q23 compared to $1.29 billion in 2Q23.

•Average cost of total deposits increased to 2.66% in 3Q23 compared to 2.40% in 2Q23.

•Loan to deposit ratio improved to 94.64% in 3Q23 compared to 95.22% in 2Q23.

•Assets Under Management and custody (“AUM”) totaled $2.09 billion, down $55.3 million, or 2.6%, from $2.15 billion in 2Q23.

•Pre-provision net revenue (“PPNR”)(1) was $36.5 million in 3Q23, a decrease of $1.8 million or 4.7%, compared to $38.3 million in 2Q23.

•Net Interest Margin (“NIM”) was 3.57% in 3Q23 compared to 3.83% in 2Q23.

•Net Interest Income (“NII”) was $78.6 million, down $5.3 million, or 6.3%, from $83.9 million in 2Q23.

•Provision for credit losses was $8.0 million in 3Q23, down $21.1 million, or 72.5%, compared to $29.1 million in 2Q23. The provision for credit losses in 3Q23 was comprised of $7.6 million to cover charge-offs, $1.4 million due to loan composition and volume changes and $0.6 million added to the provision for credit contingencies, which is recorded in other liabilities. These provision requirements were offset by a $0.4 million release due to credit quality and factor updates and a $1.2 million release due to recoveries.

•Non-interest income was $21.9 million in 3Q23, down $4.7 million, or 17.6%, from $26.6 million in 2Q23. 3Q23 included $6.9 million in non-routine net gains compared to $12.4 million in 2Q23.

•Non-interest expense was $64.4 million, down $8.1 million, or 11.1%, from $72.5 million in 2Q23. 3Q23 included $6.3 million in non-routine non-interest expenses compared to $13.4 million in 2Q23.

•The efficiency ratio was 64.1% in 3Q23 compared to 65.6% in 2Q23.

•Return on average assets (“ROA”) was 0.92% in 3Q23 compared to 0.31% in 2Q23.

•Return on average equity (“ROE”) was 11.93% in 3Q23 compared to 3.92% in 2Q23.

•Repurchased 142,888 shares for $2.7 million during 3Q23. As of September 30, 2023, repurchases totaled 259,853 shares for $4.9 million; $20 million remains available of $25 million Class A common stock share repurchase program.

Additional details on third quarter 2023 results can be found in the Exhibits to this earnings release, and the earnings presentation available under the Investor Relations section of the Company’s website at https://investor.amerantbank.com.

On October 18, 2023, the Company’s board of directors declared a quarterly cash dividend of $0.09 per common share. The dividend is payable on November 30, 2023 to shareholders of record on November 14, 2023.

1 Non-GAAP measure, see “Non-GAAP Financial Measures” for more information and Exhibit 2 for a reconciliation to GAAP measures.

The Company will hold an earnings conference call on Friday, October 20, 2023 at 9:00 a.m. (Eastern Time) to discuss its third quarter 2023 results. The conference call and presentation materials can be accessed via webcast by logging on from the Investor Relations section of the Company’s website at https://investor.amerantbank.com. The online replay will remain available for approximately one month following the call through the above link.

Amerant Bancorp Inc. is a bank holding company headquartered in Coral Gables, Florida since 1979. The Company operates through its main subsidiary, Amerant Bank, N.A. (the “Bank”), as well as its other subsidiaries: Amerant Investments, Inc., Elant Bank and Trust Ltd., and Amerant Mortgage, LLC. The Company provides individuals and businesses in the U.S. with deposit, credit and wealth management services. The Bank, which has operated for over 40 years, is the largest community bank headquartered in Florida. The Bank operates 23 banking centers – 17 in South Florida and 6 in the Houston, Texas area, as well as an LPO in Tampa, Florida. For more information, visit investor.amerantbank.com.

FIS® and any associated brand names/logos are the trademarks of FIS and/or its affiliates.

This press release contains “forward-looking statements” including statements with respect to the Company’s objectives, expectations and intentions and other statements that are not historical facts. All statements other than statements of historical fact are statements that could be forward-looking statements. You can identify these forward-looking statements through our use of words such as “may,” “will,” “anticipate,” “assume,” “should,” “indicate,” “would,” “believe,” “contemplate,” “expect,” “estimate,” “continue,” “plan,” “point to,” “project,” “could,” “intend,” “target,” “goals,” “outlooks,” “modeled,” “dedicated,” “create,” and other similar words and expressions of the future.

Forward-looking statements, including those relating to our beliefs, plans, objectives, goals, expectations, anticipations, estimates and intentions, involve known and unknown risks, uncertainties and other factors, which may be beyond our control, and which may cause the Company’s actual results, performance, achievements, or financial condition to be materially different from future results, performance, achievements, or financial condition expressed or implied by such forward-looking statements. You should not rely on any forward-looking statements as predictions of future events. You should not expect us to update any forward-looking statements, except as required by law. All written or oral forward-looking statements attributable to us are expressly qualified in their entirety by this cautionary notice, together with those risks and uncertainties described in “Risk factors” in our annual report on Form 10-K for the fiscal year ended December 31, 2022 filed on March 1, 2023 (the “Form 10-K”), our quarterly report on Form 10-Q for the quarter ended March 31, 2023 filed on May 2, 2023, and in our other filings with the U.S. Securities and Exchange Commission (the “SEC”), which are available at the SEC’s website www.sec.gov.

Unaudited financial information as of and for interim periods, including the three and nine month periods ended September 30, 2023 and 2022, may not reflect our results of operations for our fiscal year ending, or financial condition, as of December 31, 2023, or any other period of time or date.

As previously disclosed in the Form 10-K, the Company adopted the new guidance on accounting for current expected credit losses on financial instruments (“CECL”) effective as of January 1, 2022. Quarterly amounts previously reported on our quarterly reports on Form 10-Q for the periods ended March 31, 2022, June 30, 2022 and September 30, 2022 do not reflect the adoption of CECL. In the fourth quarter of 2022, the Company recorded a provision for credit losses totaling $20.9 million, including $11.1 million related to the retroactive effect of adopting CECL for all previous quarterly periods in the year ended December 31, 2022, including loan growth and changes to macro-economic conditions during the period. Quarterly amounts included in the Form 10-K and this earnings release and accompanying presentation reflect the impacts of the adoption of CECL on each interim period of 2022. See the Form 10-K for more details on the adoption of CECL.

The following table shows changes to previously-reported amounts for the quarter ended December 31, 2022 versus the corresponding amounts reflecting the adoption of CECL in 2022:

The Company supplements its financial results that are determined in accordance with accounting principles generally accepted in the United States of America (“GAAP”) with non-GAAP financial measures, such as “pre-provision net revenue (PPNR)”, “core pre-provision net revenue (Core PPNR)”, “core noninterest income”, “core noninterest expenses”, “core net income”, “core earnings per share (basic and diluted)”, “core return on assets (Core ROA)”, “core return on equity (Core ROE)”, “core efficiency ratio”, “tangible stockholders’ equity (book value) per common share”, “tangible common equity ratio, adjusted for unrealized losses on debt securities held to maturity”, and “tangible stockholders' equity (book value) per common share, adjusted for unrealized losses on debt securities held to maturity”. This supplemental information is not required by, or is not presented in accordance with GAAP. The Company refers to these financial measures and ratios as “non-GAAP financial measures” and they should not be considered in isolation or as a substitute for the GAAP measures presented herein.

We use certain non-GAAP financial measures, including those mentioned above, both to explain our results to shareholders and the investment community and in the internal evaluation and management of our businesses. Our management believes that these non-GAAP financial measures and the information they provide are useful to investors since these measures permit investors to view our performance using the same tools that our management uses to evaluate our past performance and prospects for future performance, especially in light of the additional costs we have incurred in connection with the Company’s restructuring activities that began in 2018 and continued in 2023, including the effect of non-core banking activities such as the sale of loans and securities and other repossessed assets, the valuation of securities, derivatives, loans held for sale and other real estate owned and repossessed assets, the early repayment of FHLB advances, impairment of investments, and other non-routine actions intended to improve customer service and operating performance. While we believe that these non-GAAP financial measures are useful in evaluating our performance, this information should be considered as supplemental and not as a substitute for or superior to the related financial information prepared in accordance with GAAP. Additionally, these non-GAAP financial measures may differ from similar measures presented by other companies.

Exhibit 2 reconciles these non-GAAP financial measures to GAAP reported results.

The following table sets forth selected financial information derived from our interim unaudited and annual audited consolidated financial statements.

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(1)     Total gross loans include loans held for investment net of unamortized deferred loan origination fees and costs, as well as loans held for sale. As of September 30, 2023, June 30, 2023, March 31, 2023 and December 31, 2022, mortgage loans held for sale carried at fair value totaled $26.0 million, $49.9 million, $65.3 million and $62.4 million, respectively. In addition, as of September 30, 2023, includes $43.3 million in loans held for sale carried at the lower of estimated fair value or cost.

(2)     Core deposits consist of total deposits excluding all time deposits.

(3) In the fourth quarter of 2022, the Company announced that the Board of Directors authorized a new repurchase program pursuant to which the Company may purchase, from time to time, up to an aggregate amount of $25 million of its shares of Class A common stock (the “2023 Class A Common Stock Repurchase Program”). In the third, second and first quarters of 2023, the Company repurchased an aggregate of 142,188 shares of Class A common stock, 95,262 shares of Class A common stock and 22,403 shares of Class A common stock, respectively, at a weighted average price of $19.05 per share, $17.42 per share and $25.25 per share, respectively, under the 2023 Class A Common Stock Repurchase Program. In the third, second and first quarters of 2023, the aggregate purchase price for these transactions was approximately $2.7 million, $1.7 million and $0.6 million, respectively, including transaction costs.    

(4) For each of the third, second and first quarters of 2023 and the fourth quarter of 2022, the Company’s Board of Directors declared cash dividends of $0.09 per share of the Company’s common stock and paid an aggregate amount of $3.0 million per quarter in connection with these dividends. The dividend declared in the third quarter of 2023 was paid on August 31, 2023 to shareholders of record at the close of business on August 15, 2023. The dividend declared in the second quarter of 2023 was paid on May 31, 2023 to shareholders of record at the close of business on May 15, 2023. The dividend declared in the first quarter of 2023 was paid on February 28, 2023 to shareholders of record at the close of business on February 13, 2023. The dividend declared in the fourth quarter of 2022 was paid on November 30, 2022 to shareholders of record at the close of business on November 15, 2022.

(5) Assets held for clients in an agency or fiduciary capacity which are not assets of the Company and therefore are not included in the consolidated financial statements.

(6) As previously disclosed, the Company adopted CECL in the fourth quarter of 2022, effective as of January 1, 2022. See Form 10-K for more details on the CECL adoption and related effects to quarterly results for each quarter in the year ended December 31, 2022.

(7) In the third quarter of 2023, includes $7.4 million and $0.6 million of provision for credit losses on loans and unfunded commitments (contingencies), respectively. For all other periods shown, includes provision for credit losses on loans. There was no provision for credit losses on unfunded commitments in the second quarter of 2023 and the fourth quarter of 2022. In the first quarter of 2023, the provision for credit losses on unfunded commitments was $0.3 million.

(8)    In the three months ended September 30, 2023, June 30, 2023, March 31, 2023, and December 31, 2022, net income excludes losses of $0.4 million, $0.3 million, $0.2 million and $0.2 million, respectively, attributable to a minority interest in Amerant Mortgage LLC.

(9) This presentation contains adjusted financial information determined by methods other than GAAP. This adjusted financial information is reconciled to GAAP in Exhibit 2 - Non-GAAP Financial Measures Reconciliation.

(10)In all the periods shown, potential dilutive instruments consisted of unvested shares of restricted stock, restricted stock units and performance stock units. Potential dilutive instruments were included in the diluted earnings per share computation because, when the unamortized deferred compensation cost related to these shares was divided by the average market price per share in all the periods shown, fewer shares would have been purchased than restricted shares assumed issued. Therefore, in those periods, such awards resulted in higher diluted weighted average shares outstanding than basic weighted average shares outstanding, and had a dilutive effect in per share earnings.

(11) Operating data for the periods presented have been annualized.

(12) NIM is defined as NII divided by average interest-earning assets, which are loans, securities, deposits with banks and other financial assets which yield interest or similar income.

(13) Calculated based upon the average daily balance of total assets.

(14)     Calculated based upon the average daily balance of stockholders’ equity.

(15)     Total revenue is the result of net interest income before provision for credit losses plus noninterest income.

(16)     Total stockholders’ equity divided by total risk-weighted assets, calculated according to the standardized regulatory capital ratio

calculations.

(17) Tier 1 capital divided by total risk-weighted assets. Tier 1 capital is composed of Common Equity Tier 1 (CET1) capital plus outstanding qualifying trust preferred securities of $62.3 million at each of all the dates presented.

(18)     Tier 1 capital divided by quarter to date average assets.

(19) CET1 capital divided by total risk-weighted assets.

(20) Tangible common equity is calculated as the ratio of common equity less goodwill and other intangibles divided by total assets

less goodwill and other intangible assets. Other intangible assets primarily consist of naming rights and mortgage servicing rights and are included in other assets in the Company’s consolidated balance sheets.

(21) Calculated in the same manner described in footnote 19 but also includes unrealized losses on debt securities held to maturity in the balance of common equity and total assets.

(22)     Calculated as the ratio of total loans gross divided by total deposits.

(23) Non-performing assets include all accruing loans past due by 90 days or more, all nonaccrual loans and other real estate owned (“OREO”) properties acquired through or in lieu of foreclosure, and other repossessed assets.

(24) Non-performing loans include all accruing loans past due by 90 days or more and all nonaccrual loans

(25) Calculated based upon the average daily balance of outstanding loan principal balance net of unamortized deferred loan origination fees and costs, excluding the allowance for credit losses. During the third, second and first quarters of 2023, and in the fourth quarter of 2022, there were net charge offs of $14.6 million, $7.5 million , $10.8 million, and $9.8 million, respectively. During the third quarter of 2023, the Company charged-off $6.4 million related to multiple consumer loans, primarily purchased indirect consumer loans, and $9.3 million related to multiple commercial loans. During the second quarter of 2023, the Company charged-off $7.6 million related to multiple purchased indirect consumer loans and $1.5 million related to multiple commercial loans. During the first quarter of 2023, the Company charged-off $6.5 million in connection with a commercial loan relationship, $6.3 million related to multiple consumer loans and $1.5 million related to multiple commercial and real estate loans. During the fourth quarter of 2022, the Company charged-off $3.9 million related to a CRE loan, $5.5 million related to multiple consumer loans and $1.1 million related to multiple commercial loans.

(26) Other operating expenses is the result of total noninterest expense less salary and employee benefits.

(27) Efficiency ratio is the result of noninterest expense divided by the sum of noninterest income and NII.

(28) As of September 30, 2023, June 30, 2023, March 31, 2023 and December 31, 2022, includes 98, 93, 94 and 68 FTEs for Amerant Mortgage LLC, respectively.

(29) Core efficiency ratio is the efficiency ratio less the effect of restructuring costs and other non-routine items, described in Exhibit 2 - Non-GAAP Financial Measures Reconciliation.

The following table sets forth selected financial information derived from the Company’s interim unaudited and annual audited consolidated financial statements, adjusted for certain costs incurred by the Company in the periods presented related to tax deductible restructuring costs, provision for (reversal of) credit losses, provision for income tax expense (benefit), the effect of non-core banking activities such as the sale of loans and securities and other repossessed assets, the valuation of securities, derivatives, loans held for sale and other real estate owned and repossessed assets, the early repayment of FHLB advances, impairment of investments and other non-routine actions intended to improve customer service and operating performance. The Company believes these adjusted numbers are useful to understand the Company’s performance absent these transactions and events.

    

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(1)      As previously disclosed, the Company adopted CECL in the fourth quarter of 2022, effective as of January 1, 2022. See Form 10-K for more details of the CECL adoption and related effects to quarterly results for each quarter in the year ended December 31, 2022.

(2)     In the third quarter of 2023, includes $7.4 million and $0.6 million of provision for credit losses on loans and unfunded commitments (contingencies), respectively. For all other periods shown, includes provision for credit losses on loans. There was no provision for credit losses on unfunded commitments in the second quarter of 2023 and the fourth quarter of 2022. In the first quarter of 2023, the provision for credit losses on unfunded commitments was $0.3 million.

(3)     Expenses incurred for actions designed to implement the Company’s business strategy. These actions include, but are not limited to reductions in workforce, streamlining operational processes, rolling out the Amerant brand, implementation of new technology system applications, decommissioning of legacy technologies, enhanced sales tools and training, expanded product offerings and improved customer analytics to identify opportunities.

(4) Staff reduction costs consist of severance expenses related to organizational rationalization.

(5) Contract termination and related costs associated with third party vendors resulting from the Company’s engagement of FIS.

(6) Includes expenses in connection with the engagement of FIS of $2.0 million, $2.6 million and $1.1 million in the three months ended June 30, 2023, March 31, 2023 and December 31, 2022, respectively.

(7) Include expenses in connection with the disposition of fixed assets due to the write off of in-development software in the three months ended June 30, 2023.

(8) In the three months ended September 30, 2023, consists of expenses in connection with the closure of a branch in Houston, Texas in 2023. In the three months ended June 30, 2023, consists of expenses associated with the closure of a branch in Miami, Florida in 2023, including $0.9 million of accelerated amortization of leasehold improvements and $0.6 million of right-of-use, or ROU asset impairment. In the three months ended March 31, 2023, includes $0.5 million of ROU asset impairment associated with the closure of a branch in Houston, Texas in 2023.

(9) Fair value adjustment related to a New York-based CRE loan held for sale carried at the lower of fair value or cost.

(10) In the three months ended June 30, 2023, amount represents the loss on sale of repossessed assets in connection with our equipment-financing activities.

(11) In the three months ended March 31, 2023, amounts were calculated based upon the effective tax rate for the period of 21.00%. For all of the other periods shown, amounts represent the difference between the prior and current period year-to-date tax effect.

(12) Potential dilutive instruments consisted of unvested shares of restricted stock, restricted stock units and performance stock units. In all the periods presented, potential dilutive instruments were included in the diluted earnings per share computation because, when the unamortized deferred compensation cost related to these shares was divided by the average market price per share in those periods, fewer shares would have been purchased than restricted shares assumed issued. Therefore, in those periods, such awards resulted in higher diluted weighted average shares outstanding than basic weighted average shares outstanding, and had a dilutive effect on per share earnings.

(13) At September 30, 2023, other intangible assets primarily consist of naming rights and mortgage servicing rights (“MSRs”) of $2.7 million and $1.3 million, respectively. At June 30, 2023, March 31, 2023 and December 31, 2022, other intangible assets primarily consist of MSRs of $1.3 million, $1.4 million and $1.3 million, respectively. Other intangible assets are included in other assets in the Company’s consolidated balance sheets.

(14) In the three months ended September 30, 2023, June 30, 2023, March 31, 2023 and December 31, 2022, amounts were calculated based upon the fair value on debt securities held to maturity, and assuming a tax rate of 25.51%, 25.46%, 25.53% and 25.55%, respectively.

The following tables present average balance sheet information, interest income, interest expense and the corresponding average yields earned and rates paid for the periods presented. The average balances for loans include both performing and nonperforming balances. Interest income on loans includes the effects of discount accretion and the amortization of non-refundable loan origination fees, net of direct loan origination costs, accounted for as yield adjustments. Average balances represent the daily average balances for the periods presented.