Amerant Bancorp Inc. — Q1 2024 Form 10-Q
Unaudited results for the three months ended March 31, 2024; balance-sheet comparisons are against December 31, 2023. Amounts are in U.S. dollars unless noted.
Business context
Amerant is a Florida bank holding company operating through Amerant Bank and subsidiaries in South Florida, Houston, Tampa and select international markets. It provides banking, lending, mortgage, investment, wealth management and fiduciary services. The filing reports no formal earnings guidance.
Financial performance
| Metric | Q1 2024 | Prior comparable period / change |
|---|---|---|
| Interest income | $144.6 million | $125.1 million; up 15.6% |
| Net interest income | $78.0 million | $82.3 million; down 5.3% |
| Net interest margin | 3.51% | 3.90%; down 39 basis points |
| Provision for credit losses | $12.4 million | $11.7 million |
| Noninterest income | $14.5 million | $19.3 million; down 25.1% |
| Noninterest expense | $66.6 million | $64.7 million; up 2.9% |
| Net income attributable to Amerant | $10.6 million | $20.2 million; down 47.7% |
| Diluted earnings per share | $0.31 | $0.60 |
| Efficiency ratio | 72.0% | 63.7% |
| Pre-provision net revenue (non-GAAP) | $25.9 million | $37.2 million; down 30.5% |
Lower earnings reflected pressure from higher deposit costs and lower noninterest income; increased interest income and lower income-tax expense partly offset the decline. The prior-year quarter included a $13.2 million gain on early repayment of FHLB advances and a $9.7 million net securities loss. Current-quarter BOLI income increased following policy restructuring in late 2023. No significant non-routine expense items were reported for Q1 2024.
Financial condition, liquidity and capital
- Total assets were $9.82 billion, up 1.0% from year-end. Total deposits were $7.88 billion, down 0.2%; core deposits were $5.63 billion, or 71.5% of deposits.
- Cash and cash equivalents were $659.7 million, compared with $321.9 million at year-end. The loan-to-deposit ratio was 88.93%, versus 92.02%.
- Gross loans held for investment were $6.96 billion, up 1.2%. Total gross loans, including loans held for sale, were $7.01 billion, down 3.6%, primarily reflecting the first-quarter sale of Houston CRE loans previously classified as held for sale.
- FHLB advances were $715 million, up $70 million. The company reported $2.2 billion of remaining FHLB credit availability. Other reported debt included $59.6 million of senior notes, $29.5 million of subordinated notes and $64.2 million of junior subordinated debentures.
- Stockholders’ equity was $738.1 million. The company’s total capital, Tier 1 and CET1 ratios were 12.49%, 10.87% and 10.10%, respectively; the Bank’s respective ratios were 12.39%, 11.14% and 11.14%. Both were above the filing’s “well capitalized” thresholds.
- Cash flows were $2.8 million provided by operating activities, $286.7 million provided by investing activities and $48.3 million provided by financing activities. Investing cash flow included $429.6 million of loan-sale proceeds and $62.7 million from surrender of BOLI policies; these items make the period’s cash generation unusual.
Asset quality, securities and contingencies
- The loan allowance was $96.1 million, or 1.38% of loans held for investment, versus $95.5 million, or 1.39%, at year-end. Net charge-offs were $11.9 million; the annualized net charge-off ratio was 0.69%, compared with 0.64% a year earlier. Most current-quarter gross charge-offs related to purchased indirect consumer loans.
- Nonperforming assets decreased to $50.5 million from $54.6 million, while special-mention loans increased 125.8% to $103.8 million, mainly due to commercial relationship downgrades. The filing said all special-mention loans remained current except $8.2 million less than 60 days past due.
- Available-for-sale securities had $105.8 million of gross unrealized losses at quarter-end, primarily attributed by management to interest-rate and market movements rather than credit deterioration. After-tax unrealized losses on these securities contributed $5.1 million to quarterly other comprehensive loss.
- Off-balance-sheet commitments to extend credit and letters of credit totaled $1.225 billion. The filing describes ordinary-course litigation and contingencies; management does not expect pending litigation liabilities to be material.
Outlook, material developments and risks
On April 16, 2024, after quarter-end, the Bank agreed to sell certain assets and assume certain liabilities related to its six Houston-area branches to MidFirst Bank, subject to OCC approval and customary closing conditions. Closing was expected in the second half of 2024. The stated deposit premium is $13 million, subject to contractual conditions and a $9.25 million minimum, with other purchase-price components and post-closing adjustments. The filing warns that the transaction could be delayed, fail to close or disrupt customer, employee and vendor relationships.
Management cited higher deposit funding costs as a principal earnings pressure. Other disclosed risks include liquidity and funding costs, interest-rate sensitivity, CRE and commercial-loan concentrations, credit-loss estimates, securities valuation, deposit retention and concentration, cybersecurity and vendor dependence, and economic conditions in the company’s markets. Deposits domiciled in Venezuela totaled $1.99 billion at quarter-end. The filing states that available funds, credit facilities and operating cash flows are expected to meet operational cash needs for the foreseeable future; this is not earnings guidance.
Key facts for investors to verify
- Progress, regulatory approval, final terms and financial effects of the proposed Houston operations sale.
- Deposit pricing, deposit mix and retention—including large fund providers, brokered deposits and foreign-domiciled deposits—and the impact on net interest margin.
- Trends in special-mention and nonperforming loans, charge-offs, indirect consumer loan runoff and CRE exposure, alongside allowance adequacy.
- Interest-rate risk and the potential implications of the securities portfolio’s unrealized losses and duration.
- Whether elevated professional, technology, advertising and other operating costs persist, and how actual performance compares with management’s stated liquidity outlook.