Amerant Bancorp Inc. Q3 FY2024 earnings call

Hurricane Impact: Acknowledged the devastating impact of Hurricanes Helene and Milton, with Tampa area facilities spared. ### Quarter Results: Strategic investment portfolio repositioning led to a substantial earnings charge, resulting in a $48.2 million loss for the quarter. Core pre-provision net revenue was strong at $31.3 million. ### Balance Sheet: Total assets crossed $10 billion, cash and cash equivalents increased, total investments relatively unchanged. ### Investment Portfolio: Executed investment portfolio repositioning, resulting in proceeds of $551 million, duration of investment portfolio decreased, floating portion increased. ### Loan Portfolio: Total gross loans up $239.1 million, organic growth. Single-family residential and CRE portfolios had specific changes. ### Credit Quality: Allowance for credit losses decreased, nonperforming loans and assets had changes, provision for credit losses and charge-offs detailed. ### Deposit Mix: Well-diversified deposit mix with domestic and international deposits, core deposits increased. ### Net Interest Income and Margin: Net interest income up $1.6 million, margin 3.49% vs 3.56% prior quarter. ### Noninterest Income and Expense: Noninterest income negative due to securities repositioning, noninterest expense increased.

Total assets reached $10.38 billion as of the close of the third quarter, an increase from $9.75 billion in the second quarter. Cash and cash equivalents increased $361.5 million to $671.8 million. Total gross loans increased by $239.1 million to $7.56 billion. Total deposits increased by $294.9 million to $8.11 billion. Core pre-provision net revenue was strong at $31.3 million, but the company recorded a loss of $48.2 million for the quarter due to securities repositioning and other factors.

Fourth Quarter: Expect NIM to be slightly higher from 3Q results closer to mid-3.50s. Core noninterest income expected to be approximately $17.5 million to $18 million. Operating expenses expected to remain at approximately $68.5 million. Provision for credit losses expected to be around $8 million to $9 million. ### 2025: Focus on achieving 60% efficiency ratio, 1% ROA and 12% ROE targets in the second half of 2025.

Natural Disasters: Impact of Hurricanes Helene and Milton on communities and business. ### Securities Repositioning: Risks associated with the repositioning of the investment portfolio leading to losses. ### Credit Quality: Risks related to nonperforming loans and credit losses.

Q: Could you share incremental color in terms of the drivers of loan growth, whether the mix is expected to be the same?

A: It's a function of the incremental volume from added personnel with great relationships.

Q: Can you put a finer point on deposit betas picking up as rates fall? And is there different thoughts between domestic versus international customers?

A: Expect beta around 40 to 45 basis points. International deposits have significant noninterest-bearing deposits not impacted by downward rate trend.

Q: Do you have near- to intermediate-term targets for how big you'd like to grow your brokerage advisory business?

A: See opportunities on both domestic and international sides, with international and domestic AUM growth expected.

Q: How should we think about the core expense growth rate into 2025?

A: Reallocation of expenses, with amounts from Houston business sale reallocated for Florida market growth.

Q: How are you thinking about a more normalized charge-off rate into 2025 and beyond?

A: More normalized charge-off level should be closer to 30 to 40 basis points, with fourth quarter having some indirect consumer portfolio impact.