Amerant Bancorp Inc. Q4 FY2024 earnings call

• Chairman Jerry Plush thanked the team for their 2024 efforts and transition to strategic growth. - Discussed balance sheet changes including the Houston franchise sale, early repayment of FHLB advances, and loan/deposit growth. - Sharymar Calderon covered key metrics like net interest margin, efficiency ratio, loan portfolio details, credit quality, deposit mix, net interest income drivers, and interest rate sensitivity. - Operational highlights: Completion of securities portfolio repositioning, sale of Houston franchise, gain on early repayment of FHLB advances, sale of business purpose loans, dividend payment, and increase in assets under management.

Total assets were $9.9 billion as of the end of the fourth quarter, a decrease from $10.35 billion in the third quarter, primarily due to the Houston franchise sale and early repayment of $170 million in Federal Home Loan Bank advances. Total gross loans decreased by $294.7 million to $7.27 billion from $7.56 billion in the third quarter, but excluding the sale, loan growth was strong at $255 million. Total deposits decreased by $256.9 million to $7.85 billion compared to $8.11 billion in the third quarter, with organic deposit growth of $317 million excluding the transaction. Net interest income was $87.6 million, up $6.6 million from the third quarter, and the net interest margin increased to 3.75% from 3.49% in the third quarter. The provision for credit losses was $9.9 million, down $9.1 million from the third quarter. Non-interest income was $23.7 million, up from negative $47.7 million in the third quarter, while non-interest expense was $83.4 million, up $7.2 million from the third quarter.

• Projected annual loan growth of approximately 15%, with deposit growth matching loan growth. - Focus on improving the ratio of non-interest bearing to total deposits. - Net interest margin expected to be in the mid-3.60s range for the first quarter of 2025. - Expected expenses of approximately $71 million in Q1 2025. - Intend to achieve a 60% efficiency ratio in the second half of 2025.

• Market risks associated with interest rate fluctuations. - Credit risks from non-performing loans. - Potential impact of macroeconomic factors on credit quality. - Risks related to executing growth plans effectively.

Q: Regarding the $14.2 million reduction expected in non-performing loans, is it from the NPL bucket?

A: Yes, the $14.2 million is coming out of the NPL bucket. Sharymar Calderon also mentioned working towards reducing classified assets.

Q: Thoughts on net charge-offs and ACL levels?

A: Sharymar Calderon stated near-term net charge-offs are expected to be around 25 to 30 basis points, with the indirect consumer portfolio reduction helping to lower this level.

Q: Expenses and efficiency outlook?

A: Sharymar Calderon noted the first half of the year typically has higher costs, but the second half is expected to be more normalized, with efficiency driven by growth.

Q: Margin expectations for Q1 2025 and beyond?

A: Sharymar Calderon explained there will be slight pressure on the margin in Q1 2025 due to loan repricing, but the margin is expected to stay stable above the 3.60% range.

Q: Deposit betas and franchise investment balance?

A: Sharymar Calderon mentioned deposit beta is expected to move to around 40 basis points over time, with a balance between franchise investment and profitability focused on achieving operating leverage