Amerant Bancorp (US:AMTB)2025-08-01 21:25PART I. FINANCIAL INFORMATION Item 1 Financial Statements This section presents the unaudited consolidated financial statements of Amerant Bancorp Inc. and its subsidiaries, including balance sheets, statements of operations, comprehensive income, changes in stockholders' equity, and cash flows, along with detailed notes Consolidated Balance Sheets Total assets increased, driven by growth in securities and cash, while liabilities rose due to higher deposits and FHLB advances Consolidated Balance Sheet Highlights (in thousands) | Metric | June 30, 2025 | December 31, 2024 | Change ($) | Change (%) | | :-------------------------------- | :------------ | :---------------- | :--------- | :--------- | | Total Assets | $10,334,678 | $9,901,734 | $432,944 | 4.4% | | Cash and cash equivalents | $636,837 | $590,359 | $46,478 | 7.9% | | Securities | $1,970,888 | $1,497,925 | $472,963 | 31.6% | | Loans held for investment, net | $7,096,604 | $7,143,448 | $(46,844) | -0.7% | | Total Liabilities | $9,410,392 | $9,011,267 | $399,125 | 4.4% | | Total Deposits | $8,306,544 | $7,854,595 | $451,949 | 5.8% | | Advances from FHLB | $765,000 | $745,000 | $20,000 | 2.7% | | Total Stockholders' Equity | $924,286 | $890,467 | $33,819 | 3.8% | Consolidated Statements of Operations and Comprehensive Income Net income and comprehensive income significantly increased for both periods, driven by higher net interest income and reduced credit loss provisions Consolidated Statements of Operations Highlights (in thousands, except EPS) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change ($) | Change (%) | | :----------------------------------- | :--------------------------- | :--------------------------- | :--------- | :--------- | | Total interest income | $151,095 | $146,409 | $4,686 | 3.2% | | Total interest expense | $60,616 | $67,054 | $(6,438) | -9.6% | | Net interest income | $90,479 | $79,355 | $11,124 | 14.0% | | Provision for credit losses | $6,060 | $19,150 | $(13,090) | -68.4% | | Total noninterest income | $19,778 | $19,420 | $358 | 1.8% | | Total noninterest expenses | $74,400 | $73,302 | $1,098 | 1.5% | | Net income attributable to Amerant Bancorp Inc. | $23,002 | $4,963 | $18,039 | 363.5% | | Basic earnings per common share | $0.55 | $0.15 | $0.40 | 266.7% | | Diluted earnings per common share | $0.55 | $0.15 | $0.40 | 266.7% | | Metric | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change ($) | Change (%) | | :----------------------------------- | :--------------------------- | :--------------------------- | :--------- | :--------- | | Total interest income | $297,503 | $291,034 | $6,469 | 2.2% | | Total interest expense | $121,120 | $133,711 | $(12,591) | -9.4% | | Net interest income | $176,383 | $157,323 | $19,060 | 12.1% | | Provision for credit losses | $24,506 | $31,550 | $(7,044) | -22.3% | | Total noninterest income | $39,303 | $33,908 | $5,395 | 15.9% | | Total noninterest expenses | $145,954 | $139,896 | $6,058 | 4.3% | | Net income attributable to Amerant Bancorp Inc. | $34,960 | $15,531 | $19,429 | 125.1% | | Basic earnings per common share | $0.83 | $0.46 | $0.37 | 80.4% | | Diluted earnings per common share | $0.83 | $0.46 | $0.37 | 80.4% | - Other comprehensive income (loss) for the six months ended June 30, 2025, was a gain of $14.358 million, a significant improvement from a loss of $8.119 million in the same period of 2024, primarily due to net unrealized holding gains on debt securities available for sale12131 Consolidated Statements of Changes in Stockholders' Equity Stockholders' equity increased to $924.3 million at June 30, 2025, driven by net income and other comprehensive income, partially offset by common stock repurchases and dividends Changes in Stockholders' Equity (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :--------------------------------- | :------------ | :---------------- | | Balance at beginning of period | $890,467 | N/A | | Net income | $34,960 | N/A | | Other comprehensive income | $14,358 | N/A | | Repurchase of Class A common stock | $(10,000) | N/A | | Dividends paid | $(7,651) | N/A | | Balance at end of period | $924,286 | $890,467 | - The Company repurchased 491,093 shares of Class A common stock for $10.0 million in the six months ended June 30, 2025, at a weighted average price of $20.36 per share30392 - Dividends paid totaled $7.651 million in the six months ended June 30, 2025, with a dividend per share of $0.0932393 Consolidated Statements of Cash Flows Operating cash flows significantly increased in the first half of 2025, while investing activities resulted in a substantial net cash outflow, and financing activities provided a large net cash inflow Consolidated Statements of Cash Flows Highlights (in thousands) | Cash Flow Activity | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :----------------------------------- | :--------------------------- | :--------------------------- | | Net cash provided by operating activities | $77,800 | $447 | | Net cash used in investing activities | $(425,151) | $(41,160) | | Net cash provided by financing activities | $393,829 | $29,160 | | Net increase in cash and cash equivalents and restricted cash | $46,478 | $(11,553) | | Cash, cash equivalents and restricted cash, end of period | $636,837 | $310,319 | - Operating cash flows were positively impacted by net income of $34.96 million and a provision for credit losses of $24.51 million in the first half of 202518 - Investing activities included $546.31 million in purchases of investment securities (available for sale and trading) and $7.0 million in bank-owned life insurance purchases, partially offset by $93.49 million from maturities/sales of securities and $24.58 million from loan portfolio sales18 - Financing activities were boosted by a $523.48 million net increase in demand, savings, and money market accounts, and $20.0 million net proceeds from FHLB advances, but offset by $71.53 million decrease in time deposits and $60.0 million redemption of senior notes18 Notes to Interim Consolidated Financial Statements The notes provide detailed disclosures on business operations, accounting policies, financial instrument composition, credit quality, and fair value measurements, offering crucial context to the interim financial statements Note 1. Business, Basis of Presentation and Summary of Significant Accounting Policies Amerant Bancorp Inc. operates as a bank holding company, focusing on Florida markets, with strategic shifts including Cayman Bank dissolution, Amerant Mortgage refocus, and senior note redemption - The Company is executing a plan for the dissolution of Elant Bank & Trust Ltd. (Cayman Bank), expected to be completed in 202522 - Amerant Mortgage is transitioning its focus from national mortgage origination to in-footprint lending in Florida, with plans to reduce FTE count from 77 to approximately 20 by early Q4 202523 - On April 1, 2025, the Company redeemed $60.0 million of its 5.75% Senior Notes due June 30, 2025, at 100% of principal plus accrued interest25 - The Company repurchased 491,093 shares of Class A common stock for $10.0 million in the six months ended June 30, 2025, under its Stock Repurchase Program, which was increased to $25 million on May 28, 2025, and extended to December 31, 20252930 Dividends Declared and Paid (in millions) | Declaration Date | Record Date | Payment Date | Dividend Per Share | Dividend Amount | | :--------------- | :---------- | :----------- | :----------------- | :-------------- | | 04/23/2025 | 05/15/2025 | 05/30/2025 | $0.09 | $3.8 | | 01/22/2025 | 02/14/2025 | 02/28/2025 | $0.09 | $3.8 | Note 2. Interest Earning Deposits with Banks, Other Short-Term Investments and Restricted Cash Interest-earning deposits with banks increased to $573.4 million at June 30, 2025, while restricted cash balances significantly decreased to $8.0 million Interest Earning Deposits and Restricted Cash (in millions) | Metric | June 30, 2025 | December 31, 2024 | | :---------------------------------- | :------------ | :---------------- | | Interest earning deposits with banks | $573.4 | $519.9 | | Average interest rate on deposits | 4.44% | 5.31% | | Restricted cash balances | $8.0 | $24.4 | | Obligation for pledged cash collateral | $6.3 | $23.5 | Note 3. Securities The securities portfolio significantly increased, driven by debt securities available for sale and new trading securities, with a decrease in net unrealized losses on available-for-sale debt securities Securities Portfolio Composition (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :------------------------------------------------- | :------------ | :---------------- | | Debt securities available for sale (Fair Value) | $1,788,708 | $1,437,170 | | Trading securities (Fair Value) | $120,226 | $0 | | Equity securities with readily determinable fair value | $2,525 | $2,477 | | Federal Reserve Bank and FHLB stock | $59,429 | $58,278 | | Total Securities | $1,970,888 | $1,497,925 | Debt Securities Available for Sale - Unrealized Gains/Losses (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :--------------------------------- | :------------ | :---------------- | | Gross Unrealized Gains | $3,725 | $906 | | Gross Unrealized Losses | $(39,112) | $(55,734) | | Net Unrealized Losses | $(35,387) | $(54,828) | - The Company began participating in trading of MBS as part of its investment portfolio strategy in the three months ended June 30, 2025, resulting in $120.2 million in trading securities55362 - Securities pledged as collateral decreased to $75.2 million at June 30, 2025, from $135.7 million at December 31, 202458 Note 4. Loans Loans held for investment slightly decreased, with shifts in composition, while nonaccrual loans and past due accruing loans saw reductions Loans Held for Investment, Gross (in thousands) | Loan Class | June 30, 2025 | December 31, 2024 | | :------------------------------------ | :------------ | :---------------- | | Commercial real estate | $2,685,792 | $2,497,912 | | Single-family residential | $1,542,447 | $1,528,080 | | Owner occupied | $983,090 | $1,007,074 | | Commercial loans | $1,566,420 | $1,751,902 | | Loans to financial institutions and acceptances | $156,918 | $170,435 | | Consumer loans and overdrafts | $248,456 | $273,008 | | Total loans held for investment, gross | $7,183,123 | $7,228,411 | Nonaccrual Loans and Past Due Accruing Loans (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :------------------------------------ | :------------ | :---------------- | | Total Nonaccrual Loans | $81,293 | $100,022 | | Loans Past Due Over 90 Days and Still Accruing | $1,192 | $4,079 | - Loans with outstanding principal balances of $2.0 billion were pledged as collateral to secure advances from the FHLB at June 30, 202561 - Mortgage loans held for sale at fair value decreased significantly to $6.073 million at June 30, 2025, from $42.911 million at December 31, 202468 - The Company's loan portfolio has a concentration of risk in South Florida, greater Tampa, Houston, and the five New York City boroughs70 Note 5. Allowance for Credit Losses The Allowance for Credit Losses (ACL) slightly increased, with a lower provision for credit losses and significantly reduced net charge-offs, reflecting proactive credit quality monitoring Allowance for Credit Losses (ACL) Summary (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :------------------------------------ | :------------ | :---------------- | | Balance at end of period | $86,519 | $84,963 | | ACL as a percentage of total loans held for investment | 1.20% | 1.18% | | Metric | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------------ | :--------------------------- | :--------------------------- | | Provision for credit losses - loans | $20,756 | $30,050 | | Total Charge-offs | $(23,959) | $(33,416) | | Total Recoveries | $4,759 | $2,262 | | Net charge-offs | $(19,200) | $(31,154) | - The provision for credit losses on loans for the six months ended June 30, 2025, included $14.1 million for specific reserves, $10.0 million to cover net charge-offs, and $4.7 million due to macroeconomic factors, partially offset by releases76252 - Net charge-offs over average total loan portfolio held for investment decreased to 0.54% in the first six months of 2025 from 0.91% in the same period of 2024256 - Collateral-dependent loans totaled $132.961 million at June 30, 2025, with no specific reserves, compared to $156.293 million with $2.105 million in specific reserves at December 31, 2024101103 - Classified loans increased by $49.0 million, or 29.4%, to $215.4 million at June 30, 2025, primarily due to downgrades of CRE and commercial loans351 - Special mention loans increased to $132.759 million at June 30, 2025, driven by downgrades of commercial and CRE loans, but all remained current357 Note 6. Time Deposits Time deposits in denominations of $100,000 or more remained stable at approximately $1.3 billion at June 30, 2025, while brokered time deposits decreased Large Time Deposits by Maturity (in thousands) | Maturity | June 30, 2025 | December 31, 2024 | | :--------------- | :------------ | :---------------- | | Less than 3 months | $340,121 | $386,857 | | 3 to 6 months | $475,966 | $349,673 | | 6 to 12 months | $385,281 | $464,812 | | 1 to 3 years | $42,036 | $53,745 | | Over 3 years | $16,607 | $15,386 | | Total | $1,260,011 | $1,270,473 | - Brokered time deposits amounted to $635 million at June 30, 2025, down from $702 million at December 31, 2024108 Note 7. Advances from the Federal Home Loan Bank Outstanding advances from the FHLB increased to $765.0 million at June 30, 2025, including a new variable rate advance maturing in 2025 FHLB Advances Outstanding (in thousands) | Year of Maturity | Interest Rate | Interest Rate Type | June 30, 2025 | December 31, 2024 | | :--------------- | :------------ | :----------------- | :------------ | :---------------- | | 2025 | 4.58% | Variable | $50,000 | $0 | | 2025 | 4.44% | Fixed | $0 | $30,000 | | 2026 | 4.90% | Fixed | $10,000 | $10,000 | | 2027 | 4.67% to 4.89% | Fixed | $200,000 | $200,000 | | 2029 | 3.54% to 4.45% | Fixed | $505,000 | $505,000 | | Total | | | $765,000 | $745,000 | Note 8. Derivative Instruments The total notional amount of derivative instruments increased to $3.68 billion, primarily driven by customer-related interest rate swaps, with corresponding increases in fair value of derivative assets and liabilities Derivative Instruments Notional Amounts and Fair Values (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :------------------------------------ | :------------ | :---------------- | | Total Notional Amounts | $3,675,726 | $3,192,333 | | Total Derivative Assets (Fair Value) | $43,697 | $48,011 | | Total Derivative Liabilities (Fair Value) | $44,571 | $47,615 | - Interest rate swaps designated as cash flow hedges on debt instruments had a notional amount of $64.2 million, with unrealized gains of $0.1 million in Q2 2025115 - Customer-related interest rate swaps increased in notional amount to $1.51 billion at June 30, 2025, from $1.31 billion at December 31, 2024113 - Economic hedges, primarily forward to-be-announced (TBA) mortgage-backed securities, resulted in a net unrealized loss of $1.9 million in the three and six months ended June 30, 2025123 - Cash held as collateral for derivatives margin calls decreased to $6.3 million at June 30, 2025, from $23.5 million at December 31, 2024125 Note 9. Income Taxes Income tax expense increased significantly due to higher pre-tax income, with the effective combined federal and state tax rate rising to 22.70% for the six months ended June 30, 2025 Income Tax Expense and Effective Tax Rates (in thousands, except percentages) | Metric | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------------ | :--------------------------- | :--------------------------- | | Income before income tax expense | $45,226 | $19,785 | | Income tax expense | $10,266 | $4,254 | | Effective combined federal and state tax rate | 22.70% | 21.50% | - Net deferred tax assets decreased by $2.6 million to $51.0 million at June 30, 2025, primarily due to a decrease related to net unrealized holding gains on debt securities available for sale301 Note 10. Accumulated Other Comprehensive Loss/Income ("AOCL/AOCI") Total Accumulated Other Comprehensive Loss (AOCL) improved significantly, decreasing to $25.4 million at June 30, 2025, primarily driven by net unrealized holding gains on debt securities available for sale Components of AOCL (Net of Tax, in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :------------------------------------------------- | :------------ | :---------------- | | Net unrealized holding losses on debt securities available for sale | $(26,346) | $(40,822) | | Net unrealized holding gains on interest rate swaps designated as cash flow hedges | $898 | $1,016 | | Total AOCL | $(25,448) | $(39,806) | - For the six months ended June 30, 2025, the change in fair value of debt securities available for sale resulted in a net unrealized holding gain of $14.476 million (net of tax), a substantial improvement from a loss of $8.082 million in the prior year131 Note 11. Commitments and Contingencies Off-balance sheet credit risk exposures, including commitments to extend credit and letters of credit, increased to $1.93 billion at June 30, 2025, with a corresponding increase in the allowance for credit losses Off-Balance Sheet Credit Risk (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | Commitments to extend credit | $1,746,571 | $1,389,894 | | Standby letters of credit | $181,246 | $149,029 | | Commercial letters of credit | $315 | $0 | | Total | $1,928,132 | $1,538,923 | Allowance for Off-Balance Sheet Credit Risk (in thousands) | Metric | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------------ | :--------------------------- | :--------------------------- | | Balances at end of period | $9,692 | $4,602 | | Provision for credit losses - off balance sheet exposures | $3,750 | $1,500 | Note 12. Fair Value Measurements The Company measures a significant portion of its assets and liabilities at fair value on a recurring basis, primarily using observable market inputs (Level 2), with non-recurring measurements for loans and OREO using Level 3 inputs Assets Measured at Fair Value on a Recurring Basis (in thousands) | Asset Category | Level 1 | Level 2 | Level 3 | Total | | :------------------------------------------------- | :------ | :-------- | :------ | :-------- | | Other short-term investments | $0 | $7,083 | $0 | $7,083 | | Trading securities | $0 | $120,226 | $0 | $120,226 | | Debt securities available for sale | $0 | $1,788,708 | $0 | $1,788,708 | | Equity securities with readily determinable fair value | $2,525 | $0 | $0 | $2,525 | | Mortgage loans held for sale (at fair value) | $0 | $6,073 | $0 | $6,073 | | Bank owned life insurance | $0 | $255,487 | $0 | $255,487 | | Mortgage servicing rights (MSRs) | $0 | $0 | $1,460 | $1,460 | | Derivative instruments | $0 | $43,697 | $0 | $43,697 | | Total Assets | $2,525 | $2,221,274 | $1,460 | $2,225,259 | Liabilities Measured at Fair Value on a Recurring Basis (in thousands) | Liability Category | Level 1 | Level 2 | Level 3 | Total | | :------------------- | :------ | :-------- | :------ | :-------- | | Derivative instruments | $0 | $44,571 | $0 | $44,571 | Assets Measured at Fair Value on a Nonrecurring Basis (in thousands) | Asset Category | Carrying Amount | Level 1 | Level 2 | Level 3 | Total Write Downs | | :------------------------------------------------- | :-------------- | :------ | :------ | :-------- | :---------------- | | Loans held for investment measured for credit deterioration using the fair value of the collateral | $5,890 | $0 | $0 | $5,890 | $11,382 | | Other Real Estate Owned (OREO) | $15,389 | $0 | $0 | $15,389 | $1,356 | | Total | $21,279 | $0 | $0 | $21,279 | $12,738 | - The fair value of collateral-dependent loans and OREO is primarily determined using third-party appraisals, which are considered Level 3 valuations due to the use of professional judgment and adjustments for market conditions144145 Note 13. Earnings Per Share Basic and diluted earnings per share significantly increased for both the three and six months ended June 30, 2025, reflecting improved net income and higher dilutive effects of share-based compensation Earnings Per Share (in thousands, except per share amounts) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------------ | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net income available to common stockholders | $23,002 | $4,963 | $34,960 | $15,531 | | Basic weighted average shares outstanding | 41,805,550 | 33,581,604 | 41,909,948 | 33,559,836 | | Diluted weighted average shares outstanding | 41,873,551 | 33,780,666 | 42,029,575 | 33,801,114 | | Basic earnings per common share | $0.55 | $0.15 | $0.83 | $0.46 | | Diluted earnings per common share | $0.55 | $0.15 | $0.83 | $0.46 | Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on Amerant Bancorp Inc.'s financial performance and condition, highlighting key drivers, strategic initiatives, and the macroeconomic environment Cautionary Notice Regarding Forward-Looking Statements This section advises that the report contains forward-looking statements subject to various risks and uncertainties, which could cause actual results to differ materially - Forward-looking statements are identified by words such as 'may,' 'will,' 'anticipate,' 'expect,' 'estimate,' 'plan,' and similar expressions153 - Key risk factors include liquidity risks, potential inadequacy of allowance for credit losses, concentration of CRE loans, cybersecurity threats, and the ability to achieve strategic plans153154 - The Company does not undertake any obligation to update or revise forward-looking statements, except as required by law157 Overview Amerant Bancorp Inc. is a Florida-based bank holding company, strengthening its leadership, expanding banking centers, and refocusing Amerant Mortgage, amidst an uncertain macroeconomic outlook - Amerant Bancorp Inc. provides deposit, credit, investment, wealth management, retail banking, mortgage, and fiduciary services, primarily in South Florida and Tampa158 - Strategic additions to the leadership team in Q1 and Q2 2025 include a new Chief Credit Officer, Head of Treasury Management, Head of Special Assets, and Head of Business Development161 - New regional headquarters and banking centers opened in West Palm Beach, with planned openings in Miami Beach and downtown Tampa, and regulatory approval for a St. Petersburg location in mid-2026162 - Amerant Mortgage is transitioning to focus on in-footprint mortgage lending, reducing FTEs from 77 to approximately 20163 - The macroeconomic environment is characterized by heightened uncertainty due to tariff policies, steady Federal Reserve interest rates, and mixed employment and sector data, with signs of an economic slowdown emerging165166167 Primary Factors Used to Evaluate Our Business The Company evaluates its business performance using key financial indicators such as net interest income, noninterest income, and noninterest expenses, while also tracking non-routine items - Primary factors for evaluating results of operations include net interest income, noninterest income, noninterest expenses, and financial performance indicators like ROA and ROE171 - Net interest income is evaluated by monitoring yields on interest-earning assets, costs of funding sources, net interest spread, net interest margin (NIM), and provisions for credit losses172 - Noninterest income sources include deposit and service fees, brokerage/advisory/fiduciary activities, BOLI value changes, card and trade finance fees, securities gains/losses, and loan-level derivative income174 - Noninterest expenses comprise salaries and employee benefits, occupancy and equipment, professional fees, loan-level derivative expenses, FDIC assessments, telecommunication, depreciation, advertising, OREO expenses, and other operating costs184 Primary Factors Used to Evaluate Our Financial Condition The Company assesses its financial condition based on asset quality, capital adequacy, and liquidity, managing diversification, problem assets, regulatory ratios, and funding sources - Asset quality is managed by evaluating the level, distribution, and risks in asset categories, including classified, delinquent, nonaccrual, and nonperforming assets, and the adequacy of the allowance for credit losses195 - Capital is managed based on regulatory minimums (Tier 1, Total, CET1, Leverage ratios), problem asset trends, earnings quality, and balance sheet risk exposures196 - Liquidity management considers core deposits (total deposits excluding all time deposits), funding source diversification, short-term funding, non-deposit funding, unused funding sources, and liquid assets197198 - Loan production generally experiences seasonality, with the lowest volume typically in the first quarter199 Summary Results Amerant Bancorp Inc. reported strong financial performance for the three and six months ended June 30, 2025, with significant increases in total assets, deposits, net interest income, and net income, alongside improved asset quality and profitability ratios Key Financial Highlights (in millions, except percentages) | Metric | June 30, 2025 | December 31, 2024 | Change ($) | Change (%) | | :------------------------------------ | :------------ | :---------------- | :--------- | :--------- | | Total assets | $10,300 | $9,900 | $432.9 | 4.4% | | Total gross loans | $7,200 | $7,300 | $(82.1) | -1.1% | | Cash and cash equivalents | $636.8 | $590.4 | $46.5 | 7.9% | | Total deposits | $8,300 | $7,900 | $451.9 | 5.8% | | Total advances from FHLB | $765.0 | $745.0 | $20.0 | 2.7% | | Total non-performing assets | $97.9 | $122.2 | $(24.3) | -19.9% | | Allowance for credit losses (ACL) | $86.5 | $85.0 | $1.6 | 1.8% | | Assets Under Management and custody (AUM) | $3,100 | $2,900 | $175.0 | 6.1% | | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change ($) | Change (%) | | :------------------------------------ | :--------------------------- | :--------------------------- | :--------- | :--------- | | Net Interest Margin (NIM) | 3.81% | 3.56% | 0.25% | 7.0% | | Average yield on loans | 6.88% | 7.08% | -0.20% | -2.8% | | Average cost of total deposits | 2.53% | 2.98% | -0.45% | -15.1% | | Loan to deposit ratio | 86.5% | 92.6% | -6.1% | -6.6% | | Pre-provision net revenue (PPNR) | $35.9 | $25.5 | $10.4 | 40.8% | | Net Interest Income (NII) | $90.5 | $79.4 | $11.1 | 14.0% | | Provision for credit losses | $6.1 | $19.2 | $(13.1) | -68.4% | | Non-interest income | $19.8 | $19.4 | $0.4 | 1.8% | | Non-interest expense | $74.4 | $73.3 | $1.1 | 1.5% | | Efficiency ratio | 67.5% | 74.2% | -6.7% | -9.0% | | Return on average Assets (ROA) | 0.90% | 0.21% | 0.69% | 328.6% | | Return on average equity (ROE) | 10.06% | 2.68% | 7.38% | 275.4% | Results of Operations Amerant Bancorp Inc. demonstrated strong operational improvements for the three and six months ended June 30, 2025, with significant growth in net income driven by increased net interest income and reduced credit loss provisions Net Income Net income attributable to Amerant Bancorp Inc. surged by 363.5% to $23.0 million in Q2 2025 and by 125.1% to $35.0 million in H1 2025, primarily due to higher net interest income and lower provision for credit losses Net Income and EPS (in thousands, except per share amounts) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change ($) | Change (%) | | :------------------------------------ | :--------------------------- | :--------------------------- | :--------- | :--------- | | Net income attributable to Amerant Bancorp Inc. | $23,002 | $4,963 | $18,039 | 363.5% | | Basic earnings per common share | $0.55 | $0.15 | $0.40 | 266.7% | | Diluted earnings per common share | $0.55 | $0.15 | $0.40 | 266.7% | | Metric | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change ($) | Change (%) | | :------------------------------------ | :--------------------------- | :--------------------------- | :--------- | :--------- | | Net income attributable to Amerant Bancorp Inc. | $34,960 | $15,531 | $19,429 | 125.1% | | Basic earnings per common share | $0.83 | $0.46 | $0.37 | 80.4% | | Diluted earnings per common share | $0.83 | $0.46 | $0.37 | 80.4% | - The increase in net income was primarily driven by a $11.1 million (14.0%) increase in net interest income and a $13.1 million (68.4%) decrease in provision for credit losses for Q2 2025204 - Noninterest expense increased by $1.1 million (1.5%) in Q2 2025, partially offsetting the income gains208 - Non-routine noninterest expenses in Q2 2024 included $3.4 million in fixed assets impairment and $1.3 million loss on loans held for sale related to the Houston Sale Transaction209 Average Balance Sheet, Interest and Yield/Rate Analysis The average balance sheet analysis reveals an increase in total interest-earning assets, particularly debt securities and deposits with banks, leading to an improved net interest margin despite a slight decrease in average asset yield Average Balance Sheet and Yield/Rate Analysis (3 Months Ended June 30, in thousands, except percentages) | Metric | 2025 Average Balances | 2025 Income/Expense | 2025 Yield/Rates | 2024 Average Balances | 2024 Income/Expense | 2024 Yield/Rates | | :------------------------------------ | :-------------------- | :------------------ | :--------------- | :-------------------- | :------------------ | :--------------- | | Loan portfolio, net | $7,118,087 | $122,166 | 6.88% | $7,049,109 | $124,117 | 7.08% | | Debt securities available for sale | $1,769,440 | $21,931 | 4.97% | $1,267,828 | $14,104 | 4.47% | | Deposits with banks | $514,478 | $5,643 | 4.40% | $364,466 | $5,260 | 5.80% | | Total interest-earning assets | $9,527,962 | $151,095 | 6.36% | $8,966,038 | $146,409 | 6.57% | | Total interest-bearing liabilities | $7,412,162 | $60,616 | 3.28% | $7,223,989 | $67,054 | 3.73% | | Net interest income | | $90,479 | | | $79,355 | | | Net interest margin | | | 3.81% | | | 3.56% | | Cost of total deposits | | | 2.53% | | | 2.98% | Average Balance Sheet and Yield/Rate Analysis (6 Months Ended June 30, in thousands, except percentages) | Metric | 2025 Average Balances | 2025 Income/Expense | 2025 Yield/Rates | 2024 Average Balances | 2024 Income/Expense | 2024 Yield/Rates | | :------------------------------------ | :-------------------- | :------------------ | :--------------- | :-------------------- | :------------------ | :--------------- | | Loan portfolio, net | $7,145,968 | $243,187 | 6.86% | $7,018,015 | $246,822 | 7.07% | | Debt securities available for sale | $1,622,123 | $39,895 | 4.96% | $1,253,795 | $27,290 | 4.38% | | Deposits with banks | $547,262 | $12,044 | 4.44% | $393,654 | $11,011 | 5.63% | | Total interest-earning assets | $9,411,700 | $297,503 | 6.37% | $8,949,515 | $291,034 | 6.54% | | Total interest-bearing liabilities | $7,350,946 | $121,120 | 3.32% | $7,226,194 | $133,711 | 3.72% | | Net interest income | | $176,383 | | | $157,323 | | | Net interest margin | | | 3.78% | | | 3.54% | | Cost of total deposits | | | 2.56% | | | 2.99% | - The average balance of debt securities held to maturity decreased by 100% to zero in 2025, compared to $221.1 million in Q2 2024 and $223.0 million in H1 2024220223 - Average non-performing loans as a percentage of average total loans increased to 1.35% in Q2 2025 from 0.60% in Q2 2024, and to 1.39% in H1 2025 from 0.61% in H1 2024222224 Net Interest Income Net interest income increased by 14.0% in Q2 2025 and 12.1% in H1 2025, driven by a lower cost of interest-bearing liabilities and increased average balances of debt securities, improving the net interest margin - Net interest income increased by $11.1 million (14.0%) in Q2 2025 and $19.1 million (12.1%) in H1 2025228237 - The net interest margin (NIM) increased by 25 basis points to 3.81% in Q2 2025 and by 24 basis points to 3.78% in H1 2025229237 - Interest expense decreased by $6.4 million (9.6%) in Q2 2025 and $12.6 million (9.42%) in H1 2025, primarily due to a 45-basis point decrease in average rates on total interest-bearing liabilities235243 - Interest income on debt securities available for sale increased by $7.8 million (55.5%) in Q2 2025 and $12.6 million (46.2%) in H1 2025, mainly due to a 39.6% increase in average balance and a 50-basis point increase in average yields, following an investment portfolio repositioning233242 - The investment portfolio's expected overall duration decreased to 4.4 years at June 30, 2025, from 5.3 years at June 30, 2024, due to higher estimated prepayment assumptions and a larger proportion of floating rate securities234 Analysis of the Allowance for Credit Losses The provision for credit losses on loans decreased significantly in both the three and six months ended June 30, 2025, with a substantial reduction in net charge-offs, improving the ratio over the average total loan portfolio Allowance for Credit Losses Activity (in thousands) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------------ | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Provision for credit losses - loans | $3,560 | $17,650 | $20,756 | $30,050 | | Total Charge-offs | $(18,579) | $(20,214) | $(23,959) | $(33,416) | | Total Recoveries | $3,272 | $914 | $4,759 | $2,262 | | Net charge-offs | $(15,307) | $(19,300) | $(19,200) | $(31,154) | | Balance at end of period | $86,519 | $94,400 | $86,519 | $94,400 | - The provision for credit losses in Q2 2025 included $6.0 million for charge-offs and $2.2 million for macro-economic factors, partially offset by $1.5 million from lower loan balances and $3.3 million from recoveries248 - The ratio of net charge-offs over the average total loan portfolio held for investment improved to 0.86% in Q2 2025 (from 1.13% in Q2 2024) and 0.54% in H1 2025 (from 0.91% in H1 2024)251256 - In H1 2025, charge-offs included $15.8 million related to three commercial loans and $5.0 million related to purchased indirect consumer loans253 Noninterest Income Total noninterest income increased by 1.8% in Q2 2025 and 15.9% in H1 2025, primarily driven by higher securities gains, loan-level derivative income, and brokerage activities, partially offset by increased derivative losses Noninterest Income Categories (in thousands) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change ($) | Change (%) | | :------------------------------------ | :--------------------------- | :--------------------------- | :--------- | :--------- | | Deposits and service fees | $4,968 | $5,281 | $(313) | -5.9% | | Brokerage, advisory and fiduciary activities | $4,993 | $4,538 | $455 | 10.0% | | Loan-level derivative income | $3,204 | $2,357 | $847 | 35.9% | | Securities gains (losses), net | $1,779 | $(117) | $1,896 | N/M | | Derivative losses, net | $(1,852) | $(44) | $(1,808) | N/M | | Other noninterest income | $2,392 | $3,643 | $(1,251) | -34.3% | | Total noninterest income | $19,778 | $19,420 | $358 | 1.8% | | Metric | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change ($) | Change (%) | | :------------------------------------ | :--------------------------- | :--------------------------- | :--------- | :--------- | | Deposits and service fees | $10,105 | $9,606 | $499 | 5.2% | | Brokerage, advisory and fiduciary activities | $9,722 | $8,865 | $857 | 9.7% | | Loan-level derivative income | $4,712 | $2,823 | $1,889 | 66.9% | | Securities gains (losses), net | $1,843 | $(171) | $2,014 | N/M | | Derivative losses, net | $(1,852) | $(196) | $(1,656) | N/M | | Other noninterest income | $6,637 | $5,654 | $983 | 17.4% | | Total noninterest income | $39,303 | $33,908 | $5,395 | 15.9% | - Securities gains in Q2 and H1 2025 were primarily unrealized gains on market valuation of the trading securities portfolio, offset by derivative losses from TBA MBS derivative contracts267272 - Loan-level derivative income increased due to new swap contracts and income from swap terminations268273 - Assets Under Management and custody (AUM) totaled $3.07 billion at June 30, 2025, up 6.1% from December 31, 2024, driven by higher market valuations and net new assets269 Noninterest Expense Total noninterest expense increased by 1.5% in Q2 2025 and 4.3% in H1 2025, driven by higher salaries, professional fees, OREO expenses, advertising, and loan-level derivative expenses, partially offset by lower occupancy and equipment expenses Noninterest Expense Categories (in thousands) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change ($) | Change (%) | | :------------------------------------ | :--------------------------- | :--------------------------- | :--------- | :--------- | | Salaries and employee benefits | $36,036 | $33,857 | $2,179 | 6.4% | | Professional and other services fees | $13,549 | $12,110 | $1,439 | 11.9% | | Occupancy and equipment | $5,491 | $9,041 | $(3,550) | -39.3% | | Advertising expenses | $4,819 | $4,243 | $576 | 13.6% | | Loan-level derivative expense | $1,113 | $580 | $533 | 91.9% | | Other real estate owned and repossessed assets expense (income), net | $601 | $(148) | $749 | -506.1% | | Total noninterest expenses | $74,400 | $73,302 | $1,098 | 1.5% | | Metric | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change ($) | Change (%) | | :------------------------------------ | :--------------------------- | :--------------------------- | :--------- | :--------- | | Salaries and employee benefits | $69,383 | $66,815 | $2,568 | 3.8% | | Professional and other services fees | $28,231 | $23,073 | $5,158 | 22.4% | | Occupancy and equipment | $11,627 | $15,517 | $(3,890) | -25.1% | | Advertising expenses | $8,454 | $7,321 | $1,133 | 15.5% | | Loan-level derivative expense | $1,473 | $584 | $889 | 152.2% | | Other real estate owned and repossessed assets expense (income), net | $765 | $(502) | $1,267 | -252.4% | | Total noninterest expenses | $145,954 | $139,896 | $6,058 | 4.3% | - Salaries and employee benefits increased due to new hires and higher severance expenses, despite a net decrease of 28 FTEs to 692 at June 30, 2025286 - Occupancy and equipment expenses decreased significantly due to the absence of a $3.4 million fixed assets impairment charge in Q2 2024 related to the Houston Transaction and increased sublease income290297 - Other real estate owned and repossessed assets expenses increased due to losses on sale and valuation expense on OREO properties288294 - Noninterest expenses related to Amerant Mortgage were $6.2 million in H1 2025, down from $6.9 million in H1 2024, with FTEs decreasing from 83 to 35217 Income Taxes Income tax expense increased substantially in both the three and six months ended June 30, 2025, reflecting higher pre-tax income and a slight increase in the effective income tax rate Income Taxes (in thousands, except percentages) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------------ | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Income before income tax expense | $29,797 | $6,323 | $45,226 | $19,785 | | Income tax expense | $6,795 | $1,360 | $10,266 | $4,254 | | Effective income tax rate | 22.80% | 21.51% | 22.70% | 21.50% | - The increase in income tax expense was mainly driven by higher income before income taxes in 2025300 - Net deferred tax assets decreased by $2.6 million to $51.0 million at June 30, 2025, primarily due to unrealized holding gains on debt securities available for sale301 Non-GAAP Financial Measures The Company uses non-GAAP financial measures like Pre-Provision Net Revenue (PPNR) and Core PPNR to provide additional insights into its performance, showing significant improvements for the periods ended June 30, 2025 - Non-GAAP measures such as PPNR, Core PPNR, core noninterest income, and core noninterest expense are used to evaluate performance by adjusting for non-core banking activities304305 Reconciliation of Non-GAAP Financial Measures (in thousands) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------------ | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Pre-provision net revenue (PPNR) | $35,857 | $25,473 | $69,732 | $51,335 | | Core pre-provision net revenue (Core PPNR) | $37,122 | $31,007 | $68,668 | $57,075 | | Core noninterest income | $19,851 | $19,392 | $36,513 | $34,086 | | Core noninterest expenses | $73,208 | $67,740 | $144,228 | $134,334 | Tangible Common Equity Reconciliation (in thousands, except percentages) | Metric | June 30, 2025 | December 31, 2024 | | :------------------------------------ | :------------ | :---------------- | | Stockholders' equity | $924,286 | $890,467 | | Less: goodwill and other intangibles | $(24,016) | $(24,314) | | Tangible common stockholders' equity | $900,270 | $866,153 | | Total assets | $10,334,678 | $9,901,734 | | Less: goodwill and other intangibles | $(24,016) | $(24,314) | | Tangible assets | $10,310,662 | $9,877,420 | | Tangible common equity ratio | 8.73% | 8.77% | | Tangible stockholders' equity book value per common share | $21.56 | $20.56 | Financial Condition Amerant Bancorp Inc.'s financial condition as of June 30, 2025, shows growth in total assets, primarily driven by increased securities and cash, while total loans slightly decreased, and liabilities increased due to higher deposits and FHLB advances Assets Total assets increased by 4.4% to $10.3 billion at June 30, 2025, primarily driven by a 31.6% increase in total securities and a 7.9% rise in cash and cash equivalents, partially offset by a slight decrease in total loans - Total assets increased by $432.9 million (4.4%) to $10.3 billion at June 30, 2025, from $9.9 billion at December 31, 2024313 - Total securities increased by $473.0 million (31.6%), and cash and cash equivalents increased by $46.5 million (7.9%)313 - Total loans held for investment and loans held for sale, net of ACL, decreased by $83.7 million (1.2%)313 - Net cash provided by operating activities was $77.8 million in H1 2025, driven by net sales of loans held for sale and net income316 - Net cash used in investing activities was $425.2 million in H1 2025, mainly due to $546.3 million in purchases of investment securities317 - Net cash provided by financing activities was $393.8 million in H1 2025, primarily from a $523.5 million increase in deposits and $20.0 million net FHLB advances318 Loans Total loans held for investment decreased slightly by 0.6% to $7.2 billion at June 30, 2025, with domestic loans seeing shifts in composition and international loans decreasing due to repayments Total Loans, Gross and as % of Total Assets (in thousands, except percentages) | Metric | June 30, 2025 | December 31, 2024 | | :------------------------------------ | :------------ | :---------------- | | Total loans, gross | $7,189,196 | $7,271,322 | | Total loans, gross / total assets | 69.6% | 73.4% | | Allowance for credit losses / total loans held for investment, gross | 1.20% | 1.18% | Loans Held for Investment by Type (in thousands) | Loan Type | June 30, 2025 | December 31, 2024 | | :------------------------------------ | :------------ | :---------------- | | Domestic Real Estate Loans | $5,177,140 | $4,994,107 | | Domestic Commercial loans | $1,566,420 | $1,751,602 | | Domestic Consumer loans and overdrafts | $247,106 | $271,586 | | Total Domestic Loans | $7,147,584 | $7,187,730 | | Total International Loans | $35,539 | $40,681 | | Total Loans held for investment | $7,183,123 | $7,228,411 | - Domestic CRE loans increased by $187.9 million (7.5%), and domestic single-family residential loans increased by $19.1 million (1.3%)333 - Domestic commercial loans decreased by $185.2 million (10.6%), and domestic consumer loans decreased by $24.5 million (9.0%)333 - International loans decreased by $5.1 million (12.6%), mainly due to repayments of single-family residential loans334 - Loans under syndication facilities decreased by $13.8 million (3.5%) to $379.9 million335 Loan Quality The Allowance for Credit Losses (ACL) slightly increased to 1.20% of total loans, non-performing assets decreased by 19.9%, but classified loans and potential problem loans increased due to downgrades Non-Performing Assets (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :------------------------------------ | :------------ | :---------------- | | Total Non-Accrual Loans | $81,293 | $100,022 | | Past Due Accruing Loans | $1,192 | $4,079 | | Total Non-Performing Loans | $82,485 | $104,101 | | OREO and other repossessed assets | $15,389 | $18,074 | | Total Non-Performing Assets | $97,874 | $122,175 | Loans Held for Investment by Credit Quality Indicators (in thousands) | Credit Risk Rating | June 30, 2025 | December 31, 2024 | | :------------------------------------ | :------------ | :---------------- | | Special Mention | $132,759 | $5,408 | | Substandard | $215,432 | $166,476 | | Doubtful | $0 | $0 | | Loss | $0 | $0 | | Total Classified Loans | $348,191 | $171,884 | - Non-performing loans decreased by $21.6 million, primarily due to loan charge-offs, repayments, and sales201344 - Classified loans increased by $49.0 million (29.4%) to $215.4 million, mainly due to downgrades of 3 CRE loans ($41.6 million) and 9 other loans ($68.8 million) to substandard accrual351 - Special mention loans increased to $132.8 million, driven by downgrades of 8 commercial loans ($80.3 million) and 7 CRE loans ($91.3 million)357 - Potential problem loans (accruing loans classified as substandard and less than 90 days past due) increased to $134.3 million from $62.5 million358359 Securities The total securities portfolio expanded by 31.6% to $1.97 billion at June 30, 2025, driven by purchases of debt securities and the addition of trading securities, with a shortened weighted expected average effective duration Securities Portfolio Composition (in thousands, except percentages) | Security Type | June 30, 2025 Amount | June 30, 2025 % | December 31, 2024 Amount | December 31, 2024 % | | :------------------------------------------------- | :------------------- | :-------------- | :----------------------- | :---------------- | | Debt securities available for sale | $1,788,708 | 90.8% | $1,437,170 | 95.9% | | Equity securities with readily determinable fair value | $2,525 | 0.1% | $2,477 | 0.2% | | Trading securities | $120,226 | 6.1% | $0 | 0.0% | | Other securities (FHLB and Federal Reserve stock) | $59,429 | 3.0% | $58,278 | 3.9% | | Total Securities | $1,970,888 | 100.0% | $1,497,925 | 100.0% | - Net pre-tax unrealized gains of $19.4 million on debt securities available for sale contributed to the increase in the portfolio364 - Net unrealized holding losses on debt securities available for sale decreased to $39.1 million at June 30, 2025, from $55.7 million at December 31, 2024366 - The investment portfolio's weighted expected average effective duration decreased to 4.4 years at June 30, 2025, from 5.2 years at December 31, 2024370 Liabilities Total liabilities increased by 4.4% to $9.41 billion at June 30, 2025, primarily driven by a 5.8% increase in total deposits and a rise in FHLB advances, partially offset by senior note redemption - Total liabilities increased by $399.1 million (4.4%) to $9.41 billion at June 30, 2025372 - Total deposits increased by $451.9 million (5.8%) to $8.31 billion, driven by increases in savings and money market deposits, and noninterest-bearing demand deposits374 - Core deposits increased by $523.5 million (9.3%) to $6.1 billion, representing 74.0% of total deposits380 - Brokered deposits decreased by $57.9 million (8.3%) to $644.0 million, representing 7.8% of total deposits381 - Balances from large fund providers (over $20 million) increased to $1.1 billion from $942.3 million382 - The Company redeemed $60.0 million of senior notes due June 30, 2025372 Return on Equity and Assets Return on average assets (ROA) and return on average equity (ROE) significantly improved for both the three and six months ended June 30, 2025, reflecting higher net income and an increased average stockholders' equity to average total assets ratio Return on Equity and Assets (in thousands, except percentages) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------------ | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net income attributable to the Company | $23,002 | $4,963 | $34,960 | $15,531 | | Basic earnings per common share | $0.55 | $0.15 | $0.83 | $0.46 | | Diluted earnings per common share | $0.55 | $0.15 | $0.83 | $0.46 | | Average total assets | $10,256,254 | $9,729,666 | $10,149,983 | $9,742,117 | | Average stockholders' equity | $917,010 | $743,458 | $914,133 | $745,041 | | ROA | 0.90% | 0.21% | 0.69% | 0.32% | | ROE | 10.06% | 2.68% | 7.71% | 4.19% | | Average stockholders' equity / Average total assets ratio | 8.94% | 7.64% | 9.01% | 7.65% | Capital Resources and Liquidity Management Total stockholders' equity increased to $924.3 million at June 30, 2025, driven by net income and other comprehensive income, while the Company actively manages liquidity through deposits, investment securities, and FHLB advances - Total stockholders' equity increased by $33.8 million (3.8%) to $924.3 million at June 30, 2025390 - The Company repurchased $10.0 million of Class A common stock and paid $7.7 million in dividends in the first six months of 2025390 - Outstanding FHLB advances were $765.0 million at June 30, 2025, with an additional $1.9 billion in remaining borrowing capacity397 - The Company redeemed $60.0 million of Senior Notes on April 1, 2025401 - The Bank's Board of Directors approved a cash dividend of $40.0 million to the Company in July 2025402 Regulatory Capital Requirements Both the Company and the Bank maintained capital ratios well above regulatory minimums and 'well capitalized' thresholds at June 30, 2025, demonstrating strong capital adequacy Company Regulatory Capital Ratios (June 30, 2025, in thousands, except percentages) | Ratio | Actual Amount | Actual Ratio | Required for Capital Adequacy Ratio | Regulatory Minimums To be Well Capitalized Ratio | | :-------------------- | :------------ | :----------- | :---------------------------------- | :--------------------------------------------- | | Total capital ratio | $1,122,133 | 13.49% | 8.00% | 10.00% | | Tier 1 capital ratio | $996,261 | 11.97% | 6.00% | 8.00% | | Tier 1 leverage ratio | $996,261 | 9.69% | 4.00% | 5.00% | | Common Equity Tier 1 (CET1) | $935,614 | 11.24% | 4.50% | 6.50% | Bank Regulatory Capital Ratios (June 30, 2025, in thousands, except percentages) | Ratio | Actual Amount | Actual Ratio | Required for Capital Adequacy Ratio | Regulatory Minimums to be Well Capitalized Ratio | | :-------------------- | :------------ | :----------- | :---------------------------------- | :--------------------------------------------- | | Total capital ratio | $1,095,603 | 13.19% | 8.00% | 10.00% | | Tier 1 capital ratio | $999,441 | 12.03% | 6.00% | 8.00% | | Tier 1 leverage ratio | $999,441 | 9.76% | 4.00% | 5.00% | | Common Equity Tier 1 (CET1) | $999,441 | 12.03% | 4.50% | 6.50% | Off-Balance Sheet Arrangements Off-balance sheet credit risk exposures, including commitments to extend credit and letters of credit, increased to $1.93 billion at June 30, 2025, reflecting an increase in financial instruments representing potential future credit obligations Off-Balance Sheet Credit Risk (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | Commitments to extend credit | $1,746,571 | $1,389,894 | | Letters of credit | $181,561 | $149,029 | | Total | $1,928,132 | $1,538,923 | Contractual Obligations The Company's contractual obligations primarily include operating leases and outsourced technology agreements, with significant changes in H1 2025 including senior note redemption, FHLB advances, and a decrease in time deposits - The Company redeemed $60.0 million in aggregate principal amount of its 5.75% senior notes due June 30, 2025408 - The Company borrowed $50.0 million and repaid $30.0 million of FHLB advances in the six months ended June 30, 2025409 - Total time deposits decreased by $71.5 million (3.2%) in the six months ended June 30, 2025409 Critical Accounting Policies and Estimates For a comprehensive disclosure of critical accounting policies and estimates, readers are referred to the Company's 2024 Form 10-K - Critical accounting policies and estimates are disclosed in the 2024 Form 10-K410 Recently Issued Accounting Pronouncements For a description of recently issued accounting pronouncements, readers are referred to Note 1 to the Company's audited consolidated financial statements in the 2024 Form 10-K - A description of recently issued accounting pronouncements is available in Note 1 to the Company's audited consolidated financial statements in the 2024 Form 10-K410 Item 3 Quantitative and Qualitative Disclosures About Market Risk The Company's primary market risks are interest rate and price risks, monitored using sensitivity analyses, showing increased net interest income sensitivity and a decreased investment portfolio duration - Interest rate and price risks are the most significant market risks, monitored using sensitivity analyses on earnings, equity, and available-for-sale portfolio mark-to-market exposure411 Earnings Sensitivity (Change in Net Interest Income, in thousands, except percentages) | Change in Interest Rates (Basis points) | June 30, 2025 | June 30, 2025 % Change | December 31, 2024 | December 31, 2024 % Change | | :-------------------------------------- | :------------ | :--------------------- | :---------------- | :------------------------- | | Increase of 200 | $27,103 | 7.3% | $24,427 | 6.8% | | Increase of 100 | $22,953 | 6.2% | $19,262 | 5.3% | | Decrease of 50 | $(3,029) | -0.8% | $(6,931) | -1.9% | | Decrease of 100 | $(16,537) | -4.5% | $(13,550) | -3.8% | | Decrease of 200 | $(32,873) | -8.9% | $(30,120) | -8.3% | Economic Value of Equity (EVE) Analysis (Percentage Change in Equity) | Change in Interest Rates (Basis points) | June 30, 2025 | December 31, 2024 | | :-------------------------------------- | :------------ | :---------------- | | Increase of 200 | -12.33% | -13.61% | | Increase of 100 | -3.29% | -4.86% | | Decrease of 50 | 1.87% | 2.24% | | Decrease of 100 | 2.35% | 3.82% | | Decrease of 200 | 1.50% | 4.50% | - The estimated average effective duration of the investment portfolio decreased to 4.4 years at June 30, 2025, from 5.2 years at December 31, 2024, due to higher prepayment assumptions and increased variable-rate investments420 - The floating rate portfolio increased to 19% at June 30, 2025, from 16.8% at December 31, 2024421 Item 4 Controls and Procedures The Company's disclosure controls and procedures were deemed effective as of June 30, 2025, ensuring timely and accurate reporting, with no material changes in internal control over financial reporting identified - The Company's disclosure controls and procedures were evaluated and concluded to be effective as of June 30, 2025424 - Management recognizes that controls provide reasonable, not absolute, assurance and involve judgment in balancing benefits and costs425 -