Amerant Bancorp (US:AMTB)2023-10-20 20:47Financial Data and Key Metrics Changes - Net income attributable to the company was $22.1 million, a significant increase from $7.3 million in Q2 2023, primarily driven by lower provision for credit losses [7] - Net interest margin decreased to 3.57% from 3.83% in the previous quarter, influenced by higher funding costs and lower loan originations [7][29] - Total assets decreased by $174 million compared to Q2 2023, with gross loans at $7.1 billion, down from $7.2 billion [8] - Total deposits were $7.5 billion, relatively flat compared to $7.6 billion in the previous quarter [8] Business Line Data and Key Metrics Changes - Commercial loans decreased by $124 million to $1.45 billion, while single-family residential loans increased by $58 million to $1.39 billion [20] - Consumer loans decreased by $64 million or 13% quarter-over-quarter, reflecting a focus on organic growth [20] - Non-interest bearing deposits increased to 18% of total deposits, up from 17% in the previous quarter, indicating a focus on building demand deposit accounts [15] Market Data and Key Metrics Changes - Domestic deposits accounted for 67% of total deposits, totaling $5.1 billion, down 1% from the previous quarter [12] - International deposits increased by 0.5% to $2.5 billion, reflecting a strategy to diversify funding sources [12][13] - The company reported a decrease in higher-cost institutional deposits by $292 million, partially offset by organic deposit growth of $208 million [11] Company Strategy and Development Direction - The company is focused on improving balance sheet composition and prioritizing organic deposit growth to reduce reliance on higher-cost institutional deposits [4] - A core conversion to a new system is scheduled for November, aimed at enhancing operational efficiency and cybersecurity [39] - The company plans to continue expanding its physical presence with new branches and regional headquarters in key markets [40][43] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in returning to growth mode in Q4 2023, with strong loan and deposit pipelines [6] - The company anticipates continued pressure on net interest margin due to competitive deposit rates but expects to stabilize in 2024 [29][56] - Management highlighted the importance of maintaining a balance between growth and capital management, particularly in light of current market conditions [53] Other Important Information - The company paid a quarterly dividend of $0.09 per share and repurchased 260,000 shares for $5 million year-to-date [9] - The allowance for credit losses decreased to $99 million, with a provision for credit losses of $8 million recorded in Q3 [23] - Non-interest income decreased by 18% to $22 million, primarily due to lower gains on early extinguishment of FHLB advances [32] Q&A Session Summary Question: Thoughts on near-term expenses and future profitability - Management acknowledged that expenses will be elevated due to the parallel running of old and new systems during the conversion, but expects to see efficiencies in 2024 [46][48] Question: Expectations for loan yields and net interest margin - Management indicated that loan yields may have peaked, with expectations for a flat trajectory moving forward, influenced by competitive pressures on deposit costs [56][59] Question: Credit costs stabilization and charge-off expectations - Management expressed confidence in stabilizing credit costs, with a focus on managing charge-offs effectively [67]