Amerant Bancorp (US:AMTB)2024-04-25 15:59Financial Data and Key Metrics Changes - Diluted income per share for Q1 2024 was $0.31, an improvement over the prior quarter due to the impact of non-routine items in Q4 [10] - Net interest margin decreased to 3.51% in Q1 from 3.72% in Q4, influenced by the timing of the Houston multifamily portfolio sale and repayment of institutional deposits [10][12] - Total assets reached a record high of $9.82 billion, slightly up from $9.72 billion in the prior period [11] - Total deposits decreased slightly by $16.6 million to $7.88 billion compared to $7.89 billion in Q4 [11] - Total gross loans decreased by $258.5 million to $7 billion, down from $7.26 billion in Q4 [11] Business Line Data and Key Metrics Changes - Total loans decreased by $258.5 million due to the sale of a $401 million multifamily loan portfolio in Houston, but there was strong organic loan growth of $142.5 million [7] - Organic deposit growth was $331.8 million during Q1, offsetting planned reductions in institutional and broker deposits [7] - Noninterest income was $14.5 million, down $5.1 million from $19.6 million in Q4, primarily due to the absence of gains on early extinguishment of FHLB advances [35] - Noninterest expense was $66.6 million, down $43.1 million from $109.7 million in Q4, driven by the absence of non-routine items [36] Market Data and Key Metrics Changes - Domestic deposits accounted for 67% of total deposits, totaling $5.3 billion, down 2.6% compared to the prior quarter [14] - International deposits, which account for 33% of total deposits, totaled $2.6 billion, up 5.1% compared to the previous quarter [14] - The loan-to-deposit ratio temporarily decreased to 88.9% due to the Houston loan sale, expected to migrate closer to the target of 95% as loan demand increases [13] Company Strategy and Development Direction - The company is focusing on growing its Florida franchise and has exited the Houston market with the sale of its franchise there [5] - Plans include opening new banking centers in Greater Tampa and Miami, and enhancing visibility through partnerships [39] - The company aims to maintain a CET1 ratio around 10% and is considering capital deployment strategies including buybacks and growth funding [44] Management Comments on Operating Environment and Future Outlook - Management expressed confidence in organic growth and expects loan production to increase as new hires begin contributing [46] - The company anticipates stable net interest margins in the upcoming quarters, with expectations of higher yielding loan production [32] - Management is monitoring credit quality closely, with expectations for charge-offs to decrease moving forward [50] Other Important Information - The allowance for credit losses at the end of Q1 was $96.1 million, an increase of 0.6% from the previous quarter [24] - The company opened new regional headquarters and banking centers in Florida to support growth efforts [8][9] Q&A Session Summary Question: Can you provide more details on the special mention loans and the covenant breaches? - Management indicated that some downgrades were related to financial metrics and leverage, but overall, they are not seeing pervasive issues [42] Question: How will the capital from the Houston sale be deployed? - Management plans to maintain a CET1 ratio around 10% and will consider buybacks and growth funding as part of capital deployment [44] Question: What are the expectations for loan growth moving forward? - Management expects loan growth to pick up throughout the year, with a target of 15% annualized growth [46] Question: Can you clarify the charge-offs related to the consumer book? - Charge-offs included $8.6 million related to indirect consumer loans, with expectations for lower future charge-offs [50] Question: What is the expected impact on margins from the Houston exit? - Management anticipates some improvement in net interest margin post-transaction, despite temporary losses in interest income [54]