Q1 2021 Amerant Bancorp Inc Earnings Call

April 29, 2021

To ask a question during the session you will need to press star one on your telephone. Please be advised that today's conference is being recorded if you require any further assistance. Please press star zero and I would now like to hand, the conference over to your Speaker today, Laura Rossi Investor Relations Officer at Ameren Bank. Thank you.

Please go ahead.

Thank you Rocco good.

Good morning to everyone on the call and thank you for joining us to review on your on the Bancorp first quarter 2021 result.

With me. This morning are Jerry <unk>, Chief Executive Officer, and Carlos You Liana Chief Financial Officer.

Before we begin note that the company's press release comments made on today's call and responses to your questions contain forward looking statements the.

And the company's business and operations are subject to a variety of risks and uncertainties many of which are beyond its control and consequently actual results may differ materially from those expressed or implied.

Please refer to the cautionary notice regarding forward looking statements in the company's earnings release and presentation.

For a more for more complete description of these and other possible risks. Please refer to the company's annual report on form 10-K for the year ended December 31st 2020, and you know on all of our filings with the SEC you.

You can access these findings on the SEC's website.

Please note that average has no obligation and makes no commitment to update or publicly release any revisions to forward looking statements in order to reflect new information or subsequent events circumstances or changes and expectations, except as required by law.

You should also note that the company's press release earnings presentation and today's call include references to certain adjusted financial measures also known as non-GAAP financial measures.

Please refer to appendix one of the company's earnings presentation for a reconciliation of each non-GAAP non-GAAP financial measure to its most comparable GAAP financial and Asher I will now turn the call over to Jerry.

Thank you Laura and good morning, and thank you for joining amarin and first quarter 2021 on earnings call I'm pleased to join you today as average new CEO.

Before I begin I'd like to take a moment to recognize my predecessor Millar Wilson over the course of his more than 40 year tenure oversaw and this growth from $6 billion and assets to $8 billion and the expansion from 15 branches to 'twenty five.

He spearheaded the spin off and subsequent listing and among other things. Most recently navigated and then through the COVID-19 pandemic, a well deserved. Thank you tomorrow for it is time and service to the company.

On another note I would like to announce and starting next quarter. We're planning to release earnings on the third Thursday of the following month. So the dates would be July 22nd on October 21, and January 20th for the balance of this year.

We wanted to do this for several reasons primarily to have more time each quarter to be focused on completing initiatives and generating growth and to also have the window open for insiders and additional week each quarter.

So today I'll be providing details about a number of new strategic initiatives and objectives that were referenced in our press release, we will share more detail about each one as these are essential for improving average performance and growth and achieving the growth objectives that we have but first I'd like to briefly talk about our performance and the first quarter and then Carlos will provide some more details.

And so if you turn to slide three you'll see our first quarter highlights. We are pleased to report improved results and the first quarter compared to the prior quarter. Our net income was up 77% quarter over quarter, primarily driven by higher noninterest income and lower expenses. In addition, there was no provision expense and the quarter.

And the NIM improved slightly to 266% driven primarily from lower average deposit costs. We also show our progress on class B share repurchases since we announced the buyback program on March 10.

Our total loans were $5 8 billion and total deposits were $5 7 billion. There were both down slightly in the quarter. The decrease in loans was driven by higher prepayments, including 111 million and PPP loans, while the decrease in deposits was due to lower Cds and brokered deposits as we continue to pursue lower cost.

And relationship focused funding.

So moving on to the next slide you will see several key performance metrics, which show improvement on all fronts. This quarter reflective of higher operating profitability, all while maintaining a robust capital position and solid credit coverage. These are just the first steps and the right direction. So while we know we have much more to do it's good day.

We are showing progress this quarter and as I will get into later on the call. We will outline and number of initiatives underway that are focused on driving continued improvement and operating results. So with that said I'll turn the call over to Carlos to walk through our results for the quarter and more detail.

Thank you Jerry and thank you everyone for joining us today, turning to slide five I will begin by discussing our investment portfolio.

Our first quarter investment Securities balance was $1 3 billion unchanged from the previous quarter and down from day, one 7 billion during the first quarter of 2020.

For this quarter, we compete on where its strategy to insulate investment portfolio broke prepayment risk.

Floating portion represents only 14% and weakened position towards hydration and a natural extension of the mortgage portfolio has increased the overall duration for the end of the Q1 234 years moving.

And on to slide six we would like to provide an overview of our loan portfolio.

At the end of the first quarter total loans were $5 8 billion slightly down by 88 million compared to the end of the fourth quarter.

The decline was primarily driven to prepayments across our commercial loan portfolio inclusive those from PPP loans.

And the challenge low production due to the convenience per as economic activity as a result of the pandemic.

And the first quarter approximately half of prepayments were related to PPP loan forgiveness.

And we remain committed forward communities by originated and over 80 million and PPP loans. During the first quarter. Additionally, we received 111 immediate and Brexit both forgiven by the SBA. After all this we had $165 million left outstanding on PPP loans as of the end of the first quarter.

Before I move on and I wanted to talk about some positive signals, we see and our loan portfolio. This quarter. We continued to see strong performance across our order occupied and consumer loan portfolios, specifically consumer loans to increase approximately 32 million quarter over quarter, primarily driven by our participated and they need to Atlanta, and we expect to continue.

We have purchased and this high yield and indirect loans and efforts to mitigate NIM pressures and the future quarters.

Turning to slide seven I would like to provide some more details on number of credit risk and.

And the first quarter women's day, and strong credit risk coverage the ratio of allowance for loan losses to total loans was 183% higher than previous quarter. The absence of loan loss provision expenses for this quarter was driven by lower loan production during the quarter.

Nonperforming assets ended on $90 million, which represented an increase of 1 million quarter over quarter, and a 57 million compared to a year ago nonperforming assets to total assets increased to 116% up three basis points from the prior quarter and 75 basis points versus a year ago.

This increase was due to the downgrades across our commercial and CRE portfolios.

And also highlight only one 1% of our loan portfolio remained on the deferral or forbearance and the first quarter down from the almost 20% and the same period last year almost the entirety of this portfolio is backed by real estate collateral.

All of the loans out of forbearance have resumed regular payments.

I'd like to mention that we no longer have any hotels on their forbearance and we have seen a healthy increase in the acute does he have the properties and the portfolio, which is a great improvement versus 2020.

Our do you remain focused on proactively managing the status on lower loans to ensure sound credit quality and strong reserve coverage.

Moving to slide eight.

Total deposits were $5 7 billion down 9% quarter over quarter and down two 8% year over year.

Whatever quarter decrease was primarily driven by 169 million combined reduction and customer Cds and brokered deposits, partially offset by an increase of $188 million and customer transaction on the gallons declining number and as customers see D was due to our continued efforts to aggressively lower CD rates as we focus on increasing low.

Average cost of deposits and multi product relationships.

The result, our cost of interest bearing deposits went down 10 basis points and this first quarter compared to the previous one.

As of March 31.

EBIT related deposits reached 173 million compared to $95 million as of the end of the previous quarter, four and deposits decreased $26 million compared to the prior quarter represented an annualized vacate of 4% compared to the 6% we had on the break on the quarter ago.

We are really encouraged to see a slowdown and foreign deposits indicate given the contribution does deposits provide glove with cost of funds.

Four and deposits the cost of funds is volume, 16% versus domestic up 85%, having said that international customers continue to use their savings on their day to day expenses. We continue our efforts to engage and cross sell with customers and strengthened relationships with our international deposits.

And gain a bigger share of wallet.

Turning to slide nine the first quarter of 2021 net interest income was 48 million down 2% from the fourth quarter of 2023% year over year.

The decrease in net interest income compared to the fourth quarter was remind me due to two factors first lower non volumes as a result of our continuous low within normal non production and customer prepayments taken due to lower average balances on interest securities primarily due to prepayments. These factors and this quarter were partially offset by <unk>.

Lower overall deposit cost and average balances on customer Cds.

With regards to the margin first quarter knee and was $2, 66% of supply basis points quarter over quarter, primarily due to lower cost of funds and customers CD balance on essentially flat year over year on.

Actions to elevate pressures on margin included and repricing of customer time deposits and the relationship on the markets.

<unk> and flow rates to our new loan production and repricing.

Additional interest starting opportunities and high yield lending programs.

Moving to slide 10, non interest income and the first quarter was $14 million up 23% quarter over quarter and down 35% year over year.

Over the quarter the increase in non interest income was remind me due to the absence of the loss on the sale of our operations Center.

B and is at $2 6 million total and net gains and securities and increased fees from brokerage and advisory activities also contributed to our higher non interest income this quarter and such.

And offset to this increase we did and have fees related to the main street lending program and had lower derivative income and white transfer fees.

<unk> assets under management management reached $2 billion as of the end of March up 2% year over year and up 28% year over year.

Net new assets contributed by approximately 80 and $90 million year over year.

Our teams continue to deepen share of wallet and attract new relationships.

Turning to slide 11, first quarter noninterest expenses was $44 million down 60% quarter over quarter and down 3% year over year, the drivers of the quarter over quarter and a year over year decreases and non interest expenses were largely the same this is primarily driven by the separation.

And implemented in the last quarter, which lowered salary and benefit expenses as well as the absence of severance expenses and.

In connection with this plan.

Other contributing factors included lower onetime expenses following the closure of two branches.

And the implementation of this severance plans, we have reduced our staff by 76 Ftes, 49%. However, we saw an increase and ftes and the first quarter driven by a number of our strategic hiring is primarily in the frontline personnel and.

Also note we have resumed normal levels of bonus compensation and adopted new long term equity incentive comps and compensation program.

As more till 2021, the Ameren fee income continues to look for opportunities to create efficiencies and improve our cost structure.

Moving to the next slide our business continues to be asset sensitive.

At the end of March over half of our loan portfolio, either look has and floating rate structures or mature within the year.

And to manage these sensitive and mitigate the impact on our margins. We continue to actively manage our loans and investment portfolio. This includes implementation of flow rates on our loans and capitalizing on higher yielding securities and longer durations.

With this I will turn it back to Jerry.

Thank you Carlos I'd like to address how we are positioning amarin for immediate and long term success and walk through some of those specific initiatives, we are focusing on as.

As you can see on slides 13, and there are a handful of initiatives that serve as the foundation for our and long term growth strategy.

Our goal is simple and prove our performance and drive sustainable profitable growth importantly, we want to do this with the best interest of our investors team members customers and communities and which we operate.

So first it's clear to me from experience and from peer comparisons that ameren needs to become and will become a deposits first focused bank core deposits are the lifeblood of a strong banking franchise and growing core deposits is critical to our near and long term success and profitability, we have opportunities and the markets we.

Share to increase our share and.

And consumer and small business and commercial to achieve a lower cost of funds and reduce the reliance on brokered funds and other high cost sources, we've identified a number of ways to better target and attract these core deposits, including implementing and enhancing a digital onboarding platform the build out of our Treasury management sales.

And adding additional treasury management capabilities, focusing our marketing to drive the digital additional digital on and branch traffic and gathering other sources of deposits such as municipal accounts and private banking.

So with these efforts, we are targeting and reduced reliance on broker deposits. So the target and not to exceed 5% of total deposits and increasing our core deposits to make up over 20% of total deposits within the next six quarters, but please know our goal will be to exceed that target and keep going.

Additionally, we're focused on achieving a target loan to deposit ratio of 95% all of which means to achieve these targets. We will all be very focused on gathering and core deposit accounts.

We are also going to accelerate our digital transformation over the past several quarters, we ramped up our digital efforts with the rollout of them and see no and sales force across the organization and with the introduction of Ameren investments model, we've been focusing on and evaluating digital solutions and a number of areas so including deposit account.

Acquisition small business lending and wealth management, and we expect to be able to update everyone on our progress with these soon.

Another area of immediate focus is dramatically improvement ameren and brand awareness, so and the communities. We serve building brand awareness is key for both growing our presence in these markets as well as laying a strong foundation for future expansion we.

We have a number of efforts currently underway that we will continue to pursue in the coming quarters to grow the awareness of the amarin brand from improved signage and promotions to evaluating and affinity relationships and greater community involvement.

Much of this can happen from us just being outward focused and proactive as well I consider our south Florida is best kept secret and we need to break through that.

Additionally, we are diligently looking at rationalizing our lines of business and geographies, we plan to expand our Treasury management wealth management private banking and specialty finance capabilities in order to grow the bank's revenue streams and fee opportunities.

At the same time, we are curtailing future originations and New York City.

Our New York City location as a commercial real estate loan production office with minimal deposit relationships and as we evaluate our alternatives there we will be focusing on growing and our core markets.

We intend to look for opportunities to grow and the contiguous markets as well. Please note that over half the New York portfolio and will pay off and the next 12 months to 18 months and we believe there are solid opportunities to replace that so more to come and as we evaluate our next steps there.

We are also evaluating new ways to drive cost efficiencies across the business as part of our margin improvement plan. We have set a target goal to improve our efficiency ratio to 60% within the next six quarters. This will require and looking at everything pricing balance sheet composition and of course, what we're spending and why.

There is ample opportunity for us to improve and a number of areas.

We also intend to optimize our capital structure and to look for ways to lower average cost of capital.

The recent tender offer and now the class B share buyback program authorized and Q1 that is currently underway or just first steps and continuously evaluating how much capital do we need and what are the ways in which we can support our valuation.

We need to be constantly exploring and evaluating new ways to optimize the structure, while continuing to drive profitable growth to appropriately utilize the capital that we have a lower cost of capital can come from optimizing capital composition, and we intend to explore that as well.

Finally, a quick comment regarding ESG and corporate responsibility. Many companies are now just facing the reality that ESG is becoming a business imperative major institutional investors the FCC and communities, we serve as well as existing and potential customers and vendors are all looking to see what steps banks like us or.

Taking please.

Please note we're on the very early stages of developing our program, but I am confident doing so will differentiate us from our competitors and drive business our way more to come as we complete our evaluation and determine what steps we will actually take.

So in conclusion as all of you know I joined the team here on February 15th and became CEO and we filed our 10-K on March 19th So when the 70 or so days since coming on board I think it's clear that we have much work underway. There isn't anything we wont consider to make banking with us easier and to drive better results.

<unk> for our shareholders, so whether it's pricing restructuring, adding complementary lines of business or products and staffing levels facilities Tech process improvement among others. We are going to explore every option to drive better performance and returns for our shareholders, while providing great customer service and.

And a great experience and also being well known and community oriented.

We're very committed to increase transparency and we look forward to providing you with more detail as we advance our strategy.

And I promise, we'll be sharing more detail on upcoming calls.

So recall with that would you. Please open the lines, we'd be happy to take questions.

As a reminder to ask a question you will need to press star one on your telephone to withdraw your question press the pound key please standby, while we compile the Q&A roster.

Our first question comes from the line of Michael Rose with Raymond James.

Okay.

Good morning, everyone. Thanks for taking my questions.

And Michael Jerry how are you.

So maybe we could start with just.

A little bit more on the specifics of maybe what's your plan to do on the expense side. So obviously, there's been a few voluntary and voluntary retirement programs you talked about adding some some ftes. This quarter would you expect to be able to fund and so many investments that youre going to need to be able to.

Grow the revenue piece of the business with further trimming and expense cuts I'm, just trying to get a sense for <unk>.

Basically if this expense level that we saw on the first quarter, which had some benefits from those those voluntary and voluntary retirement programs.

And should we expect that to remain relatively stable with some of those investments are funded by additional attrition on the cost cuts and other areas. Thanks.

Yes look I think great question and the timing on that is going to really be probably the bigger issue, which you could see.

I would say Carlos will give more perspective on this round guidance, but.

Our expenses as he referenced will go up and the second quarter just from adding the adds to staff that we made plus we're bringing more folks on and amarin mortgage as well and as I referenced in my remarks, we're looking for additional treasury sales swaps.

We also are looking for additions and B and the wealth area. One thing we will be doing.

Anyone who's customer facing that can add profitable growth to our organization.

We are we're going to evaluate those additions along the way now how do we pay for it and that's absolutely one of the things that we will do is looking at each and every area again from a span and layer and perspective from how many of those functions. We think we need to continue to do the way we are today and really.

Making sure that we rationalize the number of votes and every given area. That's not an issue as it relates to look we're going to do another executive.

Retirement plan, but what it is is that we're looking to make sure that we get as many people on our customer facing revenue producing as possible and so we will look at every single expense line as ways to offset that.

Okay. That's really helpful. And then just on the on the balance sheet I heard the commentary about bringing the loan to deposit ratio down to kind of the mid ninety's as I look at the securities portfolio, we've seen and many other banks begin to grow that your duration is around three and a half years would the expectation.

And as you grow the deposit base from here.

And would be to increase the size and the investment portfolio, maybe take some of that rate sensitivity off the table, just given a lower for longer environment, assuming thats.

Whats going to be on the card just just trying to get a sense for kind of the size and the balance sheet and as we move forward and what what you can do on the on security side. Thanks.

Yeah, I'm going to say that first and foremost, while I said where deposits first organization.

We certainly are going to be equally focused on continuing to generate.

Loans and again as I mentioned not only in our footprint and I think a lot of it is what I've said.

On the call its brand awareness.

We've got really good people here I think we just need to provide more support around them and so I think raising the awareness that we're out we're going to be active.

I would say and the time that I've been here we've seen some.

Great interest and people wanting to do business with us and so I would expect and we should see some good loan growth, so and frankly, not just in commercial real estate, and Bud and C&I and and on the business side.

I think there and that's something I think you should take into account regarding the size of the securities portfolio I would say just generally speaking I think the securities portfolio is a terrific way for obviously for managing rate risk, it's and asset liability tool, but you know what we get paid for is organic loan growth.

<unk> and organic deposit growth and you supplement that with certain areas that you need to manage your asset liability mix right and for interest rate risk. So.

Whether we grow that portfolio, specifically or not at this stage I think it's fairly sizable to be candid and I think if anything you'll look at us continuously looking at ways to restructure that portfolio.

We did a little bit of and optimization and the first quarter that resulted in a gain we're continuing to have conversations about ways to further optimize the portfolio positioning wise it should be it should be to complement and we should be fairly stable.

As we gather more deposits, they should be or ways to potentially increase a little bit, but but and the long term.

It's pretty sizable force.

The size of the balance sheet too and the long term it should be dropping.

Okay very helpful and maybe finally for me just on the credit front you guys have a really star reserve I think I calculate and almost 2% ex PPP.

Loans at the end of the quarter no provision two quarters ERO and any reason to think based on kind of line of sight and what you see.

Would you expect to have really any material provisions as we kind of move over the next couple of quarters does it seem like you would just given that that reserve coverage and where he spent per day. Thanks.

Yes, I think great question, clearly, it's going to depend on loan production and the composition of the loan production as to what will need to either add to the allowance or as we see opportunities to free up parts of the allowance over the next day.

Quarters, it'll get offset by the production that we intend to put on the books. So in terms of large provisioning I would say that again, we feel really confident with the level of provision or excuse me low level would be and allowance where it is right now and I do think that.

Over the next several quarters.

You'll either see some level of significant growth eating up any excess that we have or of course, if it's not there.

And that's going to be a problem, but I am looking at my head of business development on that one by the way just for the benefit of the group.

But I would tell you that.

Really I think it'll get stopped up so to speak by growth as opposed to.

Any type of release I think it will be but there will be opportunities for us to be.

Acyclic say theres a swap between why do we need.

Reserved on certain parts of the portfolio and that can get freed up and offset against the growth we expect in coming quarters.

Michael and apples.

<unk> mentioned that we keep out of the total reserve about $10 million that is related to COVID-19 that we created and institutional side of the loan loss provision. So taking into account Euro has commented that should be helpful for any potential growth that could be reallocated to potential grew and so on.

Very helpful.

Well I appreciate you taking all my questions.

Sure.

Our next question comes from the line of Brady Gailey with <unk>.

Hey, Thanks, good morning, guys.

Hey, Brady on hand on.

Good.

And so I wanted to start with 60% efficiency ratio goal.

I mean bigger picture, there's two ways to get there and you can cut expenses, where you can grow revenue and I'm sure you'll be looking at both but is there one side of that equation, but that you think there's a real opportunity to get that efficiency ratio down.

Yeah. Thanks for the question Brady, Yes, I think that.

We've got opportunity to expand both the NIM and then also on the fee side right. So which you start to think about us on a go forward basis.

The launch of the mortgage venture that we have and amarin mortgage on.

That'll start producing for us in Q really producing for full quarter Q3 Q4.

And I would expect that all of the deposit initiatives that we're undertaking.

And we'll also be able to help right as it relates to you know.

Widening out that net interest margin.

I'd also expect that the growth on the top side and the portfolio will be helpful.

But there's no avoiding that you have to optimize your expense structure and we have to have real justification from a return on investment standpoint of where every dollar is being spent but I would share that we're looking to optimize so that we have more dollars to put back into production right I mean so.

I think it's important to note on one hand, we're going to do a lot of cost rationalization on the other hand, we are going to be looking to put more dollars to work to drive more revenue. So.

On.

As I said, we're going to turn over every rock we're looking at absolutely everything it's all on the table.

And we'll give you guys more clarity on that on.

Obviously and in the quarters to pump.

Alright.

And I think we all understand your plan for New York.

But I wanted to ask about the.

Houston market I mean, thats also on market.

And it was obviously not core Florida, so any thoughts on your presence on.

Houston, Texas.

Look I think the big difference is that Texas is a deposit.

Deposit gathering franchise for us, we actually see opportunities there, yes, it's highly competitive but.

But I would tell you that right now and what we're more focused on.

Is.

The the opportunities that you know so we just said to redeploy resources and focus on the core market here, we think there's enormous opportunity. So I would consider that sort of our first step, but please know we do see that and the Houston marketplace that there's a lot of opportunity to expand.

And both on the deposit and loan side, and we're actually evaluating opportunities there even to expand more on the wealth side too.

To complement your euro and surgery and important to mention that Texas is not by any means.

And New York is a more of a balance.

Vehicle Laura on.

George addiction.

Almost 1 billion and the loan portfolio and 600 index.

On the depository side, so it's more in balance.

Alright, and then.

And you might not want to answer. This next question, Jerry but when you look at the profitability of Amarin.

Outside of last year, what COVID-19, where thing for all of our in place and Mark had been running.

Kind of a 65 to 70 basis point ROA.

And so you have a lot of initiatives here, which is great to hear about any idea you know longer term. What you think the profitability profile could look like getting them on in terms of on.

ROA and ROE or however, you want to look at it.

Yeah, I would respond by saying, we need to be at 1% or greater on our way and 10% or greater on a row.

Our objective is to be a top performer and we have to build that brick by brick so to speak but you know I clearly and focused on getting to those type of numbers with this organization and I think with the team that we have here we can achieve that.

Okay, Great all right.

Thanks for all this color jewelry, it's great to hear.

And here about your plan here. Thank you.

We appreciate the questions.

Your next question comes from the line of Stephen Scouten with Piper Sandler.

Hey, good morning, everyone.

And David.

And I'm curious I'm well, thanks, I'm curious, how you're thinking about.

<unk> growth maybe over the next 12 to 18 months, if you talked about that that New York City book repricing or maturing over that same duration of time and kind of if you could remind us what the size of that loan book and New York City is today I think the case it was about 24% of CRE loans and so just trying to think about the size of potential run off.

Sure.

Yes, it's a 730 or so million dollar tree book with about 35 million and associated deposits.

In terms of as.

As you start to think about you know what we said was 12 months to 18 months, we'd expect half the portfolio due to mature margin stated maturities. So.

And obviously theres lots of competition and if people come and solicit into some of those customers, which I'm sure. It will happen our view is that and our and our markets here and also we see opportunity and Houston.

And for continued growth I have to say that here, we add if we continue to add that type of revenue producers were currently chatting with I think we'll be in great shape to be easily replacing that low.

Runoff that happens out and New York.

Okay great.

And maybe thinking about the consumer loan growth briefly.

Thank you guys just kind of you know maybe 10% would be the long term Max there, but can you.

And remind us if there are any new relationships and it was primarily so five but did you. You think you were close to adding another relationship there and then maybe the average yield on that new production as well.

On that and Steven has and how's it going.

He has been for the most part and sulfide.

We have roughly $200 million summed up in the portfolio.

And the contractual it's close to the 10% yield more or less effective he tends to be closer to the seven 5% more or less.

And at this point and we.

We are evaluating.

Potentially on our sources.

But this has been this.

This strong growth.

And I got one so far so it's each sulfide and for the most part.

Okay.

Good.

And maybe along with that so those yields coming on at seven five and what's kind of do you have anything thats near like a blended yield for your total production and where that's been coming on relative to to your average yields.

So this one is not the biggest portion of the of the production.

The blended rate for the food and the U S does come in between three 5% to 425% more or less.

On margin on basis.

Great Great. Okay, and then maybe just last thing from me you talked Gary you talked about optimizing capital.

What is that I guess look like for you and the near term I mean is there a target capital ratio I know you talked about on competition as well and lowering the cost of capital, but just wondering if you could give some more color on what you know.

And that could potentially look like here and the next six to 12 months.

Yes, and I think.

We're on.

Obviously planning to execute on as much as we can and that buyback program.

But as we grow but and also as we evaluate the best places you know.

We'll continue to look at and does it make sense for even continued buybacks or replacement and the structure with what we'll call lower costs.

Capital sources, obviously market conditions right now are excellent and we're seeing pricing that we thought the pricing last year was good.

Clearly, we think as we continue to show improvement in terms of profitability that we too will be able to look and take advantage of some of these lower cost sources that others are getting to.

You've seen the announcements on a daily basis right now so.

That would be what I would like to try and do it right. Okay.

Okay, great great and thanks for the color, everyone and congrats on the initiatives and and the progress you've made.

Thank you I appreciate it.

There are no further questions. Mr. <unk> the floor is yours for any closing remarks.

Yes.

Thank you Rocco.

I just wanted to say thank you to everyone for joining our first quarter earnings conference call. We're really excited about the future here at Amarin and we look forward to updating you on our progress towards becoming a higher performing bank hope everyone has a great day take care.

Thank you ladies and gentlemen. This concludes today's conference call. Thank you for participating you may now disconnect.

[music].

Good day, and thank you for standing by welcome to the Amarin and first quarter 2021 earnings Conference call. At this time, all participants are in a listen only mode and.

After the speaker's presentation, there will be a question and answer session to ask a question. During the session you will need to press star one on your telephone. Please be advised that today's conference is being recorded if you require any further assistance. Please press star zero and I would now like to hand, the conference over to your speaker today.

Laura Rossi Investor Relations Officer at Amarin Bank. Thank you. Please go ahead.

Thank you Rocco good morning to everyone on the call and thank you for joining us to review on run the Bancorp first quarter 2020 one result.

With me. This morning are Jerry <unk>, Chief Executive Officer, and Carlos you feeling on the Chief Financial Officer.

Before we begin note that the company's press release comments made on today's call and responses to your questions contain forward looking statements.

The company's business and operations are subject to a variety of risks and uncertainties many of which are beyond its control and consequently actual results may differ materially from those expressed or implied.

Please refer to the cautionary notice regarding forward looking statements in the company's earnings release and presentation.

For a more complete description of these and other possible risks. Please refer to the company's annual report on form 10-K for the year ended December 31st 2020 and even.

And on older filings with the SEC.

You can access these filings on the SEC's website.

Please note that average has no obligation and makes no commitment to update on publicly release any revisions to forward looking statements in order to reflect new information or subsequent events circumstances or changes and expectations, except as required by law.

You should also note that the company's press release earnings presentation and todays call include references to certain adjusted financial measures also known as non-GAAP financial measures.

Please refer to appendix one of the company's earnings presentation for a reconciliation of each non-GAAP non-GAAP financial measure towards most comparable GAAP financial measure I will now turn the call over to Jerry. Thank you Laura and good morning, and thank you for joining average first quarter 2021 earnings call I am.

Joining me today is average new CEO.

Before I begin I'd like to take a moment to recognize my predecessor, Millar Wilson and over the course of his more than 40 year tenure are oversaw emirates growth from $6 billion and assets to $8 billion and the expansion from 15 branches to 25, he spearheaded the spin off and subsequent listing and among other things most recently.

Navigated average through the COVID-19 pandemic.

Well deserved thank you to MLR for his time and service to the company.

On another note I would like to announce and starting next quarter. We are planning to release earnings on the third Thursday of the following month.

So the dates would be July 22nd October 'twenty, one and January 20th for the balance of this year.

We want to do this for several reasons primarily to have more time each quarter to be focused on completing initiatives and generating growth and to also have a window and for insiders and additional week each quarter.

So if you turn to slide three you'll see our first quarter highlights. We are pleased to report improved results and the first quarter compared to the prior quarter. Our net income was up 77% quarter over quarter, primarily driven by higher non interest income and lower expenses. In addition, there was no provision expense and the quarter.

And then and improved slightly to 266% driven primarily from lower average deposit costs. We also show our progress on class B share repurchases since we announced the buyback program on March 10th or.

Our total loans were $5 8 billion and total deposits were $5 7 billion and they were both down slightly in the quarter. The decrease in loans was driven by higher prepayments, including 111 million and PPP loans, while the decrease in deposits was due to lower Cds and brokered deposits as we continue to pursue lower cost.

Relationships focused funding.

So moving on to the next slide Youll see several key performance metrics, which show improvement on all fronts. This quarter reflective of higher operating profitability, all while maintaining a robust capital position and solid credit coverage. These are just the first steps and the right direction. So while we know we have much more to do.

Good to be showing progress this quarter and.

And as I will get into later on the call will outline a number of initiatives underway that are focused on driving continued improvement and operating results. So with that said I'll turn the call over to Carlos to walk through our results for the quarter and more detail.

Thank you Jerry and thank you everyone for joining us today, turning to slide five I will begin by discussing our investment portfolio and.

Our first quarter investment Securities balance was $1 3 billion unchanged from the previous quarter and down from day, one 7 billion and the first quarter of 2000 and Duane.

And for this quarter, we continued on with strategies to insulate investment portfolio broke prepayment risk.

Floating portion represents only 14% and we compensation doors hydration and a natural extension of the mortgage portfolio has increased the overall duration for the end of the Q1 234 years moving.

And on to slide six we would like to provide an overview of our loan portfolio.

At the end of the first quarter total loans were $5 8 billion slightly down by 88 million compared to the end of the fourth quarter.

The decline was primarily driven to prepayments across our commercial loan portfolio inclusive those from PPP loans.

And the challenge low production due to the convenience per as economic activity as a result of the pandemic.

And the first quarter approximately half of prepayments were related to PPP loan forgiveness.

And we remain committed to our communities by originated over $80 million and PPP loans. During the first quarter. Additionally, we received 111 million and Brexit all forgiven by the SBA and <unk>.

All of this we have $165 million left outstanding on PPP loans as of the end of the first quarter.

Before I move on I wanted to talk about some positive signals, we see and our loan portfolio. This quarter. We continued to see strong performance across our order occupied and consumer loan portfolios, specifically consumer loans increased approximately 32 million quarter over quarter, primarily driven by our participation in India and we expect to continue.

And your purchase and this high yield and indirect loans and efforts to mitigate NIM pressures and the future quarters.

Turning to slide seven I would like to provide some more details on number of credit risk and.

And the first quarter, we maintained our strong credit risk coverage the ratio of allowance for loan losses to total loans was 183% higher than previous quarter. The absence of loan loss provision expenses for this quarter was driven by lower loan production during the quarter.

And the downgrades across our commercial and CRE portfolios.

As a highlight only one 1% of our loan portfolio remain on the deferral or forbearance and the first quarter down from the almost 20% and the same period last year almost the entirety of this portfolio is backed by real estate collateral.

All of the loans auto forbearance have resume regular payments I would like to mention that we no longer have 80 hotels on their forbearance and we have seen a healthy increase and the <unk> of the properties and the portfolio, which is a great improvement versus 2020.

Our team remains focused on proactively managing the status on lower loans to ensure sound credit quality and strong reserve coverage.

Moving to slide eight total deposits were $5 7 billion down 9% quarter over quarter and down two 8% year over year.

The quarter over quarter decrease was primarily driven by a 159 million combined reduction and customer Cds and brokered deposits, partially offset by an increase of 188 million and customer transaction on the guidance the declining number and customer CD was due to our continued efforts to aggressively lower CD rates as we focus on increasing.

And lower cost deposits and multi product relationship.

As a result, our cost of interest bearing deposits went down 10 basis points and this first quarter compared to the free as well.

As of March 31 <unk>.

BBB related deposits reached 173 million compared to $95 million as of the end of the previous quarter, four and deposits decreased $26 million compared to the prior quarter represented an annualized VK of 4% compared to the 6% we had on the 300 a quarter ago.

We are really encouraged to see a slowdown and foreign deposits indicate given the contribution this deposits provide to our cost of funds for and deposits and cost of funds is 16% versus domestic on 85% having said this international customers continue to use those savings to fund our day to day.

We continue our efforts to engage and cross sell with customers on and strengthened relationships with our international deposits and gain a bigger share of wallet.

Turning to slide nine the first quarter of 2021 net interest income was 48 million down 2% from the fourth quarter of 2020, and 3% year over year. The decrease in net interest income compared to the fourth quarter was remind me due to two factors first lower non volumes as a result of our continued slower than normal.

Non production and customer prepayments.

And then due to lower average balances on interest securities primarily due to prepayments. These factors and the quarter were partially offset by lower overall deposit costs and average balances on customers CD.

With regards to the margin first quarter, NIM was 266% up five basis points quarter over quarter, primarily due to lower cost of funds and customers CD balance on essentially flat year over year.

Actions to elevate pressures on margin included and repricing of customer time deposits and the relationship on the market and.

Implementing flow rates to our new loan production and re pricing.

Additional interest, earning opportunities and high yield lending programs.

Moving to slide 10, non interest income and the first quarter was $14 million up 23% quarter over quarter and down 35% year over year over the quarter. The increase in non interest income was remind me due to the absence of the loss on the sale of our operations Center.

And is at $2 6 million total net gains and securities and increased fees from brokerage and advisory activities also contributed to our higher non interest income this quarter as on.

And offset to this increase we didn't have fees related to the main street lending program and had lower derivative income and white transfer fees on.

<unk> asset under management management reached $2 billion as of the end of March up 2% year over year and up 28% year over year net new assets contributed by approximately $89 million year over year as our teams continue to deepen share of wallet and attract new relationships.

Turning to slide 11, first quarter noninterest expenses was $44 million balance, 60% quarter over quarter and down 3% year over year, the drivers of the quarter over quarter and a year over year decreases and noninterest expenses were largely the same this primarily driven by the SEC.

Duration plans implemented in the last quarter, which lowered salary and benefit expenses as well as the absence of severance expenses.

In connection with this plan.

Other contributing factors included lower onetime expenses following the closure of two branches.

Since the implementation of this severance plan, we have reduced our staff by 76, Ftes or 9%. However, we saw an increase and ftes and the first quarter driven by a number of the strategic highlights primarily in the frontline personnel.

Of note, we have resumed normal levels of bonus compensation and adopted new long term equity incentive comps and compensation programs.

It's more to 2021 beyond royalty income continues to look for opportunities to create efficiencies and improve our cost structure.

Moving to the next slide our business continues to be asset sensitive as of the and have launched over half of our loan portfolio, either look has and floating rate structures or mature within the year to manage these sensitive and mitigating and better on our margins. We continue to actively manage our loan and investment portfolio. This includes implementing.

And on flow rates on our loans and capitalizing on higher yielding securities and longer duration with this I will turn it back to Jerry.

Thank you Carlos and I'd like to address how we are positioning amarin for immediate and long term success and walk through some of those specific initiatives. We are focusing on as you can see on slide 13, and there are a handful of initiatives that serve as the foundation for our long term growth strategy. Our goal is simple and <unk>.

Our performance and drive sustainable profitable growth importantly, we want to do this with the best interest of our investors team members customers and communities and which we operate.

So first it is clear to me from experience and from peer comparisons that ameren and needs to become and will become a deposits first focused bank core deposits are the lifeblood of a strong banking franchise and growing core deposits is critical to our near and long term success and profitability, we have opportunities and the markets we.

And to increase our share and consumer and small business and commercial to achieve a lower cost of funds and reduce the reliance on brokered funds and other high cost sources, we've identified a number of ways to better target and attract these core deposits, including implementing and enhancing a digital onboarding platform.

And the build out of our Treasury management sales force and adding additional treasury management capabilities and focusing our marketing to drive the digit additional digital on and branch traffic and gathering other sources of deposits such as municipal accounts and private banking. So with these efforts, we are targeting and reduced reliance on broker deposits to the <unk>.

Target not to exceed 5% of total deposits and increasing our core deposits to make up over 20% of total deposits within the next six quarters, but please know our goal will be to exceed that target and keep going.

Additionally, we are focused on achieving a target loan to deposit ratio of 95% all of which means to achieve these targets. We will all be very focused on gathering and core deposit accounts.

We are also going to accelerate our digital transformation over the past several quarters, we ramped up our digital efforts with the rollout of <unk> and sales force across the organization and with the introduction of Amarin investments model.

<unk> been focusing on and evaluating digital solutions and a number of areas, so including deposit account acquisition and small business lending and wealth management, and we expect to be able to update everyone on our progress with these soon and.

Another area of immediate focus is dramatically improvement average brand awareness, so and the communities. We serve building brand awareness is key for both growing our presence in these markets as well as laying a strong foundation for future expansion.

We have a number of efforts currently underway that we will continue to pursue in the coming quarters to grow the awareness of the amarin brand from improved signage and promotions to evaluating infinity relationships and greater community involvement.

Much of this can happen from us just being outward focused and proactive as well I consider a south Florida is best kept secret and we need to break through that.

Additionally, we are diligently looking at rationalizing our lines of business and geographies and we plan to expand our Treasury management wealth management private banking and specialty finance capabilities in order to grow the bank's revenue streams and fee opportunities.

At the same time, we are curtailing future originations and New York City.

New York City location as a commercial real estate loan production office with minimal deposit relationships and as we evaluate our alternatives. There we will be focusing on growing and our core markets. We intend to look for opportunities to grow and the contiguous markets as well. Please note that over half and your portfolio will pay off and then.

Next 12 months to 18 months and we believe there are solid opportunities to replace that so more to come as we evaluate our next steps there.

We are also evaluating new ways to drive cost efficiencies across the business as part of our margin improvement plan and we've set a target goal to improve our efficiency ratio to 60% within the next six quarters. This will require and looking at everything pricing balance sheet composition and of course, what we're spending and why.

There is ample opportunity for us to improve and a number of areas.

We also intend to optimize our capital structure and to look for ways to lower <unk> cost of capital.

The recent tender offer and now the class B share buyback program authorized in Q1 that is currently underway or just first steps and continuously evaluating how much capital do we need and what are the ways in which we can support our valuation we need to be constantly exploring and evaluating new ways to optimize the structure while continuing.

To drive profitable growth to appropriately utilize the capital that we have a lower cost of capital can come from optimizing capital composition, and we intend to explore that as well.

Finally, a quick comment regarding ESG and corporate responsibility. Many companies are now just facing the reality that ESG is becoming a business imperative major institutional investors the SEC and communities, we serve as well as existing and potential customers and vendors are all looking to see what steps banks like us or <unk>.

<unk> please.

Please note we are and the very early stages of developing our program, but I am confident doing so will differentiate us from our competitors and drive business our way more to come as we complete our evaluation and determine what steps we will actually take.

So in conclusion as all of you know I joined the team here on February 15th and became CEO and we filed our 10-K on March 19th So and the 70 or so days since coming on board I think it's clear that we have much work underway. There isn't anything we wont consider to make banking with us easier and to drive better results.

<unk> for our shareholders, so whether it's pricing restructuring, adding complementary lines of business or products and staffing levels facilities tact process improvement among others. We are going to explore every option to drive better performance and returns for our shareholders, while providing great customer service and.

And a great experience and also being well known and community oriented we're very committed to increase transparency and we look forward to providing you with more detail as we advance our strategy.

And I promise, we'll be sharing more detail on upcoming calls.

So recall with that would you. Please open the lines, we'd be happy to take questions.

As a reminder to ask a question you will need to press star one on your telephone to withdraw your question press the pound key please standby, while we compile the Q&A roster.

Our first question comes from the line of Michael Rose with Raymond James.

Good morning, everyone. Thanks for taking my questions.

Jeremy.

Are you.

So maybe we could start with just.

A little bit more on the specifics of maybe what's your plan to do on the.

The expense side. So obviously, there's been a few voluntary and and voluntary retirement program you talked about adding some some ftes. This quarter would you expect to be able to fund some of the investments that youre going to need to be able to.

To grow the revenue piece of the business with further trimming and expense got it and just trying to get a sense for.

Basically if this expense level that we saw on the first quarter, which had some benefits from those those voluntary and voluntary retirement program.

And should we expect that to remain relatively stable with some of those investments are funded by additional attrition and cost cuts and other areas. Thanks.

Yes look I think great question and the timing on that is going to really be probably the bigger issue, which you could see I would say Carlos will give more perspective on this and round guidance, but.

Our expenses as he referenced will go up and the second quarter just from AD and be adds to staff that we made plus we're bringing more folks on and amarin and mortgage as well and as I referenced in my remarks, we're looking for additional treasury sales swaps.

And also we're looking for additions and the and the wealth area. One thing we will be doing.

Anyone who is a customer facing that can add profitable growth to our organization.

We are we're going to evaluate those additions along the way now how do we pay for and that's absolutely one of the things that we will do is looking at each and every area again from a span and layer and perspective from how many of those functions. We think we need to continue to do the way we are today and really.

Making sure that we rationalize the number of folks and every given area. That's not an issue as it relates to what we're going to do another executive.

Okay. That's really helpful. And then just on the on the balance sheet I heard the commentary about bringing the laundry deposit ratio down to kind of the mid ninety's as I look at the securities portfolio, we've seen and many other banks begin to grow that your duration is around three and a half years would the expectation.

And as you grow the deposit base from here.

And would be to increase the size and the investment portfolio may be take some of that rate sensitivity off the table, just given a lower for longer environment assuming that.

Whats going to be on the cards as just trying to get a sense for kind of the size and the balance sheet as we as we move forward and what what you can do on the on the security side.

Yes, I'm going to say that first and foremost, while I said where deposits first organization.

And we certainly are going to be equally focused on continuing to generate.

Loans and again as I mentioned not only in our footprint and I think a lot of it is what I've said.

And on the call is brand awareness.

We've got really good people here I think we just need to provide more support around them and so I think raising the awareness that we're out we're going to be active.

I would say and the time that I've been here we've seen some.

Great interest and people wanting to do business with us and so I would expect that we should see some good loan growth, so and frankly, not just in commercial real estate, but and C&I and and on the business side. So I think there and that's something I think you should take into account regarding the size of the securities.

Portfolio I would say just generally speaking I think the securities portfolio is a terrific way for obviously for managing rate risk.

And asset liability tool, but you know what we get paid for as organic loan growth and organic deposit growth and just to supplement that with certain areas that you need to manage your asset liability mix right and for interest rate risk. So.

We did a little bit of and optimization and the first quarter that resulted and again, we're continuing to have conversations about ways to further optimize the portfolio positioning wise it should be it should be to complement it should be fairly stable.

As we gather more deposits they should be a way to potentially increase a little bit but in the long term.

It's pretty sizable force for the size of the balance sheet share and the long term you should be dropping.

Okay very helpful and maybe finally for me just on the credit front you guys have a really stout reserve I think I calculate and almost 2% ex PPP loans at the end of the quarter no provision two quarters ERO and any reason to think based on kind of line of sight and what you see.

Would you expect to have really any material provisions as we kind of move over the next couple of quarters does it seem like you would just given the fed reserve coverage and where he spent the day. Thanks.

Yes, I think.

Great question, clearly, it's going to depend on loan production and the composition of the loan production as to what will need to either add to the allowance or as we see opportunities to free up parts of the allowance over the next several quarters it will get offset by that.

And the production that we intend to put on the books. So in terms of large provisioning I would say that again, we feel really confident with the level of provision or excuse me the level of the allowance where it is right now and I do think that over the next several quarters.

You'll either see some level of significant growth eating up any excess that we have or of course, if it's not there.

It's going to be a problem, but I'm.

And I'm looking at my head of business development on that one by the way just for the benefit of the group.

But I would tell you that.

Really I think it will get stopped up so to speak by growth as opposed to.

Any type of release I think it will be but there will be on.

<unk> for us to basically say theres a swap between why we need.

Reserves on certain parts of the portfolio and that can get freed up and offset against the growth we expect in coming quarters.

Michael.

<unk> mentioned that we keep out of the total reserve above $10 million that is related to call. It that we created.

And institutional side of the on those provision so taking into account and <unk> commented that should be helpful for any potential growth that could be reallocated to potential grew and so on.

Very helpful. I appreciate you taking all my questions.

Sure.

Our next question comes from the line of Brady Gailey with <unk>.

Hey, Thanks, good morning, guys.

Hey, Brandy on Haegarda.

Good.

And I wanted to start with the 60% efficiency ratio goal.

I mean bigger picture Theres two ways to get there you can cut expenses and you can grow revenue.

I'm sure you'll be looking at but is there one.

Net of that equation, but that you think is the real opportunity to get that efficiency ratio down.

Yes. Thanks for the question Brady, Yes, and I think that we.

<unk> got opportunity to expand both the NIM and then also on the fee side right. So as you start to think about us on a go forward basis.

The launch of the mortgage venture that we have at Ameren and mortgage.

That will start producing for us and really producing for full quarter Q3 Q4.

And I would expect that all of the deposit initiatives that we're undertaking.

And we'll also be able to help right as it relates to widening out that net interest margin.

I would also expect that the growth on the top side and the portfolio will be helpful. But there's no avoiding that you have to optimize your expense structure and we have to have real justification from a return on investment standpoint of where every dollar is being spent but I would share that we're looking to optimize.

So that we have more dollars to put back into production right I mean so.

Think it's important to note on one hand, we're going to do a lot of cost rationalization on the other hand, we are going to be looking to put more dollars to work to drive more revenue. So.

No.

As I said, we're going to turn over every rock, we're looking at absolutely everything and it's all on the table and we'll give you guys more clarity on that obviously.

Obviously and in the quarters to come.

Alright, and then.

Think we all understand your plan for New York, but I wanted to ask about the Houston market I mean, thats also on market.

And it was obviously not core Florida, so any thoughts on your presence and <unk>.

Houston, Texas.

Look I think the big difference is that Texas is a <unk>.

Deposit gathering franchise for us, we actually see opportunities there, yes, it's highly competitive but.

But I would tell you that right now what we're more focused on us.

The opportunities that we just said to redeploy resources and focus on the core market here, we think there's enormous opportunity. So I would consider that sort of our first step, but please know we do see that and the Houston marketplace that there's a lot of opportunity to.

And expand both on the deposit and loan side, and we're actually evaluating opportunities there even to expand more on the wealth side too.

And to complement your answer Jerry important to mention that Texas is not by any means.

New York is a more of a balance.

Vehicle.

And were jurisdiction.

Almost 1 billion and the loan portfolio and 600.

On the depository side, so it's more in balance.

Alright, and then.

And you might not want to answer. This next question, yet Jerry but when you look at the.

Profitability of Amarin.

Outside of last year, what COVID-19, where things were all over the place, but amarin had been running.

Kind of a 65 to 70 basis point ROA.

And you have a loss.

A lot of initiatives here, which is great to hear about any idea you know longer term. What you think the profitability profile could look like at Ameren and in terms of them.

ROA and ROE or however, you want to look at it.

Yes, I would respond by saying, we need to be at 1% or greater on our way and 10% or greater on on ROE.

Our objective is to be a top performer, we have to build that brick by brick so to speak but.

And I, clearly and focused on getting to those type of numbers with this organization and I think with the team that we have here we can achieve that.

Okay, Great all right. Thanks for all this color Jerry it's great to hear about your plan here. Thank you.

We appreciate the questions.

Your next question comes from the line of Stephen Scouten with Piper Sandler.

Hey, good morning, everyone.

And David.

I'm curious I'm well, thanks, I'm curious, how you're thinking about.

Loan growth maybe over the next 12 to 18 months, if you talked about that that New York City book repricing or maturing over that same duration of time and kind of if you could remind us what the size of that loan book and New York City is today I think the case there was about 24% of CRE loans and so just trying to think about the size of the potential runoff.

Sure.

Yes, it's a 730 or so million dollar tree book with about $35 million and associated deposits.

In terms of as you start to think about what we said was 12 months to 18 months, we'd expect half the portfolio due to mature margin stated maturities. So.

And obviously theres lots of competition, if people come and solicit into some of those customers, which I'm sure will happen our view is that and our and our markets here and also we see opportunity and Houston.

For continued growth I have to say that here, we add if we continue to add that type of revenue producers.

We're currently chatting with I think we'll be in great shape to be easily replacing that loan runoff.

Runoff that happens out and New York.

Okay great.

And maybe thinking about the consumer loan growth briefly.

Thank you guys have said you know maybe 10% would be the long term Max there, but can you.

And remind us if there are any new relationships and it was primarily so five but did you think you were close to adding another relationship there and then maybe the average yield on that new production as well.

On that and Steven and How's it going.

He has been for the most part and sulfide.

We have roughly $200 million summed up in the portfolio.

And the contractual.

It's close to the 10% yield more or less effective it tends to be closer to the seven 5% more or less.

And at this point.

We are evaluating.

Actually on our sources.

But this has been the.

The stronger and stronger.

Trunk is yet one so far and so it's sulphide Ford and most part.

Okay.

Good.

So.

And this one is not the biggest portion of the of the production.

The blended rate for the food and the U S does come in between three 5% to 425% more or less.

Margin on basis.

Great Great. Okay, and then maybe just last thing from me you talked Gary you talked about optimizing capital.

What is that I guess look like for you and the near term I mean is there a target capital ratio I know you talked about and the composition as well and lowering our cost of capital, but just wondering if you could give some more color on what.

That could potentially look like here and the next not on a six to 12 months.

Yes, and I think.

We're on.

Obviously planning to execute on as much as we can and that buyback program.

But as we grow and also as we evaluate the best places.

We'll continue to look at does it make sense for even continued buybacks or replacement and the structure with what we'll call lower costs.

Capital sources, obviously market conditions right now are excellent and we're seeing pricing that we thought the pricing last year was good.

Clearly, we think as we continue to show improvement and.

Terms of profitability that we too will be able to look and take advantage of some of these lower cost sources that others are getting to <unk>.

Youre seeing the announcements on a daily basis right now so.

That would be what I would like to try and do it right. Okay.

Okay, great great and thanks for the color everyone and congrats on the initiatives and the progress you've made.

Thank you I appreciate it.

There are no further questions. Mr. <unk> the floor is yours for any closing remarks.

Thank you Rocco.

Thank you ladies and gentlemen. This concludes today's conference call. Thank you for participating you may now disconnect.

Q1 2021 Amerant Bancorp Inc Earnings Call

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