Q1 2024 Amerant Bancorp Inc Earnings Call

Operator: Greetings. Welcome to the Amerant Bancorp First Quarter 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to your host, Laura Rossi, Head of Investor Relations. You may begin.

Greetings and welcome to the Amarin first quarter 2024 earnings conference call. At this time, all participants are in a listen only mode.

You didn't answer session will follow the formal presentation, if anyone should require operator assistance. During the conference. Please press star zero on your telephone keypad. Please note. This conference is being recorded I would now turn the conference over to your host Laura Rossi head of Investor Relations you may begin.

Laura Rossi: Thank you sure Molly.

Laura Rossi: Good morning, everyone, and thank you for joining us to review Amerant Bancorp's first quarter 2024 results. On today's call are Jerry Plush, our Chairman and CEO, and Sharymar Calderon, our Executive Vice President and CFO.

Laura Rossi: Good morning, everyone and thank you for joining us to review I'm run Bancorp's first quarter 'twenty 'twenty four resource.

Laura Rossi: On today's call are Jerry plush, our chairman and CEO and Sharon Malka, our executive Vice President and CFO.

Laura Rossi: As we begin, please note that discussions on today's call contain forward-looking statements within the meaning of the Securities Exchange Act. In addition, references will also be made to non-GAAP financial measures. Please refer to the company's earnings release for a statement regarding forward-looking statements as well as for information on reconciliation of non-GAAP financial measures to GAAP measures. I will now turn it over to our Chairman and CEO, Jerry Plush. Thank you, Laura

Speaker Change: We begin please note that discussions on todays call contain forward looking statements within the meaning of the Securities Exchange Act.

Sharymar Calderon Yepez: In addition references will also be made to non-GAAP financial measures.

Gerald Paul Plush: Please refer to the company's earnings release for a statement regarding forward looking statements as well as for information and reconciliation of non-GAAP financial measures to GAAP measures I will now turn it over to our chairman and CEO Jerry Josh. Thank you Laura Good morning, everyone and thank you for joining <unk> first quarter 2024 earned.

Gerald Paul Plush: Thank you, Laura. Good morning, everyone, and thank you for joining Amerant's first quarter 2024 earnings call. We're happy to be here today to update everyone on the continued progress we've made during this first quarter of the year. So before we get to the slides, I'd like to make a brief comment.

Jerry Josh: <unk> call, we're happy to be here today to update everybody on the continued progress we've made during this first quarter of the year.

Jerry Josh: So before we get to the slides I'd like to make a brief comment. So as previously noted you can clearly see the shift this quarter from transformation to execution.

Gerald Paul Plush: As previously noted, you can clearly see the shift this quarter from transformation to execution, highlighted by our decision to exit the Houston market with the recently announced sale of our franchise there and to instead focus all of our efforts on growing our Florida franchise. You will also note this quarter the lack of noise, in quotes, as many refer to it in previous periods, having numerous non-routine income and operating expense items in comparison to this first quarter of 2024.

Jerry Josh: Highlighted by our decision to exit the Houston market with the recently announced sale of our franchise there and to instead focus all of our efforts on growing our Florida franchise. You will also note this quarter the lack of noise in quotes as many refer to it in previous periods, having numerous non routine income and operating expense items.

Speaker Change: In comparison to this first quarter of 2024.

Gerald Paul Plush: Results this quarter also clearly show organic growth from our team member efforts in growing both loans and deposits, the focus on relationships, and The quality shift in the composition of our deposit portfolio reached another milestone with the runoff of all remaining institutional funds. And please know in advance that we will address credit in detail this morning on the call, specifically what happened in 1Q with special mention of those that continued to perform and the elevated net charge-offs from the discontinued indirect consumer portfolio. So let's now get to the slides, and we'll turn to slide three.

Speaker Change: Results. This quarter also clearly show organic growth from our team member efforts in growing both loans and deposits the focus on relationship banking the quality shift in the composition of our deposit portfolio reached another milestone with the run off of all remaining institutional funds.

Speaker Change: And please know in advance that we will address credit in detail. This morning on the call specifically what happened in <unk> with special mention that continued perform and the elevated net charge offs from the discontinued indirect consumer portfolio.

Speaker Change: So, let's now get to the slides and we'll turn to slide three here you can see the total loans decreased by $258 5 million as we completed the sale of the previously announced 401 million multifamily loan portfolio in Houston.

Gerald Paul Plush: Here you can see the total loans decreased by $258.5 million as we completed the sale of the previously announced $401 million multifamily loan portfolio in use. Otherwise, we had strong organic loan growth of $142.5 million. Our pipeline is strong for 2Q, and we've already closed on approximately $150 million in the month of April 2024.

Speaker Change: Otherwise, we had strong organic loan growth of $142 5 million. Our pipeline is strong for Q2, and we've already closed on approximately $150 million in the month of April 2024.

Gerald Paul Plush: We had organic deposit growth of $331.8 million during the first quarter, offsetting the planned reduction of $262 million we had in institutional deposits and a decrease of $86.4 million in broker deposits. Please note that the decline in broker deposits was replaced with the lower cost FHLB advantage. Our assets under management increased $68.5 million to $2.36 billion, driven primarily by market valuations and net new assets. Regarding our expansion in Florida, we officially opened our banking center in downtown Fort Lauderdale and our first banking center in Tampa.

Speaker Change: Organic deposit growth of $331 8 million during the first quarter offsetting the planned reduction of $262 million, we had in institutional deposits and a decrease of $86 $4 million in broker deposits.

Speaker Change: Please note that the decline in broker deposits was replaced with lower cost S. H L B advances.

Speaker Change: Our assets under management increased $68 5 million to $2, three 6 billion, driven primarily by market valuations and net new assets.

Speaker Change: Regarding our expansion in Florida, we officially opened our banking center in downtown.

Speaker Change: Yeah.

Speaker Change: Fort Lauderdale at first banking center and.

Gerald Paul Plush: We also opened a new regional headquarters office in Tampa, and we announced a multi-year partnership becoming hometown bankers in Miami-Dade. We've also had a few subsequent events since quarter end. On April 15th, we opened our new regional headquarters office in Broward County.

Speaker Change: We also opened a new regional headquarters office in Canada, and we announced a multi year partnership becoming hometown Miami wireless.

Speaker Change: Also had subsequent actions correct. Some April 15th we opened our new regional headquarters office for Broward County, It's located in plantation, Florida, and this will support our efforts to grow in this market also as announced on April 17th we entered into a definitive purchase and assumption agreement under which mid first bank based in Oklahoma City.

Gerald Paul Plush: It's located in Plantation, Florida, and this will support our efforts to grow in this market. Also, as announced on April 17th, we entered into a definitive purchase and assumption agreement under which Midfirst Bank, based in Oklahoma City, will acquire Amerant Bank's banking operations in six branches in Houston, Texas. This transaction includes approximately $576 million in deposits and $529 million in loans, and it's expected to close in the second half of 20

Speaker Change: D well acquire Ameren banks banking operations in six branches in Houston, Texas. This transaction includes approximately $576 million of deposits and $529 million in loans and it's expected to close in the second half of 2024.

Gerald Paul Plush: So we'll turn now to slide four for financial highlights of the first quarter. Looking at the income statement, diluted income per share for the first quarter was $0.31, an improvement over the prior quarter due to the impact that non-routine items had on operating results during the fourth quarter. The net interest margin was 3.51% in the first quarter compared to 3.72% in the fourth quarter. However, note that the fourth quarter included an additional 16 basis points of interest collected from the loan principal recovery in that particular period.

Speaker Change: So we'll turn now to slide four for financial highlights of the first quarter.

Speaker Change: Looking at the income statement diluted income per share for the first quarter was 31 cents an improvement over the prior quarter due to the impact that non routine items had on operating results during the fourth quarter.

Speaker Change: Net interest margin was $3 five 1% in the first quarter compared to $3 seven 2% in the fourth quarter note that the fourth quarter included an additional 16 basis points of interest collected from a loan principle recovery in that particular period.

Gerald Paul Plush: The additional decrease in margin comes as a result of the timing difference between the sale of the Houston Multifamily Portfolio in January 2024 and the repayment of institutional deposits later in the quarter, in addition to the reduction of higher yield in direct consumer loans. Credit quality events continue to be an area of focus, and reserve levels are carefully monitored to provide sufficient coverage.

Speaker Change: The additional decrease in margin comes as a result of the timing difference between the sale of the Houston multifamily portfolio in January of 'twenty, 'twenty, four and the repayment of institutional deposits later in the quarter. In addition to the reduction of higher yield indirect consumer loans.

Speaker Change: Credit quality events continue to be an area of focus and the reserve levels are carefully monitored to provide sufficient coverage for.

Gerald Paul Plush: Her vision for credit losses was $12.4 million, down $100,000, from $12.5 million in the fourth quarter. Shary will be covering credit in further detail later in the presentation, including an update on non-performing loans and special mention credit. Non-interest income was $14.5 million, down $5.1 million from $19.6 million in the fourth quarter, while non-interest expense was $66.6 million, also down $43.1 million from $109.7 million in the fourth quarter. These two expenses included several non-routine.

Speaker Change: Provision for credit losses was $12 4 million down 100000 from $12 5 million in the fourth quarter Sherri, we'll be covering credit in further detail later in the presentation, including an update on nonperforming loans and special mentioned credits.

Speaker Change: Noninterest income was $14 5 million down $5 1 million from $19 6 million in the fourth quarter, while noninterest expense was $66 6 million also down $43 1 million from $109 7 million in the fourth quarter for two expenses included several non routine items.

Gerald Paul Plush: Our total assets reached a record high of $9.82 billion as of the close of 1Q, slightly up from $9.72 billion in the prior period. However, total deposits decreased slightly by $16.6 million, to $7.88 billion compared to $7.89 billion in the fourth quarter. Our total gross loans decreased by $258.5 million to $7 billion, down from $7.26 billion in Q4. Our total securities were $1.6 billion, up $81.6 million from the fourth quarter as we purchased fixed-rate securities as part of our asset liability management actions, given an expected decline in rates later in Q24 and into Q25.

Speaker Change: Our total assets reached a record high of $9 82 billion as of the close of one two slightly up from $9 72 billion in the prior period total deposits decreased slightly by $16 6 million.

Speaker Change: 278, 8 billion compared to 7.89 billion in the fourth quarter. Our total gross loans decreased by $258 5 million to $7 billion down from 726 and four to our total securities were $1 6 billion up $81 6 million from the fourth quarter as we purchase fixed rate securities as part.

Speaker Change: Our asset liability management actions given an expected decline in rates later in 'twenty four it into 'twenty five.

Gerald Paul Plush: Cash and cash equivalents increased $337.8 million to $659.7 million at the end of the quarter as a result of the previously mentioned Houston Multifamily Sale and also from organic deposits. Moving on to capital, our total capital ratio as of 1-2 ended at 12.5% compared to 12.12% as of 4-2, and our CET-1 was 10.11% compared to 9.79%. Our tangible equity ratio was 7.28%, which included $75.9 million in AOCI, resulting from an after-tax change in the valuation of our AFS investment portfolio.

Speaker Change: Cash and cash equivalents increased $337 8 million to $659 7 million at the end of the quarter as a result of the previously mentioned Houston multifamily sale.

Speaker Change: And also from organic deposit growth.

Speaker Change: Moving on to capital our total capital ratio as of Q ended at $12 five per cent compared to $12, one 2% as for Q and our CET. One was 10 point, 11% compared to $9, 79%, our tangible equity ratio was 7.28%, which includes $75 9 million in.

Speaker Change: A OCI, resulting from the after tax change in the valuation of our E. S. S investment portfolio lastly, as a one to our tier one capital ratio was 10, 88% compared to 10.54% as affords you.

Gerald Paul Plush: Lastly, as of 1Q, our Tier 1 capital ratio was 10.88%, compared to 10.54% as of 4Q. Also of note is that on April 24th, our Board of Directors approved a dividend of $0.09 per share, payable on May 30th, 2020.

Speaker Change: Also of note is that on April 24th our board of directors approved a dividend of nine cents per share payable on may 30th of 'twenty 'twenty four.

Gerald Paul Plush: So we'll move now to slide five, and we'll provide an overview regarding our deposit base. Total deposits at the end of the quarter were $7.9 billion, down slightly, as we mentioned before $16.6 million from the previous quarter. This slight decrease was driven primarily by a reduction of $262 million in institutional deposits as we used the proceeds from the Houston loan sale and a decrease of $86.4 million in a broker. The decrease was mostly offset by increases in relationship deposits of $331.8 million. You will also note that our loan-to-deposit ratio decreased temporarily to 88.9 percent as a result of the Houston loan sale. This will eventually migrate closer to our stated target of 95 percent, given loan sales.

Speaker Change: So we'll move now to slide five I'll provide an overview regarding our deposit base.

Speaker Change: Total deposits at the end of the quarter was $7 9 billion down slightly as we mentioned before a $16 6 million from the previously quarter.

Speaker Change: This slight decrease was driven primarily by the reduction of $262 million in institutional deposits as we use the proceeds from the Houston loan sale and a decrease of $86 4 million of broker. The decrease was mostly offset by increases in relationship deposits of $331 8 million.

Speaker Change: You'll also note that our loan to deposit ratio decreased temporarily to 88, 9% as a result of the Houston alone. So this will eventually migrate closer to our stated target of 95% given the loan demand.

Gerald Paul Plush: We can turn now to slide 6, and you can see here that we continue to have a well-diversified deposit mix composed of domestic and international customers. Our domestic deposits, which account for 67 percent of our total deposits, totaled $5.3 billion at the end of the first quarter, and that's down $141.4 million, or 2.6 percent, compared to the prior quarter. International deposits, which account for 33% of total deposits, totaled $2.6 billion, up $124.7 million, or 5.1% compared to the previous year.

Speaker Change: We can turn now to slide six and you can see here that we continue to have a well diversified deposit mix composed of domestic and international customers, our domestic deposits, which account for 67, 67% of our total deposits totaled $5 3 billion at the end of the first quarter and that's down to $141 4 million.

Speaker Change: Or two 6% compared to the prior quarter.

Speaker Change: International deposits, which account for 33% of total deposits totaled $2 6 billion up $124 7 million or five 1% compared to the previous quarter.

Gerald Paul Plush: We continue to take advantage of our infrastructure and capabilities as well as make the Amerant brand more visible through corporate events and partnerships to emphasize international deposit gathering as a source of funds, giving more favorable prices, while also adding diversification to our funding.

Speaker Change: We continue to take advantage of our infrastructure and capabilities as well as making the ameren brand more visible through corporate events and partnerships to emphasize international deposit gathering as a source of funds getting more favorable pricing.

Speaker Change: While also adding diversification to our funding base. The decrease in total deposits was driven by reductions in broker deposits and noninterest bearing deposits, partially offset by increases in interest bearing deposits and customer C. DS.

Gerald Paul Plush: The decrease in total deposits was driven by reductions in broker deposits and non-interest-bearing deposits, partially offset by increases in interest-bearing deposits and customers. Speaking of CDEs, total time deposits for the quarter were $2.2 billion, a decrease of $52 million from the previous quarter due to a decrease in brokered time deposits of $69.3 million. And that was offset by an increase of $17.2 million, or partially offset by $17.2 million in customer deposits. Our core deposits, defined as total deposits excluding time deposits, were $5.6 billion as of the end of the first quarter.

Speaker Change: Speaking of Cds total time deposits for the quarter were $2 2 billion, a decrease of $52 million from the previous quarter due it due to the decrease in broker time deposits of $69 3 million.

Speaker Change: And that was offset by an increase of $17 2 million or partially offset $17 2 million in customer Cds.

Speaker Change: Our core deposits totaled defined as total deposits. Excluding time deposits were $5 6 billion as of the end of the first quarter, an increase of $35 4 million or 6% compared to the previous quarter to $5 6 billion of core deposits included $2 6 billion in interest bearing deposits and that's up $58 5 million.

Gerald Paul Plush: It's an increase of $35.4 million, or 0.6%, compared to the previous quarter. The $5.6 billion in core deposits included $2.6 billion in interest-bearing deposits, and that's up $58.5 million, or 2.3%, compared to the previous quarter. $1.6 billion in savings and money market deposits; that's up $6.5 million, or 0.4%, versus the previous quarter. $1.4 billion in non-interest bearing demand deposits. That's down 29.6 million or 2.1% percent. So at this point, I'll turn things over to Shary. She'll go over key metrics, other balance sheet items, and results for the first quarter in more detail.

Speaker Change: Or two 3% versus the previous quarter $1 6 billion in savings and money market deposits, that's up $6 5 million or 4% versus the previous quarter.

Speaker Change: And one 4 billion and noninterest bearing demand deposits, that's down $29 6 million or two 1% versus the previous quarter. So at this point I will turn things over to Sherry she'll go over key metrics other balance sheet items and results for the first quarter in more detail. Thank.

Sharymar Calderon Yepez: Thank you, Jared.

Sharymar Calderon Yepez: Thank you, Jared, and good morning, everyone. As part of today's presentation, I will share more color on our financial position and performance. So during test flight 7, I'll begin by discussing our key performance metrics and their changes compared to last quarter. Non-interest bearing deposits to total deposits decreased to 17.7% in one queue, compared to 18.1% in the previous quarter, as a result of customer interest and higher yielding activity. The net interest margin was 3.51% in the first quarter compared to 3.72% in the fourth quarter, which included 16 basis points in connection with a one-time loan recovery. Our efficiency ratio was 72.03% compared to 108.30% last quarter. Given the absence of material non-routine items, we recorded last quarter.

Sherry: Thank you Gary and good morning, everyone.

Sherry: As part of today's presentation, I will share more color on our financial position and performance. So turning to slide seven I'll begin by discussing our key performance metrics and are changes compared to last quarter.

Sherry: Noninterest bearing deposits to total deposits decreased to 17, 7% Q1compared to 18, 1% in the previous quarter as a result of customer interest in higher yielding accounts.

Sherry: Net interest margin was 351% in the first quarter compared to $3, 72% in the fourth quarter, which included 16 basis points in connection with a onetime nonrecurring.

Sherry: Our efficiency ratio was 72 point or 3% compared to $108 30 per cent last quarter, given the absence of material non routine items, we recorded last quarter.

Sharymar Calderon Yepez: Our ROA and ROE were higher this quarter at 0.44% and 5.69%. The year 1 capital ratio increased to 10.88% compared to 10.54% due to the balance sheet improvement as a result of the sale of the CRE multi-family loans in Houston and the income for the period. Lastly, the coverage of the allowance for credit losses to total loans remains stable at 1.38% compared to 1.39% in the previous year. Continuing on to slide 8, I'll discuss our investment portfolio.

Sherry: Our ROA and ROE were higher this quarter at 44% and 69% respectively.

Sherry: Your one capital ratio increased to $10, 88% compared to $10, 54% due to the balance sheet improvement as a result of the sale of the theory multifamily nothing Houston and the income for the period.

Sherry: Lastly, the coverage of the allowance for credit losses to total loans remained stable at 138% compared to 139% in the previous quarter.

Sherry: Continuing on to slide eight I'll discuss our investment portfolio.

Sherry: Our first quarter investment securities balance away from one 5 billion slightly up from the previous quarter when compared to the prior quarter. The duration of the investment portfolio has extended to five three years at the model anticipates lower MBS principal prepayments due to higher market rate is.

Sharymar Calderon Yepez: Our first quarter investment securities balance was $1.5 billion, slightly up from the previous quarter. When compared to the prior quarter, the duration of the investment portfolio has extended to 5.2 years as the model anticipates slower MBS principal prepayments due to higher market rates. The chart on the upper right shows the expected prepayments and maturities of our investment portfolio for the next 12 months, which represents a liquidity source available to support growth and higher interest earnings.

Sherry: Chart on the upper right shows the expected prepayments and maturities of our investment portfolio for the next 12 months, which represents a liquidity source available to support growth and higher interest earning assets.

Sherry: Moving on to the re competition of our portfolio you can see that the floating portion decreased to 12, 9% compared to 13, 3% in the fourth quarter.

Sherry: And you already mentioned before we purchased mostly fixed rate securities. During the quarter. Do you think you are here you and positioned the balance sheet for a decreasing rate environment, while maintaining our high credit quality of the portfolio.

Sharymar Calderon Yepez: Moving on to the rate composition of our portfolio, you can see that the floating portion decreased to 12.9% compared to 13.3% in the fourth quarter. As Jerry mentioned before, we purchased mostly fixed-rate securities during the quarter to secure higher yields and position the balance sheet for a decreasing-rate environment, while maintaining a high credit quality of the portfolio. It is important to note that 80% of our available for sale portfolio has government guarantees, while the remainder is rated investment grade. Continuing on to slide 9, let's talk about the loan person.

Sherry: It is important to note that 80% over available for sale portfolio has the government guarantees while the remainder are rated investment grade.

Sherry: Continuing on to slide nine let's talk about the loan portfolio.

Sherry: At the end of the first quarter total gross loans were seven point of 1 billion down slightly three 6% compared to $7 26 billion at the end of <unk>.

Sherry: The decrease was primarily driven by the sale of $401 million in Houston based multifamily loans as previously disclosed.

Sherry: Well, we see a decrease of 40 basis points in the loan yield from seven 9% to in <unk> to seven 5% in <unk>. It was actually an increase in their normal like the yield of the portfolio when excluding the law recovery recorded during the period and the reduction into high yielding indirect consumer portfolio.

Sherry: Most notable in this line as a reduction in our CRE portfolio. Following the completion of the sale of the 401 1 million of Houston based multifamily loan.

Sharymar Calderon Yepez: At the end of the first quarter, total gross loans were $7.01 billion, down slightly 3.6% compared to $7.26 billion at the end of 4Q. The decrease was primarily driven by the sale of 401 million in Houston-based multi-family loans, as previously described. While we see a decrease of 4 basis points in the loan yield from 7.09% in 4Qs to 7.05% in 1Qs, there was actually an increase in the normalized yield of the portfolio when excluding the loan recovery recorded during the period and the reduction in the high-yielding indirect consumer portfolio. Most notable on this slide is the reduction in our CRE portfolio following the completion of the sale of the 401 million of Houston-based multi-family I will cover this portfolio in the next slide.

Sherry: I will cover this portfolio in the next slide.

Sherry: The single family residential portfolio was 151 billion, an increase of $33 5 million compared to $1 48 billion in for Q2 'twenty three.

Sherry: This amount includes the loans originated during the quarter, primarily done with private banking customers and commercial clients with residential income producing properties as collateral.

Sherry: Consumer loans has a 124 were $337 6 million a decrease of 101 4 million or 23, 1% quarter over quarter.

Sherry: This includes $106 3 million in higher yielding indirect loans purchase prior to 2022, that's a tactical move to increase yields we estimate that our current prepayment speed. This portfolio will run off by the first quarter of 2026.

Sherry: That's part of the announcement regarding the sale of our Houston franchise. We said, we had 230 million in remaining along that he will manage from Florida until they reach their maturity.

Sharymar Calderon Yepez: The single-family residential portfolio was $1.51 billion, an increase of $33.5 million compared to $1.48 billion in 4Q 2020. This amount includes loans originated during the quarter, primarily done with private banking customers and commercial clients with residential income-producing properties as collateral. Consumer loans as of 1Q24 were $337.6 million, a decrease of $101.4 million, or 23.1% quarter-over-quarter. This includes $106.3 million in higher-yielding indirect loans purchased prior to 2022 as a tactical move to increase. We estimate that at current prepayment speed, this portfolio will run off by the first quarter of 2020.

Sherry: As of today, the balance is $187 million, which are primarily larger commercial customers of which 94 million mature in 2024 and includes $61 million in construction loans.

Sherry: Moving onto slide 10 here, we show our CRE portfolio in greater detail, we have a conservative weighted average loan to value of 58% and debt service coverage of one three times as well as the strong sponsorship tiered profile based on a U N net worth and yourself experience for each sponsor.

Sherry: And so at the end of <unk> 'twenty, four we had 31% over theory portfolio in top tier borrowers.

Sherry: We have no significant tenant concentration in our CRE retail loan portfolio and the top 15 tenants represent 23% of the total major tenants include recognized national or regional grocery stores pharmacy, food and clothing retailers and fans.

Sharymar Calderon Yepez: As part of the announcement regarding the sale of our Houston franchise, we said we had $230 million in remaining loans that we would manage from Florida until they reach their maturity. As of today, the balance is $187 million, which is primarily larger commercial customers, of which $94 million mature in 2024 and include $61 million in construction. Moving on to Flight 10, here we show our theory portfolio in greater detail.

Sherry: Our underwriting methodology for theory include sensitivity analysis for multiple risk factors like interest rates interest rates and their impact on redemption of its paresh ratio vacancy and tenant retention.

Sherry: Turning to slide 11, let's take a closer look at credit quality credit quality events continue to be an area of focus and reserve levels are carefully monitored to provide sufficient coverage of the allowance for credit losses at the end of the first quarter with $96 1 million, an increase of 26% from $95 5 million at the close of the <unk>.

Sharymar Calderon Yepez: We have a conservative weighted average loan-to-value of 58% and debt service coverage of 1.3 times, as well as a strong sponsorship-tiered profile based on AUM, net worth, and years of experience for each sponsor. As of the end of 1Q24, we had 31% of our theoretical portfolio in top-tier borrowers. We have no significant tenant concentration in our CRE Retail Loan Portfolio, as the top 15 tenants represent 23% of the total. Major tenants include recognized national and regional grocery stores, pharmacies, food and clothing retailers, and vendors.

Sherry: This quarter.

Sherry: We recorded a provision for credit losses of 12 4 million in the first quarter, which was comprised of $11 7 million to cover charge offs.

Sherry: Super 4 million due to loan competition involving change it.

Sherry: Provision requirements were offset by $1 6 million release related to credit quality macroeconomic factors and factor.

Sherry: During the first quarter of 2024, there were net charge offs of $11 9 million of which $8 6 million were related to purchase consumerism.

Sherry: 6 million related to up here in New York multifamily note sale and $3 9 million were related to multiple retail and business banking loans. This was offset by $1.3 million in recovery.

Sharymar Calderon Yepez: Our underwriting methodology for CRE includes sensitivity analysis for multiple risk factors like interest rates and their impact on the debt service coverage ratio, vacancy, and tenant retention. Turning to slide 11, let's take a closer look at credit quality. Credit quality events continue to be an area of focus, and reserve levels are carefully monitored to provide sufficient coverage.

Sherry: Nonperforming loans to total loans are down to 43 basis points compared to 47 basis points last quarter.

Sherry: This was primarily due to charges mentioned 1.8 million due to loan sold 2 million due to pay downs and $1 9 million to two upgrades.

Sherry: Nonperforming assets totaled $50 5 million at the end of the first quarter, a decrease of $4 1 million compared to four Q 'twenty three primarily due to the decrease in S. E. L D.

Sharymar Calderon Yepez: The allowance for credit losses at the end of the first quarter was $96.1 million, an increase of 0.6% from $95.5 million at the close of the previous quarter. We recorded a provision for credit losses of $12.4 million in the first quarter, which was comprised of $11.7 million to cover charge-offs. $2.4 million due to loan compensation and volume changes. These provision requirements were offset by $1.6 million released related to credit quality, macroeconomic factors, and factorization.

Sherry: The ratio of nonperforming assets to total assets was 51 basis points down five basis points from the fourth quarter of 2023.

Sherry: In the first quarter of 2020 for the coverage ratio of loan loss reserve to nonperforming loans close at three two times up from two eight times at the end of last quarter and down from three eight times at the close of the first quarter of last year.

Sherry: Now moving onto slide 12, which is a new slide we added last quarter to better show the drivers of the allowance for credit losses.

Sherry: At the end of the first quarter. The allowance was $96 1 million, an increase of 25 million or 6% compared to $95 5 million at the close of the fourth quarter.

Sharymar Calderon Yepez: During the first quarter of 2024, there were net charges of $11.9 million, of which $8.6 million were related to purchase consumer loans, $0.6 million related to a CRE New York multi-family no-sale, and $3.9 million were related to multiple retail and business bans.

Sherry: The drivers of the a lot of movement. This quarter were $3 2 million in charge offs, and we're often by $12 4 million due to provision expense and $1 3 million in recovery.

Sherry: Previously mentioned the provision for the quarter of $12 4 million was primarily driven by incremental charge of $11 7 million.

Sherry: Primarily due to the indirect consumer portfolio.

Sharymar Calderon Yepez: This was offset by $1.3 million in recovery. Our non-performing loans to total loans are down to 43 basis points compared to 47 basis points last quarter. This was primarily due to the charges mentioned, $1.8 million due to the loan sold, $2 million due to paydown, and $1.9 million due to the upgrade. Non-performing assets totaled $50.5 million at the end of the first quarter, a decrease of $4.1 million compared to 4Q23, primarily due to the decrease in NPL. The ratio of non-performing assets to total assets was 51 basis points, down 5 basis points from the fourth quarter of 2023.

Sherry: If we exclude this portfolio the incremental charges for the quarter would have been $3 1 million.

Sherry: We introduced slide 13, this quarter to provide more color regarding special mentioned loans.

Sherry: As you mentioned the increased by 58 million or 126, 1% the.

Sherry: The increase is primarily due to four commercial loans totaling $60 8 million that also extended payment performance. We're doing rated special mention during the quarter due to covenant failures.

Sherry: These consist of one commercial loan relationship in Florida in the health care industry totaling $32 4 million and three commercial loan relationships in Texas that are not part of the sales of green.

Sharymar Calderon Yepez: In the first quarter of 2024, the coverage ratio of loan loss reserves to non-performing loans closed at 3.2 times, up from 2.8 times at the end of last quarter and down from 3.8 times at the close of the first quarter of last year. Now moving on to slide 12, which is a new slide we added last quarter to better show the drivers of the allowance for credit loss. At the end of the first quarter, the allowance was $96.1 million, an increase of.5 million or.6% compared to $95.5 million at the close of the fourth quarter. The drivers of the allowance movement this quarter were $3.2 million in charge of, and were offset by $12.4 million due to provision expense and $1.3 million in recovery.

Sherry: These types of loans totaling 28 4 million are in the health care car dealer and industrial machinery manufacturing industry.

Sherry: Approximately 40% of these exposures are secured with real estate. These.

Sherry: These increases were offset by $2 5 million in pay downs.

Sherry: Next I'll discuss net interest income and net interest margin on slide 14.

Sherry: Net interest income for the first quarter was 78 million down $3 7 million or four 5% compared to the previous quarter.

Sherry: Decrease was primarily driven by lower average balances on total loans following the sale of our Houston based multifamily portfolio.

Sherry: Lower average rates and securities available for sale and placement.

Sherry: Higher average volumes and money market accounts, and we continue to focus our efforts in relationship deposits as well as higher rates and interest bearing demand deposits and time deposit.

Sharymar Calderon Yepez: As previously mentioned, the provision for the quarter of $12.4 million was primarily driven by an incremental charge-out of $11.7 million, primarily due to the indirect consumer portfolio. If we exclude this portfolio, the incremental charges for the quarter would have been $3.1 million. We introduced Light 13 this quarter to provide more color regarding special mentions.

Sherry: The decrease in net interest income was partially offset by higher average rates and total loan even after adjusting for the effect of the low recovery in for Q higher average balances and securities and placement as a portion of the funds from the Houston multifamily loan sale was temporary place here well they already played in loan production and lower average rates and money.

Sherry: Accounts and she'll be offensive.

Sherry: In terms of really popping data considering there was no change in fed funds rate. This quarter. There was no beta calculation for this period. However, we observed a rate of approximately 49 basis points on a cumulative basis since the beginning of the interest rate cycle.

Sharymar Calderon Yepez: Special mention loans increased by $58 million, or $126.1 billion. The increase is primarily due to four commercial loans totaling $60.8 million that, although exhibit payment performance, were downgraded to special mention during the quarter due to covenant failure. These consist of one commercial loan relationship in Florida in the healthcare industry totaling $32.4 million and three commercial loan relationships in Texas that are not part of the sales agreement. These types of loans, totaling $28.4 million, are in the healthcare, car dealer, and industrial machinery manufacturing industries. Approximately 40% of these exposures are secured with real equipment.

Sherry: Laney effect of rate increases in transactional deposits and repricing of time deposits that had not repriced at current market rate.

Sherry: We also saw that the magnitude of the meda change from quarter to quarter and all of the increase in cost of funds is compressing, which is indicative of a flooding trend or the nearing of the inflection point in future period.

Sherry: Moving on to net interest margin we show in slide 15, the contribution can name from each of its component.

Sherry: Mentioned NIM for the first quarter was 351% down by 21 basis points quarter over quarter. This change. However include 16 basis points in connection with the low recovery recorded in <unk>.

Sharymar Calderon Yepez: These increases were offset by $2.5 million in pay. Next, I'll discuss net interest income and net interest margin on slide 14. Net interest income for the first quarter was $78 million, down $3.7 million or 4.5% compared to the previous quarter. The decrease was primarily driven by lower average balances on total loans following the sale of our Houston-based multi-family project, lower average rates, and securities available for sale in place.

Sherry: So excluding the positive impact of this none in the prior quarter the net change in NIM quarter over quarter, it's only five basis points.

Sherry: The small change in the name was primarily driven by the reduced interest income, resulting from the Houston multifamily sales, while still having the interest expense of the into institutional deposits and our cost of funds for an extended part of the quarter.

Sherry: In the short term, we expect the margin to be stable due to higher yielding loan production, partially offset by the reduction of the indirect consumer loan portfolio and deposit costs given market competition for domestic deposits and demand for hiring.

Sharymar Calderon Yepez: Higher average volumes in money market accounts as we continue to focus our efforts on relationship deposits, as well as higher rates in interest-bearing demand deposits and time deposits. The decrease in net interest income was partially offset by higher average rates in total loans, even after adjusting for the effect of the loan recovery in 4Q. Higher average balances in securities and placements, as a portion of the funds from the Houston Multifamily Loan Sale was temporarily placed here while they were deployed in loan production, and lower average rates in money market accounts and official BFM.

Speaker Change: I'll provide some additional color on NIM and my final remarks.

Speaker Change: Moving on to interest rate sensitivity on slide 16, you can see the asset sensitivity of our balance sheet with 53% over a long having floating rate structure and 58% repricing within a year.

Speaker Change: Also we continue to position our portfolio for a change in rate cycle by incorporating rate floors, when originating adjustable rate loan we.

Speaker Change: We currently have 50% of our adjustable loan portfolio with Fleury and.

Sharymar Calderon Yepez: In terms of our deposit beta, considering there was no change in the Fed Funds Rate this quarter, there is no beta calculation for this period. However, we observed a beta of approximately 49 basis points on a cumulative basis since the beginning of the interest rate up cycle, via the combined effect of rate increases in transactional deposits and repricing of time deposits that had not repriced at current markets. We also saw that the magnitude of the beta change from quarter to quarter, as well as the increase in cost of funds, is compressing, which is indicative of a flattening trend or the nearing of the inflection point in future periods.

Speaker Change: Additionally, you can see here then within the variable rate mode, 36% are indexed a sofa.

Speaker Change: Additionally, we continue to execute asset liability management strategies, including hedging interest rate risk and we expect a downward trend in interest rates starting in the second half of 2024.

Speaker Change: Our NIM sensitivity profile remains stable compared to the previous quarter. We also show here the sensitivity of our available for sale portfolio to choking to showcase our ability to withstand additional negative valuation changes, although we should start seeing an organic improvement in AUC on monetary policy changes and interest rates start to decrease later in the year.

Sharymar Calderon Yepez: Moving on to net interest margins, we show in slide 15 the contribution to NIM from each of its components. As mentioned, NIM for the first quarter was 3.51%, down by 21 basis points quarter-over-quarter. This change, however, includes 16 basis points in connection with the loan recovery we recorded in 4Q. So excluding the positive impact of this loan in the prior quarter, the net change in NIM quarter over quarter is only five basis points.

Speaker Change: We will continue to actively manage our balance sheet to best position or bad for the upcoming period.

Speaker Change: Continuing to slide 17, non interest income for the first quarter was $14 5 million down by $5 1 million or 26, 1% from $19 6 million in the fourth quarter of 2023.

Speaker Change: The decrease was primarily driven by the absence of the gain on the early extinguishment of English it'll be advances during the fourth quarter of 2023, and lower and lower loan level derivative income.

Speaker Change: This decrease in noninterest income was partially offset by higher additional income stemming from the restructuring of bolt bully policies that begin in the fourth quarter of 2023 and higher mortgage banking income.

Sharymar Calderon Yepez: This small change in the name was primarily driven by the reduced interest income resulting from the Houston multifamily sale, while still having the interest expense of the institutional deposits in our cost of funds for an extended part of the quarter. In the short term, we expect the margin to be stable due to higher-yielding loan production, partially offset by the reduction in the indirect consumer loan portfolio and deposit costs given market competition for domestic deposits and demand for higher rates. I'll provide some additional color on NIMH in my final remarks.

Speaker Change: Average assets under management totaled $2 36 billion F&B end of the first quarter up $68 5 million or 3% from the fourth quarter. This increase was primarily driven by market valuation and net new assets.

Speaker Change: Turning to slide 18, first quarter noninterest expenses were $66 6 million down $43 1 million or 39, 3% from the fourth quarter.

Sharymar Calderon Yepez: Moving on to interest rate sensitivity, on slide 16, you can see the asset sensitivity of our balance sheet with 53% of our loans having floating rate structures and 58% repricing within a year. Also, we continue to position our portfolio for a change in the rate cycle by incorporating rate floors when originating adjustable rates. We currently have 50% of our adjustable loan portfolio with floor rates. Additionally, you can see here that within the variable rate long, 36% are indexed to fill.

Speaker Change: The quarter over quarter decrease was primarily driven by the absence of non routine items that were included in for Q as well as lower professional and other fees compared to four Q lower occupancy and equipment expenses due to the absence of software services in the first quarter.

Speaker Change: The decrease in noninterest expense was partially offset primarily by higher salaries and employee benefits and increase in FDIC assessment base during the quarter.

Speaker Change: In terms of our team we ended the quarter with 696 FTE slightly higher from 682, we had in <unk>.

Sharymar Calderon Yepez: Additionally, we continue to execute asset liability management strategies, including hedging interest rate risk, as we expect a downward trend in interest rates starting in the second half of 2025. Our NIMS sensitivity profile remains stable compared to the previous quarter.

Speaker Change: Moving on to Slide 19, we reported first quarter diluted income per share of 31 cents on net income of $17 1 million.

Speaker Change: Mentioned earlier, we had a decrease in noninterest expense items this quarter, which resulted in a favorable net impact of non routine items diluted EPS.

Sharymar Calderon Yepez: We also show here the sensitivity of our available for sale portfolio to showcase our ability to withstand additional negative valuation changes, although we should start seeing an organic improvement in AOCI as monetary policy changes and interest rates start to decrease later in the year. We will continue to actively manage our balance sheet to best position our bank for the upcoming period. Continuing to slide 17, non-interest income for the first quarter was $14.5 million, down by $5.1 million or 26.1% from $19.6 million in the fourth quarter of 2020.

Speaker Change: I will now give some color of our outlook for Q 'twenty, four and 'twenty 'twenty four overall.

Speaker Change: Regarding growth, we estimate our balance sheet to grow between 200 and $250 million, we foresee organic deposit growth to continue to be strong we will use the Pos growth and current liquidity to fund our loan production.

Speaker Change: We expect the NIM to be stable compared to fourth Q2, <unk> with results expected in the range of $3 50, and 355, and we onboard loan production at higher rates, partially offset by the reduction of the indirect consumer loan portfolio and deposit costs.

Speaker Change: Regarding noninterest income, we expect it to be in the range of $14 five through $15 5 million.

Sharymar Calderon Yepez: The decrease was primarily driven by the absence of gains on the early extinguishment of FHLB advances during the fourth quarter of 2023 and lower loan-level derivative income. This decrease in non-interest income was partially offset by higher additional income stemming from the restructuring of BOLI policies that began in the fourth quarter of 2023 and higher mortgage banking income. Amerant's assets under management totaled $2.36 billion as of the end of the first quarter, up $68.5 million, or 3% from the fourth quarter.

Speaker Change: We expect operating expenses to be closer to 68 million and we onboard new team members towards her for all the time.

Speaker Change: Finally, we expect the provision for credit losses to be in or around eight to 12 million next quarter and we do expect asset growth as I. Previously mentioned this amount will reflect the impact of the relief and we transferred the Houston in our portfolio to held for sale following the recently announced Texas franchisee.

Speaker Change: I'll now pass it back to Jerry for closing remarks.

Sharymar Calderon Yepez: This increase was primarily driven by market valuations and net new assets. Turning to Flight 18, first quarter non-interest expenses were $66.6 million, down $43.1 million, or 39.3% from the fourth quarter. The quarter-over-quarter decrease was primarily driven by the absence of non-routine items that were included in 4Q, as well as lower professional and other fees compared to 4Q, and lower occupancy and equipment expenses due to the absence of software services in the first quarter.

Speaker Change: Thanks, Jerry so before we move on to Q&A I'd like to briefly comment on some of the initiatives. We're working on to accelerate the execution of our growth plans here in Florida.

Jerry: So as we previously announced on April 17th we just entered into a letter of intent for a highly visible and accessible space for our new Palm Beach Regional office, along with a new banking center we.

Jerry: We do have an executive search underway for a new central Florida market President, we intend to open three or more banking centers over the next 24 months in the greater Tampa area and we just opened our new Broward County Regional headquarter office. This week as I just previously mentioned.

Sharymar Calderon Yepez: The decrease in non-interest expense was partially offset primarily by higher salaries and employee benefits and an increase in the FDIC assessment base during the quarter. In terms of our team, we ended the quarter with 696 FTEs, slightly higher from 682 we had in 2014. Moving on to slide 19, we reported first quarter diluted income per share of $0.31 on net income of $17.1 million. As mentioned earlier, we had a decrease in non-interest expense items this quarter, which resulted in a favorable net impact of non-routine items on our diluted EPI.

Jerry: We also intend to open one additional banking center in Miami for which negotiations are in process and we're actively recruiting for additional commercial relationship bankers and private bank officers in Broward County.

Jerry: Yeah.

Jerry: I'll be Tony integrate Tampa market.

Jerry: First quarter of higher <unk> team members, who had recently started or are starting in April 2024. So in summary, we remain committed to the execution of our strategic plan drive profitable growth and to be the bank of choice in the markets. We serve so with that I'll stop and sharing I'll look to answer any questions. You have if you would operator. Please open the line for Q&A.

Sharymar Calderon Yepez: I'll now get some color on our outlook for QQ24 and 2024 overall. Regarding growth, we estimate our balance sheet to grow between $200 and $250 million. We foresee organic deposit growth to continue to be strong, and we will use deposit growth and current liquidity to fund our loan production. We expect the NIMS to be stable compared to 4Q, with results expected in the range of $350 and $355, as we onboard loan production at higher rates, partially offset by the reduction of the indirect consumer loan portfolio and deposits.

Speaker Change: Thank you.

Speaker Change: Thank you at this time, we will be conducting a question and answer session. If you would like.

Speaker Change: To ask a question. Please press star one on your telephone keypad.

Speaker Change: Confirmation tone will indicate your line is in the question queue you.

Speaker Change: You May press star two if he would like to remove your question from the queue for participants using speaker equipment. It may be necessary to pick up your handset before pressing the star.

Speaker Change: And our first question comes from the line of Tim Mitchell with Raymond James. Please proceed with your question.

Sharymar Calderon Yepez: Regarding non-interest income, we expect it to be in the range of $14.5 to $15.5 million. We expect operating expenses to be closer to $68 million as we onboard new team members towards our growth. Finally, we expect provision for credit losses to be in or around $8 to $12 million next quarter, as we do expect asset growth, as I previously mentioned. This amount will reflect the impact of the release as we transfer the Houston Loan Portfolio to Hill for Sale following the recently announced Texas franchise. I will now pass it back to Jerry for his closing remarks.

Speaker Change: Yeah.

Tim Mitchell: Hey, good morning, everyone.

Tim Mitchell: Good morning, good morning.

Tim Mitchell: Just wanted to start on the special the drop in special mention loans. This quarter I. Appreciate the color there share you gave in the prepared remarks, but.

Tim Mitchell: Is there any incremental color you could give on kind of what drove the downgrade what where the covenant breaches.

Tim Mitchell: What do you think the ACL needs to especially right now or do we need to migrate that little more north to south.

Tim Mitchell: You kind of think about credit going forward.

Speaker Change: Sure so when looking at special Mandan, and specifically the claims piece some.

Gerald Paul Plush: Thanks, Shary. So before we move on to Q&A, I'd like to briefly comment on some of the initiatives we're working on to accelerate the execution of our growth plans here in Florida. So, as we previously announced on April 17th, we just entered into a letter of intent for a highly visible and accessible space for our new Palm Beach regional office, along with a new banking center. Additionally, we do have an executive search underway for a new Central Florida market president.

Speaker Change: Some of them are related like a nice timely audit financial you must be received the other one is related to metrics like the trailing 12 month leverage, but although we're seeing some deterioration. There. We're also monitoring the progress and positive trend in EBITDA. So it's it's a mix some of them are information.

Speaker Change: And some of them are metrics, but in essence, we are not seeing something a pervasive or we are not being an indicator right now of a further downgrades.

Gerald Paul Plush: We intend to open three or more banking centers over the next 24 months in the greater Tampa area. And we just opened our new Broward County Regional Headquarters office this week, as I just previously mentioned. We also intend to open one additional banking center in Miami, for which negotiations are in process. And we're actively recruiting for additional commercial relationship bankers and private banking officers. I'll be joining you in the great Tampa.

Speaker Change: Awesome. Thank you and then touching on the kind of capital you're going to get from this Houston sale that you guys announced last week.

Speaker Change: How should we think about the capital deployment from that you mentioned or maybe potential bond restructuring in the slides or do you think maybe it leaned a little bit more into the buyback I'm just kind of wanted to get a.

Gerald Paul Plush: During the first quarter, we hired 12 team members who had recently started or are starting in April of 2024. So, in summary, we remain committed to the execution of a strategic plan, driving profitable growth, and being the bank of choice in the markets we serve. So with that, I'll stop, and Shary and I will look to answer any questions you have. If you would, operator, please open the line for Q&A. Thank you.

Speaker Change: Flair for what do you think youre going to do with that capital and maybe is there like a C. T. One level you'd like to stay above after you kind of deploy those proceeds.

Jerry: Yes, it's Jerry.

Jerry: From a CET one perspective, I think we want to be certainly around the 10% level. We're happy to see that we popped back above that I think as it relates to how we will deploy capital I think you know there's a combination of things certainly buybacks will be considered we do have.

Operator: Thank you. At this time, we will be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is busy. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key. And our first question comes from the line of Tim Mitchell with Raymond James. Please proceed with your question.

Speaker Change: A program in place authorizing us for up to $20 million and we do.

Speaker Change: We need capital for growth you know our expectations are where we're on a really good trajectory right now on both sides of the balance sheet and so some of the obviously you'll be needed to because we're gonna grow through Oh, my expectations right now even Oh when I gave you guys the number.

Tim Mitchell: I just want to start on the special mention loans this quarter. I appreciate the color there, Shary, you gave in your prepared remarks, but just any incremental call you could give on kind of what drove the downgrade, what were the covenant breaches, and you know, what do you think the ACL needs to be, is it sufficient right now, or do we need to migrate that a little more north as you kind of think about credit going forward?

Speaker Change: For April I mean doing $150 million in production already month to date should give you guys. An indication that you know all of these additional people that we've been bringing on are driving in a lot of incremental growth. So I think you know you'll get to see this play out over time, but I think we want to have flexibility.

Speaker Change: So for supporting growth for buybacks prudent buybacks I think also for we'll always evaluate based on earnings you know, where we are on the dividend side as well.

Sharymar Calderon Yepez: Sure, so when looking at special mentions and specifically the finance piece, some of them are related to timely financial statements being received. The other one is related to metrics like the trillion 12-month leverage. But although we're seeing some deterioration there, we're also monitoring the progress and positive trend in EBITDA. So it's a mix. Some of them are information, some of them are metrics, but in essence, we are not seeing anything pervasive, or we are not seeing an indicator right now of a further downturn.

Speaker Change: Yeah.

Speaker Change: Oh, but ultimately it would hold steady with that we will see consistency in earnings so sure.

Speaker Change: Appreciate it and then maybe just one last one for me I think initially in the fourth quarter slides you guys talked about 15% annualized loan growth or year. If I just do a quick math on that $250 million for the quarter, that's about like 10%.

Tim Mitchell: And then touching on the kind of capital you're going to get from this Houston sale that you guys announced last week. How do we think about the capital deployment from that? You mentioned maybe a potential bond restructuring in the slides, or do you think maybe we should lean a little bit more into the buyback? I just kind of want to get a feel for what you think you're going to do with that capital, and maybe there is like a CET-1 level you'd like to say above after you kind of deploy those proceeds? Yeah.

Speaker Change: Do you think maybe yeah, I think as I mentioned, a few rate cuts.

Speaker Change: And in the back half of the R&D do you expect lender, if you kind of pick up through the year. Okay. Yeah.

Speaker Change: Yeah, Yeah, Hi, Colorado, absolutely absolutely, we do see it ticking up over the course of the year.

Speaker Change: Well I think again with his addition, yeah I think again when factoring in the these folks you know if you could give them 60 90 days to start hitting stride and our expectation is to get all our hiring done here between.

Gerald Paul Plush: Yeah, it's Jerry. From a CET1 perspective, I think we want to be certainly around the 10% level. We're happy to see that we pop back above that. I think as it relates to how we'll deploy capital, I think, you know, there's a combination of things. Certainly buybacks will be considered. We do have a program in place authorizing us for up to $20 million.

Speaker Change: Between now and the end of the second quarter. So that we've got you know positive contributions from all the new folks we've added in the course of the year.

Speaker Change: Thanks for taking thanks for taking my questions guys.

Speaker Change: Absolutely have a good day.

Speaker Change: Yes.

Speaker Change: Thank you. Our next question comes from the line of Freddie Strickland with Janney Montgomery Scott. Please proceed with your question.

Gerald Paul Plush: And we do need capital for growth. You know, our expectations are that we're on a really good trajectory right now on both sides of the balance sheet. And so some obviously will be needed because we're going to grow through, you know, my expectations right now. Even, you know, when I gave you guys the number for April, I mean, doing $150 million in production already month to date should give you guys an indication that, you know, all these additional people that we've been bringing on are driving a lot of incremental growth.

Feddie Justin Strickland: Hey, good morning, everybody.

Feddie Justin Strickland: Okay. Okay.

Feddie Justin Strickland: Just want to make sure I'm thinking through the charge offs I appreciate the prepared comments on that.

Feddie Justin Strickland: Did you basically just see a little bit more of an acceleration of the consumer book than you were anticipating here and you know should we think about that as maybe some of the charge offs that we thought were going to come from consumer later.

Gerald Paul Plush: So I think, you know, you'll get to see this play out over time. But I think we want to have flexibility. So for supporting growth, for buybacks, prudent buybacks, I think also we'll always evaluate based on earnings, you know, where we are on the dividend side as well. But at this point, we're told, steady with that, we must seek consistency in earnings.

Feddie Justin Strickland: Just you went ahead and some of that already happened in the first quarter. So maybe theres a little less to go later on just just trying to think about how to think through.

Feddie Justin Strickland: How that consumer book plays out and how much of a factor it was this quarter.

Speaker Change: Sure. So if we if we go back to the $13 1 million in charge offs, we had this quarter and we break it down into two components right. We had $8 six that's related to the indirect consumer everything else was regarding our portfolio and that's more or less less than six basis points, but going back to the 686 on the indirect if we and we look.

Tim Mitchell: I appreciate it. Then, maybe just one last one for me. I think initially in the fourth quarter slides, you guys talked about 15% annualized land growth through the year. If I just do a quick math on that, $250 million for the quarter, that's about 10%. Do you think maybe, I think you mentioned a few rate cuts you're expecting in the back half of the year. Do you expect land growth to kind of pick up through the year?

Speaker Change: At the competition over vintages were gonna see that are both programs in all of our vintages have already reached the peak so you're absolutely right. What we're expecting going forward from charge offs is not adopt the same loss level than we experienced in the past.

Tim Mitchell: Yeah, absolutely. Absolutely, we do see it ticking up over the course of the year. I think again, factoring in these folks, you know, if you give them 60-90 days to start hitting stride, you know, our expectation is to get all our hiring done here between now and the end of this second quarter so that we've got, you know, positive contributions from all the new folks we've added in the course of the year. Perfect. Thanks for taking my questions, guys. Absolutely.

Speaker Change: Got it that's really helpful.

Speaker Change: And then just.

Speaker Change: Wanted to talk about the commercial healthcare relationship as well can you give a little more specific on what type of health care is that is it like a managed care or I was just curious.

Speaker Change: <unk>, what what type of.

Speaker Change: Health care it is.

Speaker Change: Sure. So on that particular health care relationship its history, it's a surgical center specialty health care.

Gerald Paul Plush: Absolutely. Have a good day.

Operator: Thank you. Our next question comes from the line of Feddie Strickland with Janie Montgomery Scott. Please proceed with your question.

Speaker Change: Relationship.

Speaker Change: Got it.

Speaker Change: And then just last piece here I'm, just thinking through the Houston exit later in the year.

Feddie Justin Strickland: Hey, good morning, everybody. I just want to make sure I'm thinking through the charge-offs. I appreciate the report's comments on that. I mean, did you basically just see a little bit more of an acceleration of the consumer book than you were anticipating here? And, you know, should we think about that as maybe some of the charge-offs that we thought were going to come from consumers later? Just, you went ahead. Some of that already happened in the first quarter, so maybe there's a little less to go later on. Just trying to think through how that consumer book plays out and how much of a factor it was this quarter.

Speaker Change: I've tried to do some preliminary look you're doing some of the math myself I mean do you expect an overall positive impact to the margin I mean, I know, there's probably maybe had yield come down some because youre not going to get the same yield on.

Speaker Change: Short term instruments that are going to get on the loans, but on the flip side I can see that the Houston footprint is a higher cost of deposits than your overall cost. So I'm just trying to think through later in the year, whether that's a bit of a tailwind to the margin.

Sharymar Calderon Yepez: Sure, Feddie. So, if we go back to the $13.1 million in charges we had this quarter, and we break it down into two components, right? We had $8.6 million that was related to the indirect consumer. Everything else was related to our portfolio, and that's more or less less than six bases. But going back to 8.6 on the indirect, if we look at the composition of our vintages, we're going to see that both programs and all of our vintages have already reached a peak. So you're absolutely right. What we're expecting going forward from Charge Up is not at the sustained loss level that we experienced.

Speaker Change: Sure. So at the point in time, when the transaction closes from a margin perspective, we do expect to see some improvement as you were.

Speaker Change: We're mentioning it comes with a yield on loans, but it's partially offset by a higher cost of funds. So we do expect some improvement on the NIM there and then from an overall P&L perspective, what we can expect to see is that although we're gonna be loosing temporarily some of that interest income it's gonna be a wash with the reduction of operating expenses. So it's kind of a pause.

Speaker Change: Or miners will take us a twin that net effective.

Speaker Change: No.

Speaker Change: But the the next step with Dod is then we will be able to redeploy into loan production here. So we with all of that factor and we do expect any proof margin. Yeah. I think just add to share. His remarks, we're getting better spreads on production. We're booking right now obviously, we're getting higher pricing.

Feddie Justin Strickland: Got it. That's really helpful.

Feddie Justin Strickland: And then just, you know, wanted to talk about the commercial health care relationship as well. Can you be a little more specific about what type of health care it is? Is it like managed care? Or I was just curious exactly what type of health care it is.

Speaker Change: And fees on that then that existing portfolio, so that will more than compensate if the funding we need to raise as higher cost in that 4% I believe it is in Houston right now right.

Sharymar Calderon Yepez: Sure, so in that particular healthcare relationship, it's a surgical center specialty healthcare.

Feddie Justin Strickland: And then just last piece here, just thinking through the Houston exit later in the year. I've tried to do some preliminary calculations here, doing some of the math myself. I mean, do you expect an overall positive impact on the margin? I mean, I know there's probably – yields might come down some because you're not going to get the same yield on short-term instruments that you're going to get on loans.

Speaker Change: Got it.

Speaker Change: Quick question just.

Speaker Change: Is the opening of these new offices and the teams and whatnot.

Speaker Change: <unk> already kind of implied in that I think you said $68 million expense guide for next quarter and does that kind of continue to go up throughout the year or can it be relatively flat from there.

Feddie Justin Strickland: But on the flip side, I can see that the Houston footprint has a higher cost of deposits than your overall cost. So just trying to think through later in the year whether that's a bit of a tailwind on the margin.

Sharymar Calderon Yepez: Sure, so at the point in time when the transaction closes, from a margin perspective, we do expect to see some improvement. As you were mentioning, it comes with yield on loans, but it's partially offset by a higher cost of funds.

Speaker Change: Yes.

Speaker Change: Houston transaction yeah.

Speaker Change: Yeah, that's where we're expecting the 68 could be a normalized level throughout the year.

Speaker Change: That's my question and that's it for me.

Sharymar Calderon Yepez: So we do expect some improvement in the NIM there. And then from an overall P&L perspective, what we can expect to see is that although we're going to be temporarily losing some of that interest income, we're going to be awash with the reduction in operating expenses. So it's kind of a plus or minus that will take us to a net effect of nothing. But the next step with that is that we will be able to redeploy into loan production here. So with all of that factored in, we do expect an improved margin. Yeah, I think.

Speaker Change: Yeah, that's factoring in the growth of our team members and everything that we have been mentioning in terms of growth.

Speaker Change: Got it thanks for the color guys.

Speaker Change: Thank you absolutely.

Speaker Change: Thank you. Our next question comes from the line of Russell Gunther with Stephens. Please proceed with your question.

Russell Elliott Teasdale Gunther: Hey, good morning, guys.

Russell Elliott Teasdale Gunther: Hey, good morning, good morning, just had.

Russell Elliott Teasdale Gunther: I just had a couple of follow ups first on the loan growth was very clear momentum is quite strong.

Russell Elliott Teasdale Gunther: We talked around maybe the 15% target year over year is that still good with the multifamily or you're kind of talking about that.

Gerald Paul Plush: Yeah, I think, just to add to Shary's remarks, we're getting better spreads on production. We're booking right now, and obviously, we're getting higher pricing and fees on that than on the existing portfolio. So that'll more than compensate if the funding we need to raise is higher cost than that 4%, I believe it is.

Russell Elliott Teasdale Gunther: Ah is a overall kind of number.

Speaker Change: So Russell if we if we look at the balance we had the fourth quarter and we compare it to our projection of growth, we could see from a 10% to 12% growth year over year. If we exclude the effect of the 400 million. If we add back that reduction of the 400 million, we could see a number closer to the 17% growth. So I know, it's a little bit.

Feddie Justin Strickland: Last quick question: is the opening of these new offices and the teams and whatnot already kind of implied in that? I think you said $68 million expense guide for next quarter, and does that kind of continue to go up throughout the year, or can it be relatively flat?

Speaker Change: And add back to be able to get to the number but in overall, we are expecting growth in the next quarters to make it to two.

Sharymar Calderon Yepez: Yeah, we're expecting the 68 to be a normalized level throughout the year. That's factoring in the...

Speaker Change: 2% to 17% growth excluding that Scott.

Feddie Justin Strickland: Got it. Thanks for the call, guys.

Operator: Thank you. Our next question comes from the line of Russell Gunther with Stevens. Please proceed with your question.

Russell: I appreciate the clarification and that's very helpful and again very clear the opportunity Australia guys.

Russell Elliott Teasdale Gunther: Hey, good morning, guys. Good morning.

Russell: And then on the expense side so.

Russell Elliott Teasdale Gunther: I just had a couple follow-ups. The first is on the loan growth, very clear momentum is quite strong. We talked around maybe the 15% target year over year. Is that still good with the multifamily, or are you kind of talking about that? as an overall kind of number.

Scott: Very clear guidance from a core basis going forward could you just remind us of what the.

Speaker Change: P&L save will be on expenses from the Houston exit I think you've quantified.

Russell: The number of folks, leaving and maybe expensive there, but sort of all in on the noninterest expense piece.

Sharymar Calderon Yepez: So, Russell, if we look at the balance we had in the fourth quarter and compare it to our projection of growth, we could see from a 10 to 12% growth year over year if we exclude the effect of the $400 million. If we add back that reduction of the $400 million, we could see a number closer to 17% growth. So I know it's a little bit of an add-on to be able to get to the number, but overall, we are expecting growth in the next quarters to make it to 17% growth excluding that piece.

Speaker Change: Yeah from a P&L perspective, and just to confirm Russell in the P&L impact in terms of Houston solely to expense. So it right. So that would be around 495 million.

Russell: Okay.

Speaker Change: Thanks, Sharon and then guys last one for me I noticed international deposits were up this quarter. I think you guys had sort of reengage some effort to try to grow those balances. If you could just give any update there on the dynamics this quarter and.

Russell Elliott Teasdale Gunther: I appreciate the clarification. That's very helpful.

Russell Elliott Teasdale Gunther: And again, very clear, the opportunity is strong, guys. And then on the expense side, so very clear guidance from a core basis going forward. Could you just remind us of what the P&L save will be on expenses from the Houston exit? I think you've quantified the number of folks leaving and maybe expenses there, but sort of all in on the non-interest expense piece.

Speaker Change: Strategic focus on that on those balances.

Sharymar Calderon Yepez: Yeah, I mean, we we continue our efforts on our international deposit gathering with.

Sharymar Calderon Yepez: Then the competition, we have some commercial accounts that have that are transactional in nature. What do we expect to have an international perspective, the more normal level are worried about them right now, but for the remainder of the year, Yeah, We're actually I think.

Russell Elliott Teasdale Gunther: Yeah, from a panel perspective, just to confirm, Russell, this is the panel impact in terms of Houston.

Sharymar Calderon Yepez: The expense solely. Right, so that would be around $4.5 million.

Sharymar Calderon Yepez: We've talked about this in the last call really and a continued to be an effect finding of how exactly we're going to expand even further there. So we'll be giving more color either by the end of the second quarter of what the game.

Sharymar Calderon Yepez: Right, so that would be around 4.9 to 5 million.

Russell Elliott Teasdale Gunther: Thanks, Shary. And then, guys, last one for me.

Russell Elliott Teasdale Gunther: I noticed international deposits were up this quarter. I think you guys have sort of reengaged an effort to try to grow those balances. If you could just give any update on the dynamics this quarter and your strategic focus on that, on those balances.

Sharymar Calderon Yepez: Yeah.

Sharymar Calderon Yepez: And playing into the balance of the year of two.

Sharymar Calderon Yepez: Two weeks out there, but we've got a number of initiatives you probably see press releases and appearances and things are going to be doing here, we'd love to May and June that'll that'll give you much more color as to how we're thinking about to expand there.

Gerald Paul Plush: Yeah, I mean, we continue our efforts with our International Deposit Gathering with... In the competition, we have some commercial accounts that are transnational in nature. What we expect to have an international perspective and a more normal level for the balance right now, but for the remainder of the year.

Speaker Change: Okay, Great Alright, Jerry Jerry Thank you very much for taking my question.

Speaker Change: Absolutely have a great day.

Gerald Paul Plush: Yeah, we're actually, I think we talked about this in the last call, really in a constant state of discovery of how exactly we're going to expand even further there. So we'll be giving more color, you know, either by the end of the second quarter on what the game looks like, and plans for the balance of the year to expand there, but we've got a number of initiatives you might see press releases and appearances and things we are going to be doing here you know in the month of May and June that'll give you much more color as to how we're thinking about expanding there.

Speaker Change: Thank you.

Jerry: We have reached the end of the question and answer session I'll now turn the call back over to CEO, Jerry flush for closing remarks.

Jerry: Thank you everyone for joining our first quarter earnings call. We appreciate your interest in Ameren as always and your continued support and have a great day.

Speaker Change: And this concludes today's conference and you may disconnect. Your lines at this time. Thank you for your participation.

Speaker Change: [music].

Russell Elliott Teasdale Gunther: Okay, great. All right, Jerry, and Shary, thank you very much for taking my question. Thank you. Absolutely.

Jerry: Hum.

Jerry: [music].

Gerald Paul Plush: Thank you. Absolutely, have a great day!

Gerald Paul Plush: Thank you, and we have reached the end of the question and answer session. I'll now turn the call back over to CEO Jerry Plush for closing remarks.

Jerry: Uh-huh.

Gerald Paul Plush: Thank you everyone for joining our first quarter earnings call. We appreciate your interest in Amerant, as always, and your continued support. Have a great day.

Jerry: [music].

Operator: And this concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.

Jerry: Mhm.

Jerry: Mhm.

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