Q2 2025 Amerant Bancorp Inc Earnings Call

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 Laura Rossi SVP head of Investor Relations. Thank you you may begin.

Speaker Change: Thank you Darryl good morning, everyone and thank you for joining us to review <unk> Bancorp's second quarter 2025 results on today's call are Gary <unk>, Chairman and CEO and shut them out of kind of their own senior executive Vice President and CFO.

Speaker Change: As we begin please note that discussions on today's call will contain forward looking statements within that hang off the Securities Exchange Act. In addition references will also be made to non-GAAP financial measures.

Greetings, welcome to amorites second quarter 2025 earnings conference call. At this time, all participants are going to listen. Only mode. The 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 Laura Rossi SVP, head of investor relations. Thank you. You may begin.

Speaker Change: Please refer to the company's earnings release or statements regarding forward looking statements as well as for information and reconciliation of non-GAAP financial measures still got measures I will now turn it over to our chairman and CEO Jerry Buss.

Speaker Change: Thank you, Daryl. Good morning, everyone. And thank you for joining us to review. Omron corpse second, quarter 2025 results.

Jerry Posh: On today's call are Jerry, Posh, chairman and CEO and Sheron. Senior Executive Vice President and CFO.

Speaker Change: Thank you Laura and good morning, everyone and thank you for joining us today to discuss <unk> second quarter 2025 resource.

Speaker Change: Youll notice we continue to evolve our approach to these calls including refining the slides we will cover today. So sure it's going to take the lead and commenting on results and asset quality and I'll wrap up our prepared remarks with some strategic outpace in order to allow ample time for Q&A.

Jerry Posh: As we begin, please note that discussions on today's call contain forward-looking statements within the meaning of the security exchange act. In addition references will also be made to none that Financial measures

Jerry Posh: Please refer to the company's earnings release for statement regarding what we're doing statements, as well as for information and Reconciliation of non-gaap financial measures to gaap measures.

Jerry Posh: I will now turn it over to our chairman and CEO Jerry buck.

Speaker Change: As I noted in our press release, we are pleased to be reporting improved results this quarter, which were driven by higher core pre provision net revenue along with a lower provision for credit losses, a lot of time and effort. This quarter was focused on asset quality and that will continue to be a top priority for us.

Jerry Buck: Thank you, Laura and good morning everyone and thank you for joining us today to discuss Amber's second quarter of 2025 results.

Speaker Change: Growth in <unk> was offset by payoffs and Paydowns in a number of deals we closed in Q2 have yet to fund.

Jerry Buck: Um you will notice we continue to revolve our approach to these calls including refining the slides. We will cover today. So Sherry's going to take the lead in commenting on results and asset quality and I'll wrap up our prepared remarks with some strategic updates in order to allow ample time for Q&A.

Speaker Change: We saw solid customer deposit growth in later, if competition for market share, which we utilize to grow our investment portfolio this quarter.

Jerry Buck: As I noted in our press release, we are pleased to be reporting. Improved results, this quarter, which were driven by higher poorer, pre-provision net revenue along with a lower provision, for credit losses.

Speaker Change: Our new banking centers continued to grow nicely and we've included the details by banking center and the supplemental slides.

Speaker Change: And we continued to selectively add key personnel to our team, which I'll comment on later in this presentation.

Jerry Buck: A lot of time and effort this quarter was focused on asset quality and that will continue to be a top priority for us low growth. In 2q was offset by payoffs and pay downs and the number of deals. We closed in 2q have yet to fund.

Speaker Change: So with that let me turn it over to Sherry now to cover <unk> results in detail. Thank you Jeremy and good morning.

Sherry: Let's turn to slide three.

Sherry: Here, you will see the highlights of our balance sheet.

Sherry: Total assets reached <unk> 3 billion as of the close of the second quarter.

Jerry Buck: We saw solid customer deposit growth in light of skip competition for market share, which we utilize to grow our Investment Portfolio. This quarter, our new banking centers, continue to grow nicely, and we've included the details by banking center and the supplemental slides.

Sherry: Anthony go ahead in the first quarter, we temporarily supplement centered on origination with purchases of investment securities.

Jerry Buck: And we continue to selectively. Add Key Personnel to our team, which I'll comment on later in this presentation.

Sherry: Total investment Securities were 2 billion up by 290, <unk>, Oh, no I'm going to just $1 million.

Sherry: Our mortgage backed securities were spent on many classifying upstream securities.

Jerry Buck: So with that, let me turn it over to Sheri. Now to cover 2. Key results in detail. Thank you. Jerry and good morning everyone. Let's turn to slide 3.

Sheri: Here, you will see the highlights of our balance sheet.

Sherry: <unk> 7 million arent available per sale.

Sherry: Both loans were down by 30 million to $7 2 billion, primarily driven by increased prepayments, which often loan production and support as well as some loans originated that are yet to fund.

Speaker Change: Total assets reached 10.3 billion as of the close of the second quarter.

Speaker Change: Temporary, supplemented loan originations with purchases of investment securities.

Sherry: On the deposit side total deposits were up by 151 6 million to $8 3 billion driven by growth in core deposit customer.

Speaker Change: Total investment Securities were 2 billion by 209.22 million of note of March 2000 of the Securities or mortgage back Securities, which the company classified as trading securities.

Sherry: Customer deposits grew by $223 million, partially offset by a planned reduction of 51 million in broker deposits.

Speaker Change: And 87 million are available for sale.

Sherry: Our assets under management increased by 130 to 142 million to $3 1 billion, primarily driven by higher market valuation and net new assets.

Speaker Change: The growth loans were down by 30 million to 7.2 billion, primarily driven by increased repayments which offered Loan Production in the court as well as some loans originated there yet to fund.

Sherry: Continue to see this as an area of opportunity for us to grow fee income going forward.

Speaker Change: Under the deposit site total deposit were up by 151.6 million to 8.3 billion. Your to my growth in court deposits.

Sherry: Looking at the income statement on slide four you'll see that we had strong pre provision net revenue driven by higher than previously projected net interest income and net interest margin.

Speaker Change: Customer deposits. Grew by 202.3 million partially offset by a plan reduction of 51 million in broker details.

Sherry: Our NIM was higher than projected at three 1% due to recovery of interest on commercial loans, including our non accrual loan that was fully paid off and another loan that had been fully charged off.

Speaker Change: Our assets under management increased by 132.42 million with 3.1 billion, primarily driven by higher market valuations and net new assets.

Speaker Change: We continue to see this as an area of opportunity for us to grow the income going forward.

Sherry: Lower cost of time deposits, resulting from lower average balances and repricing rates.

Sherry: Cost of ear nose and deeper fully repaid in April 2025.

Sherry: These increases were partially offset by higher average balances of interest bearing demand and money market deposit by prepayments, which often don't production. It took us 25 as well as higher average balances in the investment securities portfolio.

Speaker Change: Looking at the income statement on July 4th, you will see that we have strong pre-provision and revenue driven by higher than previously projected. Net interest income and net interest margin.

Speaker Change: Our name was higher than projected at 3.81% due to recovery of interest on Commercial loans, including a non-approval loan that was fully paid off and another loan that had been fully charged off.

Sherry: Net interest income was $90 5 million up $4 6 million, primarily driven by higher average balances of securities and lower average balances and rates sometimes impossible.

Speaker Change: Lower cost of time. Deposits recalling from lower, average, balances and replacing rates, and lower cost of deer notes at. These are fully repaid in April 2025.

Sherry: Provision for credit losses was one one.

Sherry: Down from $12 4 million from $18 4 million in the first quarter.

Speaker Change: Mint increases were partially offset by higher average. Balances of interest bearing, demand and money market deposit.

Sherry: Noninterest income was $19 8 million, while non interest expense was $74 for me.

Speaker Change: By free payments which opted Loan Production in 2225, as well as higher average, balances in the investment security portfolio.

Sherry: Looking back at the guidance you provided for noninterest expense for the second quarter, we had guidance at 71 5 million.

Sherry: The variance to actual results was primarily driven by non core expenses of one point to make.

Speaker Change: Net, interest income was 90.5 million up. 4.6 million, primarily driven by higher average, balances of security and lower average, balances and rates on time, deposits.

Sherry: Additionally, we incurred a one time 1 million in expenses I'm customer derivatives and he picks up 700000, when compared to the prior quarter.

Speaker Change: Permission for credit, losses was 6.1 million down to 12.44% from 18.4 million in the first quarter.

Sherry: Pre provision net revenue was higher at 35 million. It took us one five compared to $33 9 million and 125 and four PNR with $37 1 million an increase of five.

Speaker Change: Not interested income was 19.28 Million while not interested, expense was 74.4 Million.

Sherry: One 6 million or 17, 7% compared to 31 5 million and <unk> 25 a.

Sherry: A reconciliation of of course, the DNR and the impacts on Q ratio, that's shown in appendix, one people who didn't need presentation.

Looking back at the guidance provided for non-interest expense for the second quarter. We had guided to 71.5 minutes, the various 2. Actual results was primarily driven by non-core expenses of 1.2 million. Additionally, we incurred 1.1 million in expenses, on customer, derivatives and increase of 700,000 when compared to the prior quarter.

Jimmy: Jimmy This is slide five you can improvement across all capital metrics, we paid our quarterly cash dividend of 90 cents per share of common stock on May 32025.

Jimmy: And our board of directors, just approved a quarterly dividend of nine cents per share payable on August 30 of this year.

Speaker Change: Preparation and revenue was higher at 35.9 million and 22.5 compared to 33.9 million, and 1225 and 4, ppnr was 37.1 million, and increase of 5.6 million, or 17.7%, compared to 31.5 million, and 1 225.

Jimmy: During the second quarter, we also repurchased 275666 shares at a weighted average price of $18.14 per share Jerry will cover some additional notes on buybacks as part of his remarks later in this call.

Speaker Change: A Reconciliation of 4 ppnr and the impact on Q ratio is shown in appendix 1 included in this presentation.

Jimmy: Next up is like six you kind of give you made significant improvement in our Aro <unk> Aro <unk> this quarter at 90% and 10, 1% compared to 48% and five 3% respectively.

Speaker Change: Journey to slide 5, you can see Improvement of all capital metrics. We pay your quarterly cash dividend of 90 cents per share of Common Stocks on May 30th 2025.

Speaker Change: And reward of directors just approved. A quarterly dividend of 9 cents per share payable on August 30th of this year.

Jimmy: These metrics might be improved profitability just sports.

Jimmy: This quarter, we had $1 2 million in non routine noninterest expenses, which included an 800000 net loss on the sale of two Oreo property and approximately 400000 in salaries and employee benefit expenses in connection with the downsizing of our mortgage.

Speaker Change: During the second quarter, we also ref purchased 27566 shares at a weighted average price of $18.14 per share. Jerry will cover some additional notes on BuyBacks as part of this remarks later in this call.

Jimmy: Our core efficiency ratio was 66, 5% for our weight with 94% and core ROE was 10, 49%.

Speaker Change: Next up is slide 6. You can see we made significant improvement in our roast and Roe this quarter at 0.9% and 10.1% compared to 0.48% and 5.3% respectively.

Speaker Change: Both of these metrics, reflect the improved profitability discourse.

Jimmy: Turning to slide eight here you can see the roll forward of classified loans from the first quarter to the second quarter, showing a net increase of $9 3 million or four 5% to $215 working primarily due to a theory loans totaling 21 million downgraded to substandard.

Speaker Change: This quarter, we had 1.2 million in non- routine, non-interest expenses, which included an 800,000 net loss on the sale of 2, or a property and approximately 400,000 in salaries, and employee benefit expenses in connection with the downsizing of government mortgage.

If a tenant and debate and recognition.

Jimmy: Well, it's two commercial loans totaling $16 8 million and weighted from special mention and took commercials all totaling $18 3 million downgraded from pass.

Speaker Change: Our coefficient of ratio was 66.35% for our way was 0.94% and for row was 10.49%.

Jimmy: These downgrades were based upon receipt of a year of 'twenty 'twenty four and once you're 25 financials.

Speaker Change: Turning to slide 8 here, you can see the move forward of classified loans from the first quarter, to the second quarter, showing a net increase of 9.3 million or 4.5% to 215.44 million.

Jimmy: These were partially offset by approximately 50 mid $50 million in charge offs payoffs and loan yields.

Jimmy: Classified loans include nine loans totaling 134 million, knowing me and a premium package.

Jimmy: Let's move on to slide nine where we included a roll forward of nonperforming loans from the first quarter to the second quarter of 2025, showing a significant decrease of 41 million, mainly driven by a combination of payoffs loan sold paydowns and charge offs.

Speaker Change: As well as 2 commercial loans. Totaling 16.8 million. The upgraded from special mention and 2 commercial loans, totaling 18.3 million downgraded from PS.

Speaker Change: beat down rates were based on receipts of year in 2024 and 1225 financials

Speaker Change: These increases were partially offset by approximately 15 minutes, 50 million in charge of payoffs and loss.

Jimmy: Important to note that the.

Jimmy: Charge offs included three commercial loans totaling 16 million with 12 million previously.

Speaker Change: Classified loans include 9 loans, totaling 100, 134 minutes that remains in a Korean press.

Jimmy: Previously the different reserves.

Jimmy: Net pay standpoint in addition to the reduction in M. P. L. Two out of four older properties were sold during the quarter, therefore, reducing our Oreo balances 15 it.

Jimmy: Turning to slide 10, we show the look forward a special mentioned loans from the first quarter to the second floor and provide color on demand library of these changes.

Speaker Change: Let's move on to slide 9 where we included the role forward of non-performing loans. From the first quarter to the second quarter of 2025, showing a significant. Net increase of 41 million may be driven by a combination of payoffs loans, sold, pay downs and charges.

Jimmy: Special mentioned loans increased by 33 million, primarily driven by three CRE loan.

Speaker Change: It is important to note that the charge of included 3 commercial loans totally 16 million with 12 million previous previously, and specific Reserves.

Jimmy: 236 million that meet certain milestones.

Jimmy: However, there are ethical weight against simply such a quite long for body injured reserve personal guarantee or other structural enhancements. The increase in special mentioned loans, but also due to a four commercial block and multiple industry totaling 57 million. The brightest paper receipt of year end 2024 and first quarter.

Speaker Change: From an NPA standpoint. In addition to the reduction in NPO, 2 out of 4 order, properties, were sold during the quarter, therefore, reducing our order balance to 15 minutes.

Speaker Change: Chinese the flight 10. We showed the rules forward, a special mentioned. Loans from the first quarter to the second quarter and provide color on the main drivers of these changes.

Jimmy: 2019 by financials.

Jimmy: The increases were partially offset by 22 million in payoffs and further downgrades to classified previously mentioned.

Speaker Change: special mention loans increased by 33 million, primarily driven by 3, CR loans, totaling 36 million that missed, certain milestones,

Jimmy: Now moving on to slide 11, where which shows the drivers of the $11 7 million decrease in the allowance for credit losses.

Speaker Change: However, there are acceptable mitigants in place such as adequate loan to value insurance reserves personal guarantee or other structural enhancements.

Jimmy: The provision for credit losses were $6 1 million in the second quarter, excluding reserves for commitment. The provision was $3 6 million and was comprised of 6 million to cover net charge offs to one 2 million due to macroeconomic factors offset by means of $1 4 million for loan growth and $3 3 million.

Speaker Change: The increase in special mention loans was also due to 4 commercial loans, in multiple Industries, totally 57 million, the greatest based on receipts of year. End 2024 and first quarter 2025 financials,

Speaker Change: The increases were partially offset by 22 million in chaos and further down reach the classified previously mentioned.

Jimmy: To recovery.

Jimmy: During the second quarter of 2020 by newer gross charge offs of 18 six days related to three commercial loans totaling $60 million with choke me then soften that had previously been reserved one 7 million free data to purchase consumer golf, and one 1 million related to certain smaller retail and business banking.

Speaker Change: Now moving on to flight 11 where, which shows the drivers of the 11.7 million increase in the allowance for credit losses.

Jimmy: This was offset by $3 3 million recovery, primarily due to the recovery up 1 million related to a commercial loan previously charged off.

Speaker Change: The provision for credit. Losses was 6.1 million in the second quarter, excluding reserves for commitments. The provision was 3.6 million and was comprised of 6 million of Covenant, charge of 2.2 million due to my free economic factors offered by releases of 1.4 million, to, to Long growth and 3.3 million due to recovery.

Jimmy: Lastly, the coverage of the allowance for credit losses to total loans decreased to one 2% compared to one point or two 7% in the first quarter, primarily due to the charge offs in some specific reserves.

Speaker Change: During the second quarter of 2025, there were gross charge of of 18.6 million related to 3 commercial loans to lose 60 million with 12 million 12 million, previously, into the reserves.

Jimmy: Otherwise no specific reserves the ratio remained unchanged at 117%.

Speaker Change: 1.7 million related to purchase Consumer loans and 1.1 million related to certain smaller retail and Business Bank people.

Jimmy: Turning now to slide 12, I'd like to provide some details on our expectations for the third quarter of 2025.

Speaker Change: They look offset by 3.3 million in recovery, primarily due to the recovery of 1.9 million related to a commercial loan previously charged off.

Speaker Change: Lastly.

Jimmy: Starting with the deposit side, we can see he switched back 14% to 15% annual growth by year end 2025, even if this is not a linear during the third and fourth quarters.

Jimmy: Also note that we plan to further reduce broker deposits by at least $100 million and we think with either official be investors or incremental organic market.

Speaker Change: The coverage of the allowance for credit losses, the total loss decreased to 1.2% compared to 1.37% in the first quarter primarily due to the charge of income specific reserves. Otherwise, net specific reserve, the ratio remained unchanged at 1.17%

Jimmy: On the lending side, we expect to evidence loan production and growth of approximately 5% annually by here.

Speaker Change: join me now to slide 12. I'd like to provide some details on our expectations for the third quarter of 2025

Jimmy: And three Q, we project an increase in investment securities similar to what you saw into.

Jimmy: Unless you have profitability, we project, our net interest margin to be approximately 375% for the third quarter.

Speaker Change: starting with the deposit site, we continue to expect 14 to 15%, annual growth by year. End 2025, even if this is not linear during the third and fourth quarter,

Jimmy: We project non interest income to be at $17 5 million in Q and $18 5 billion in 14.

Speaker Change: Also notice that we plan to further reduce brokerage deposits by at least 100 million and replace with either official via advances or incremental organically profitable.

Jimmy: Regarding expenses, we expect them to be in line with what we reported at or noninterest expenses for two Q of $73 million based on recent key ambition for the fees and investment and continued expansion in Florida.

Speaker Change: On the lending side, we expect to evidence Loan Production and growth of approximately 5% annualized by Europe.

Speaker Change: and 32, we project an increase in investment security similar to what we saw in 2,

Jimmy: This is expected to be partially offset by cost reduction and average mortgage.

Speaker Change: Looking at profitability, we project our net interest margin to be approximately 3.75% for the third quarter.

Jimmy: We expect the ratio to be in the mid sixties, given the investment in April.

Jimmy: And as previously stated we are prioritizing our weight over all other metrics and continue to expect to reach 1% in the second half of 2025 contingent on any significant macroeconomic updates to be captured by the allowance model in the last quarter of a point on flight.

Speaker Change: We project non-interest income to be at 17.5 million in 3, kilos and 18.5 million in 42.

Speaker Change: Regarding expenses, we expect them to be in line with what we reported at 49, interest expenses for 2, cube of 73 million based on recent key additions to the team and investment in continued expansion in Florida.

Jerry Buss: And with that I pass it back to Jerry for additional comments a little differently.

Jerry Buss: Thanks Sherry.

Speaker Change: Turning to the final slide will cover I'm going to provide some color on the topics.

Speaker Change: This is expected to be partially offset by cost. Reductions in our mortgage. We expect the efficiency ratio to be in the mid-60s. Given the investment in growth.

Jerry Buss: Here so.

Jerry Buss: So first regarding mortgage as we reported last quarter, we've been executing on a plan to reduce the size and scope of our mortgage business transitioning from being a national mortgage originator to focusing solely on input rate mortgage lending to support our retail and private banking customer base.

Speaker Change: Make updates to be captured by the allowance model in the last quarter of 2025.

Speaker Change: And with that, I got it back to Jerry for additional comments in closing remarks.

Jerry Buss: We've been progressively reducing the FTE count toward our stated goal of under 20.

Jerry: Thanks Sherry finally turning to the final slide will cover. I'm going to provide some color on the topics that we've placed in here.

Jerry Buss: The process of transferring load zone into our core platform, we expect everything to be completed.

Jerry Buss: Here then early toward shoe.

Jerry Buss: Regarding where we stand with the opening of new banking centers.

Jerry Buss: Pedro thing, but first of our two new Miami Beach office seats in the third quarter with the second office in Miami Beach closer downtown Tampa banking centers to be opened in the fourth quarter.

Jerry Buss: Please note. We've also recently entered into an agreement on a highly visible location in St. Petersburg, we anticipated second quarter 2026, okay. There.

Jerry Buss: While we continue to look for opportunities in the greater Tampa marketplace.

Jerry Buss: You should know this new St. Pete location gives us three of the original six offices issue would contemplate.

Jerry Buss: But at this point, we're now looking at a longer time horizon to try to complete the rest of this expansion in 2026.

Jerry Buss: Let's talk a little bit about new people that we added in the quarter too risky business developed so on our first quarter call, we announced several key additions to our leadership team both in rescue business development and we noted we were going to continue to add talented individuals to both areas scattered in the coming months. So in the second quarter would be about it.

Jerry Buss: The special access and just this week, our new head of credit for C&I starts.

Jerry Buss: And both of these talented individuals have strong experience for larger commercial organizations.

Speaker Change: And on the business development side, we recently announced the addition of Bally Schafer, who joined us from having to head up our business development efforts out of our <unk>.

Jerry Buss: Recently opened West Palm Beach Regional office.

Jerry Buss: Joining us in August as our new head of loan syndications themselves, who as it demonstrated a proven track record of success at several well known institutions.

Jerry Buss: Definitely assist us immediately with our loan growth agenda as we continue to see new large relationship opportunities that recruit risk management, we need to participate in these deals with other banks.

Jerry Buss: Wrapping up my comments on talent additions, we have and will continue to selectively look for additions to build towards perhaps where it too much to say.

Jerry Buss: Our loan strategy going forward. So on our first quarter call. We noted that reduced loan growth may result in temporary increases in mortgage backed securities to offset any shortfalls that we saw.

Jerry Buss: That happened in the second quarter, so for the second quarter in a row, we were basically flat and loans outstanding quarter over quarter. Despite the fact, there was a significant amount of activity.

Jerry Buss: A couple of things are happening here.

Jerry Buss: Please note that asset quality is our top focus looking at number of construction deals year to date that have not funded yet and higher pay downs and a projected all contributed basically to having flat numbers quarter over quarter.

Jerry Buss: So it is fair to say that rebuilding our roadmap will need to come in the second half of 2025 and a big part of that will be boosted from recent talent additions. We've made like I've mentioned and there are more almost all of our regions.

Jerry Buss: So the new head of business development to do has a loan syndications and sales along with other additions.

Jerry Buss: Each of our locations will continue to help rebuild and boost our pipeline.

Jerry Buss: Let's talk about the continued emphasis we're putting on improving asset quality and reducing nonperforming assets.

Jerry Buss: Regarding asset quality I think needless to say further NPL reductions are a top priority for us right now and the need to continue to proactively address credit quality is paramount.

Jerry Buss: They recognize that work is also underway on further strengthening our risk culture now that we're a regional bank with the heightened scrutiny that comes with that.

The new additions to our team are already contributing and having an impact there.

Jerry Buss: And last on prudent capital management, and specifically on buybacks, so with respect to capital management, our intention remains the same.

Jerry Buss: The state.

Jerry Buss: We're going to take a prudent approach, which involves carefully balancing between retaining capital to support our growth objectives, compared with buybacks and dividends to enhance returns.

Jerry Buss: As Sheri mentioned in the second quarter, we utilized at 75, one plan to purchase shares up to 5 million in the court.

Jerry Buss: We expect to continue to prudently repurchase shares depending on trading volume and the price in the third quarter under the current remaining amount authorized.

Jerry Buss: And in conclusion. Please know that we continue to be steadfast in our focus on continuing to execute on our strategy to be the bank of choice in the markets we serve.

Jerry Buss: So with that I'll stop all our prepared remarks, and we will look forward to sharing our reported yesterday any questions. You have so operator, if you would please open the line.

Speaker Change: Thank you we will now be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad a.

Speaker Change: A confirmation tone will indicate your line is in the question queue. 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 keys.

Speaker Change: One moment, please while we poll for your questions.

Speaker Change: Our first questions come from the line of Russell Gunther with Stephens. Please proceed with your question.

Russell Gunther: Hey, good morning, guys.

Speaker Change: Thanks for taking the question.

Speaker Change: Wanted to start on the loan growth discussion I appreciate the color you've shared in the prepared remarks, maybe just bigger picture thinking maybe into 'twenty.

Speaker Change: Okay.

Speaker Change: Should we be thinking about more in the mid teens growth.

Speaker Change: Growth range going forward and is this reflective of a strategic refocus or is it more just market driven.

Speaker Change: Yeah.

Speaker Change: Yes.

Speaker Change: Thanks for the question no I think you should expect us.

Speaker Change: To be back in double digit growth.

Speaker Change: We've talked about very consistently that our deposits first focus is our number one priority I want to continue to emphasize the quality of the organic growth that we're seeing on the deposit side and I think as Sherri Bradfords, we're well into the mid <unk>.

Speaker Change: Teams on that side, and so that's enabling us to be able or I should say affording us the opportunity to also grow equally on the loan side.

Speaker Change: Our expectation is a rebuild of the pipeline and you know with some of the new additions and again I'm not going to elaborate on the number of additions on they are at levels that would have made but I think our focus and I said this on the call right now our focus has been solely as a top priority on asset quality.

Speaker Change: But our expectations are there are significant growth opportunities in the markets, we serve and we should be back into higher loan growth in coming quarters, and certainly in 2026, but we're going to continue to be very prudent and selective in the additions that we're gonna make oxide.

Speaker Change: Okay, great. Thank you Jerry.

Speaker Change: And then just one more for me switching gears onto the asset quality discussion so nice to see the NPA has come down this quarter.

Speaker Change: Charge offs were a bit higher than at least I was expecting so are we also saw a build back in classified and special mention would just be helpful to get a sense for how you guys are thinking about our realized losses in the back half of this year I think we've kind of talked about a 30 to 40 basis point range prior and I guess, just what's embedded in that one.

Speaker Change: Percent ROA expectation in the back half of 'twenty five.

Speaker Change: Yeah, Ralph I think the key thing and Sherri referenced it a couple of times in her remarks, we we had already provisioned for the the uptick that we took this quarter and charge offs.

Speaker Change: So again, you know the 12 of the $18 billion was already in specific reserves.

Speaker Change: So if you subtract that and then do the comparison from a charge off rate, we were relatively flat quarter over quarter. I think we were probably about five and a half range last quarter.

Speaker Change: Six and change this quarter.

Speaker Change: And that's still the core of again continuing to see the consumer indirect consumer charge offs and some of the business banking charge offs is primarily would be the key drivers there.

Jerry Buss: Jerry's question.

Stuart: Brookfield is 1% of our money not conclude reservation number we can go to Stuart.

Stuart: Early in the second half of the year. So that is still within our progression expectation because even without that I prepared from day one.

Speaker Change: Thank you guys for taking my questions.

Stuart: Thanks Ross.

Speaker Change: Thank you our next questions come from the line of Stephen Scotland with Piper Sandler. Please proceed with your questions.

Stephen Scotland: Great. Thanks, good morning.

Stephen Scotland: With the extending on that conversation with the as you mentioned the onetime alone could charge off already having systemic reserves with this 120 loan losses or kind of be the right way to think about.

Stephen Scotland: Okay.

Stephen Scotland: You need to reserve for the loan book currently.

Steve: Yes, Steve Great question.

Steve: Think that's right in the range you know allowance is always going to depend on what asset classes, you're growing it right and so you know I think thinking around the 121 25 range is probably a good way to think about us level.

Steve: Forward basis, but you know we'll.

Steve: Over a quarter and we'll certainly be talking about where we're growing and what the reserve requirements are I mean part of this quarter with growth coming from the quarter definitely benefited yeah. When you think about the flat from a loan growth standpoint.

Steve: That obviously is is actually a positive and the growth that we did book came in the investment side, but as Shari just referenced.

Steve: We look at it is you booked a provision.

Steve: Side with when you report the growth so.

Steve: Our expectation is.

Steve: As mentioned the provisional will tick up a little bit because we expect oil growth to start to come back again, and then one thing also to add that we have.

Steve: We're able to see the provision doesn't have a plenty of them on their commitments, so as and even moving to funding those loans you will see our beef up.

Steve: So basically you're going to see every department to be funded portion.

Steve: With that as well.

Steve: Thank you.

Steve: Sure that makes sense.

Steve: And then as you guys in those in the third quarter outlook looks like the margin is projected to be.

Steve: Down a touch can you walk me through some of the dynamics there I mean, given where the loan to deposit ratio had moved down in the expectation for growth to kind of resume I would actually.

Steve: Kind of theoretically thought there'd be incremental upside to the NIM on a positive remix, but maybe you can help me think he knows dynamics or where you think the NIM will trend beyond third quarter.

Steve: Sure. So I think the first step Stephen is to normalize as the name because this quarter, we had a component related to a recovery and we also had a component related to collection of an NPL. So if we normalize the name and we think about what would be different in the third quarter. The first thing I would say is we're expecting to have a slightly higher average balance.

Steve: Just on the wholesale side based on the timing of the maturities within the quarter.

Steve: And the replenishing of the of that wholesale funding at the.

Steve: Second thing is related to the securities portfolio, where we're going to see a full quarter effect of a higher security balance that well and definitely is the contribution to NII, it's slightly lower than the average of the NIM. So once we see that fully effect in the third quarter. It takes us to the 375 with that said we.

Steve: We're also working in terms of NPL resolution. So if we do.

Steve:

Steve: The collection of those items, then it will certainly impact NIM like it did this quarter. So what are the 375 net guidance towards a normalized NIM.

Steve: Okay.

Steve: What does that compare to this quarter and forgive me if I missed that but relative to the 381, what's the kind of normalized NIM would have been this quarter.

Steve: And let's take four basis points less more or less.

Steve: Okay great.

Steve: And then lastly for me you noted a higher around.

Steve: The loan loan syndications and sales.

Steve: I'm kind of curious how you guys are thinking about that component moving forward if that.

Steve: It's something where youre desiring to move up market and do some larger loans and kind of if there's a <unk>.

Steve: Maybe a limit of where you'd say hey at this dollar amount we want a syndicated everything out above this dollar amount or just kind of how we can think about that.

Steve: Okay.

Steve: Yes no.

Steve: Really appreciate that question. So we can clarify you know I think that the.

Steve: Since Stephen and you know one of the nice things I think that we see.

Steve: In terms of opportunities as we're getting a chance at a lot of significant size deals and to me I think that you have to look at this is you know number one it's really prudent risk management. If we go to look at a larger size credit, but let's just use gorilla.

Steve: <unk>, if you get a 50 million dollar opportunity. It's a great credit you know it's really good you know really well underwritten we go.

Steve: To hold 25 of that right and that's kind of where I want to make sure people understand we're not really looking at this by having this position and eventually building or probably some some support around.

Steve: Higher.

Steve: As our growth objective.

Steve: Starting to see we're going to bigger and bigger and bigger its just our ability to do more transactions and participate in more transactions gets exponential for us and again from a risk management standpoint, it's very prudent for us to be participating in these deals with us.

Steve: Second or even a third bank right and so I think this is part of it I'll call. It a natural evolution of the call.

Steve: I'll make a true regional bank.

Steve: We've had in the past and I and I know we've talked about this on calls have had several large exposures.

Only mode.

Operator: The 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 key. Please note, this conference is being recorded.

Steve: In the portfolio and our view is just you know we've got customers that are growing.

Steve: Another opportunity for us to continue to grow with them.

Laura Rossi: I will now turn the conference over to Laura Rossi, SVP, Head of Investor Relations. Thank you. Thank you, Daryl.

Steve: Those two.

Steve: They out outgrow us right. So while we're both growing.

Jerry Plush: Good morning, everyone, and thank you for joining us to review Amerant Bancorp's second quarter 2025 results.

Steve: Gives us that letter of where we can continue to maintain great relationships that we've seen from the very beginning and I just think it's okay.

Laura Rossi: On today's call are Jerry Plush, Chairman and CEO, and Sharymar Calderon, Senior Executive Vice President and CFO. As we begin, please note that discussions on today's call contain forward-looking statements within the name of the Securities Exchange Act.

Steve: So one more time, it's just really prudent risk management standpoint.

Steve: For a bank our size when you look at things from a capital perspective spoke to us.

Laura Rossi: In addition, references will also be made to non-GAAP financial Please refer to the company's earnings release or statement regarding forward-looking statements, as well as for information on reconciliation of non-GAAP financial measures to GAAP measures.

Steve: Yeah I appreciate that that's great color, Yeah, why don't you to grow in scale still managing the risk and the concentration. So again I appreciate all the time.

Steve: Okay. Thank you.

Speaker Change: Thank you our next questions come from the line of Michael Rose with Raymond James. Please proceed with your questions.

Jerry Plush: I will now turn it over to our Chairwoman and CEO, Sherry Plush. Thank you, Laura, and good morning, everyone, and thank you for joining us today to discuss Amerant's second quarter 2025 results. You'll notice we continue to evolve our approach to these calls, including refining the slides we will cover today.

Really good. And, you know, really well underwritten, we want to hold 25 of that, right? And that's kind of where I want to make sure people understand. We're not really looking at this, you know, by having this position and eventually building, you know, probably some some support around, you know, higher as a growth objective, you know, where you'll start to see, you know, we're going to bigger and bigger and bigger. It's just our ability to do more transactions and participate in more transactions gets exponential for us. And again from a risk management standpoint is very crude for us to be participating these deals with a second or even a, a third bank. Right? And so I think this is part of the I'll call it a natural evolution of of being a, becoming a true Regional Bank. Um, we've had in the past and I and I know we've talked about this on calls have had several

Michael Rose: Hey, good morning, everyone. Thanks for taking my questions.

Speaker Change: Maybe I'll just kind of ask the same question that I asked last quarter.

Russell Gunther: Jerry what where do you think you are in terms of the the evolution of asset quality, maybe we'll use hockey analogy. This time since the <unk>.

Jerry Plush: So, Shary is going to take the lead in commenting on results in asset quality, and I'll wrap up our prepared remarks with some strategic updates in order to allow ample time for Q&A. As I noted in our press release, we are pleased to be reporting improved results this quarter, which were driven by higher quarter pre-provisioned net revenue, along with a lower provision for credit loss. A lot of time and effort this quarter was focused on asset quality, and that will continue to be a top priority for us. Loan growth in 2Q was offset by payoffs and paydowns, and a number of deals we closed in 2Q have yet to fund.

Russell Gunther: There's just one but what periods do you think we are in and do you think I know, it's hard to make definitive statements, but do you think we've kind of already reached a peak in criticized classified.

Russell Gunther: And we should expect continued progression from here just given you.

Russell Gunther: What seems to be an improving macro backdrop just.

Russell Gunther: From trade deals being struck everything macro but seemingly off the worst case, just just wanted to get your view on where we are and how this plays out over the next year or so.

Russell Gunther: Yeah no. Thanks for the question look I think we put ourselves in a position with the talent we've added to the organization and the approach.

Jerry Plush: We saw a solid customer deposit growth in light of stiff competition for marketing. which we utilized to grow our investment portfolio this quarter.

Russell Gunther: Referenced this around heightened scrutiny that you go through as a regional.

Jerry Plush: Our new banking centers continue to grow nicely, and we've included the details by banking center in the supplemental slide. And we continue to selectively add key personnel to our team, which I'll comment on later in this presentation.

Russell Gunther: All right.

Russell Gunther: I think from our perspective, you know I wouldn't refer to it as earnings are periods as much as I think this is just part of the natural transition for us as an organization.

Sharymar Calderon: So with that, let me turn it over to Shary now to cover two key results in deep learning. Thank you Jerry, and good morning everyone. Let's turn to slide 3. Here you will see the highlights of our ballot. total assets reached $10.3 billion as of the close of the second quarter. As we guided in the first quarter, we temporarily supplemented loan originations with purchases of investment securities. Total investment securities were $2 billion, up by $209.2 million. Of note, $120 million of these securities are mortgage-backed securities, which the company classified as trading securities. and 87 million are available.

Russell Gunther: Our credit quality.

Russell Gunther: Recognizing any concerns that are out there as you know as <unk>.

Russell Gunther: Proactively as we can.

Russell Gunther: And addressing them and I think when you hire it have the talent around special assets that we've talked about the additions in terms of leadership in the on the credit side.

Russell Gunther: We're working on this with both sides right, where we're looking to always.

Russell Gunther: Well two ways to strengthen credit culture, the risk culture in the organization at the same point in time.

Russell Gunther: Later.

Russell Gunther: We recognize that.

Russell Gunther: Critically important to make sure that we can get consistency.

Sharymar Calderon: The gross loans were down by $30 million to $7.2 billion, primarily driven by increased prepayments, which offset loan production in the port, as well as some loans originated there yet to follow. On the deposit side, total deposits were up by $151.6 million to $8.3 billion during my growth and core deposits. Customer deposits grew by $202.3 million, partially offset by a planned reduction of $51 million in broker deposits. Our assets under management increased $132.42 million to $3.1 billion, primarily driven by higher market valuations and net new assets. We continue to see this as an area of opportunity for us to grow the income going forward.

Russell Gunther: And we don't want the credit box college for it so.

Russell Gunther: Not really.

Russell Gunther: I need to tell you one way or another wherever we are on something I would take it that the good news is it's been nonperforming loans continue to come down.

Russell Gunther: Put the right people in the right seats and I think that you know what.

Russell Gunther: Proactively and transparently.

Russell Gunther: We're in a better position today than we were last quarter and where we've been in the past and I.

Russell Gunther: That's the really important takeaway you should have with this.

Russell Gunther: Okay helpful. And then just maybe the tagging onto that I mean, you obviously brought in some some some people from some larger organizations last quarter, it's been 90 days.

Sharymar Calderon: Looking at the income statement on slide four, you will see that we have strong pre-provision net revenue, driven by higher-than-previously-projected net interest income and net interest margin. Our NIP was higher than projected at 3.81% due to recovery of interest on commercial loans including a non-approval loan that was fully paid off and another loan that had been fully charged off. Lower costs of time being paused is resulting from lower average balances and reprices. And lower costs on senior notes as these were fully repaid in April 2025. Planned increases were partially offset by higher average balances of interest-bearing demand and money market deposits by prepayment, which offset loan production in Q25, as well as higher average balances in the investment securities portfolio.

Russell Gunther: I know that it was it was kind of too early to lessons learned and maybe some policies procedures put into place, but if you can just share with us anything that you know it was.

Russell Gunther: Kind of materially changed.

Russell Gunther: From a underwriting or are a grading or just new production standpoint.

Russell Gunther: That would be helpful. Just to get more comfortable on the on the go forward and what you're putting on the books today. Thanks.

Russell Gunther: Yes, I mean, we are look at what.

Russell Gunther: I would call it sort of a.

Russell Gunther: Anything thats coming on the books today and I'll give you a great example, we're making sure that comes back to the syndications comments from level from the last series of questions, making sure that we don't get into a situation, where we can't retain credits ripe or that you know we're in a position where you know what.

Sharymar Calderon: Net interest income was $90.5 million of $4.6 million, primarily driven by higher average balances of security and lower average balances in rates on time default. Provision for credit losses was $6.1 million down to $12.4 million from $18.4 million in the first quarter. Non-interest income was $19.8 million, while non-interest expense was $74.4 million. Looking back at the guidance provided for non-interest expense for the second quarter, we have guided to $71.5 million. The various actual results were primarily driven by non-core expenses of $1.2 million. Additionally, we incurred $1.1 million in expenses on customer derivatives, an increase of $700,000 when compared to the prior quarter.

Russell Gunther: Such a forward look on our underwriting.

Russell Gunther: I think we're in a better place than we were in the past there.

Russell Gunther: But I also would tell you that look.

Russell Gunther: I think the key asset quality ratios that everyone should be looking at with US are nonperforming loans, because if we dictate that alone has to go on non accrual.

Russell Gunther: The NPL I think that's the leading indicator and I would also say that you know other things we did not talk about and highlight and I know in past quarters people were concerned right. I think we do think that the allowance as it relates to non performers is a really critical ratio and we're happy to be back over.

Sharymar Calderon: Reprovision and revenue was higher at $35.9 million in 2Q25 compared to $33.9 million in 1Q25. And core PPNR was $37.1 million, an increase of $5.6 million or 17.7% compared to $31.5 million in 1Q25. A reconciliation of core PPNR and the impact on Q-ratios is shown in Appendix 1 included in this presentation. To read this slide slide, you can see improvement across all capital maps. We paid our quarterly cash dividend of $0.09 per share of Common Stocks on May 30, 2025. And our Board of Directors just approved a quarterly dividend of $0.09 per share available on August 30 of this year.

Russell Gunther: Perfect coverage there so the early identification.

Russell Gunther: Really you know I would say the strengthening and by the way you just talked about adding a new head of C&I team comes from a larger europeanization.

Russell Gunther: Larger organizations and her background.

Russell Gunther: We're excited for their continuing to bill we don't want the growth for growth's sake, we wanted to make sure that we're putting the right growth on and we think these are all prudent steps to do at this point again because of the transition, we're making putting our community organizations reiteration thing.

Jerry Buss: I appreciate the color Jerry maybe just one more switching gears.

Sharymar Calderon: During the second quarter, we also repurchased 275,666 shares at a weighted average price of $18.14 per share.

Russell Gunther: Last couple of quarters have been fairly heavy in terms of hiring.

Jerry Buss:

Jerry Buss: Do you expect the pace to kind of slow at least on some of the back office non revenue producing.

Jerry Plush: Jerry will cover some additional notes on buybacks as part of his remarks later in this call.

Jerry Buss: Efforts as we move into the fourth quarter and as we think about kind of the intermediate term, where do you think from an efficiency standpoint, you guys can can operate you know I'm not trying to ask for kind of longer term targets necessarily but I think you know everyone wants to obviously see these these revenue hires.

Sharymar Calderon: Next up in slide 6, you can see we made significant improvement in our ROH and ROE disorder at 0.90% and 10.1%, compared to 0.48% and 5.3% respectively. Both of these metrics reflect the improved profitability and support.

Sharymar Calderon: This quarter, we had $1.2 million in non-routine, non-interest expenses, which included an $800,000 net loss on the sale of two order properties, and approximately $400,000 in salaries and employee benefit expenses in connection with the downsizing of Amerant Bancorp. Our core efficiency ratio was 66.35%, core ROE was 0.94%, and core ROE was 10.49%.

Jerry Buss: You know would be accretive to the efficiency ratio, but kind of intermediate term.

Jerry Buss: Where do you where do you think the company should.

Jerry Buss: And can continue to run.

Jerry Buss: Obviously, the pickup in growth, but obviously continue to support our revenue growth efforts, but with additional hires. So just wanted to get a sense for kind of where we're going in and kind of what the efficiency could look like kind of intermediate to longer term. Thanks.

Jerry Buss: Yes look I think that's a very fair question.

Sharymar Calderon: Turning to slide 8, here you can see the roll forward of classified loans from the first quarter to the second quarter, showing a net increase of $9.3 million or 4.5% to $216.4 million. primarily due to two theory loans totaling $21 million downgraded to substandard due to the loss of a tenant and delays in repositioning. as well as two commercial loans totaling $16.8 million, downgraded from special mention, and two commercial loans totaling $18.3 million, downgraded from PAP. These downgrades were based on receipts of year end 2024 and 1-2-25 financial. These increases were partially offset by approximately $50 million in charge-offs, pay-offs, and loan defaults.

Jerry Buss: Our projections are from let's call. It from an earning asset perspective, if you would look at it sort of on a total asset side.

Jerry Buss: We know that with the hires that we've made we want to be in the.

Jerry Buss: $11 billion plus range right. So I mean 11 billion pretty much gets us.

Jerry Buss: And from an earning asset standpoint, much closer to being a 60% efficiency or innovation.

Jerry Buss: So our expectations are.

Sherri Bradfords: Sherri referenced in her comments right.

Sherri Bradfords: We're focused on getting told what our away getting too.

Speaker Change: Glad to have 12% Roe type.

Speaker Change: Type of numbers the efficiency is going to come with that with just increased size. So you don't want to go back and address it head on it though your specific question is we think that the selective hires that we've made are absolutely going to be accretive to us.

Sharymar Calderon: Classified loans include nine loans totaling $134 million that remain in accruing status.

Sharymar Calderon: Let's move on to slide 9, where we included the roll forward of non-performing loans from the first quarter to the second quarter of 2025, showing a significant net decrease of $41 million may be driven by a combination of payoffs, loan solds, paydowns, and charges. It is important to note that the charges included three commercial loans totaling $16,000,000 with $12,000,000 previously in specific reserve. From an SPA standpoint, in addition to the reduction in NPLs, 2 out of 4 order properties were sold during the quarter, therefore reducing our order balance to $6.

Speaker Change: As part of getting to that 11, plus $1 billion right and so I.

Speaker Change: I think the other thing Michael I'd take away from the comments that we made this morning.

Speaker Change: Really important.

Speaker Change: You know, we're looking at ways to adopt artificial intelligence to make ourselves more efficient I also signal to everyone that we were going to have a slowdown as it relates to the physical expansion here.

Speaker Change: Because we've added a lot and you know that's already reflected in the numbers of share it likes to remind me every day you know the second we signed a new lease were incurring the expense, it's only the incremental expense its actually.

Sharymar Calderon: Turning to slide 10, we show the move forward of special mentioned loans from the first quarter to the second quarter, and provide color on the main drivers of these changes. Special mention loans increased by $33 million, primarily driven by three CRE loans totaling $36 million that missed certain milestones. However, there are acceptable mitigants in place, such as adequate loan-to-value, interest reserves, personal guarantees, or other structural enhancements. The increase in special mention loans was also due to four commercial loans in multiple industries, totaling $67 million of rated-basement receipts of year-end 2024 and first quarter 2025 financials.

Speaker Change: The expense of the people who run in the office and so you know, we're we're sort of doing a balancing act here of Hey, it's weak we expect more deposit growth more loan opportunities from a relationship opportunities from these new locations are.

Speaker Change: Expansion is pretty significant right, what we've done so far and by the way I highly encourage people to look into the supplemental slides and see the growth is coming from these new locations.

Speaker Change: <unk> already.

Sharymar Calderon: These increases were partially offset by $22 million in payouts and further downbreaks to classifieds previously mentioned.

Speaker Change: Not only meeting, but exceeding expectations all of them and we're very excited about that and our expectations are that's going to come from is what I referenced as the four additions the three that will come this year between the third and the fourth quarter and we expect to open in the first quarter of 'twenty six, but if you take a combination of.

Sharymar Calderon: Now moving on to slide 11, which shows the drivers of the $11.7 million decrease in the allowance for credit loss. The provision for credit losses was $6.1 million in the second quarter. Excluding reserves for commitment, the provision was $3.6 million and was comprised of $6 million due to cover-net charge-offs, $2.2 million due to macroeconomic factors, offset by releases of $1.4 million due to loan growth, and $3.3 million due to recovery. during the second quarter of 2025. They were both charged up of $18.6 million related to three commercial loans, totaling $16 million, with $12 million previously in the derivative.

Speaker Change: All my remarks there.

Speaker Change: We're looking at ways to become more efficient and we're scrutinizing expenses to get that efficiency ratio to the 60 and the <unk>.

Speaker Change: Expectations are a combination of incremental asset growth.

Speaker Change: The hires we've already made opening those locations we have.

Speaker Change: We feel confident that that is something that is going to be easily achieved with those components all coming together.

Speaker Change: Jerry I appreciate all the color. Thanks for taking my questions I'll step back.

Sharymar Calderon: $1.7 million related to purchase consumer loans and $1.1 million related to certain smaller retail and business banking. This was offset by $3.3 million in recovery, primarily due to the recovery of $1.9 million related to a commercial loan previously charged off. Lastly, the coverage of the allowance for credit losses to total loans decreased to 1.2% compared to 1.37% in the first quarter, primarily due to the charge-offs of specific reserves. Otherwise, net of specific reserves, the ratio remained unchanged at 1.17%.

Jerry Buss: No absolutely thanks, Michael.

Speaker Change: Thank you our next questions come from the line of will Jones with <unk>. Please proceed with your questions.

Will Jones: Yeah, Hey, guys good morning.

Speaker Change: Alright, good morning.

Speaker Change: Sure I wanted to circle back on the margin discussion I know you called out some interest recoveries that happened in the quarter I'm just just to help us normalize that margin did you have the dollar amount of recoveries and.

Speaker Change: And then just a follow on to that I. Appreciate all the helpful color around around the guidance and where the margin could be in the third quarter, but could you just remind us from an asset sensitivity standpoint, where did you guys kind of stand today, and what maybe a cut or two would do to the margins as we think about an exit rate for 2025.

Sharymar Calderon: Turning now to slide 12, I'd like to provide some details on our expectations for the third quarter of 2025. Starting with the deposit side, we continue to expect 14-15% annual growth by year-end 2025, even if this is not linear during the 3rd and 4th quarters. Also note that we plan to further reduce brokerage costs by at least $100 million and replace with either official B-Advances or incremental organic deposits. On the lending side, we expect to evidence loan production and growth of approximately 5% annually per year. In 3Q, we project an increase in investment security similar to what we saw in Looking at profitability, we project our net interest margin to be approximately 3.75% for the third quarter.

Speaker Change: Yes.

Speaker Change: Sure. So in terms of in terms of the normalization of the NIM I think we should be close to $1 2 million and I, both the recovery and the collection from D. A.

Speaker Change: The NPL, so between $1 $21 3 million.

Speaker Change: And then in regards to the second question about the NIM for the third quarter I guess the question would be the components towards the 375.

Speaker Change: Just to make sure.

Speaker Change: I addressed the question.

Speaker Change: Or it was really just help us sensitize the margin if we do get a few cuts in the back half of the year wasn't due to the margin and just.

Speaker Change: Any general commentary on your own assets.

Correct.

Sharymar Calderon: We project non-interest income to be at $17.5 million in 3Q and $18.5 million in 4Q. Regarding expenses, we expect them to be in line with what we reported as poor non-interest expenses for 2Q of $73 million. Based on recent key additions to the team and investment in continued expansion in Florida, This is expected to be partially offset by cost reductions in average mortgage. We expect the efficiency ratio to be in the mid-60s given the investment in growth.

Speaker Change: At least for forecast purposes, where we're modeling one cut occurring in September and one in December so third quarter, what would you need much of an impact from that cut it would be more seen in the fourth quarter typically a rate cut.

Speaker Change: Assuming a full quarter impact would be around one four to one five maybe up to NII.

Speaker Change: Okay. That's great. That's helpful. And then just could you maybe talk us a little bit through the decision to kind of see the securities balances build here.

Sharymar Calderon: And as previously stated, we are prioritizing ROA over all other metrics and continue to expect to reach 1% in the second half of 2025, contingent on any significant macroeconomic updates to be captured by the allowance model in the last quarter of 2025.

Speaker Change: How do you weigh that decision as opposed to maybe paying down some of your own broker deposits or wholesale borrowings just the decision I guess to build the balance sheet as opposed to shrinking and maybe a little more efficient.

Jerry Plush: And with that, I pass it back to Jerry for additional comments and closing remarks. Thanks, Shary.

Speaker Change: Yes, I think it's not an either or I think we're looking at multiple options. We are considering in the third quarter a reduction of broker deposits depending on the timing of the loan fundings, we would either replacing with some wholesale funding or we would actually pay it down and not renew so it is a possibility. However, we do see.

Jerry Plush: Finally, turning to the final slide we'll cover, I'm going to provide some color on the topics that we've listed here. So first, regarding Amerit Mortgage, as we reported last quarter, we've been executing on a plan to reduce the size and scope of our mortgages. Transitioning from being a national mortgage originator to focusing solely on in-footprint mortgage lending to support our retail and private banking customer base. We've been progressively reducing the FTE count toward our stated goal of under 20, and we're in the process of transferring loans owned into our core platform. We expect everything to be completed no later than early 4-June.

Speaker Change: See that through the investment portfolio, where we're getting a very a decent yield.

Speaker Change: Yield from the portfolio sale from a risk weighted risk weighted asset perspective.

Speaker Change: That's helpful as well and you can see that through metric like <unk>. So I do believe that where we're getting optionality through the securities portfolio, we have cash flow optionality. So that we can fund the portfolio as the pipeline materializes.

Jerry Plush: Next, regarding where we stand with the opening of new banking centers, we anticipate opening the first of our two new Miami Beach offices in the third quarter, with the second office in Miami Beach, plus our downtown Tampa Banking Center to be opened in the fourth quarter. Please note, we've also recently entered into an agreement on a highly visible location in St. Petersburg, and we anticipate a second quarter 2026 opening there. While we continue to look for opportunities in the greater Tampa marketplace, you should know this new St. Pete location gives us three of the original six offices that we initially contemplated.

Speaker Change: Yes.

Sherri Bradfords: I think it's not either or I think Sherri just described it perfectly we were looking at all options. There I think we signaled that our intent.

Yeah, I think it's not an either or I think we're looking at multiple options. We are considering in the third quarter, a redemption of broker deposits depending on the timing of the loan fundings, we want to either replace it with some wholesale funding or we would actually pay it down and not renewals. So it is a possibility. However, we do see.

Sherri Bradfords: Is to reduce broker to it we're going to continue to to look at that as whether that gets replaced with organic whether we need to do.

Sherri Bradfords: Take advantage just given where we are you know of options around taking additional advances to offset I mean, obviously, we have a lot of collateral and billions of dollars. Obviously at this point, but I think we've signaled again.

See that through the investment portfolio, where we're getting a very decent.

<unk> yield from the portfolio sale from a risk weighted.

Jerry Plush: But at this point, we're now looking at a longer time horizon in trying to complete the rest of this expansion in 2026.

Risk weighted asset perspective.

Sherri Bradfords: We view the increases in investments as temporary obviously, we want to run the company and the 90 plus range on you know.

Helpful as well and you can see that through metric like an easy one.

Jerry Plush: Let's talk a little bit about new people that we added in the quarter to risk and business development. So, on our first quarter call, we announced several key additions to our leadership team, both in risk and business development. And we noted we were going to continue to add talented individuals in both areas again in the coming months. So in the second quarter, we've added a new head of special assets, and just this week, our new head of credit for C&I started. And both of these talented individuals have strong experience from larger commercial organizations. And on the business development side, we've recently announced the addition of Elliot Shaffer, who joined us from Huntington, to head up our business development.

I do believe that where we're getting optionality through the securities portfolio, we have cash flow optionality. So that we can fund the portfolio as the pipeline materializes.

Sherri Bradfords: Loans to deposits, we've been very consistent about saying, 95% is sort of the optimal target were running in the I'll call. It the.

Yes.

Its not either or I think Sherri just described it perfectly we were looking at all options. There I think we signaled our intent.

Sherri Bradfords: The mid to upper <unk> right now I think right around 86, or so and we obviously.

Sherri Bradfords: Strongly prefer to be funding loan growth right now and that's our expectation is that we'll continue to build back up.

Is to reduce brokered and we're going to continue to look at that as whether that gets replaced with organic whether we need to do.

Sherri Bradfords: As we move forward.

Sherri Bradfords: Okay.

Take advantage, just given where we are.

Sherri Bradfords: Okay. That's great color appreciate that answer.

Sherri Bradfords: And then.

Options around taking additional advances to offset I mean, obviously, we have a lot of collateral billions of dollars. Obviously at this point, but I think we've signaled again that we view the increases in investments as temporary obviously, we want to run.

Jerry Plush: out of our recently opened West Palm Beach Regional Office. And joining us in August is our new head of loan syndications and sales, who has a demonstrated proven track record of success at several well-known institutions. He will definitely assist us immediately with our loan growth agenda, as we continue to see new large relationship opportunities that recruit risk management. We need to participate in these deals with other banks.

Sherri Bradfords: They're just terrible for you.

Speaker Change: I know that you're very much an organic focus story right now you're very much focused on building density in the state of Florida.

Sherri Bradfords:

Sherri Bradfords: At the same time, there's quite a bit of optimism out there regarding just M&A and what's happened and then maybe more of a deregulatory environment could you just help us.

Run the company and the 90 plus range on.

Sherri Bradfords: Recall, what where M&A stands and then in terms of your priority list and whether.

Both the deposits we've been very consistent about saying, 95% is sort of the optimal target were running in the <unk>.

Sherri Bradfords: You feel like that could be an opportunity for you guys.

Jerry Plush: But wrapping up my comments on talent additions, we have and will continue to selectively look for additions to build to our team, or add to our team, I should say. Our loan strategy going forward. So, on our first quarter call, we noted that reduced loan growth may result in temporary increases in mortgage-backed securities to offset any shortfalls. And we saw that happen in the second quarter. So, for the second quarter in a row, we were basically flat in loans outstanding quarter over quarter, despite the fact there was a significant amount of activity. A couple of things are happening.

Sherri Bradfords: Down the road here and maybe whether it's whether you consider either upstream or downstream M&A.

Cause the mid to upper <unk> right now I think right at around 86% or so and we obviously.

Sherri Bradfords: Yeah look I think that's.

Strongly prefer to be funding loan growth right now and that's our expectation is that we'll continue to build back up.

Sherri Bradfords: We have said and as you just referenced you know organic growth is sort of the top priority and focus for the company and.

As we move forward.

[laughter].

Sherri Bradfords: I think that will continue to be but that doesn't mean that as our currency improves.

Okay. That's great color appreciate that answer and then.

They're just terrible for you.

Sherri Bradfords: I think thats, probably been and again, we've had so many significant projects right between system conversions the additions the expansion on that.

I know that you're very much an organic focus story right now youre very much focused on building density in the state of Florida.

Jerry Plush: Please note that asset quality is our top focus, booking a number of construction deals year-to-date that have not flooded yet. And higher paydowns than projected have all contributed basically to having flat numbers quarter over quarter. So it's fair to say that rebuilding our momentum will need to come in the second half of 2025, and a big part of that will be boosted from recent talent additions we've made, like I mentioned, and there are more in almost all of our regions.

Hum.

Sherri Bradfords: It's kind of been the <unk>.

But at the same time, there's quite a bit of optimism out there regarding this M&A and what's happened and then maybe more of a deregulatory environment could you just help us.

Sherri Bradfords: Focus, but certainly as we look at the Plainfield everything you just referenced you know the regulatory environment.

Sherri Bradfords: Our hope for as you know, there's there's higher returns from us that our currency gets better of course, we'll we'll look at it as an option, but that is not the top focus our top focus is continuing to grow and continuing to be the bank of choice in the markets that we serve right. So can you.

Recall, what where M&A stands and in terms of your priority list and whether.

You feel like that could be an opportunity for you guys.

Down the road here.

Whether whether you consider either upstream or downstream M&A.

Jerry Plush: So the new head of business development, the new head of loans, indications, and sales, along with other additions, RMs, in each of our locations, will continue to help rebuild and boost our pipeline.

Yes look I.

I think that's.

Sherri Bradfords: Think about the opportunities we believe we have greater Tampa Bay St. Pete If you still look at the expansion we've done in Palm Beach.

We've said and as you just referenced you know organic growth is sort of the top priority of focus for the company and.

Jerry Plush: Let's talk about the continued emphasis we're putting on improving asset quality and reducing non-performing assets. So regarding asset quality, I think needless to say, further NPL reductions are a top priority for us right now. And the need to continue to proactively address credit quality is paramount. It's important to recognize that work is also underway on further strengthening our risk culture now that we're a regional bank with the heightened scrutiny that comes with that. The new additions to our team are already contributing and having an impact there.

Sherri Bradfords: Our view of Palm Beach County, I should say I think there's just lots of opportunities for us.

I think that will continue to be but that doesn't mean that as our currency improves.

I think thats, probably been and again, we've had so many significant projects right between system conversions the additions the expansion that's.

Sherri Bradfords: After that that's very helpful. Thanks for all the color guys.

Sherri Bradfords: Okay. Thank you.

Sherri Bradfords: Thank you. This now concludes our question and answer session I would now like to turn the floor back over to Jerry for closing comments.

Thats kind of been the.

Focus, but certainly as we look at the Plainfield everything you just referenced the regulatory environment.

Jerry Buss: First of all let me just say thank you to everyone for joining today. We appreciate it given the opportunity to share some of our comments and provide some color on second quarter results greatly appreciate everyone's interest in amarin.

Our hope for as you know, there's there's higher returns from us that our currency gets better of course will look at it as an option, but that is not the top focus our top focus is continuing to grow.

Jerry Plush: And last, on improving capital management, and specifically on buybacks. So with respect to capital management, our intention remains the same as we previously stated. We're going to take a proven approach, which involves carefully balancing the need between retaining capital to support our growth objectives, compared with buybacks and dividends to enhance return. As Shary mentioned in the second quarter, you know, we utilized the 10D51 plan to purchase shares up to $5 million in the quarter. We expect to continue to crudely repurchase shares, depending on trading volume and the price in the third quarter, under the current remaining amount off-price.

Jerry Buss: And your continued support have a great day and thanks again.

<unk> to be the bank of choice in the markets that we serve right. So if you think about the opportunities. We believe we have greater Tampa Bay St. Pete If you still look at the expansion we've done in Palm Beach.

Jerry Buss: Thank you. This does now conclude today's teleconference. We appreciate your participation you may disconnect. Your lines at this time enjoy the rest of your day.

Our view of Palm Beach County, I should say I think there's just lots of opportunities for us.

Yeah.

After that that's very helpful. Thanks for all the color guys.

Jerry Plush: Any conclusion, please note that we continue to be steadfast in our focus of continuing to execute on our strategy to be the bank of choice in the markets we serve.

Okay. Thank you.

Thank you. This now concludes our question and answer session I would now I would like to turn the floor back over to Jerry for closing comments.

Operator: So with that, I'll stop all our prepared remarks and we'll look forward to, Shary and I will look forward to answering any questions you have. So operator, if you would, please open the line. Thank you.

First of all let me just say thank you to everyone for joining today. We appreciate it given the opportunity to share some of our comments and provide some color on second quarter results.

Operator: We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone. The confirmation tone will indicate your line. You may press star 2 if you would like to remove your...

Greatly appreciate everyone's interest in Amarin and.

And your continued support have a great day and thanks again.

Thank you. This does now conclude today's teleconference. We appreciate your participation you may disconnect. Your lines at this time enjoy the rest of your day.

Operator: participants using speaker equipment it may be necessary to pick up your handset before pressing the start One moment, please, while we pull for your.

[music].

Russell Gunther: Our first questions come from the line of Russell Gunther with Stevens.

Russell Gunther: Please proceed with your Hey, good morning, guys. Thanks for taking the question.

Russell Gunther: I wanted to start on the loan growth discussion. I appreciate the color you shared in the prepared remarks, maybe just bigger picture. I'm thinking maybe into 20. Should we be thinking about the guys more in the mid-season growth range going forward? And is this reflective of a strategic refocus, or is it more just marketing?

Jerry Plush: Yeah, hey, Russell, thanks for the question. No, I think you should expect us to be back in double-digit growth. You know, we've talked about, you know, very consistently that our Deposits First focus is our number one priority. I want to continue to emphasize the quality of the organic growth that we're seeing on the deposit side, and I think as Shary referenced, we're well into the mid-teens, you know, on that side. And so that's enabling us to be able, or I should say affording us the opportunity to also grow equally on the loan side. You know, our expectation is a rebuild of the pipeline and, you know, with some of the new additions.

Uh huh.

Jerry Plush: And again, I'm not going to elaborate on the number of additions on the RM level that we've made. But I think our focus, and I said this on the call right now, our focus has been solely, you know, as a top priority on asset quality. But our expectations are there are significant growth opportunities in the markets we serve, and we should be back into higher loan growth in coming quarters, and certainly in 2026. But we're going to continue to be very prudent and selective in the additions that we're going to make on the loan side.

Russell Gunther: Okay, great.

Russell Gunther: Thank you, Jerry.

Russell Gunther: And then just one more for me, switching gears on to the asset quality discussion. So, nice to see the NPAs come down this quarter. Chargeoffs were a bit higher than at least I was expecting. So, we also saw a build back in classified and special mention.

Jerry Plush: Would just be helpful to get a sense for how you guys are thinking about realized losses in the back half of this year. I think we kind of talked about the 30 to 40 basis point range prior and I guess just what's embedded in that 1% ROA expectation in the back. Yeah, Russell, I think the key thing, and Shary referenced it a couple times in her remarks, we had already provisioned for the uptick that we took this quarter in charge-offs. So again, you know, the $12 of the $18 million was already in specific preserves, you know.

Sharymar Calderon: So if you subtract that and then do the comparison from a charge-off rate, we were relatively flat quarter over quarter. I think we were probably in the five and a half range last quarter, to roughly six and change this quarter. And that's still the core of, you know, again, continuing to see the consumer, indirect consumer charge-offs and some of the business banking charge-offs is primarily the key drivers there. And Jerry, to add to that, Russell, in the 1% ROA that includes the probation number, we do still expect some loan rolls occurring in the probation expectation, because we would have to set up reserves when they would.

Russell Gunther: Thank you guys for taking my questions.

Russell Gunther: Thank you.

Stephen Scouten: Our next questions come from the line of Stephen Scouten with Piper Sandler. Please proceed with your Great, thanks. Good morning, y'all. With extending on that conversation with on a loan could charge off already having specific reserves. Would this 120 loan loss reserve kind of be the right way to think about? how you need to reserve for the loan book. Yeah, look, Stephen, great question. I think that's right in the range. You know, allowance is always going to depend on what asset classes you're growing in, right? And so, you know, I think thinking around the 120, 125 range is probably a good way to think about us level.

Stephen Scouten: forward basis but you know we'll we'll record and we'll certainly be talking about where we're growing and what the reserve requirements are I mean you know part of this quarter with growth coming from you know the quarter definitely benefited you know when you think about flat from a low growth standpoint you know that that obviously is is actually a positive and the growth that we did book came in the investment side right but it shares this reference you know the way we look at it is you put the provision alongside with you know when you record the growth so you know our expectation is you know and as she's mentioned the provisional will tip off a little bit because we expect a low growth to start to come back in.

Stephen Scouten: And then one thing also to add is that we have as you were able to see the provision doesn't have a component of a funding commitment so as we move into funding those you know you will see our for that role, thank you for making our day, thank you. Sure. Yep. And then, as you guys, in the third quarter outlook, looks like the margin is projected. down a touch. Can you walk me through some of the dynamics there? I mean, given where the loan to deposit ratio has moved down and the expectation for growth to kind of resume, I would actually.

Stephen Scouten: theoretically thought there'd be incremental upside to the NIM on a positive. Maybe you can help me think through those dynamics or where you think the NIM will trend beyond third quarter.

Sharymar Calderon: Sure. So, I think the first step, Stephen, is to normalize the NIM because this quarter, we had a component related to our recovery, and we also had a component related to collection of an NPL. So, if we normalize the NIM and we think about what would be different in the third quarter, the first thing I would say is we're expecting to have slightly higher average balances on the wholesale side based on the timing of the maturities within the quarter and the replenishing of that wholesale funding. But the second thing is related to the securities portfolio, where we're going to see a full quarter effect of a higher securities balance, that while it definitely is a contribution to NII, it's slightly lower than the average of the NIM.

Sharymar Calderon: So, once we see that full effect in the third quarter, it takes us to the 375. With that said, we're also working in terms of NPL resolution. So, if we do see collection of those items, then it will certainly impact NIMs like it did this quarter. So, the 375 is guidance towards a normalized. Okay, and what does that compare to this quarter? And forgive me if I missed that, but relative to the 381, what's the kind of normalizing and what would I would say four basis points less, more or less. Okay, great.

Jerry Plush: And then lastly, for me, Jerry, you noted higher around the I'm kind of curious how you guys are thinking about that component moving forward, is that where you're desiring to move up market and do some larger loans and kind of if there's a... be a limit of where you'd say hey at this dollar amount we want to syndicate everything out above this dollar amount or just kind of how we can think about that Yeah, no, I really appreciate that question. So we can clarify, you know, I think the sense, Stephen, and, you know, one of the nice things I think that we see in terms of opportunities is we're getting a chance at a lot of significant size deals.

Jerry Plush: And, you know, to me, I think that you have to look at this as, you know, number one, it's really prudent risk management if we go to look at a larger size credit. But let's just use for illustration, if you get a $50 million opportunity, it's a great credit, you know, it's really good, you know, really well underwritten. We want to hold 25 of that, right? And that's kind of where I want to make sure people understand we're not really looking at this, you know, by having this position and eventually building probably some support around, you know, earning higher as a growth objective, you know, where you'll start to see, you know, we're going to bigger and bigger and bigger.

Jerry Plush: It's just our ability to do more transactions and participate in more transactions gets exponential for us. And again, from a risk management standpoint, it's very prudent for us to be participating in these deals with a second or even a third bank, right?

Jerry Plush: And so I think this is part of the, I'll call it a natural evolution of being a, becoming a true regional bank. We've had in the past, and I know we've talked about this on calls, have had several large exposures, you know, in the portfolio. And our view is just, you know, we've got customers that are growing. You know, it's just another opportunity for us to continue to grow with them as opposed to, you know, they outgrow us, right? So while we're both growing, you know, this just gives us that letter of where, you know, we can continue to maintain great relationships that we've seen from the very beginning.

Stephen Scouten: And, you know, I just think it's, like I said, I'll emphasize one more time, it's just really prudent from a risk management standpoint. For a bank our size, when we look at things from a capital perspective, you know, it's still true. Yeah, appreciate that. That's great color. Yeah, allowing you to grow and still still managing the risk. So I like that. Appreciate it.

Stephen Scouten: Okay, thank you.

Michael Rose: Thank you. Our next questions come from the line of Michael Rose with Raymond James. Please proceed with Hey, good morning, everyone. Thanks for taking my questions. Maybe I'll just kind of ask the same question that I asked last quarter. Jerry, where do you think you are in terms of the evolution of asset quality? Maybe we'll use hockey analogy this time.

Michael Rose: The Panthers just won, but what period do you think we're in, and do you think, I know it's hard to make definitive statements, but do you think we've kind of already reached the peak in criticized classified, and we should expect continued progression from here just given what seems to be an improving macro backdrop. trade deals being struck everything back. seemingly often. wanted to get your view on where we are and how this plays out over the next year. Yeah, no, Michael, thanks for the question. Look, I think we put ourselves in a position with the talent we've added to the organization and the approach, you know, and I referenced this around heightened scrutiny that you go through as a regional, you know, and I think from our perspective, you know, I wouldn't refer to it as innings or periods as much as I think this is just part of the natural transition for us as an organization.

Jerry Plush: You know, around credit quality, we are recognizing any concerns that are out there as, you know, as proactively as we can and addressing them. And I think, you know, when you hire and have the talent around special assets that we've talked about, the additions in terms of leadership in the credit side, you know, we're working on this on both sides, right? Okay, helpful.

Jerry Plush: And then just maybe tagging on to that. I mean, you obviously brought it. people from some larger organizations. Last quarter, it's been 90 days. I know that it was it was kind of too early to, you know, lessons learned and maybe some policies, procedures put into place. But if you can just share with us anything that, you know, has kind of materially changed, you know, from a underwriting or grading or just new production standpoint, that would be helpful just to get more comfortable on the on the go forward and what you're putting on the books today.

Jerry Plush: Bye. Yeah, I mean, we are located, you know, I would call it sort of a Anything that's coming on the books today, and I'll give you a great example, we're making sure, you know, that comes back to the syndications comments, you know, from the last series of questions, making sure that we don't get into a situation where we can't retain credits, right, or that, you know, we're in a position where, you know, taking such a forward look on our underwriting, I think we're in a better place than we were in the past there. But I also would tell you that, you know, look, I think the key asset quality ratios that everyone should be looking at with us are non-performing loans, because if we dictate that a loan has to go on non-approval in NPL, I think that's the leading indicator, and I would also say that one of the things we did not talk about and highlight, and I know in past quarters people were concerned, right?

Jerry Plush: I think we do think that the allowance as it relates to non-performers is a really critical ratio, and we're happy to be back over 100% coverage there. So early identification, I would say the strengthening, and by the way, we just talked about adding a new head of CNI to the team, comes from a larger organization, larger organizations in her background. We're excited, you know, for continuing to build, you know, we don't want the growth for growth's sake. We want to make sure that we're putting the right growth on, and we think these are all good, prudent steps to do at this point, again, because of the transition we're making from being a community organization to being a regional one.

Michael Rose: I appreciate the color, Jerry.

Michael Rose: Maybe just one more, switching gears, you know, the last couple quarters have been fairly heavy in terms of hiring. Do you expect the pace to kind of slow, at least on some of the back office non-revenue producers? you know, efforts as we move, you know, into the fourth quarter. And as we think about kind of the intermediate term, you know, where do you think from an efficiency standpoint you guys can, can operate? And I'm not trying to ask for kind of, you know, longer term targets necessarily, but you know, I, I think, you know, everyone wants to obviously see these, these revenue hires, you know, be accretive to the efficiency ratio, but kind of intermediate term, you know, where do you, where do you think the company should and can continue to run just with obviously the pickup and growth, but, but obviously continue to support you know, revenue growth efforts with, with additional hires.

Jerry Plush: So just wanted to get a sense for kind of where we're going and kind of what the efficiency could look like kind of intermediate to longer term. Thanks. Yeah, look, I think, no, and it's a very fair question, you know, our projections are from, you know, let's call it from an earning asset perspective, if you would look at it sort of on a total asset side, we know that with the hires that we've made, we want to be in the, you know, 11 billion plus range, right? So I mean, 11 billion, pretty much gets us and, you know, from an earning asset standpoint, much closer to being a 60% efficiency organization.

Jerry Plush: So you know, our expectations and, you know, and Sherry referenced in her comments, right? We're focused on getting to a one ROA, getting to, you know, the 11 and a half, 12% ROE type of numbers, the efficiency is going to come with that with just increased size. So, you know, I want to go back and address it head on, though, your specific question is, we think that the selective hires that we've made, are absolutely going to be agreed to us, you know, as part of getting to that 11 plus billion dollars, right. And so, you know, I think the other thing, Michael, I'd take away from the comments that we made this morning, really important is, you know, we're looking at ways to adopt artificial intelligence to make ourselves more efficient.

Jerry Plush: I also signaled to everyone that, you know, we're going to have a slowdown as it relates to, you know, the physical expansion here, because, you know, we've added a lot. And you know, that's already reflected in the numbers that Sherry likes to remind me every day, you know, the second we sign a new lease, we're incurring the expense, you know, it's only the incremental expense, it's actually the expense of the people in running the office. And so, you know, we're sort of doing a balancing act here of, hey, it's, we expect more deposit growth, more loan opportunities, more relationship opportunities from these new locations.

Jerry Plush: You know, our expansion is pretty significant, right? What we've done so far, and by the way, I certainly encourage people to look into the supplemental slides and see the growth that's coming from these new locations. They are already, you know, not only meeting, but exceeding expectations, all of them, and we're really excited about that. And our expectations are that's going to come from these, you know, what I referenced is the four additions, the three that will come this year, between the third and the fourth quarter, and the one that we expect to open in the first quarter of 26.

Michael Rose: But if you take a combination of all my remarks there, we're looking at ways to become more efficient, we're scrutinizing expenses to get that efficiency ratio to the 60, and, you know, the expectations are a combination of incremental asset growth, you know, the hires we've already made opening the locations we have, you know, we feel confident that that is, you know, something that is going to be easily achieved with those components all coming together. Jerry, I appreciate all the color. Thanks for taking my questions. Absolutely. Thanks, Mike. Thank you.

Will Jones: Our next questions come from the line of Will Jones with KBW. Please proceed with your questions. Yeah, hey guys. Good morning.

Will Jones: Shary, I wanted to circle back on the margin discussion. I know you called out some interest recoveries that happened in the quarter. Just to help us normalize that margin, did you have that dollar amount of recoveries? And then just a follow-on to that, I appreciate all the helpful color around the guidance and where the margin could be. remind us from the after Where do you guys kind of stand today and what maybe a cut or two would do to improve? great for Sure, so in terms of the normalization of the NIM, I think we should be close to $1.2 million, and adding both the recovery and the collection from the NPL, so between $1.2 and $1.3 million.

Sharymar Calderon: And then in regards to the second question about the NIM for the third quarter, I guess the question would be the components towards the $375? Just to make sure. to address the question. or it was really to just help us synthesize the margin. If we do get a few cuts in the back half of the year, what does that do to the margin? Do you have any general commentary on your assets? So, at least for forecast purposes, we're modeling one cut occurring in September and one in December. So, third quarter wouldn't receive much of an impact from that cut.

Sharymar Calderon: It would be more seen in the fourth quarter. Typically, a rate cut, assuming a full quarter impact, would be around $1.4 to $1.5 million to NII. Okay, that's great. That's helpful.

Sharymar Calderon: And then just could you maybe talk us a little bit through the decision to kind of see the securities balances build here? You know, and how you weigh that decision as opposed to maybe paying down from Europe. depositor, wholesale borrower. Yeah, I think it's not an either-or. I think we're looking at multiple options. We are considering in the third quarter a reduction of broker deposits depending on the timing of the loan fundings we would either replace with some wholesale funding or we would actually pay it down and not renew. So it is a possibility. However, we do see that through the investment portfolio we're getting a very decent yield from the portfolio still from a risk-weighted perspective.

Jerry Plush: It's helpful as well and you can see that through metrics like CET1. So I do believe that we're getting optionality through the securities portfolio. We have cash flow optionality so that we can fund the portfolio as the pipeline materializes. Yeah, well, I think it's not an either-or. I think Shary just described it perfectly. We're looking at all options there. I think we signaled that our intent, you know, is to reduce brokered and we're going to continue to look at that as, you know, whether that gets replaced with organic, whether we need to do, you know, take advantage just given where we are, you know, options around, you know, taking additional advances to offset.

Jerry Plush: I mean, obviously, we have a lot of collateral, billions of dollars, obviously, at this point. But, you know, I think we've signaled again that, you know, we view the increases in investments as temporary. Obviously, we want to run the company in the 90 plus range on, you know, rose to deposits. We've been very consistent about saying 95% is sort of the optimal target. We're running in the mid to upper 80s right now. I think we're at around 86 or so. And we obviously strongly prefer to be funding loan growth right now. And, you know, that's our expectation is that we'll continue to build back up as we move forward.

Will Jones: That's a great call. and then they're just terrible for you.

Jerry Plush: I know that you're very much an organic focused story right now, you're very much focused on building density in the state of Florida. but at the same time there's quite a bit of optimism out there regarding just M&A and what's happened and maybe more of a deregulatory environment. Could you just help us? call where M&A stands in terms of your priority list and whether you feel like that could be an opportunity for you guys. down the road here, you know, and maybe whether you consider either upstream or down. Yeah, look, I think that We've said, and as you just referenced, organic growth is sort of the top priority and focus for the company.

Jerry Plush: And I think that will continue to be, but that doesn't mean that as our currency improves. I think that's probably been, and again, we've had so many significant projects, right, you know, between system conversions, the additions, the expansion, that's kind of been the focus. But certainly, as we look at the playing field, everything you just referenced, you know, the regulatory environment, you know, our hope was, you know, there's higher returns from us, that our currency gets better, of course, we'll look at it as an option. But that is not the top focus. Our top focus is continuing to grow and continuing to be the bank of choice in the markets that we serve, right?

Jerry Plush: So if you think about the opportunities we believe we have, you know, in greater Tampa Bay, St. Pete, if you still look at, you know, the expansion we've done in Palm Beach, you know, our view in Palm Beach County, I should say, I think there's just lots of opportunities for us, you know.

Will Jones: That's very helpful. Thanks for all the color guidance. Thank you.

Jerry Plush: This now concludes our question and answer session.

Jerry Plush: I would now like to turn the floor back over to Jerry. First of all, let me just say thank you to everyone for joining today. We appreciate it, given the opportunity to share some of our comments and provide some color on second quarter results. Greatly appreciate everyone's interest in Amerant and your continued support.

Operator: Have a great day and thanks again. Thank you.

Operator: This does now conclude today's teleconference. We appreciate your participation. You may disconnect your lines at this time. Enjoy the rest of your day.