Q1 2026 Amerant Bancorp Inc Earnings Call

April 24, 2026

Operator 2: Greetings, and welcome to the Amerant Q1 2026 Earnings Conference Call and Webcast. At this time, all participants are in listen-only mode. A question and answer session will follow the formal presentation. You may be placed into question queue at any time by pressing star one on your telephone keypad. As a reminder, this conference is being recorded. If anyone should require operator assistance, please press star zero. It's now my pleasure to turn the call over to Laura Rossi, Executive Vice President, Head of Investor Relations. Laura, please go ahead.

Operator: Greetings, and welcome to the Amerant Q1 2026 Earnings Conference Call and Webcast. At this time, all participants are in listen-only mode. A question and answer session will follow the formal presentation. You may be placed into question queue at any time by pressing star one on your telephone keypad. As a reminder, this conference is being recorded. If anyone should require operator assistance, please press star zero. It's now my pleasure to turn the call over to Laura Rossi, Executive Vice President, Head of Investor Relations. Laura, please go ahead.

Speaker #2: A question-and-answer session will follow the formal presentation. You may be placed into the question queue at any time by pressing star one on your telephone keypad.

Speaker #2: As a reminder, this conference is being recorded. If anyone should require operator assistance, please press star zero. It's now my pleasure to turn the call over to Laura Rossi, Executive Vice President and Head of Investor Relations, Laura, please go ahead.

Speaker #2: Thank you, operators. Good morning, everyone, and thank you for joining us to review Emerant Bancorp's first quarter 2026 results. On today's call, our Carlos Yafiliola, our interim CEO, and Sharymar Calderon, our CFO.

Laura Rossi: Thank you, operator. Good morning, everyone, and thank you for joining us to review Amerant Bancorp Inc.'s Q1 2026 results. On today's call are Carlos Iafigliola, our interim CEO, and Sharymar Calderón, our CFO. Additionally, we're pleased to welcome as a guest speaker this quarter, Lee Ann Cragg, Chief Credit Officer, who will share further insight into our credit risk management initiatives. As we begin, please note that discussions on today's call contain forward-looking statements within the meaning of the Securities Exchange Act. In addition, references will also be made to non-GAAP financial measures. Please refer to the company's earnings release for a statement regarding forward-looking statements, as well as for information and reconciliation of non-GAAP financial measures to GAAP measures. I will now turn it over to our interim CEO, Carlos Iafigliola.

Speaker #2: Additionally, we're pleased to welcome, as our guest speaker this quarter, Leanne Craig, Chief Credit Officer, who will share further insight into our credit risk management initiatives.

Speaker #2: As we begin, please note that discussions on today's call contain forward-looking statements within the meaning of the Securities Exchange Act. In addition, references will also be made to non-GAAP financial measures.

Speaker #2: Please refer to the company's earnings release for a statement regarding forward-looking statements as well as for information and reconciliation of non-GAAP financial measures to GAAP measures.

Speaker #2: I will now turn it over to our interim CEO, Carlos Yafiliola.

Speaker #3: Thank you, Laura. Good morning, everyone, and thank you for joining us today to discuss Amerant First Quarter 2026 results. As we begin, I want to acknowledge where we are in the execution of our strategic plan.

Carlos Iafigliola: Thank you, Laura. Good morning, everyone, and thank you for joining us today to discuss Amerant Q1 2026 results. As we begin, I want to acknowledge where we are in the execution of our strategic plan. I'm proud of the continued progress we have made on the three priorities we outlined last quarter, stabilizing the business, optimizing our credit portfolio, and growing sustainably. I also want to thank the Amerant team for the hard work and dedication throughout the quarter. Our people are the key enabler of this plan, and that continues to guide our execution. Let's begin with our primary focus, which has been credit quality and improving our loan portfolio. As a reminder, in Q4 last year, we completed a comprehensive reassessment of our portfolio in terms of risk identification and classification, and subsequently exited a segment of loans from classified categories.

Speaker #3: I'm proud of the continued progress we have made on the three priorities we outlined last quarter. Stabilizing the business, optimizing our credit portfolio, and growing sustainably.

Speaker #3: I also want to thank the Amerant team for the hard work and dedication throughout the quarter. Our people are the key enabler of this plan, and that continues to guide our execution.

Speaker #3: So let's begin with our primary focus, which has been credit quality and improving our loan portfolio. As a reminder, in Q4 last year, we completed a comprehensive reassessment of our portfolio in terms of risk identification and classification, and subsequently exited a segment of loans from classified categories.

Speaker #3: This process continued into the first quarter, where we demonstrated proactive credit management and further refined the classifications of certain loans based on current macroeconomic data and new information received.

Carlos Iafigliola: This process continued into Q1, where we demonstrated proactive credit management and further refined declassifications of certain loans based on current macroeconomic data and new information received. We identified both necessary downgrades as well as meritable upgrades. Additionally, we exited and transferred to held for sale another group of loans that we no longer consider core to our business. The new process and people we have put in place have significantly improved our credit evaluation capabilities, and the team is executing well. The composition of our loan portfolio now reflects a healthier mix with a risk profile that is more consistent with our long-term goals. Lee Ann Cragg will share additional details shortly. Going forward, as we prioritize business development, we will pursue growth within credit parameters that allow for sustainable financial results. To this end, we have enhanced risk-based limits to adjust concentration risk and prevent single borrower overexposure.

Speaker #3: We identified both necessary downgrades as well as meritable upgrades. Additionally, we exited and transferred to health for sale another group of loans that we no longer consider core to our business.

Speaker #3: The new process and people we have put in place have significantly improved our credit evaluation capabilities, and the team is executing well. The composition of our loan portfolio now reflects a healthier mix, with a risk profile that is more consistent with our long-term goals.

Speaker #3: Leanne will share additional details shortly. Going forward, as we prioritize business development, we will pursue growth within credit parameters that allow for sustainable financial results.

Speaker #3: To this end, we have enhanced risk-based limits to adjust concentration risk and prevent single borrower overexposure. We have also refined our market approach by moving away from out-of-market collateral projects, except selectively for existing clients in core markets where we have deeper borrower insight.

Carlos Iafigliola: We have also refined our market approach by moving away from out-of-market collateral projects, except selectively for existing clients in core markets where we have deeper borrower insight. We have also fundamentally shifted underwriting, prioritizing borrowers with proven stable operating history over projection-based lending and tightened our policy exception framework by lowering allowable exception thresholds to better align with our risk appetite. Lastly, we have continued to invest in experienced talent, and we're taking a more intentional approach to growth, focusing on what we believe are the right fundamentals to drive stability, consistency, and sustainable top-line performance. Our top priority is continuing to improve our efficiency, which the team executed well against this quarter. Our net income for Q1 was in line with our guidance, and we have significantly reduced non-interest expenses quarter over quarter, supported by better-than-expected cost savings.

Speaker #3: We have also fundamentally shifted on the writing, prioritizing borrowers with proven, stable operating history over projection-based lending and tightening our policy exception framework by lowering allowable exception thresholds to better align with our risk appetite.

Speaker #3: Lastly, we have continued to invest in experienced talent and we're taking a more intentional approach to growth, focusing on what we believe are derived fundamentals to drive stability, consistency, and sustainable top-line performance.

Speaker #3: Our top priority is continuing to improve our efficiency, which the team executed well against this quarter. Our net income for Q1 was in line with our guidance, and we have significantly reduced non-interest expenses quarter over quarter, supported by better-than-expected cost savings.

Speaker #3: To put this in perspective, our expense management efforts represent approximately $30 million in cost savings for 2026. Additionally, we saw strong growth in favorable low-cost international deposits as a result of the reactivation of the Venezuelan economy and our deep knowledge and experience in the market as well as the extensive work that for many years we have done to preserve and expand our relationships in the country.

Carlos Iafigliola: To put this in perspective, our expense management efforts represents approximately $30 million in cost savings for 2026. Additionally, we saw strong growth in favorable low-cost international deposits as a result of the reactivation of the Venezuelan economy and our deep knowledge and experience in the market, as well as the extensive work that for many years we have done to preserve and expand our relationships in the country. In line with this, I would like to take a moment to provide some additional context on our international deposit growth. Last quarter, we highlighted Venezuela as an area of opportunity, and this quarter, we delivered, recording $188 million of total deposit growth in Q1, from which $95 million came from Venezuela, and $66 million of this growth was in March alone.

Speaker #3: In line with this, I would like to take a moment to provide some additional context on our international deposit growth. Last quarter, we highlighted Venezuela as an area of opportunity.

Speaker #3: And this quarter, we delivered. Recording 188 million of total deposit growth in Q1. From which 95 million came from Venezuela, and 66 million of this growth was in March alone.

Speaker #3: This deposits are quite attractive due to their stability. Overall cost of funds and beta in rates of cycle, such as the one we recently experienced, allowing for improved profitability as we continue to grow our international presence.

Carlos Iafigliola: These deposits are quite attractive due to their stability, overall cost of funds, and beta in rate sub-cycle, such as the one we recently experienced, allowing for improved profitability as we continue to grow our international presence. Furthermore, these customers are well-aligned with our relationship-first approach as they can be cross-sold via our wealth management offering. Moving forward, Venezuela represents a key opportunity to continue generating net interest income from a source of funds and to capture increased market share. We believe Amerant is uniquely positioned to take advantage of this opportunity and support both individual and entities as the country reopens. In summary, we believe we executed well against our strategic plan. We took a focused, deliberate action to further optimize our credit portfolio while reinforcing risk management. We implemented cost savings initiatives that have reduced our expenses and improved our efficiency.

Speaker #3: Furthermore, these customers are well aligned with our relationship-first approach, as they can be cross-sold via our wealth management offering. Moving forward, Venezuela represents a key opportunity to continue generating net interest income from a source of funds and to capture increased market share.

Speaker #3: We believe Amerant is uniquely positioned to take advantage of this opportunity and support both individual entities as the country reopens. In summary, we believe we executed well against our strategic plan.

Speaker #3: We took a focused, deliberate action to further optimize our credit portfolio while reinforcing risk management. We implemented cost-saving initiatives that have reduced our expenses and improved our efficiency.

Speaker #3: We generated loan growth that is aligned with our risk appetite, despite exits of certain criticized loans and significant loan repayments, which provides a clear line of sight to sustain credit performance.

Carlos Iafigliola: We generated loan growth that is aligned with our risk appetite, despite exits of certain criticized loans and significant loan prepayments, which provides a clear line of sight to sustain credit performance. We executed well on our international strategy, particularly in Venezuela, which we view as a meaningful opportunity to further scale our international deposit franchise and drive incremental earnings. With that, I will turn it over to Shari to review our quarterly financial results in more detail.

Speaker #3: And we executed well on our international strategy, particularly in Venezuela, which we view as a meaningful opportunity to further scale our international deposit franchise and drive incremental earnings.

Speaker #3: With that, I will turn it over to Sherry to review our quarterly financial results in more detail.

Speaker #1: Thank you, Carlos. And good morning, everyone. I want to begin by saying that going forward, we will be discussing results without breaking down core versus non-core metrics in our financials.

Sharymar Calderón: Thank you, Carlos, and good morning, everyone. I want to begin by saying that going forward, we will be discussing results without breaking down core versus non-core metrics in our financials. We would like to be more selective with adjustments, with the goal of providing a clearer and more straightforward view of our quarterly performance. All comparisons made to last quarter's results are to our GAAP-reported figures. Let's turn to slide 4, where you will see our balance sheet highlights. Note that in the next 3 slides, I will focus on those items that are most relevant to the quarter and will not be covered in subsequent slides. Total assets were $9.9 billion as of the end of Q1, an increase from $9.8 billion as of the end of Q4. The increase was primarily driven by higher deposit balances.

Speaker #1: We would like to be more selective with adjustments, with the goal of providing a clearer and more straightforward view of our quarterly performance. I'll compare since May to last quarter's results relative to our gap-reported figures.

Speaker #1: Let's turn to slide four, where you will see our balance sheet highlights. Note that in the next three slides, I will focus on those items that are most relevant to the quarter, and will not be covered in subsequent slides.

Speaker #1: Total assets were $9.9 billion, as of the end of the first quarter. An increase from $9.8 billion as of the end of the fourth quarter.

Speaker #1: The increase was primarily driven by higher deposit balances. Additionally, we reallocated our assets to fund net loan growth, including selected residential loan purchases, and deployed available cash into higher-yielding assets.

Sharymar Calderón: Additionally, we reallocated our assets to fund net loan growth, including selected residential loan purchases, and deployed available cash into higher-yielding assets. Cash and cash equivalents were $188.7 million, down by $281.5 million, compared to $470.2 million in Q4, due to the purchases of investment securities at attractive yields, as well as to fund loan growth. Total investment securities were $2.4 billion, up by $346.3 million, compared to $2.1 billion in the previous quarter. Total gross loans were $6.8 billion, up by $56.5 million, compared to $6.7 billion in Q4.

Speaker #1: Cash and cash equivalents were $188.7 million, down by $281.5 million, compared to $470.2 million in the fourth quarter, due to the purchases of investment securities at attractive yields, as well as to fund loan growth.

Speaker #1: Total investment securities were $2.4 billion, up by $346.3 million, compared to $2.1 billion in the previous quarter. Total gross loans were $6.8 billion, up by $56.5 million, compared to $6.7 billion in the fourth quarter.

Speaker #1: While we experienced increases in certain portfolios, overall loan balances were only slightly higher than in the fourth quarter due to a high level of prepayments and some loans that we exited in line with our focus on credit quality.

Sharymar Calderón: While we experienced increases in certain portfolios, overall loan balances were only slightly higher than in Q4 due to a high level of prepayments and some loans that we exited in line with our focus on credit quality. This was anticipated and guided, too, in our call last quarter. On the deposit side, total deposits were $7.9 billion, up by $152.2 million, compared to $7.8 billion in Q4, primarily driven, as Carlos mentioned, by strong growth in international deposits. Our assets under management increased $148.6 million to $3.4 billion, driven by higher market valuations. As we've shared previously, we continue to see this business as an area of opportunity for us to grow fee income going forward, increasingly in light of the opportunity in Venezuela. Let's turn to slide five.

Speaker #1: This was anticipated and guided to in our call last quarter. On the deposit side, total deposits were $7.9 billion, up by $152.2 million compared to $7.8 billion in the fourth quarter, primarily driven, as Carlos mentioned, by strong growth in international deposits.

Speaker #1: Our assets under management increased $148.6 million to $3.4 billion, driven by higher market valuations. As we've shared previously, we continue to see this business as an area of opportunity for us to grow fee income going forward, increasingly in light of the opportunity in Venezuela.

Speaker #1: Let's turn to slide five. Looking at the income statement, diluted income per share for the first quarter was $0.44, compared to $0.07 in the fourth quarter.

Sharymar Calderón: Looking at the income statement, diluted earnings per share for Q1 was $0.44 compared to $0.07 in Q4. Net interest income was $80.3 million, down $9.9 million from $90.2 million in Q4. This was primarily driven by lower average balances and yields on interest-earning assets, largely attributable to the anticipated cuts of 50 basis points in market rates impacting the portfolio for the entire quarter. The decrease in net interest income was also driven by the asset mix reallocation. That translated into a contraction of our net interest margin to 3.55% from 3.78% in Q4. Provision for credit losses was $7.8 million, compared to $3.5 million in Q4.

Speaker #1: Net interest income was $80.3 million, down $9.9 million from $90.2 million in the fourth quarter. This was primarily driven by lower average balances and yields on interest-earning assets, largely attributable to the anticipated cuts of 50 basis points in market rates, impacting the portfolio for the entire quarter.

Speaker #1: The decrease in net interest income was also driven by the asset mix reallocation. That translated into a contraction of our financial margin to 3.55% from 3.78% in the fourth quarter.

Speaker #1: Provision for credit losses was $7.8 million, compared to $3.5 million in the fourth quarter. Non-interest income was $17.4 million, down $4.6 million from $22 million, primarily driven by the absence of the gain that we had in the fourth quarter from the sale and leaseback of two banking centers, as well as lower securities gains this quarter compared to the fourth quarter.

Sharymar Calderón: Non-interest income was $17.4 million, down $4.6 million from $22 million, primarily driven by the absence of the gain that we had in Q4 from the sale and leaseback of two banking centers, as well as lower securities gains this quarter compared to Q4. Non-interest income this quarter includes securities gains of $516 thousand. Non-interest expense was $66.9 million, down by $39.9 million or 37.3% from $106.8 million in Q4. The significant reduction in non-interest expenses this quarter was primarily driven by our cost savings efforts, which included $3.3 million savings in vendor contract renegotiations.

Speaker #1: Non-interest income this quarter includes securities gains of $516,000. Non-interest expense was $66.9 million, down by 39.9 million or 37.3% from $106.8 million in the fourth quarter.

Speaker #1: The significant reduction in non-interest expenses this quarter was primarily driven by our cost savings efforts, which included $3.3 million savings in vendor contract renegotiations.

Speaker #1: The decrease in non-interest expenses in 1Q26 was partially offset by $1.7 million in an impairment on investment carried at cost and $1.8 million in net losses on loans held for sale.

Sharymar Calderón: The decrease in non-interest expenses in Q1 2026 was partially offset by $1.7 million in an impairment on investment carried at cost and $1.8 million in net losses on loans held for sale. Pre-tax, pre-provision net revenue was $30.7 million, compared to $5.4 million in Q4 2025. As mentioned earlier, we have significantly reduced non-interest expenses this quarter, which more than offsets the lower net interest income and non-interest income, driving an improvement in PPNR. You can also see that ROA and ROE this quarter were 0.73% and 7.63%, compared to 0.10% and 1.12% respectively, and our efficiency ratio was 68.52% compared to 95.19%.

Speaker #1: Pre-tax, pre-provision net revenue was $30.7 million, compared to $5.4 million in Q4 '25. As mentioned earlier, we have significantly reduced non-interest expenses this quarter, which more than offsets the lower net interest income and non-interest income, driving an improvement in PP&R.

Speaker #1: You can also see that ROA and ROE this quarter were 0.73% and 7.63%, compared to 0.10% and 1.12%, respectively, and our efficiency ratio was 68.52%, compared to 95.19%.

Speaker #1: These ratios were primarily impacted by the increase in net income and significant decreases in expenses this quarter. Turning now to slide six to discuss our capital metrics.

Sharymar Calderón: These ratios were primarily impacted by the increase in net income and significant decreases in expenses this quarter. Turning now to slide 6 to discuss our capital metrics. Our CET1 remains strong at 11.84% compared to 11.80% last quarter, mainly driven by lower risk-weighted assets and from net income during the quarter, while partially offset by $18.7 million in share repurchases and $3.7 million in shareholder dividends. We paid our quarterly cash dividend of $0.09 per share of common stock on 27 February 2026, and our board of directors just approved a quarterly dividend of $0.09 per share payable on 29 May of this year. During Q1, we also repurchased 859,493 shares at a weighted average price of $21.77 per share, compared to tangible book value of $22.38 as of 31 March 2026. This represents at 97% of tangible book value and 95% of book value.

Speaker #1: Our CET1 remains strong at $11.84%, compared to $11.80% last quarter, mainly driven by lower risk-weighted assets and from net income during the quarter, while partially offset by $18.7 million in share repurchases and $3.7 million in shareholder dividends.

Speaker #1: We paid our quarterly cash dividend of $0.09 per share of common stock on February 27, 2026, and our board of directors just approved a quarterly dividend of $0.09 per share payable on May 29 of this year.

Speaker #1: During the first quarter, we also repurchased $859,493 shares at a weighted average price of $21.77 per share, compared to tangible book value of $22.38 as of March 31, 2026.

Speaker #1: This represented 97% of tangible book value and 95% of book value. On slide seven, we show our well-diversified deposit mix along with the composition of our loan portfolio.

Sharymar Calderón: On slide seven, we show our well-diversified deposit mix along with the composition of our loan portfolio. Total deposits for the quarter were $7.9 billion, up $152.2 million, or 2%, compared to $7.8 billion in the previous quarter. As Carlos mentioned, this increase was primarily driven by the significant deposit growth in our international deposits as a result of Venezuela's economy starting to reactivate, which we believe presents a strong opportunity for us to pursue. In terms of deposit mix, broker deposits totaled $548.1 million, up by $112.4 million compared to $435.7 million in Q4 as we used mostly short-term funding to compensate for some large fund providers that left in the prior quarter. We also saw an increase in interest-bearing demand, savings, and money market deposits partially offset by a reduction in non-interest-bearing deposits.

Speaker #1: Total deposits for the quarter were $7.9 billion, up $152.2 million, or 2%, compared to $7.8 billion in the previous quarter. As Carlos mentioned, this increase was primarily driven by the significant deposit growth in our international deposits as a result of Venezuela's economy starting to reactivate, which we believe presents a strong opportunity for us to pursue.

Speaker #1: In terms of deposit mix, broker deposits totaled $548.1 million, up by $112.4 million compared to $435.7 million in the fourth quarter, as we used mostly short-term funding to compensate for some large fund providers that left in the prior quarter.

Speaker #1: We also saw an increase in interest-bearing demand, savings, and money market deposits, partially offset by a reduction in non-interest-bearing deposits. Total loans were $6.8 billion, up $56.5 million, or 0.8%, compared to $6.7 billion in the fourth quarter.

Sharymar Calderón: Total loans were $6.8 billion, up $56.5 million or 0.8%, compared to $6.7 billion in Q4. This increase was driven by a combination of originations as well as purchases of selected residential mortgages during the quarter, which were largely offset by the higher prepayments we received as well as loan sales completed this period. Next, on slide eight, you can see the evolution of our net interest income. You can see that we maintained a healthy net interest margin despite this Q1 fully capturing the impact of two rate cuts toward the end of the last year and our asset mix reallocation. We continued to reprice our interest-bearing deposits during the quarter to maintain a healthy NIM and saw the cumulative beta at 0.48% since the rate down period started.

Speaker #1: This increase was driven by a combination of originations, as well as purchases of selected residential mortgages during the quarter, which were largely offset by the higher prepayments we received, as well as loan sales completed this period.

Speaker #1: Next, on slide eight, you can see the evolution of our net interest income. You can see that we maintained a healthy net interest margin despite this first quarter fully capturing the impact of two rate cuts toward the end of last year and our asset mix reallocation.

Speaker #1: We continued to reprice our interest-bearing deposits during the quarter to maintain a healthy NIM, and saw the cumulative beta at 0.48% since the rates-down period started.

Speaker #1: Our net interest income was also impacted by non-performing loans and some of the exits of classified loans that I mentioned earlier. While this may have a short-term impact, it improved the long-term sustainability of our business.

Sharymar Calderón: Our net interest income was also impacted by non-performing loans and some of the exits of classified loans that I mentioned earlier. While this may have a short-term impact, it improved the long-term sustainability of our business. Now, I'd like to turn it over to Lee Ann Cragg, who will speak a bit more about some of the updates we have made to our portfolio management processes as we continue improving credit quality.

Speaker #1: Now, I'd like to turn it over to Leanne, who will speak a bit more about some of the updates we have made to our portfolio management processes, as we continue improving credit quality.

Speaker #2: Thanks, Shary. And thank you for having me on today's call. As Carlos highlighted, we are taking significant steps to improve our credit quality evaluation processes, which I'd like to highlight for you today.

Lee Ann Cragg: Thanks, Sharymar Calderón, and thank you for having me on today's call. As Carlos Iafigliola highlighted, we are taking significant steps to improve our credit quality evaluation processes, which I'd like to highlight for you today. To begin, we staffed a dedicated portfolio management team to improve the timeliness of the collection of financial information from borrowers and for the escalation of possible issues to the credit team. We've also invested in additional training for both credit and line of business teams to improve the accuracy and consistency of assigning regulatory risk ratings. We have further embedded new checkpoints throughout our monitoring process, upon which updated risk rating models should be run and attested. Beyond that, we've made our review procedures more rigorous and risk focused.

Speaker #2: To begin, we staffed a dedicated portfolio management team to improve the timeliness of the collection of financial information from borrowers and for the escalation of possible issues to the credit team.

Speaker #2: We've also invested in additional training for both credit and line-of-business teams to improve the accuracy and consistency of assigning regulatory risk ratings. We have further embedded new checkpoints throughout our monitoring process upon which updated risk rating models should be run and attested.

Speaker #2: Beyond that, we've made our review procedures more rigorous and risk-focused. We redesigned our annual review format to drive deeper risk identification and recalibrated the review threshold from total credit exposures of $5 million to $3 million to expand portfolio coverage.

Lee Ann Cragg: We redesigned our annual review format to drive deeper risk identification and recalibrated the review threshold from total credit exposures of $5 million to $3 million to expand portfolio coverage. Subsequently, with additional process and staff build-out, we expect to review all exposures over $1 million through our standardized review. We also introduced quarterly top 20 reviews across CRE, C&I, and private banking segments to closely monitor our largest relationships. These discussions include risk ratings, exceptions, and exposure strategy. These quarterly meetings will be held for portfolio segments that may be deemed in higher risk categories throughout the year. We have also increased the cadence of hosting multiple loan monitoring meetings. These meetings are for adversely classified loans with ongoing proactive strategy discussions focusing on restructures or obtaining additive credit enhancements where possible.

Speaker #2: Subsequently, and with additional process and staff buildout, we expect to review all exposures over 1 million through our standardized review. We also introduced quarterly top 20 reviews across CRE, C&I, and private banking segments to closely monitor our largest relationships.

Speaker #2: These discussions include risk ratings, exceptions, and exposure strategy. These quarterly meetings will be held for portfolio segments that may be deemed in higher risk categories throughout the year.

Speaker #2: We have also increased the cadence of hosting multiple loan monitoring meetings. These meetings are for adversely classified loans, with ongoing proactive strategy discussions focusing on restructures or obtaining additive credit enhancements where possible.

Lee Ann Cragg: Finally, we're aligning our incentives with asset quality by incorporating portfolio management metrics into banker compensation starting in 2026. Collectively, these steps provide stronger controls, better visibility, and more hands-on portfolio management. Now turning to asset quality, as shown on slide 10, non-performing loans were up $4.7 million or 2.7% for a total of $176.1 million or 1.78% of total assets. During Q1 2026, downgrades to NPL were primarily driven by 3 relationships that included a combination of CRE, owner-occupied, and commercial loans and were offset by payoffs and note sales as noted on the slide. In the next slide, we have included similar information as it relates to the classified portfolio.

Speaker #2: Finally, we're aligning our incentives with asset quality by incorporating portfolio management metrics into banker compensation starting in 2026. Collectively, these steps provide stronger control, better visibility, and more hands-on portfolio management.

Speaker #2: Now, turning to asset quality, as shown on slide 10, non-performing loans were up $4.7 million, or 2.7%, for a total of $176.1 million, or 1.78% of total assets.

Speaker #2: During Q1, 2026, downgrades to NPL were primarily driven by three relationships that included a combination of CRE, owner-occupied, and commercial loans. And we're offset by payoffs and note sales as noted on the slide.

Speaker #2: In the next slide, we have included similar information as it relates to the classified portfolio. During Q1 '26, downgrades to classified loans were primarily driven by the three relationships just mentioned in NPL, as well as a large non-depository financial institution loan with underlying CRE property as collateral, and one large single-family residential loan which was adequately secured with real estate.

Lee Ann Cragg: During Q1 2026, downgrades to classified loans were primarily driven by the three relationships just mentioned in NPL, as well as a large non-depository financial institution loan with underlying CRE property as collateral, and one large single-family residential loan, which was adequately secured with real estate. On this slide, you can also see the results of our efforts to reduce the loan balances in this classification during this quarter, with loan payoffs totaling $59.5 million and loans sold totaling $65.7 million during the period. Now moving into slide 12, we discuss special mention loans and their key characteristics, including portfolio composition and collateral coverage. During the first quarter of 2026, downgrades to special mention were primarily driven by three CRE loans, partially offset by upgrades to pass totaling $67.3 million. This is based on new year-end financial information that was received and analyzed.

Speaker #2: On this slide, you can also see the results of our efforts to reduce the loan balances in this classification during this quarter, with loan payoffs totaling $59.5 million and loans sold totaling $65.7 million during the period.

Speaker #2: Now, moving into slide 12, we discussed special mention loans and their key characteristics, including portfolio composition and collateral coverage. During the first quarter of 2026, downgrades to special mention were primarily driven by three CRE loans, partially offset by upgrades to past totaling 67.3 million, this is based on new year-end financial information that was received and analyzed.

Lee Ann Cragg: As of 22 April, special mention loans were reduced to $117.3 million due to a $30.9 million CRE loan sale, and is projected to reach a further reduced level to $88.3 million as a result of an additional CRE loan exit of $29 million. This is expected in the coming weeks. Overall, these results reflect the proactive approach to credit monitoring, evaluation, and resolution that we have taken to effectively manage risk across the portfolio. You will also see the impact of these efforts as we continue to exit these credits through paydowns, payoffs, and loan sales, with expected balances declining as a result. With that, I'd like to pass it back to Shari.

Speaker #2: As of April 22nd, special mention loans were reduced to 117.3 million due to a 30.9 million CRE loan sale and it is projected to reach a further reduced level to 88.3 million as a result of an additional CRE loan exit of 29 million.

Speaker #2: This is expected in the coming weeks. Overall, these results reflect the proactive approach to credit monitoring, evaluation, and resolution that we have taken to effectively manage risk across the portfolio.

Speaker #2: You will also see the impact of these efforts as we continue to exit these credits through paydowns, payoffs, and loan sales, with expected balances declining as a result.

Speaker #2: And with that, I'd like to pass it back to Shari.

Sharymar Calderón: Thank you, Lee Ann Cragg. Now moving on to slide 13. Here, we show the drivers of the provision recorded this quarter and impact to the allowance for credit losses. The provision for credit losses was $7.8 million in Q1. The provision was driven by $6.3 million in additional reserves for charge-offs, a $1.7 million net increase in specific reserves allocation, and $2.6 million attributable to changes in credit quality and macroeconomic factors. These increases were partially offset by a $2.9 million release related to held-for-investment loan volume changes. During Q1 2026, gross charge-offs totaled $9.1 million, which includes $4.4 million related to a commercial loan participation agreement that the borrower and the company agreed to wind down in Q4 2025, and no further charge-offs are expected from this agreement going forward.

Speaker #3: Thank you, Leanne. Now, moving on to slide 13. Here, we show the drivers of the provision recorded this quarter and the impact to the allowance for credit losses.

Speaker #3: The provision for credit losses was $7.8 million in the first quarter. The provision was driven by $6.3 million in additional reserves for charge-offs, a $1.7 million net increase in specific reserves allocations, and $2.6 million attributable to changes in credit quality and macroeconomic factors.

Speaker #3: These increases were partially offset by a $2.9 million release related to health for investment loan volume changes. During the first quarter of 2026, gross charge-offs totaled $9.1 million, which includes $4.4 million related to a commercial loan participation agreement that the borrower and the company agreed to wind down in Q2 2025, and no further charge-offs are expected from this agreement going forward.

Sharymar Calderón: The remaining charge-offs were related to one commercial relationship and indirect consumer loans. These charge-offs were offset by $1.9 million due to recoveries. Lastly, the allowance for credit losses ratio was up slightly to 1.21% from 1.20% in Q4, primarily due to increases in specific reserves. On slide 14, you can see our outlook for 2026. For Q2 2026, we project loan balances to reach approximately $7 billion, driven by organic originations and selective residential loan purchases, which also support a shift towards a more granular portfolio. For the full year 2026, we expect annualized loan growth of approximately 7%. These expectations will be governed by two deliberate and non-negotiable priorities. First, we will continue to exit certain credits to further optimize our loan portfolio, which will offset a portion of organic production in the near term.

Speaker #3: The remaining charge-offs were related to one commercial relationship and indirect consumer loans. These charge-offs were offset by 1.9 million due to recoveries. Lastly, the allowance for credit losses ratio was up slightly to 1.21% from 1.20% in the fourth quarter, primarily due to increases in specific reserves.

Speaker #3: On slide 14, you can see our outlook for 2026. For Q2 2026, we project loan balances to reach approximately $7 billion, driven by organic originations and selective residential loan purchases, which also support a shift towards a more granular portfolio.

Speaker #3: For the full year 2026, we expect annualized loan growth of approximately 7%. These expectations will be governed by two deliberate and non-negotiable priorities: first, we will continue to exit certain credits to further optimize our loan portfolio, which will offset a portion of organic production in the near term.

Sharymar Calderón: Second, we will pursue future loan growth that is consistent with our risk appetite and supports the predictability of our credit metrics. On the funding side, we expect deposits to reach $8 billion by Q2 2026 and cumulative deposit growth between 8% and 10% for 2026. The confidence in our deposit growth outlook is supported by emerging opportunities in Venezuela, as Carlos mentioned, and our continued efforts to grow domestically. We expect net interest margin to be in the 3.4% to 3.5% range in Q2 2026, stabilizing around 3.4% towards year-end, reflecting disciplined balance sheet management and pricing. From an expense perspective, we are projecting approximately $68 million to $69 million in expenses for Q2 2026, with quarterly expenses stabilizing around $68 million by the second part of the year as we continue to make progress towards a target efficiency ratio of approximately 60%.

Speaker #3: Second, we will pursue future loan growth that is consistent with our risk appetite and supports the predictability of our core upper credit metrics. On the funding side, we expect deposits to reach 8 billion by Q2, 2026 and cumulative deposit growth between 8 to 10 percent for 2026.

Speaker #3: The confidence in our deposit growth outlook is supported by emerging opportunities in Venezuela as Carlos mentioned and our continued efforts to grow domestically. We expect net interest margin to be in the 3.4% to 3.5% range in Q2, 2026, stabilizing around 3.4% towards year-end.

Speaker #3: Reflecting disciplined balance sheet management and pricing. From an expense perspective, we are projecting approximately 68 to 69 million in expenses for Q2, 2026 with quarterly expenses stabilizing around 68 million by the second part of the year, as we continue to make progress towards a target efficiency ratio of approximately 60%.

Sharymar Calderón: Lastly, we continue to believe that buying back our stock represents an attractive use of capital, and we expect to continue using a portion of our cash to directly return capital to our shareholders through repurchases and dividends. With that, I pass it back to Carlos for additional comments and closing remarks.

Speaker #3: Lastly, we continue to believe that buying back our stock represents an attractive use of capital and we expect to continue using a portion of our cash to directly return capital to our shareholders through repurchases and dividends.

Speaker #3: And with that, I pass it back to Carlos for additional comments and closing remarks.

Carlos Iafigliola: Thank you, Shari. As we wrap up today's call, I would like to reiterate, as shown in slide 15, the continued progress we have made in stabilizing the business, optimizing our credit portfolio, and growing sustainably. Our results this quarter reflect strong execution and tangible progress from the decisive actions we have taken over the past two quarters across these priorities. As we look ahead, we will continue to prioritize building a healthier loan portfolio that is consistent with our risk appetite and long-term goals. We will also continue our disciplined expense management efforts, driving efficiencies across the organization. Lastly, we will emphasize growth in our core business with a clear line of sight to sustain credit performance.

Speaker #1: Thank you, Shari. As we wrap up today's call, I would like to reiterate as shown in slide 15 the continued progress we have made in stabilizing the business, optimizing our credit portfolio, and growing sustainably.

Speaker #1: Our results this this quarter reflect strong execution and tangible progress from the decisive actions we have taken over the past two quarters across these priorities.

Speaker #1: As we look ahead, we will continue to prioritize building a healthier loan portfolio that is consistent with our risk appetite and long-term goals. We will also continue our disciplined expense management efforts driving efficiencies across the organization.

Speaker #1: And lastly, we will emphasize growth in our core business with a clear line of sight to sustain credit performance. We will continue to strengthen our relationship-first model to enhance collaboration across our business lines, to unlock synergies, proactively manage deposit funding costs, and capitalize on strong deposit growth opportunities, including Venezuela.

Carlos Iafigliola: We will continue to strengthen our relationship-first model to enhance collaboration across our business lines to unlock synergies, proactively manage deposit funding cost, and capitalize on strong deposit growth opportunities, including Venezuela. We have a durable franchise, a clear strategic vision, and a disciplined execution plan. While there is more work ahead.

Speaker #1: We have a durable franchise, a clear strategic vision, and a disciplined execution plan. While there is more work ahead, we are excited about the opportunities and remain confident in our ability to deliver value for our shareholders over the long term.

Carlos Iafigliola: We are excited about the opportunities and remain confident in our ability to deliver value for our shareholders over the long term. With that, Shari, Leanne, and I will take questions. Operator, please open the line for Q&A.

Speaker #1: With that, Shari, Leanne, and I will take questions. Operator, please open the line for Q&A.

Operator 2: Certainly. We'll now be conducting a question and answer session. If you'd like to be placed in the question queue, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. One moment please while we poll for questions. Our first question today is coming from Evan Yee from Raymond James. Your line is now live.

Operator: Certainly. We'll now be conducting a question and answer session. If you'd like to be placed in the question queue, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. One moment please while we poll for questions. Our first question today is coming from Evan Yee from Raymond James. Your line is now live.

Speaker #4: Certainly. Without conducting your question and answer session, if you'd like to be placed into question queue, please press star one on your telephone keypad.

Speaker #4: A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue.

Speaker #4: One moment, please, while we pull for questions. Our first question today is coming from Evan Yee from Raymond James. Your line is now live.

Evan Yee: Hey, good morning. Thank you for taking my questions. Just wanted to start on expenses. It looks like expenses turned out a little bit better than the initial H1 2026 expectation. Could you just give us some color into what is factoring into your outlook for the rest of the year? Thanks.

Speaker #5: Hey, good morning. Thank you for taking my questions. So just wanted to start on expenses. So it looks like expenses trended a little bit better than the initial first half of 2026 expectation.

Speaker #5: Could you just give us some color into what this is factoring into your outlook for the rest of the year? Thanks.

Carlos Iafigliola: Yeah. Hey, how are you? Thank you so much for the question. Pretty much we accelerated some of the contract renegotiation that we have scheduled for later into 2026. We had it completed in early 2026, and the run rate seems to be closer to the $68 million for the entire year quarter-over-quarter. That's a collective effort that we have done to improve expenses. Shari, I'm not sure if you want to-

Speaker #1: So yeah, hey, how are you? Thank you so much for the question. So, pretty much, we accelerated some of the contract renegotiation that we had scheduled for later into 2026.

Speaker #1: So, we had it completed in early 2026, and the run-rate seems to be closer to the $68 million for the entire year, quarter over quarter.

Speaker #1: So that's a collective effort that we have done to improve expenses. Shari, I'm not sure if you want to.

Sharymar Calderón: Yes. Yeah, Carlos. To complement that, I think it's important that we state that we're not looking into just a one-time cost reduction. We're looking more into sustainability quarter-over-quarter. That's why you're going to see that the run rate that we have provided some guidance on goes to the $68 more or less, in the upcoming quarters. As we continue to plan to cross the $10 million threshold, I know we're at $9.9 million right now, but we continue to plan to cross that threshold. We're going to have some investments in people and technology, so it means that we have to make sure that we materialize those cost savings initiatives that we have identified so that we get to that run rate of $68 million that we have guided to.

Speaker #3: Yeah, yeah, Carlos, I want to complement that. I think it's important that we state that we're not looking into just a one-time cost reduction. We're looking more into sustainability quarter over quarter.

Speaker #3: So that's why you're going to see that the run rate that we have provided some guidance on goes to the 68, more or less, in the upcoming quarters.

Speaker #3: As we continue to plan to cross the $10 million threshold, I know we're at $9.9 million right now, but we continue to plan to cross that threshold.

Speaker #3: We're going to have some investments in people and technology. So it means that we have to make sure that we materialize those cost savings initiatives that we have identified so that we get to that run rate of 68 that we have guided to.

Carlos Iafigliola: I guess, the takeaway is that those savings are durable throughout the entire 2026.

Speaker #1: I guess the takeaway is that those savings are durable throughout the entire 2026.

Evan Yee: Got it. Thank you. That's super helpful. I guess switching over to capital, so it looks like you used a large portion utilization this quarter. Just kind of curious on what the appetite is there moving forward. I know you've mentioned it was an attractive option. Thanks.

Speaker #5: Got it. Thank you. And that's super helpful. And then I guess switching over to capital. So it looks like you used a large utilization, a large portion of utilization this quarter.

Speaker #5: Just kind of curious on what the appetite is there moving forward. I know you've mentioned it was an attractive option. Thanks.

Carlos Iafigliola: Do you mean in terms of the buyback? The leftover of the buyback right now is $21 million, and we're planning to complete the buyback through Q2.

Speaker #1: Do you mean in terms of the buyback? The leftover of the buyback right now is $21 million. And we're planning to complete the buyback through Q2.

Sharymar Calderón: Yep. We definitely saw opportunity. We believe in the bank, and we saw a lot of value and opportunity in Q1 because we were trading below tangible book. We're now over tangible book, but we continue to see opportunities through the buyback program. As Carlos mentioned, the plan is to continue with the plan throughout the year for the remaining portion.

Speaker #3: Yep. And we have, I mean, we definitely saw opportunity. We believe in the bank, and we saw a lot of value and opportunity in the first quarter because we were trading below tangible book.

Speaker #3: We're now over tangible book, but we continue to see opportunities through the buyback program. So, as Carlos mentioned, the plan is to continue with the program throughout the year.

Speaker #3: With the remaining portion.

Evan Yee: Okay, great. I'll step back. Thank you.

Speaker #5: Okay. Great. I'll step back. Thank you.

Operator 2: Thank you. Next question today is coming from Russell Gunther from Stephens. Your line is now live.

Operator: Thank you. Next question today is coming from Russell Gunther from Stephens. Your line is now live.

Speaker #3: Thanks.

Speaker #4: Thank you. Next question today is coming from Russell Gunther from Stevens. Your line is now live.

[Analyst] (Stephens): Hey, good morning. This is Nick stepping in for Russell. It's good to see progress on special mention, especially with that $31 million sale already closed. Looking ahead to that additional CRE exit that you guys have targeted for mid-Q2, does that effectively wrap up the heavy lifting on de-risking? I'm just trying to gauge if there are more bulk exits on the horizon or if the portfolio is finally where you want it to be.

Speaker #6: Hey, good morning. This is Nick stepping in for Russell. So, it's good to see progress on special mention, especially with that $31 million sale already closed.

Speaker #6: But looking ahead to that additional CREX that you guys have targeted for mid-Q2, does that effectively wrap up the heavy lifting on de-risking? I'm just trying to gauge if there are more bulk exits on the horizon or if the portfolio is finally where you want it to be.

Carlos Iafigliola: Thank you for the question. The exercise that we have been doing, and probably you noticed the progression, has been risk identification. We exit the relationships that we consider they were critical exits in Q4 2024. From now on, it will be a risk calibration exercise. What we place in available for sale reflects a combination of line items that are either out of footprint or they are too bulky with our new risk appetite. The progression will be that those line items will continue to fade away out of the balance sheet. Right now, we executed on the 30, and there is another exit upcoming week, so that will be left with 130 in available for sale. The plan is to continue to execute, and the path is to create a portfolio that is more granular going forward.

Speaker #1: Sure, thank you. Thank you for the question. And the exercise that we have been doing—and I'm sure you probably noticed the progression—has been risk identification.

Speaker #1: We exited the relationships that we considered were critical exits in Q4 2024. And from now on, it will be a risk calibration exercise.

Speaker #1: So, what we place in available-for-sale reflects a combination of line items that are either out-of-footprint, or they are too bulky with our new risk appetite.

Speaker #1: So the progression will be that those line items will continue to fade away out of the balance sheet. Right now, we executed on the 30, and there is another exit upcoming week.

Speaker #1: So that will leave us with 130 in available for sale. But the plan is to continue to execute, and the path is to create a portfolio that is more granular going forward.

Carlos Iafigliola: You minimize the swings between the risk rating categories.

Speaker #1: So you minimize the swings between the risk rating categories.

Sharymar Calderón: Yeah. Carlos, to complement that too, if we look also at the categories of classified or NPLs, we're looking into different paths to exit those. Some have opportunities for upgrades, which we'll look into, but others have opportunities, whether it's to refi, and so on. When we think about what is the de-risking that we have left over the portfolio, as Carlos mentioned, we have the available for sale that we plan to exit, and then we have the reductions of the classified portfolio as well.

Speaker #3: Yeah. And Carlos, to complement that too, if we look also at the categories of classified or NPLs, we're looking into different paths to exit those.

Speaker #3: Some have opportunities for upgrades, which we'll look into. But others have opportunities, whether it's to refi and so on. So, when we think about what is the de-risking that we have left over the portfolio, as Carlos mentioned, we have the available-for-sale that we plan to exit.

Speaker #3: And then we have the reductions of the classified portfolio as well.

[Analyst] (Stephens): Got it. That's all I have. Thanks for my question.

Speaker #6: Got it. That's all I have. Thanks. Thank you for my question.

Sharymar Calderón: Thank you.

Carlos Iafigliola: Sure.

Speaker #3: Thank you.

Operator 2: Thank you. Next question today is coming from Woody Lay from KBW. Your line is now live.

Operator: Thank you. Next question today is coming from Woody Lay from KBW. Your line is now live.

Speaker #1: Sure.

Speaker #4: Thank you. Next question today is coming from Woody Lay from KBW. Your line is now live.

Woody Lay: Hey, good morning, guys.

Speaker #7: Hey, good morning, guys.

Carlos Iafigliola: Hey.

Speaker #1: Hey.

Operator 1: wanted to start on the net interest margin in the quarter. It came below the guide you all had given for the quarter, and it looked like it came from lower loan yields. I was just wondering, were there any elevated interest reversals in the quarter? Two, is new loan production coming on at lower yields, just given the adjustment, the risk appetite, and trying to put on cleaner and safer credits?

Woody Lay: wanted to start on the net interest margin in the quarter. It came below the guide you all had given for the quarter, and it looked like it came from lower loan yields. I was just wondering, were there any elevated interest reversals in the quarter? Two, is new loan production coming on at lower yields, just given the adjustment, the risk appetite, and trying to put on cleaner and safer credits?

Speaker #7: I wanted to start on the net interest margin. In the quarter, it came below the guide y'all had given for the quarter, and it looked like it came from lower loan yields.

Speaker #7: One, I was just wondering, were there any elevated interest reversals in the quarter? And two, is new loan production coming on at lower yields, just given the adjustment in the risk appetite and trying to put on cleaner and safer credits?

Sharymar Calderón: Sure. Woody, what I'm going to do is I'm going to walk you through some of the elements of the NIM that may be helpful to get to that response. The first thing is we have the repricing of the loan portfolio due to the costs as we had planned for. That did happen, and that's why we had guided to a lower number versus the NIM that we had in Q4. Then after that, during Q1, we had a different asset mix. You're going to see that we had a higher proportion of investments available for sale. We had some impact due to the timing of the funding of the loan growth, which occurred later in the quarter.

Speaker #3: Sure. And Woody, what I'm going to do is walk you through some of the elements of the NIM that may be helpful in getting to that response.

Speaker #3: But the first thing is, we had a change—I mean, we have the repricing of the loan portfolio due to the cuts, as we had planned for.

Speaker #3: So, that did happen, and that's why we had guided to a lower number versus the NIM that we had in Q4. But then after that, during Q1, we had a different asset mix.

Speaker #3: You're going to see that we had a higher proportion of investments available for sale. We had some impact due to the timing of the funding of the loan growth, which occurred later in the quarter.

Sharymar Calderón: Additionally, to your point, we had onboarding of production with a quality that's aligned with the current risk appetite that will come, and it's expected to come with an overall lower yield than the existing portfolio. On top of that, we also had an impact of approximately three basis points associated to the number of days in the quarter versus the last quarter. I think you also had a question regarding if we had certain impacts of non-accrual. I didn't see anything significant this quarter, but if we compare that to the last quarter, we did have some impact due to collections or recoveries on NPL loans. Trying to create something comparable for apples to apples, you're going to see that because we didn't have that in Q1, the NIM is slightly lower as well. Hope that helps with that bridge.

Speaker #3: And then, additionally to your point, we had onboarding of production with a quality that's aligned with the current risk appetite. That will come and is expected to come with an overall lower yield than the existing portfolio.

Speaker #3: And then, on top of that, we also had an impact of approximately three basis points associated with the number of days in the quarter versus the last quarter.

Speaker #3: I think you also had a question regarding if we had certain impacts of non-accrual. I didn't see anything significant this quarter. But if we compare that to the last quarter, last quarter, we did have some impacts due to collections or recoveries on NPL loans.

Speaker #3: So trying to create something comparable for apples to apples, you're going to see that because we didn't have that in Q1, the NIM is slightly lower as well.

Speaker #3: So, I hope that helps with that bridge.

Carlos Iafigliola: Woody, the other item that I would like to emphasize is that this guidance that we're providing, and we're pending still to see the progression. International deposits started to resume, and as you know, they come with a lower cost of funds, closer to the 1% or in some cases even lower. We started to see that coming over. As we started to see a significant progression, and we started to see a clear path towards accumulation of those deposits, that may have an impact on the cost of funds and will trigger a recalibration on the guidance for the financial margin. For the time being, the financial margin projected includes the lower loan spreads. Remember that the production that we're looking at right now is probably closer to the 200 basis points or even lower in some cases over SOFR.

Speaker #1: Woody, the other item that I would like to emphasize is that this guidance that we're providing—and we're still pending to see the progression—the international deposits have started to resume.

Speaker #1: And as you know, they come with a lower cost of funds, closer to 1%, or in some cases even lower. So we started to see that coming over as we started to see a significant progression, and we started to see a clear path towards accumulation of those deposits.

Speaker #1: That may have an impact on the cost of funds, and we'll trigger a recalibration on the guidance for the financial margin. So, for the time being, the financial margin projected includes the lower loan spreads.

Speaker #1: Remember that the production that we're looking at right now, it's probably closer to the 200 basis points, so even lower in some cases. Oversoffer.

Carlos Iafigliola: Generally speaking, what we'll have is that if the international portfolio of deposits started to increase furthermore, we'll have additional savings in the cost of funds. That's something that we're carefully assessing right now. We have a good quarter from that perspective, and looking forward to see what's the accumulation of those line items. Okay?

Speaker #1: And generally speaking, what we'll have is that if the international portfolio of deposits started to increase furthermore, we'll have additional savings in the cost of funds.

Speaker #1: But that's something that we're carefully assessing right now. We have a good quarter from that perspective, and looking forward to seeing what's the accumulation of those line items.

Sharymar Calderón: Yeah. Carlos, to add to that, now on the deposit side, given the uncertainty in the rate environment, although we're expecting some positive improvements in terms of cost of funds due to the maturities of customer time deposits and broker deposits as it relates to other interest-bearing products, there's still uncertainty as to the timing of the repricing of those deposits. It's something that we will continue to look and model, but that definitely will impact the guidance to the NIM.

Speaker #1: Okay?

Speaker #3: Yeah. And Carlos, to add to that, now on the deposit side, given the uncertainty in the rate environment, although we're expecting some positive improvements in terms of cost of funds due to the maturities of customer time deposits and broker deposits, as it relates to other interest-bearing products, we still there's still uncertainty as to the timing of those as to the timing of the repricing of those deposits.

Speaker #3: So, it's something that we will continue to look at and model. But that definitely will impact the guidance to the NIM.

Woody Lay: That's really helpful, Carlos Iafigliola. I appreciate you walking me through that. Maybe to follow up on the international deposits, as you mentioned, the growth was really impressive as the Venezuelan market is opening up. How are you shifting the strategy on your end? Do you need to hire more people that call on that market? How do you unlock the potential of Venezuela? Could you also just remind us of the cost of those Venezuelan deposits or the cost on the incremental deposits? That'd be helpful.

Speaker #4: That's really helpful, Carl. I appreciate you walking me through that. And then, maybe to follow up on the international deposits, as you mentioned, the growth was really impressive.

Speaker #4: As Venezuelan market is opening up. But how are you shifting the strategy on your end? Do you need to hire more people? That call in that market?

Speaker #4: How do you unlock the potential of Venezuela? And could you also just remind us of the cost of those Venezuelan deposits, or the cost on the incremental deposits? That'd be helpful.

Carlos Iafigliola: No. Thank you so much for the question. Definitely we are looking to increase the staff to help us with these efforts. Something that is really important is that we have seen a progression in the way that the jurisdiction is being looked from the perspective of sanctions. Progressively, we have seen a path towards reducing the number of sanctions towards Venezuela and the central bank from the country having access to their funds. Therefore, there is an incremental flow of funds through the economy. This is happening in conjunction with the United States Department of the Treasury. We're seeing that positive uptick. We're looking to increase the staff in the international side, and we're also resuming our outreach to the region since now traveling into the country is much easier now than it used to be before.

Speaker #1: No. Thank you so much for the question. So definitely, we are looking into increase the staff to help us with this efforts. Something that is really important is that we have seen a progression in the way that the jurisdiction is being looked from the perspective of sanctions.

Speaker #1: So, progressively, we have seen a path towards reducing the number of sanctions towards Venezuela, and the central bank from the country having access to their funds.

Speaker #1: So, therefore, there is an incremental flow of funds through the economy. And this is happening in conjunction with the US Treasury Department. So we're seeing that positive uptick.

Speaker #1: We're looking to increase the staff on the international side, and we also resumed our outreach to the region since traveling into the country is much easier now than it used to be before.

Carlos Iafigliola: The cost of funds right now for the entire international portfolio sits around 130. Actually, even a little bit lower, 115 maybe. We have the incremental deposits that we're getting are actually sub 1%.

Speaker #1: And the cost of funds right now for the entire international portfolio sits around 130—actually, even a little bit lower, 115 maybe. And then we have the incremental deposits that we're getting are actually sub-1%.

Woody Lay: Got it. Then maybe just last for me, on credit, thinking about the charge-offs expectations going forward, it was good to see the quarter-over-quarter improvement over charge-offs. Does the noise in the Middle East and some of the inflation to input cost, does that make achieving resolution for some of these credits more expensive and we would expect charge-offs to go up, or any thoughts there?

Speaker #4: Got it. And then, maybe just last for me on credit—thinking about the charge-off expectations going forward. It's good to see the quarter-over-quarter improvement in charge-offs.

Speaker #4: But does the noise in the Middle East, and some of the inflation-to-input cost, does that make achieving resolution for some of these credits more expensive?

Speaker #4: And we would expect charge-offs to go up. Or any thoughts there?

Lee Ann Cragg: Yeah. We have no direct exposure to exploration or extraction on the oil piece. We're obviously looking at our overall portfolio to see impacts there. What I would say from a high level on our overall charge-off is that we're predicting around 30 to 35 basis points, which is in line with our guidance. We're not seeing any need for elevation at this point.

Speaker #3: Yeah, so we have no known direct exposure to exploration or extraction on the oil piece. So we're obviously looking at our overall portfolio to see impacts there.

Speaker #3: But what I would say from a high level on our overall charge-off is that we're predicting around 30 to 35 basis points, which is in line with our guidance.

Speaker #3: We're not seeing any need for elevation at this point.

Woody Lay: Got it. All right. Thanks for taking my questions.

Speaker #4: Got it. All right. Thanks for taking my questions.

Lee Ann Cragg: Thank you, Woody.

Sharymar Calderón: Thank you, Woody.

Lee Ann Cragg: Thank you.

Speaker #3: Thank you, Woody.

Speaker #1: Thank you.

Operator 2: Thank you. We've reached the end of our question and answer session. I'd like to turn the floor back over for any further closing comments.

Operator: Thank you. We've reached the end of our question and answer session. I'd like to turn the floor back over for any further closing comments.

Speaker #4: Thank you. We have reached the end of our question-and-answer session. I'd like to turn the floor back over for any further closing comments.

Carlos Iafigliola: Thank you everyone for joining our Q1 earnings call, as well as your continued support and interest in Amerant, and have a great day.

Speaker #1: Thank you, everyone, for joining our first quarter earnings call, as well as for your continued support and interest in Amerant. Have a great day.

Operator 2: Thank you. That does conclude today's teleconference webcast. You may disconnect your line at this time and have a wonderful day. We thank you for your participation today.

Operator: Thank you. That does conclude today's teleconference webcast. You may disconnect your line at this time and have a wonderful day. We thank you for your participation today.

Speaker #4: Thank you. That does conclude today's teleconference webcast. You may disconnect your line at this time and have a wonderful day. We thank you for your participation today.

Q1 2026 Amerant Bancorp Inc Earnings Call

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