Companies: 10,793     total market cap: $134.270 T
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Amerant Bancorp
AMTB
#6055
Rank
$0.96 B
Marketcap
๐Ÿ‡บ๐Ÿ‡ธ United States
Country
$22.77
Share price
0.84%
Change (1 day)
10.00%
Change (1 year)
๐Ÿฆ Banks๐Ÿ’ณ Financial services
Categories
  1. Amerant Bancorp
  2. Quarterly Reports (10-Q)
  3. Financial Year FY2023 Q2

Amerant Bancorp - 10-Q quarterly report FY2023 Q2


Text size:
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2023
or
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________

Commission File Number: 001-38534
amerantimagea03.jpg
Amerant Bancorp Inc.
(Exact name of registrant as specified in its charter)
Florida65-0032379
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
220 Alhambra Circle
Coral Gables,
Florida
33134
(Address of principal executive offices)
(Zip Code)
(305)460-4728
(Registrant’s telephone number, including area code)
 N/A
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of exchange on which registered
Class A Common StockAMTBNASDAQ

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes   ☒  No ☐ 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes   ☒  No ☐ 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
☒
Accelerated filer
☐
Non-accelerated filer
☐
Smaller reporting company
☐
Emerging growth company
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐       No ☒
Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.
ClassOutstanding as of July 24, 2023
Class A Common Stock, $0.10 par value per share33,696,505 shares of Class A Common Stock
1

AMERANT BANCORP INC. AND SUBSIDIARIES
FORM 10-Q
June 30, 2023
INDEX
Page
PART I.
3
Consolidated Balance Sheets as of June 30, 2023 (Unaudited) and December 31, 2022
3
Consolidated Statements of Operations and Comprehensive (Loss) Income for the three and six month periods ended June 30, 2023 and 2022 (Unaudited)
4
Consolidated Statements of Changes in Stockholders’ Equity for the three and six month periods ended June 30, 2023 and 2022 (Unaudited)
6
Consolidated Statements of Cash Flows for the six months ended June 30, 2023 and 2022 (Unaudited)
8
Notes to Interim Consolidated Financial Statements (Unaudited)
10
Item 2
59
Cautionary Notice Regarding Forward-Looking Statements
59
Overview
62
Results of Operations
72
Financial Condition
97
Item 3
122
Item 4
126
PART II
Item 1
128
Item 1A
128
Item 2
128
Item 3
128
Item 4
128
Item 5
129
Item 6
130
131
2
Table of Contents


Part 1. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS
Amerant Bancorp Inc. and Subsidiaries
Consolidated Balance Sheets
(in thousands, except share data)(Unaudited)
June 30, 2023		December 31, 2022
Assets
Cash and due from banks$45,184 $19,486 
Interest earning deposits with banks365,673 228,955 
Restricted cash34,204 42,160 
Cash and cash equivalents445,061 290,601 
Securities
Debt securities available for sale, at fair value1,027,676 1,057,621 
Debt securities held to maturity, at amortized cost (estimated fair value of $209,546 and $217,609 at June 30, 2023 and December 31, 2022, respectively)
234,369 242,101 
Trading securities298 — 
Equity securities with readily determinable fair value not held for trading2,500 11,383 
Federal Reserve Bank and Federal Home Loan Bank stock50,460 55,575 
Securities1,315,303 1,366,680 
Mortgage loans held for sale, at fair value49,942 62,438 
Loans held for investment, gross7,167,016 6,857,194 
Less: Allowance for credit losses105,956 83,500 
Loans held for investment, net7,061,060 6,773,694 
Bank owned life insurance231,253 228,412 
Premises and equipment, net43,714 41,772 
Deferred tax assets, net56,779 48,703 
Operating lease right-of-use assets116,161 139,987 
Goodwill20,525 19,506 
Accrued interest receivable and other assets179,728 156,011 
Total assets$9,519,526 $9,127,804 
Liabilities and Stockholders' Equity
Deposits
Demand
Noninterest bearing$1,293,522 $1,367,664 
Interest bearing2,773,120 2,300,469 
Savings and money market1,431,375 1,647,811 
Time2,081,554 1,728,255 
Total deposits7,579,571 7,044,199 
Advances from the Federal Home Loan Bank 770,000 906,486 
Senior notes59,368 59,210 
Subordinated notes29,369 29,284 
Junior subordinated debentures held by trust subsidiaries64,178 64,178 
Operating lease liabilities119,921 140,147 
Accounts payable, accrued liabilities and other liabilities176,163 178,574 
Total liabilities8,798,570 8,422,078 
Contingencies (Note 16)
Stockholders’ equity
Class A common stock, $0.10 par value, 250 million shares authorized; 33,736,159 shares issued and outstanding at June 30, 2023 (33,815,161 shares issued and outstanding at December 31, 2022)
3,374 3,382 
Additional paid in capital195,275 194,694 
Retained earnings611,829 590,375 
Accumulated other comprehensive loss(86,926)(80,635)
Total stockholders' equity before noncontrolling interest723,552 707,816 
Noncontrolling interest(2,596)(2,090)
Total stockholders' equity720,956 705,726 
Total liabilities and stockholders' equity$9,519,526 $9,127,804 
The accompanying notes are an integral part of these consolidated financial statements (unaudited).
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Amerant Bancorp Inc. and Subsidiaries
Consolidated Statements of Operations and Comprehensive (Loss) Income (Unaudited)
Three Months Ended June 30,Six Months Ended June 30,
(in thousands)2023202220232022
Interest income
Loans$119,570 $61,514 $228,071 $117,852 
Investment securities13,233 9,135 26,532 17,763 
Interest earning deposits with banks5,694 518 9,024 650 
Total interest income138,497 71,167 263,627 136,265 
Interest expense
Interest bearing demand deposits16,678 1,034 29,533 1,324 
Savings and money market deposits9,437 1,365 17,364 2,110 
Time deposits18,528 4,503 31,362 8,784 
Advances from the Federal Home Loan Bank7,621 3,341 14,384 5,822 
Senior notes941 942 1,883 1,884 
Subordinated notes362 361 723 449 
Junior subordinated debentures1,052 676 2,167 1,302 
Securities sold under agreements to repurchase1 — 1 — 
Total interest expense54,620 12,222 97,417 21,675 
Net interest income83,877 58,945 166,210 114,590 
Provision for (reversal of) credit losses29,077 (951)40,777 (10,226)
Net interest income after provision for (reversal of) credit losses54,800 59,896 125,433 124,816 
Noninterest income
Deposits and service fees4,944 4,577 9,899 9,197 
Brokerage, advisory and fiduciary activities4,256 4,439 8,438 9,035 
Change in cash surrender value of bank owned life insurance1,429 1,334 2,841 2,676 
Cards and trade finance servicing fees562 508 1,095 1,098 
Loan-level derivative income476 1,009 2,547 4,161 
Gain (loss) on early extinguishment of advances from the Federal Home Loan Bank, net13,440 2 26,613 (712)
Derivative gains (losses), net242 855 256 (490)
Securities losses, net(1,237)(2,602)(10,968)(1,833)
Other noninterest income2,507 2,809 5,241 3,824 
Total noninterest income26,619 12,931 45,962 26,956 
Noninterest expense
Salaries and employee benefits34,247 30,212 69,123 60,615 
Professional and other services fees7,415 4,734 15,043 10,873 
Occupancy and equipment6,737 7,760 13,535 14,485 
Telecommunication and data processing5,027 3,214 8,091 7,252 
Advertising expenses4,332 3,253 6,918 6,225 
FDIC assessments and insurance2,739 1,526 5,476 2,922 
Other real estate owned and repossessed assets expense, net2,431 3,174 2,431 3,174 
Depreciation and amortization2,275 1,294 3,567 2,446 
Contract termination costs1,550 2,802 1,550 6,814 
Loan-level derivative expense110 2,012 1,710 3,055 
Loans held for sale valuation expense (reversal)— (300)— 159 
Other operating expenses5,637 2,560 9,789 5,039 
Total noninterest expenses72,500 62,241 137,233 123,059 
Income before income tax expense8,919 10,586 34,162 28,713 
Income tax expense(1,873)(2,234)(7,174)(6,058)
Net income before attribution of noncontrolling interest7,046 8,352 26,988 22,655 
Noncontrolling interest(262)(72)(506)(1,148)
Net income attributable to Amerant Bancorp Inc.$7,308 $8,424 $27,494 $23,803 
The accompanying notes are an integral part of these consolidated financial statements (unaudited).
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Amerant Bancorp Inc. and Subsidiaries
Consolidated Statements of Operations and Comprehensive (Loss) Income (Unaudited)
Three Months Ended June 30,Six Months Ended June 30,
(in thousands, except per share data)2023202220232022
Other comprehensive loss, net of tax
Net unrealized holding losses on debt securities available for sale arising during the period$(13,487)$(26,442)$(7,370)$(66,079)
Net unrealized holding gains on cash flow hedges arising during the period276 54 88 178 
Reclassification adjustment for items included in net income604 (147)991 (275)
Other comprehensive loss(12,607)(26,535)(6,291)(66,176)
Comprehensive (loss) income $(5,299)$(18,111)$21,203 $(42,373)
Earnings Per Share (Note 18):
Basic earnings per common share$0.22 $0.25 $0.82 $0.70 
Diluted earnings per common share$0.22 $0.25 $0.81 $0.69 

The accompanying notes are an integral part of these consolidated financial statements (unaudited).
5
Table of Contents
Amerant Bancorp Inc. and Subsidiaries
Consolidated Statements of Changes in Stockholders’ Equity (Unaudited)
Three and Six Month Periods Ended June 30, 2023
Common StockAdditional
Paid
in Capital		Treasury StockRetained
Earnings		Accumulated Other Comprehensive Income (loss)Total
Stockholders'
Equity Before Noncontrolling Interest		Noncontrolling interestTotal
Stockholders'
Equity
(in thousands, except share data)Shares OutstandingIssued Shares - Par Value
Class A
Balance at December 31, 202233,815,161 $3,382 $194,694 $— $590,375 $(80,635)$707,816 $(2,090)$705,726 
Repurchase of Class A common stock(22,403)— — (566)— — (566)— (566)
Treasury stock retired— (2)(564)566 — — — — — 
Restricted stock issued10,440 1 (1)— — — — — — 
Restricted stock, restricted stock units and performance stock units surrendered(44,896)(4)(1,166)— — — (1,170)— (1,170)
Restricted stock forfeited(1,394)— — — — — — — — 
Performance stock units vested10,621 1 (1)— — — — — — 
Restricted stock units vested46,731 5 (5)— — — — — — 
Stock-based compensation expense— — 1,825 — — — 1,825 — 1,825 
Net income attributable to Amerant Bancorp Inc.— — — — 20,186 — 20,186 — 20,186 
Dividends paid— — — — (3,017)— (3,017)— (3,017)
Net loss attributable to noncontrolling-interest shareholders— — — — — — — (244)(244)
Other comprehensive income— — — — — 6,316 6,316 — 6,316 
Balance at March 31, 202333,814,260 $3,383 $194,782 $— $607,544 $(74,319)$731,390 $(2,334)$729,056 
Repurchase of Class A common stock(95,262)— — (1,659)— — (1,659)— (1,659)
Treasury stock retired— (10)(1,649)1,659 — — — — — 
Restricted stock and restricted stock units surrendered(4,414)(1)(198)— — — (199)— (199)
Stock issued for employee stock purchase plan30,557 3 683 — — — 686 — 686 
Restricted stock forfeited(26,432)(3)3 — — — — — — 
Restricted stock units vested17,450 2 (2)— — — — — — 
Stock-based compensation expense— — 1,656 — — — 1,656 — 1,656 
Net income attributable to Amerant Bancorp Inc.— — — — 7,308 — 7,308 — 7,308 
Dividends paid— — — — (3,023)— (3,023)— (3,023)
Net loss attributable to noncontrolling-interest shareholders— — — — — — — (262)(262)
Other comprehensive loss— — — — — (12,607)(12,607)— (12,607)
Balance at June 30, 202333,736,159 $3,374 $195,275 $— $611,829 $(86,926)$723,552 $(2,596)$720,956 

The accompanying notes are an integral part of these consolidated financial statements (unaudited).
6
Table of Contents
Amerant Bancorp Inc. and Subsidiaries
Consolidated Statements of Changes in Stockholders’ Equity (Unaudited)
Three and Six Month Periods Ended June 30, 2022

Common StockAdditional
Paid
in Capital		Treasury StockRetained
Earnings		Accumulated Other Comprehensive Income (loss)Total
Stockholders'
Equity Before Noncontrolling Interest		Noncontrolling interestTotal
Stockholders'
Equity
(in thousands, except share data)Shares OutstandingIssued Shares - Par Value
Class A
Balance at December 31, 202135,883,320 $3,589 $262,510 $— $553,167 $15,217 $834,483 $(2,610)$831,873 
Cumulative effect of adoption of accounting principle, net of tax— — — — (13,872)— (13,872)— (13,872)
Repurchase of Class A common stock(1,643,480)— — (54,820)— — (54,820)— (54,820)
Treasury stock retired— (165)(54,655)54,820 — — — — — 
Restricted stock issued104,762 10 (10)— — — — — — 
Restricted stock surrendered(15,174)(2)(994)— — — (996)— (996)
Restricted stock forfeited(1,000)— — — — — — — — 
Restricted stock units vested22,394 2 (2)— — — — — — 
Stock-based compensation expense— — 1,260 — — — 1,260 — 1,260 
Net income attributable to Amerant Bancorp Inc.— — — — 15,379 — 15,379 — 15,379 
Dividends paid— — — — (3,154)— (3,154)— (3,154)
Net loss attributable to noncontrolling-interest shareholders— — — — — — — (1,076)(1,076)
Other comprehensive loss— — — — — (39,641)(39,641)— (39,641)
Balance at March 31, 202234,350,822 $3,434 $208,109 $— $551,520 $(24,424)$738,639 $(3,686)$734,953 
Repurchase of Class A common stock(611,525)— — (17,240)— — (17,240)— (17,240)
Treasury stock retired— (61)(17,179)17,240 — — — — — 
Restricted stock issued37,938 4 (4)— — — — — — 
Restricted stock forfeited(28,586)(3)3 — — — — — — 
Restricted stock units vested10,955 1 (1)— — — — — — 
Stock-based compensation expense— — 1,276 — — — 1,276 — 1,276 
Net income attributable to Amerant Bancorp Inc.— — — — 8,424 — 8,424 — 8,424 
Dividends paid— — — — (3,049)— (3,049)— (3,049)
Transfer of subsidiary shares from noncontrolling interest— — (1,867)— — — (1,867)1,867 — 
Net loss attributable to noncontrolling-interest shareholders— — — — — — — (72)(72)
Other comprehensive loss— — — — — (26,535)(26,535)— (26,535)
Balance at June 30, 202233,759,604 $3,375 $190,337 $— $556,895 $(50,959)$699,648 $(1,891)$697,757 

The accompanying notes are an integral part of these consolidated financial statements (unaudited).
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Table of Contents
Amerant Bancorp Inc. and Subsidiaries
Consolidated Statements of Cash Flows (Unaudited)

Six Months Ended June 30,
(in thousands)20232022
Cash flows from operating activities
Net income before attribution of noncontrolling interest$26,988 $22,655 
Adjustments to reconcile net income to net cash used in operating activities
Provision for (reversal of) credit losses40,777 (10,226)
Net premium amortization on securities2,440 4,587 
Depreciation and amortization3,567 2,446 
Stock-based compensation expense3,481 2,536 
Change in cash surrender value of bank owned life insurance(2,841)(2,676)
Securities losses, net10,968 1,833 
Derivative (gains) losses, net(256)490 
(Gains) losses on sale of loans, net(2,509)302 
Loss on sale of other repossessed assets2,649 — 
Impairment on investment carried at cost1,963 — 
Deferred taxes and others(3,309)4,784 
(Gain) Loss on early extinguishment of advances from the FHLB, net(26,613)712 
Proceeds from sales and repayments of loans held for sale (at fair value)128,478 74,999 
Originations and purchases of loans held for sale (at fair value)(189,943)(130,748)
Net changes in operating assets and liabilities:
Accrued interest receivable and other assets(8,025)(14,117)
Accounts payable, accrued liabilities and other liabilities4,346 (6,321)
Net cash used in operating activities(7,839)(48,744)
Cash flows from investing activities
Purchases of investment securities:
Available for sale(36,658)(169,383)
Held to maturity securities— (129,996)
Equity securities with readily determinable fair value not held for trading(2,500)(12,656)
Federal Home Loan Bank stock(38,660)(15,199)
(77,818)(327,234)
Maturities, sales, calls and paydowns of investment securities:
Available for sale46,093 127,125 
Held to maturity7,373 9,200 
Federal Home Loan Bank stock43,775 14,507 
Equity securities with readily determinable fair value not held for trading11,168 252 
108,409 151,084 
Net increase in loans(291,759)(302,056)
Proceeds from loan sales14,462 70,132 
Cash paid in business acquisition(1,970)— 
Net purchases of premises and equipment and others(7,247)(4,493)
Proceeds from sale of repossessed assets2,464 — 
Net cash used in investing activities(253,459)(412,567)
Cash flows from financing activities
Net increase in demand, savings and money market accounts182,073 655,414 
Net increase (decrease) in time deposits353,299 (83,431)
Proceeds from Advances from the Federal Home Loan Bank1,130,000 580,000 
Repayments of Advances from the Federal Home Loan Bank (1,240,448)(560,712)
Proceeds from issuance of subordinated notes, net of issuance costs— 29,146 
Repurchase of common stock - Class A(2,225)(72,060)
Dividend paid(6,040)(6,203)
Disbursements arising from stock-based compensation, net(901)(996)
Net cash provided by financing activities415,758 541,158 
Net increase in cash and cash equivalents and restricted cash154,460 79,847 
Cash, cash equivalents and restricted cash
Beginning of period290,601 274,208 
End of period$445,061 $354,055 
The accompanying notes are an integral part of these consolidated financial statements (unaudited).
8
Amerant Bancorp Inc. and Subsidiaries
Consolidated Statements of Cash Flows (Unaudited) (continued)
Six Months Ended June 30,
(in thousands)20232022
Supplemental disclosures of cash flow information
Cash paid:
Interest$90,207 $19,461 
Income taxes13,874 19,614 
Right-of-use assets obtained in exchange for new lease obligations6,233 4,480 
Noncash investing activities:
Mortgage loans held for sale (at fair value) transferred to loans held for investment77,702 16,056 
Loans transferred to other assets26,534 — 
The accompanying notes are an integral part of these consolidated financial statements (unaudited).
9
Table of Contents
Amerant Bancorp Inc. and Subsidiaries
Notes to Interim Consolidated Financial Statements (Unaudited)
1.Business, Basis of Presentation and Summary of Significant Accounting Policies
a) Business
Amerant Bancorp Inc. (the “Company”) is a Florida corporation incorporated in 1985, which has operated since January 1987. The Company is a bank holding company registered under the Bank Holding Company Act of 1956 (“BHC Act”), as a result of its 100% ownership of Amerant Bank, N.A. (the “Bank”). The Company’s principal office is in the City of Coral Gables, Florida. The Bank is a member of the Federal Deposit Insurance Corporation (“FDIC”), the Federal Reserve Bank of Atlanta (“Federal Reserve”) and the Federal Home Loan Bank of Atlanta (“FHLB”). The Bank has three main operating subsidiaries, Amerant Investments, Inc., a securities broker-dealer (“Amerant Investments”), Amerant Mortgage, LLC (“Amerant Mortgage”), a majority-owned mortgage lending company domiciled in Florida, and Elant Bank & Trust, a Grand-Cayman based trust company (the “Cayman Bank”).

The Company’s Class A common stock, par value $0.10 per common share, is listed and traded on the Nasdaq Global Select Market under the symbol “AMTB”.

Restructuring costs
The Company continues to work at optimizing its operating structure to best support its business activities. In the three and six month periods ended June 30, 2023, the Company recorded estimated contract termination and related costs of approximately $1.6 million in connection with the implementation of the multi-year outsourcing agreement with a recognized third party financial technology services provider entered into in 2021 ($2.8 million and $6.8 million in the three and six month periods ended June 30, 2022, respectively). The Company currently does not expect to incur additional significant contract termination costs in connection with the implementation of this agreement.
During the three and six month periods ended June 30, 2023, the Company recorded severance costs of approximately $2.2 million and $2.4 million, respectively, consulting and other professional fees of $2.1 million and $4.8 million, respectively, and branch closure expenses and related charges of $1.6 million and $2.0 million, respectively. In addition, in each of the three and six month periods ended June 30, 2023, the Company recorded a charge of $1.4 million related to the disposition of fixed assets due to the write off of in-development software.
During the three and six month periods ended June 30, 2022, the Company recorded severance costs of approximately $0.7 million and $1.4 million, respectively, and consulting and other professional fees of $0.1 million and $1.3 million, respectively. In addition, in each of the three and six month periods ended June 30, 2022, the Company recorded a lease impairment charge of $1.6 million mainly related to the closing of a branch in Pembroke Pines, Florida in 2022.
Severance costs are included in “salaries and employees benefits expense” in the Company’s consolidated statement of operations and comprehensive (loss) income.


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Table of Contents
Amerant Bancorp Inc. and Subsidiaries
Notes to Interim Consolidated Financial Statements (Unaudited)
Stock Repurchase Programs
On December 19, 2022, the Company announced that the Board of Directors authorized a new repurchase program pursuant to which the Company may purchase, from time to time, up to an aggregate amount of $25 million of its shares of Class A common stock (the “2023 Class A Common Stock Repurchase Program”). The 2023 Class A Common Stock Repurchase Program is effective from January 1, 2023 until December 31, 2023. In the three and six month periods ended June 30, 2023, the Company repurchased an aggregate of 95,262 shares of Class A common stock at a weighted average price of $17.42 per share, and 117,665 shares of Class A common stock at a weighted average price of $18.91 per share, respectively, under the 2023 Class A Common Stock Repurchase Program. The aggregate purchase price for these transactions was $1.7 million and $2.2 million in the three and six month periods ended June 30, 2023, respectively, including transaction costs.
In January 2022, the Company repurchased an aggregate of 652,118 shares of Class A common stock under a stock repurchase program to repurchase up to $50 million of the Company’s Class A common stock authorized by the Board of Directors in September 2021 (the “2021 Class A Common Stock Repurchase Program”). The aggregate purchase price for these transactions was approximately $22.1 million, including transaction costs. On January 31, 2022, the Company announced the completion of the 2021 Class A Common Stock Repurchase Program. See the 2022 Form 10-K for more details.
On January 31, 2022, the Company announced that the Board of Directors authorized a new repurchase program pursuant to which the Company may purchase, from time to time, up to an aggregate amount of $50 million of its shares of Class A common stock (the “2022 Common Stock Repurchase Program”). In the three and six month periods ended June 30, 2022, the Company repurchased an aggregate of 611,525 shares of Class A common stock at a weighted average price of $28.19 per share, and 1,602,887 shares of Class A common stock at a weighted average price of $31.14, respectively, under the 2022 Common Stock Repurchase Program. The aggregate purchase price for these transactions was approximately $17.2 million and $49.9 million in the three and six months ended June 30, 2023, respectively, including transaction costs. On May 19, 2022, the Company announced the completion of the 2022 Common Stock Repurchase Program.
In the six months ended June 30, 2023 and 2022, the Company’s Board of Directors authorized the cancellation of all shares of Class A common stock previously repurchased. As of June 30, 2023 and 2022, there were no shares of Class A common stock held as treasury stock.
For more information about repurchase programs, see Note 17 to the Company’s consolidated financial statements in the Company’s annual report on Form 10-K for the year ended December 31, 2022, filed with the Securities and Exchange Commission (“SEC”), on March 1, 2023 (the “2022 Form 10-K”).
Employee Stock Purchase Plan
The Company offers an Employee Stock Purchase Plan (“ESPP”). The number of shares of Class A common stock issued in the three and six months ended June 30, 2023 under the ESPP was 30,557. In the three and six months ended June 30, 2023, the Company recognized compensation expense of $0.1 million and $0.2 million, respectively, in connection with the ESPP. See the 2022 Form 10-K for more details on the ESPP.


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Amerant Bancorp Inc. and Subsidiaries
Notes to Interim Consolidated Financial Statements (Unaudited)
Dividends
Set forth below are the details of dividends declared and paid by the Company in the three and six month periods ended June 30, 2023 and 2022:
Declaration DateRecord DatePayment DateDividend Per ShareDividend Amount
04/19/202305/15/202305/31/2023$0.09$3.0 million
01/18/202302/13/202302/28/2023$0.09$3.0 million
04/13/202205/13/202205/31/2022$0.09$3.0 million
01/19/202202/11/202202/28/2022$0.09$3.2 million
On July 19, 2023, the Company’s Board of Directors declared a cash dividend of $0.09 per share of the Company’s Class A common stock. The dividend is payable on August 31, 2023, to shareholders of record on August 15, 2023.
Business Acquisition
On January 13, 2023 (the “Acquisition Date”), Amerant Mortgage completed the acquisition of certain assets and the assumption of certain liabilities of F&B Acquisition Group LLC (“F&B”), including access to an assembled workforce and other identifiable intangibles which collectively constitute a business (the “F&B Acquisition.”) The F&B Acquisition was recorded as a business acquisition using the acquisition method of accounting. The initial purchase price of approximately $2.0 million was paid in cash and included the fair value of certain loans held for sale of $1.0 million. The initial purchase price excludes any contingent consideration. The Company recorded preliminary goodwill of $1.0 million, which represents the excess of the initial purchase price over the estimated fair value of tangible and intangible assets acquired, net of the liabilities assumed. As of June 30, 2023, the Company has not completed its determination of the final allocation of the purchase price to the assets and liabilities of the F&B Acquisition, including any identifiable intangible assets and any contingent consideration. Any adjustment to the assets purchased and liabilities assumed with the F&B Acquisition, including adjustments from any identifiable intangible asset and contingent consideration, will result in an adjustment of goodwill. The final allocation of purchase price is expected to be finalized by December 31, 2023.
Impairment on Investments Carried At Cost
In the three and six months ended June 30, 2023, the Company recorded an impairment charge of $2.0 million related to an investment carried at cost and included in other assets in the consolidated balance sheets. See the 2022 Form 10-K for more details on our investments carried at cost.

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Amerant Bancorp Inc. and Subsidiaries
Notes to Interim Consolidated Financial Statements (Unaudited)
b) Basis of Presentation and Summary of Significant Accounting Policies
Significant Accounting Policies

The accompanying unaudited interim consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required for a fair statement of financial position, results of operations and cash flows in conformity with GAAP. These unaudited interim consolidated financial statements reflect all adjustments that are, in the opinion of management, necessary for a fair statement of the results for the interim periods presented. These adjustments are of a normal, recurring nature. Interim period operating results may not be indicative of the operating results for a full year or any other period. These unaudited interim consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements as of December 31, 2022 and 2021 and for each of the three years in the period ended December 31, 2022 and the accompanying footnote disclosures for the Company, which are included in the 2022 Form 10-K.
For a complete summary of our significant accounting policies, see Note 1 to the Company’s audited consolidated financial statements in the 2022 Form 10-K.
Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Significant estimates made by management include: (i) the determination of the allowance for credit losses; (ii) the fair values of securities, the value assigned to goodwill during periodic goodwill impairment tests, and the fair value of other real estate owned (“OREO”); (iii) the cash surrender value of bank owned life insurance; and (iv) the determination of whether the amount of deferred tax assets will more likely than not be realized. Management believes that these estimates are appropriate. Actual results could differ from these estimates.
Reclassifications
In the three and six month periods ended June 30, 2023, loan-level derivative expenses are presented separately in the Company’s consolidated statement of operations and comprehensive (loss) income. Previously, these expenses were presented as a component of professional and other services fees in the Company’s consolidated statement of operations and comprehensive (loss) income.
In the three and six months ended June 30, 2023, other real estate owned (“OREO”) and repossessed assets, net expense is presented separately in the Company’s consolidated statement of operations and comprehensive (loss) income. OREO and repossessed assets expense includes expenses and revenue (rental income) from the operation of foreclosed property/assets as well as fair value adjustments and gains/losses from the sale of OREO and repossessed assets. In 2022, while OREO valuation expense was presented separately, all other OREO-related expenses were presented as part of other operating expenses in the Company’s consolidated statement of operations and comprehensive (loss) income. We had no other repossessed assets in 2022.
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Notes to Interim Consolidated Financial Statements (Unaudited)

c) Recently Issued Accounting Pronouncements
Issued and Adopted
Guidance on Troubled Debt Restructurings
In March 2022, the Financial Accounting Standards Board (“FASB”) issued guidance that eliminates the recognition and measurement guidance on troubled debt restructurings, or TDR, for creditors, and aligns it with existing guidance to determine whether a loan modification results in a new loan or a continuation of an existing loan. The guidance also requires enhanced disclosures about certain loan modifications by creditors when a borrower is experiencing financial difficulty. The amended guidance is effective in periods beginning after December 15, 2022 using either a prospective or modified retrospective transition approach. Early adoption was permitted if an entity had already adopted the guidance on accounting for credit losses on financial instruments (“CECL”). The Company adopted this guidance on TDR as of January 1, 2023, and determined that its adoption had no material impact to the Company’s consolidated financial statements.
Guidance on Accounting for Credit Losses on Financial Instruments
In 2022, the Company adopted ASC Topic 326 on CECL. The Company adopted the CECL guidance as of the beginning of the reporting period of adoption, January 1, 2022, using a modified retrospective approach for all its financial assets measured at amortized cost and off-balance sheet credit exposures. For more details on the adoption of CECL, see the 2022 Form 10-K.
The following table reflects the impact of adopting CECL on the allowance for credit losses (“ACL”) and other line items on the Company’s consolidated financial statements as of and for the three and six month periods ended June 30, 2022:
Consolidated Balance Sheets

As of June 30, 2022
(in thousands)As ReportedAs Recast (1)Changes
Assets
Allowance for credit losses$52,027 $70,475 $18,448 
Deferred tax assets, net33,265 38,009 4,744 
Liabilities
Accounts payable, accrued liabilities and other liabilities116,177 116,166 (11)
Stockholders’ Equity
Retained earnings570,588 556,895 (13,693)

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Notes to Interim Consolidated Financial Statements (Unaudited)

Consolidated Statements of Operations

Three Months Ended June 30, 2022Six Months Ended June 30, 2022
(in thousands, except per share amounts)As ReportedAs Recast (1)ChangesAs ReportedAs Recast (1)Changes
Total interest income$71,167 $71,167 $— $136,265 $136,265 $— 
Total interest expense12,222 12,222 — 21,675 21,675 — 
Net interest income58,945 58,945 — 114,590 114,590 — 
Reversal of credit losses— (951)(951)(10,000)(10,226)(226)
Net interest income after reversal of credit losses58,945 59,896 951 124,590 124,816 226 
Total noninterest income12,931 12,931 — 26,956 26,956 — 
Total noninterest expense62,241 62,241 — 123,059 123,059 — 
Income before income taxes9,635 10,586 951 28,487 28,713 226 
Income tax expense (2,033)(2,234)(201)(6,011)(6,058)(47)
Net income before attribution of noncontrolling interest7,602 8,352 750 22,476 22,655 179 
Noncontrolling interest(72)(72)— (1,148)(1,148)— 
Net income attributable to Amerant Bancorp Inc.    $7,674 $8,424 $750 $23,624 $23,803 $179 
Basic earnings per common share$0.23 $0.25 $0.02 $0.69 $0.70 $0.01 
Diluted earnings per common share$0.23 $0.25 $0.02 $0.68 $0.69 $0.01 
Cash dividends declared per common share$0.09 $0.09 $— $0.18 $0.18 $— 
__________________
(1)Quarterly amounts previously reported on our quarterly reports on Form 10-Q for the periods ended March 31, 2022 and June 30, 2022 do not reflect the adoption of CECL. In the fourth quarter of 2022, the Company recorded a provision for credit losses totaling $20.9 million, including $11.1 million related to the retroactive effect of adopting CECL for all previous quarterly periods in the year ended December 31, 2022, including loan growth and changes to macro-economic conditions during the period. Quarterly amounts included in the 2022 Form 10-K and in this Form 10-Q reflect the impacts of the adoption of CECL on each interim period of 2022. See the 2022 Form 10-K for more details on the adoption of CECL.
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Notes to Interim Consolidated Financial Statements (Unaudited)
Guidance on Fair Value Hedges
In March 2022, the FASB issued amended guidance to expand and clarify existing guidance on fair value hedge accounting of interest rate risk for portfolios of financial assets. The amendments clarify, among others, the “last-of-layer” method for making the fair value hedge accounting for these portfolios more accessible. The amendment also improves the last-of-layer concepts and expands them to non-prepayable financial assets, allowing more flexibility in the structure of derivatives used to hedge interest rate risk. The amended guidance is effective for public business entities for fiscal years beginning after December 15, 2022, and interim periods within those fiscal years. For all other entities, the amended guidance is effective for fiscal years beginning after December 15, 2023. The amended guidance is available for early adoption. The Company adopted this guidance as of January 1, 2023, and determined that its adoption had no material impact to its consolidated financial statements.
Issued and Not Yet Adopted
For a complete summary of recently issued accounting guidance that has not yet been adopted, see Note 1 to the Company’s audited consolidated financial statements in the 2022 Form 10-K.

d) Subsequent Events
The effects of other significant subsequent events, if any, have been recognized or disclosed in these unaudited interim consolidated financial statements.


2. Interest Earning Deposits with Banks and Restricted Cash
At June 30, 2023 and December 31, 2022, interest-earning deposits with banks are mainly comprised of deposits with the Federal Reserve and other U.S. banks of approximately $366 million and $229 million, respectively. At June 30, 2023 and December 31, 2022, the average interest rate on these deposits was approximately 5.33% and 1.79%, respectively. These deposits have no stated maturity dates.

At June 30, 2023 and December 31, 2022, the Company had restricted cash balances of $34.2 million and $42.2 million, respectively. These balances include cash pledged as collateral, by other banks to us, to secure derivatives’ margin calls. This cash pledged as collateral also represents an obligation, by the Company, to repay according to margin requirements. At June 30, 2023 and December 31, 2022, this obligation was $33.6 million and $41.6 million, respectively, which is included as part of other liabilities in the Company’s consolidated balance sheet. In addition, we have cash balances of $0.6 million pledged as collateral to secure the issuance of letters of credit by other banks on behalf of our customers.
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Notes to Interim Consolidated Financial Statements (Unaudited)
3.Securities
a) Debt Securities
Debt securities available for sale
Amortized cost, allowance for credit losses and approximate fair values of debt securities available for sale are summarized as follows:
June 30, 2023
Amortized
Cost		Gross UnrealizedAllowance for Credit LossesEstimated
Fair Value
(in thousands)GainsLosses
U.S. government-sponsored enterprise debt securities (1) (2)$457,651 $549 $(43,275)$— $414,925 
Corporate debt securities (2)285,521 17 (34,170)— 251,368 
U.S. government agency debt securities (1) (2)378,539 27 (42,538)— 336,028 
Collateralized loan obligations5,000 — (150)— 4,850 
Municipal bonds (1)1,732 — (59)— 1,673 
U.S. treasury securities18,860 1 (29)— 18,832 
Total debt securities available for sale (3)$1,147,303 $594 $(120,221)$— $1,027,676 
__________________
(1)Includes residential mortgage-backed securities. As of June 30, 2023, we had total residential-mortgage backed securities, included as part of total debt securities available for sale, with amortized cost of $733.0 million and fair value of $656.8 million.
(2)Includes commercial mortgage-backed securities. As of June 30, 2023, we had total commercial mortgage-backed securities, included as part of total debt securities available for sale, with amortized cost of $88.0 million and fair value of $77.8 million.
(3)Excludes accrued interest receivable of $5.5 million as of June 30, 2023, which is included as part of accrued interest receivable and other assets in the Company’s consolidated balance sheet. The Company did not record any write offs on accrued interest receivable related to these securities in the three and six month periods ended June 30, 2023.


December 31, 2022
Amortized
Cost		Gross UnrealizedAllowance for Credit LossesEstimated
Fair Value
(in thousands)GainsLosses
U.S. government sponsored enterprise debt securities (1) (2)
$480,359 $981 $(43,666)$— $437,674 
Corporate debt securities (2)306,898 1 (26,199)— 280,700 
U.S. government agency debt securities (1) (2)373,593 42 (42,814)— 330,821 
U.S. treasury securities1,997 — (1)— 1,996 
Municipal bonds (1)1,731 — (75)— 1,656 
Collateralized loan obligations5,000 — (226)— 4,774 
Total debt securities available for sale (3)$1,169,578 $1,024 $(112,981)$— $1,057,621 
__________________
(1)Includes residential mortgage-backed securities. As of December 31, 2022, we had total residential-mortgage backed securities, included as part of total debt securities available for sale, with amortized cost of $743.0 million and fair value of $666.5 million.
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Notes to Interim Consolidated Financial Statements (Unaudited)
(2)Includes commercial mortgage-backed securities. As of December 31, 2022, we had total commercial mortgage-backed securities, included as part of total debt securities available for sale, with amortized cost of $91.0 million and fair value of $80.9 million.
(3)Excludes accrued interest receivable of $5.6 million as of December 31, 2022, which is included as part of accrued interest receivable and other assets in the Company’s consolidated balance sheet. The Company did not record any write offs on accrued interest receivable related to these securities in 2022.
The Company had investments in foreign corporate debt securities available for sale, primarily in Canada, of $9.9 million and $9.7 million at June 30, 2023 and December 31, 2022, respectively. At June 30, 2023 and December 31, 2022, the Company had no foreign sovereign or foreign government agency debt securities available for sale. Investments in foreign corporate debt securities available for sale are denominated in U.S. Dollars.
In the three and six month periods ended June 30, 2023 and 2022, proceeds from sales, redemptions and calls, gross realized gains, and gross realized losses of debt securities available for sale were as follows:
Three Months Ended June 30,Six Months Ended June 30,
(in thousands)2023202220232022
Proceeds from sales, redemptions and calls of debt securities available for sale$765 $145 $1,240 $14,158 
Gross realized gains$— $— $— $49 
Gross realized losses(1,235)— (10,760)— 
Realized (loss) gain, net $(1,235)$— $(10,760)$49 

The Company’s investment in debt securities available for sale with unrealized losses aggregated by the length of time that individual securities have been in a continuous unrealized loss position, are summarized below:
June 30, 2023
Less Than 12 Months12 Months or MoreTotal
(in thousands, except securities count)Number of SecuritiesEstimated
Fair Value		Unrealized
Loss		Number of SecuritiesEstimated
Fair Value		Unrealized
Loss		Estimated
Fair Value		Unrealized
Loss
U.S. government-sponsored enterprise debt securities112 $109,915 $(6,217)244 $259,471 $(37,058)$369,386 $(43,275)
Corporate debt securities13 46,549 (3,374)46 200,796 (30,796)247,345 (34,170)
U.S. government agency debt securities65 34,035 (401)139 300,883 (42,137)334,918 (42,538)
Municipal bonds1 733 (26)2 940 (33)1,673 (59)
U.S. treasury securities2 3,924 (29)— — — 3,924 (29)
Collateralized loan obligations— — — 1 4,850 (150)4,850 (150)
193 $195,156 $(10,047)432 $766,940 $(110,174)$962,096 $(120,221)

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Notes to Interim Consolidated Financial Statements (Unaudited)

December 31, 2022
Less Than 12 Months12 Months or MoreTotal
(in thousands, except securities count)Number of SecuritiesEstimated
Fair Value		Unrealized
Loss		Number of SecuritiesEstimated
Fair Value		Unrealized
Loss		Estimated
Fair Value		Unrealized
Loss
U.S. government sponsored enterprise debt securities250 $292,595 $(22,315)108 $96,986 $(21,351)$389,581 $(43,666)
Corporate debt securities50 203,516 (13,374)14 72,190 (12,825)275,706 (26,199)
U.S. government agency debt securities92 88,056 (4,976)104 240,668 (37,838)328,724 (42,814)
Municipal bonds3 1,656 (75)— — — 1,656 (75)
U.S. treasury securities1 1,996 (1)— — — 1,996 (1)
Collateralized Loan Obligations1 4,774 (226)— — — 4,774 (226)
397 $592,593 $(40,967)226 $409,844 $(72,014)$1,002,437 $(112,981)


U.S. Government Sponsored Enterprise Debt Securities and U.S. Government Agency Debt Securities

At June 30, 2023 and December 31, 2022, the Company held certain debt securities issued or guaranteed by the U.S. government and U.S. government-sponsored entities and agencies. The Company does not intend to sell these debt securities and it is more likely than not that it will not be required to sell the securities before their anticipated recovery. The Company evaluates these securities for credit losses by reviewing current market conditions, the extent and nature of changes in fair value, credit ratings, default and delinquency rates and current analysts’ evaluations. The Company believes the decline in fair value on these debt securities is attributable to changes in interest rates and investment securities markets, generally, and not credit quality. As a result, the Company did not record an ACL on these securities as of June 30, 2023 and December 31, 2022.

Corporate Debt Securities

Investments in corporate debt securities available for sale in an unrealized loss position as of June 30, 2023 include: (i) securities considered “investment-grade-quality,” primarily issued by financial institutions, with a fair value of $227.4 million ($258.8 million at December 31, 2022) and total unrealized losses of $27.1 million at that date ($24.1 million at December 31, 2022), and (ii) securities considered “non-investment-grade-quality,” primarily issued by financial institutions and companies in the technology industry, with a fair value of $19.9 million ($16.9 million at December 31, 2022) and total unrealized losses of $7.1 million at that date ($2.1 million at December 31, 2022).


As of June 30, 2023 and December 31, 2022 , our corporate debt securities available for sale issued by financial institutions were primarily “investment-grade-quality”, and had a fair value of $179.9 million and $206.3 million, respectively, and net unrealized losses of $25.3 million and $16.6 million, respectively.




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Notes to Interim Consolidated Financial Statements (Unaudited)

At December 31, 2022, the Bank had one corporate debt security held for sale (the “Signature Bond”) issued by Signature Bank, N.A. (“Signature”) with a fair value $9.1 million and unrealized loss of $0.9 million. At December 31, 2022, the Signature Bond was in an unrealized loss position for less than one than year. On March 12, 2023, Signature was closed by the New York State Department of Financial Services, which appointed the Federal Deposit Insurance Corporation (“FDIC”) as receiver. The FDIC, as receiver, announced that shareholders and certain unsecured debt holders will not be protected. On March 27, 2023, the Bank sold the Signature Bond in an open market transaction and realized a pretax loss on sale of approximately $9.5 million which is recorded in the consolidated statement of comprehensive income (loss) for the six months ended June 30, 2023.

In May 2023, the Company sold a portion of its investment in a corporate debt security held for sale issued by a financial institution, to reduce single point exposure. The Company had proceeds of $0.8 million and realized a pre-tax loss of $1.2 million in connection with this transaction. This loss was recorded in the consolidated statement of comprehensive (loss) income for the three and six months ended June 30, 2023.

The Company does not intend to sell its investments in corporate debt securities available for sale and it is more likely than not that it will not be required to sell these investments before their anticipated recovery. The Company evaluates corporate debt securities for credit losses by reviewing various qualitative and quantitative factors such as current market conditions, the extent and nature of changes in fair value, credit ratings, default and delinquency rates, and current analysts’ evaluations. The Company believes the decline in fair value on these debt securities is attributable to changes in interest rates and investment securities markets, generally, and not credit quality. As a result, the Company did not record an ACL on these securities as of June 30, 2023 and December 31, 2022.

Debt securities held to maturity

Amortized cost and approximate fair values of debt securities held to maturity are summarized as follows:
June 30, 2023
Amortized
Cost		Gross UnrealizedEstimated
Fair Value		Allowance for Credit Losses
(in thousands)GainsLosses
U.S. government agency debt securities (1)$66,173 $75 $(7,756)$58,492 $— 
U.S. government sponsored enterprise debt securities(1) (2)168,196 — (17,142)151,054 — 
 Total debt securities held to maturity (3)$234,369 $75 $(24,898)$209,546 $— 
__________________
(1)Includes residential mortgage-backed securities. As of June 30, 2023, we had total residential mortgage-backed securities, included as part of total debt securities held to maturity, with amortized cost of $206.6 million and fair value of $183.6 million.
(2)Includes commercial mortgage-backed securities. As of June 30, 2023, we had total commercial mortgage-backed securities, included as part of total debt securities held to maturity, with amortized cost of $27.8 million and fair value of $25.9 million.
(3)Excludes accrued interest receivable of $0.7 million as of June 30, 2023, which is included as part of accrued interest receivable and other assets in the Company’s consolidated balance sheet. The Company did not record any write offs on accrued interest receivable related to these securities in the three and six month periods ended June 30, 2023.



December 31, 2022
Amortized
Cost		Gross UnrealizedEstimated
Fair Value		Allowance for Credit Losses
(in thousands)GainsLosses
U.S. government agency debt securities (1)$68,556 $109 $(7,778)$60,887 $— 
U.S. government sponsored enterprise debt securities (1) (2)173,545 — (16,823)156,722 — 
 Total debt securities held to maturity (3)$242,101 $109 $(24,601)$217,609 $— 
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Notes to Interim Consolidated Financial Statements (Unaudited)
__________________
(1)Includes residential mortgage-backed securities. As of December 31, 2022,we had total residential mortgage-backed securities, included as part of total debt securities held to maturity, with amortized cost of $213.9 million and fair value of $191.4 million.
(2)Includes commercial mortgage-backed securities. As of December 31, 2022, includes total commercial mortgage-backed securities with amortized cost of $28.2 million and fair value of $26.2 million.
(3)Excludes accrued interest receivable of $0.8 million as of December 31, 2022, which is included as part of accrued interest receivable and other assets in the Company’s consolidated balance sheet. The Company did not record any write offs on accrued interest receivable related to these securities in 2022.

The Company’s investment in debt securities held to maturity with unrealized losses aggregated by length of time that individual securities have been in a continuous unrealized loss position, are summarized below:
June 30, 2023
Less Than 12 Months12 Months or MoreTotal
(in thousands)Number of SecuritiesEstimated
Fair Value		Unrealized
Loss		Number of SecuritiesEstimated
Fair Value		Unrealized
Loss		Estimated
Fair Value		Unrealized
Loss
U.S. government agency debt securities— $— $— 12 $48,459 $(7,756)$48,459 $(7,756)
U.S. government sponsored enterprise debt securities11 77,045 (4,908)23 74,009 (12,234)151,054 (17,142)
11 $77,045 $(4,908)35 $122,468 $(19,990)$199,513 $(24,898)
December 31, 2022
Less Than 12 Months12 Months or MoreTotal
(in thousands)Number of SecuritiesEstimated
Fair Value		Unrealized
Loss		Number of SecuritiesEstimated
Fair Value		Unrealized
Loss		Estimated
Fair Value		Unrealized
Loss
U.S. government agency debt securities— $— $— 12 $50,755 $(7,778)$50,755 $(7,778)
U.S. government sponsored enterprise debt securities31 142,033 (9,085)3 14,689 (7,738)156,722 (16,823)
31 $142,033 $(9,085)15 $65,444 $(15,516)$207,477 $(24,601)


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Notes to Interim Consolidated Financial Statements (Unaudited)
Beginning January 1, 2022, the Company evaluates all debt securities held to maturity quarterly to determine if any securities in an unrealized loss position require an ACL. The Company considers that all debt securities held to maturity issued or sponsored by the U.S. government are considered to be risk-free as they have the backing of the government. The Company believes there are not current expected credit losses on these securities and, therefore, did not record an ACL on any of its debt securities held to maturity as of June 30, 2023 and December 31, 2022. The Company monitors the credit quality of held to maturity securities through the use of credit ratings. Credit ratings are monitored by the Company on at least a quarterly basis. As of June 30, 2023 and December 31, 2022, all debt securities held to maturity held by the Company were rated investment grade or higher.
Contractual maturities
Contractual maturities of debt securities at June 30, 2023 are as follows:
Available for SaleHeld to Maturity
(in thousands)Amortized
Cost		Estimated
Fair Value		Amortized
Cost		Estimated
Fair Value
Within 1 year$16,921 $16,914 $— $— 
After 1 year through 5 years122,913 116,151 6,562 3,806 
After 5 years through 10 years225,507 196,185 12,916 12,206 
After 10 years781,962 698,426 214,891 193,534 
$1,147,303 $1,027,676 $234,369 $209,546 
b) Equity securities with readily available fair value not held for trading
As of June 30, 2023, the Company had an equity security with readily available fair value not held for trading with an original cost and fair value of $2.5 million which was purchased in the second quarter of 2023. As of December 31, 2022, the Company had equity securities with readily available fair value not held for trading with an original cost of $12.7 million, and fair value of $11.4 million, respectively. These equity securities have no stated maturities. The Company recognized net unrealized losses of $2.6 million and $1.9 million in the three and six month periods ended June 30, 2022, respectively, related to the change in market value of these equity securities. There were no significant unrealized gains and losses related to the change in market value of these equity securities in the three and six months periods ended June 30, 2023. In the three months ended March 31, 2023, the Company sold its equity securities with readily available fair value not held for trading, with a total fair value of $11.2 million at the time of sale, and recognized a net loss of $0.2 million in connection with this transaction.

c) Securities Pledged

As of June 30, 2023 and December 31, 2022, the Company had $181.9 million and $314.5 million, respectively, in securities pledged as collateral. These securities were pledged to secure advances from the Federal Home Loan Bank, public funds and for other purposes as permitted by law.

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Notes to Interim Consolidated Financial Statements (Unaudited)
4.Loans
a) Loans held for investment
Loans held for investment consist of the following loan classes:
(in thousands)June 30,
2023		December 31,
2022
Real estate loans
Commercial real estate
Non-owner occupied$1,645,224 $1,615,716 
Multi-family residential764,712 820,023 
Land development and construction loans314,010 273,174 
2,723,946 2,708,913 
Single-family residential1,285,857 1,102,845 
Owner occupied1,063,240 1,046,450 
5,073,043 4,858,208 
Commercial loans (1)1,577,209 1,381,234 
Loans to financial institutions and acceptances13,332 13,292 
Consumer loans and overdrafts503,432 604,460 
    Total loans held for investment, gross (2)$7,167,016 $6,857,194 
_________________
(1)At June 30, 2023 and December 31, 2022, includes equipment loans and leases totaling $47.7 million and $45.3 million, respectively.
(2)Excludes accrued interest receivable.


At June 30, 2023 and December 31, 2022, loans with outstanding principal balances of $1.9 billion and $1.2 billion, respectively, were pledged as collateral to secure advances from the FHLB.

The amounts above include loans under syndication facilities of approximately $403 million and $367 million at June 30, 2023 and December 31, 2022, respectively, which include Shared National Credit facilities and agreements to enter into credit agreements with other lenders (club deals) and other agreements. In addition, consumer loans and overdrafts in the table above include indirect consumer loans purchased totaling $312.3 million and $433.3 million at June 30, 2023 and December 31, 2022, respectively.


International loans included above were $87.6 million and $99.2 million at June 30, 2023 and December 31, 2022, respectively, mainly single-family residential loans. These loans are net of collateral of cash, cash equivalents or other financial instruments totaling $6.6 million and $6.3 million as of June 30, 2023 and December 31, 2022, respectively.
In the three and six month periods ended June 30, 2023, the Company purchased $6.2 million and $7.1 million, respectively, in single-family residential loans. There were no significant purchases of single-family residential loans in the three and six month periods ended June 30, 2022. In the three and six month periods ended June 30, 2022, the Company purchased $130 million and $254 million, respectively, in indirect consumer loans. There were no purchases of indirect consumer loans in the three and six month periods ended June 30, 2023.
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Amerant Bancorp Inc. and Subsidiaries
Notes to Interim Consolidated Financial Statements (Unaudited)
The age analyses of the loan portfolio by class as of June 30, 2023 and December 31, 2022, are summarized in the following tables:
June 30, 2023
Total Loans,
Net of
Unearned
Income		Past Due
(in thousands)Current30-59
Days		60-89
Days		Greater than
90 Days		Total Past
Due
Real estate loans
Commercial real estate
Non-owner occupied$1,645,224 $1,643,403 $— $1,821 $— $1,821 
Multi-family residential764,712 740,169 24,543 — — 24,543 
Land development and construction loans314,010 307,513 6,497 — — 6,497 
2,723,946 2,691,085 31,040 1,821 — 32,861 
Single-family residential1,285,857 1,283,089 — 2,210 558 2,768 
Owner occupied1,063,240 1,057,795 665 — 4,780 5,445 
5,073,043 5,031,969 31,705 4,031 5,338 41,074 
Commercial loans1,577,209 1,564,989 1,178 394 10,648 12,220 
Loans to financial institutions and acceptances13,332 13,332 — — — — 
Consumer loans and overdrafts503,432 497,948 2,854 2,552 78 5,484 
$7,167,016 $7,108,238 $35,737 $6,977 $16,064 $58,778 

December 31, 2022
Total Loans,
Net of
Unearned
Income		Past Due
(in thousands)Current30-59
Days		60-89
Days		Greater than
90 Days		Total Past
Due
Real estate loans
Commercial real estate
Non-owner occupied$1,615,716 $1,615,716 $— $— $— $— 
Multi-family residential820,023 818,394 1,387 242 — 1,629 
Land development and construction loans273,174 273,174 — — — — 
2,708,913 2,707,284 1,387 242 — 1,629 
Single-family residential1,102,845 1,098,310 3,140 150 1,245 4,535 
Owner occupied1,046,450 1,039,928 172 6,014 336 6,522 
4,858,208 4,845,522 4,699 6,406 1,581 12,686 
Commercial loans1,381,234 1,373,042 1,523 475 6,194 8,192 
Loans to financial institutions and acceptances13,292 13,292 — — — — 
Consumer loans and overdrafts604,460 601,921 2,439 62 38 2,539 
$6,857,194 $6,833,777 $8,661 $6,943 $7,813 $23,417 

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Notes to Interim Consolidated Financial Statements (Unaudited)


Nonaccrual status
The following tables present the amortized cost basis of loans on nonaccrual status and loans past due over 90 days and still accruing as of June 30, 2023 and December 31, 2022:
As of June 30, 2023
(in thousands)Nonaccrual Loans With No Related AllowanceNonaccrual Loans With Related AllowanceTotal Nonaccrual Loans (1)Loans Past Due Over 90 Days and Still Accruing
Real estate loans
Commercial real estate
Nonowner occupied$— $1,696 $1,696 $— 
Multi-family residential— 24,306 $24,306 — 
— 26,002 26,002 — 
Single-family residential849 832 $1,681 302 
Owner occupied6,688 202 6,890 — 
7,537 27,036 $34,573 302 
Commercial loans407 11,834 $12,241 — 
Consumer loans and overdrafts1 — 1 78 
Total$7,945 $38,870 $46,815 $380 
As of December 31, 2022
(in thousands)Nonaccrual Loans With No Related AllowanceNonaccrual Loans With Related AllowanceTotal Nonaccrual Loans (1)Loans Past Due Over 90 Days and Still Accruing
Real estate loans
Commercial real estate
Nonowner occupied$20,057 $— $20,057 $— 
Multi-family residential— — — — 
20,057 — 20,057 — 
Single-family residential— 1,526 1,526 253 
Owner occupied5,936 334 6,270 — 
25,993 1,860 27,853 253 
Commercial loans482 8,789 9,271 183 
Consumer loans and overdrafts— 4 4 35 
Total$26,475 $10,653 $37,128 $471 
The Company did not recognize any interest income on nonaccrual loans during the three and six month periods ended June 30, 2023 and 2022.
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Amerant Bancorp Inc. and Subsidiaries
Notes to Interim Consolidated Financial Statements (Unaudited)

b) Loans held for sale
Loans held for sale consist of the following loan classes:
(in thousands)June 30,
2023
December 31, 2022
Loans held for sale at fair value
Land development and construction loans (1)$3,726 $9,424 
Single-family residential (2)46,216 53,014 
Total loans held for sale at fair value (3)(4)(5)$49,942 $65,289 
_______________
(1)In the six months ended June 30, 2023, the Company transferred approximately $13 million in land development and construction loans held for sale to the loans held for investment category.
(2)In the six months ended June 30, 2023, the Company transferred approximately $64 million in single-family residential loans held for sale to the loans held for investment category.
(3)Loans held for sale in connection with Amerant Mortgage’s ongoing business.
(4)Remained current and in accrual status at each of the periods shown.
(5)Excludes accrued interest receivable.


c) Concentration of risk

The Company’s loan portfolio is dependent mostly on the economic conditions that affect South Florida, Tampa Bay and the greater Houston and New York City areas. The Company manages diversification of its loan portfolio held for investment and held for sale, through policies with limitations primarily for exposure to individual or related debtors, economic sectors, geography, loan types, and for country risk exposure.


d) Accrued interest receivable on loans

Accrued interest receivable on total loans, including loans held for investment and held for sale, was $32.9 million and $27.7 million as of June 30, 2023 and December 31, 2022, respectively. In the three and six month periods ended June 30, 2023, the Company reversed approximately $0.2 million and $0.4 million, respectively, of accrued interest receivable against interest income in connection with real estate and commercial loans placed in non-accrual status during the periods. In the three months ended June 30, 2022, the Company reversed approximately $0.1 million of accrued interest receivable against interest income in connection with consumer loans and overdrafts placed in non-accrual status during the period. In the six months ended June 30, 2022, the Company reversed approximately $0.3 million of accrued interest receivable against interest income in connection with loans placed in non-accrual status during the period, including: (i) $0.2 million related to consumer loans and overdrafts, and (ii) a total of $0.1 million related to real estate and commercial loans.


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Notes to Interim Consolidated Financial Statements (Unaudited)
5.Allowance for Credit Losses
The analyses by loan segment of the changes in the ACL for the three and six month periods ended June 30, 2023 and 2022 is summarized in the following tables:
Three Months Ended June 30, 2023
(in thousands)Real EstateCommercialFinancial
Institutions		Consumer
and Others		Total
Balance at beginning of the period$23,195 $30,647 $— $30,519 $84,361 
Provision for credit losses18,903 6,386 — 3,788 29,077 
Loans charged-off— (1,452)— (7,633)(9,085)
Recoveries140 1,045 — 418 1,603 
Balance at end of the period$42,238 $36,626 $— $27,092 $105,956 

Six Months Ended June 30, 2023
(in thousands)Real EstateCommercialFinancial
Institutions		Consumer
and Others		Total
Balance at beginning of the period$25,237 $25,888 $— $32,375 $83,500 
Provision for credit losses16,722 15,787 — 8,268 40,777 
Loans charged-off— (9,427)— (13,987)(23,414)
Recoveries279 4,378 — 436 5,093 
Balance at end of the period$42,238 $36,626 $— $27,092 $105,956 

Three Months Ended June 30, 2022
Recast (1)
(in thousands)
Real Estate
Commercial
Financial
Institutions
Consumer
and Others
Total
Balance at beginning of the period$25,027 $25,079 $— $25,344 $75,450 
(Reversal of) provision for credit losses (1)
(4,578)(718)— 4,345 (951)
Loans charged-off— (4,605)— (915)(5,520)
Recoveries10 1,396 — 90 1,496 
Balance at end of the period (1)
$20,459 $21,152 $— $28,864 $70,475 
_______________
(1)Recast amounts reflect the impact of the adoption of CECL effective as of January 1, 2022. See Note 1 “Business, Basis of Presentation and Summary of Significant Accounting Policies” for additional information.

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Notes to Interim Consolidated Financial Statements (Unaudited)
Six Months Ended June 30, 2022
Recast (1)
(in thousands)
Real Estate
Commercial
Financial
Institutions
Consumer
and Others
Total
Balance at beginning of the period$17,952 $38,979 $42 $12,926 $69,899 
Cumulative effect of adoption of accounting principle (1)
17,418 (8,281)(42)9,579 18,674 
(Reversal of) provision for credit losses (1)
(14,925)(3,362)— 8,061 (10,226)
Loans charged-off— (7,880)— (1,962)(9,842)
Recoveries14 1,696 — 260 1,970 
Balance at end of the period (1)
$20,459 $21,152 $— $28,864 $70,475 
______________

(1)Recast amounts reflect the impact of the adoption of CECL effective as of January 1, 2022. See Note 1 “Business, Basis of Presentation and Summary of Significant Accounting Policies” for additional information.

The ACL was determined utilizing a reasonable and supportable forecast period. The ACL was determined using a weighted-average of various economic scenarios provided by a third-party, and incorporated qualitative components. There has not been material changes in our policies and methodology to estimate the ACL in the three and six month periods ended June 30, 2023.

The ACL increased by $22.5 million, or 26.9% at June 30, 2023, compared to December 31, 2022. The ACL as a percentage of total loans held for investment was 1.48% at June 30, 2023 compared to 1.20% at December 31, 2022. The provision for credit losses for the three and six month periods ended June 30, 2023 was partially offset by net charge-offs. During the second quarter of 2023, the provision for credit losses includes $15.7 million in additional reserve requirements for loan charge-offs and credit quality ($8.6 million related to a downgraded multi-family residential CRE loan in New York City), $1.4 million to account for loan growth in the quarter and $12.0 million to reflect updated macroeconomic factors. In the first half of 2023, the provision for credit losses includes $23.2 million in additional reserve requirements for loan charge-offs and credit quality, $3.6 million to account for loan growth in the quarter and $14.0 million to reflect updated macroeconomic factors.


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Amerant Bancorp Inc. and Subsidiaries
Notes to Interim Consolidated Financial Statements (Unaudited)
The following is a summary of net proceeds from sales of loans held for investment by portfolio segment:
Three Months Ended June 30,
(in thousands)		Real EstateCommercialFinancial
Institutions		Consumer
and others		Total
2023$3,575 $887 $— $— $4,462 
2022$11,566 $— $— $— $11,566 
Six Months Ended June 30,
(in thousands)		Real EstateCommercialFinancial
Institutions		Consumer
and others		Total
2023$13,575 $887 $— $— $14,462 
2022$11,566 $— $— $1,313 $12,879 

Loan Modifications to Borrowers Experiencing Financial Difficulty

The Company modifies loans related to borrowers experiencing financial difficulties by providing multiple types of concessions. Typically, one type of concession, such as a term extension, is granted initially. If the borrower continues to experience financial difficulty, another concession, such as principal forgiveness, may be granted.
The Company had no new loan modifications to borrowers experiencing financial difficulty during the three and six month periods ended June 30, 2023. There were no loans that defaulted in the three and six month periods ended June 30, 2023 and had been modified within 12 months preceding the payment default related to these modifications.
Troubled Debt Restructurings
As result of adoption of guidance related to CECL effective as of January 1, 2023, the Company had no reportable balances related to TDRs as of and for the three and six month periods ended June 30, 2023. See Note 1 “Business, Basis of Presentation and Summary of Significant Accounting Policies” for additional information.
There were no new TDRs in the three and six month periods ended June 30, 2022. In addition, during the three and six month periods ended June 30, 2022, there were no TDR loans that subsequently defaulted within the 12 months of restructuring in the three and six month periods ended June 30, 2022.

Credit Risk Quality
The sufficiency of the ACL is reviewed at least quarterly by the Chief Risk Officer and the Chief Financial Officer. The Board of Directors considers the ACL as part of its review of the Company’s consolidated financial statements. As of June 30, 2023 and December 31, 2022, the Company believes the ACL to be sufficient to absorb expected credit losses in the loans portfolio in accordance with GAAP.

Loans may be classified but not considered collateral dependent due to one of the following reasons: (1) the Company has established minimum dollar amount thresholds for individual assessment of expected credit losses, which results in loans under those thresholds being excluded from individual assessment of expected credit losses; and (2) classified loans may be considered in the assessment because the Company expects to collect all amounts due.
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Notes to Interim Consolidated Financial Statements (Unaudited)

As part of the on-going monitoring of the credit quality of the Company’s loan portfolio, management tracks certain credit quality indicators including trends related primarily to (i) the risk rating of loans, (ii) the loan payment status, (iii) net charge-offs, (iv) nonperforming loans and (v) the general economic conditions in the main geographies where the Company’s borrowers conduct their businesses. The Company considers the views of its regulators as to loan classification and in the process of estimating expected credit losses.
The Company utilizes an internal risk rating system to identify the risk characteristics of each of its loans, or group of homogeneous loans such as consumer loans. Internal risk ratings are updated on a continuous basis on a scale from 1 (worst credit quality) to 10 (best credit quality). Loans are then grouped in five master risk categories for purposes of monitoring rising levels of potential loss risks and to enable the activation of collection or recovery processes as defined in the Company’s Credit Risk Policy. Internal risk ratings are considered the most meaningful indicator of credit quality for commercial loans. Generally, internal risk ratings for commercial real estate loans and commercial loans with balances over $3 million are updated at least annually and more frequently if circumstances indicate that a change in risk rating may be warranted. For consumer loans, single-family residential loans and smaller commercial loans under $3 million, risk ratings are updated based on the loans past due status.The following is a summary of the master risk categories and their associated loan risk ratings, as well as a description of the general characteristics of the master risk category:
Loan Risk Rating
Master risk category
Nonclassified
4 to 10
Classified
1 to 3
Substandard3
Doubtful2
Loss1
Nonclassified
This category includes loans considered as Pass (5-10) and Special Mention (4). A loan classified as Pass is considered of sufficient quality to preclude a lower adverse rating. These loans are generally well protected by the current net worth and paying capacity of the borrower or by the value of any collateral received. Special Mention loans are defined as having potential weaknesses that deserve management’s close attention which, if left uncorrected, could potentially result in further credit deterioration. Special Mention loans may include loans originated with certain credit weaknesses or that developed those weaknesses since their origination.
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Notes to Interim Consolidated Financial Statements (Unaudited)

Classified
This classification indicates the presence of credit weaknesses which could make loan repayment unlikely, such as partial or total late payments and other contractual defaults.
Substandard
A loan classified substandard is inadequately protected by the sound worth and paying capacity of the borrower or the collateral pledged. They are characterized by the distinct possibility that the Company will sustain some loss if the credit weaknesses are not corrected. Loss potential, while existing in the aggregate amount of substandard loans, does not have to exist in individual assets.
Doubtful
These loans have all the weaknesses inherent in a loan classified as substandard with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. These are poor quality loans in which neither the collateral, if any, nor the financial condition of the borrower presently ensure collection in full in a reasonable period of time. As a result, the possibility of loss is extremely high.
Loss
Loans classified as loss are considered uncollectible and of such little value that the continuance as bankable assets is not warranted. This classification does not mean that the assets have absolutely no recovery or salvage value, but not to the point where a write-off should be deferred even though partial recoveries may occur in the future. This classification is based upon current facts, not probabilities. As a result, loans in this category should be promptly charged off in the period in which they are determined to be uncollectible.

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Notes to Interim Consolidated Financial Statements (Unaudited)
Loans held for investment by Credit Quality Indicators
The following tables present Loans held for investment by credit quality indicators and year of origination as of June 30, 2023 and December 31, 2022:

June 30, 2023
Term Loans
Amortized Cost Basis by Origination Year
(in thousands)20232022202120202019PriorRevolving Loans
Amortized Cost
Basis		Total
Real estate loans
Commercial real estate
Nonowner occupied
Credit Risk Rating:
Nonclassified
Pass$65,271 $195,538 $618,505 $33,976 $90,962 $402,635 $228,283 $1,635,170 
Special Mention— — — — — 8,301 — 8,301 
Classified
Substandard— — — — — 1,753 — 1,753 
Doubtful— — — — — — — — 
Loss— — — — — — — — 
Total Nonowner occupied65,271 195,538 618,505 33,976 90,962 412,689 228,283 1,645,224 
Multi-family residential
Credit Risk Rating:
Nonclassified
Pass1,484 67,844 109,783 26,731 117,683 113,106 303,775 740,406 
Special Mention— — — — — — — — 
Classified
Substandard— — — — — 24,306 — 24,306 
Doubtful— — — — — — — — 
Loss— — — — — — — — 
Total Multi-family residential1,484 67,844 109,783 26,731 117,683 137,412 303,775 764,712 
Land development and construction loans
Credit Risk Rating:
Nonclassified
Pass36,606 9,730 28,140 22,000 — 26,930 184,107 307,513 
Special Mention— — — — — — 6,497 6,497 
Classified
Substandard— — — — — — — — 
Doubtful— — — — — — — — 
Loss— — — — — — — — 
Total land development and construction loans36,606 9,730 28,140 22,000 — 26,930 190,604 314,010 
Single-family residential
Credit Risk Rating:
Nonclassified
Pass626,167 76,619 136,977 68,884 21,260 76,098 277,698 1,283,703 
Special Mention— — — — — — — — 
Classified
Substandard— — — — — 426 1,728 2,154 
Doubtful— — — — — — — — 
Loss— — — — — — — — 
Total Single-family residential626,167 76,619 136,977 68,884 21,260 76,524 279,426 1,285,857 
Owner occupied
Credit Risk Rating:
Nonclassified
Pass69,246 259,143 439,399 21,973 62,762 167,636 33,873 1,054,032 
Special Mention— — — — — 356 1,880 2,236 
Classified
Substandard— 1,931 2,845 625 — 1,571 — 6,972 
Doubtful— — — — — — — — 
Loss— — — — — — — — 
Total owner occupied69,246 261,074 442,244 22,598 62,762 169,563 35,753 1,063,240 
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Notes to Interim Consolidated Financial Statements (Unaudited)
June 30, 2023
Term Loans Amortized Cost Basis by Origination Year
(in thousands)20232022202120202019PriorRevolving Loans
Amortized Cost
Basis		Total
Non-real estate loans
Commercial Loans
Credit Risk Rating:
Nonclassified
Pass298,064 345,865 83,131 14,000 39,049 34,566 736,190 1,550,865 
Special Mention— — — — — — 13,029 13,029 
Classified
Substandard— 23 12 1,648 179 906 10,544 13,312 
Doubtful— — — — 3 — — 3 
Loss— — — — — — — — 
Total commercial Loans298,064 345,888 83,143 15,648 39,231 35,472 759,763 1,577,209 
Loans to financial institutions and acceptances
Credit Risk Rating:
Nonclassified
Pass— — — — — 13,332 — 13,332 
Special Mention— — — — — — — — 
Classified
Substandard— — — — — — — — 
Doubtful— — — — — — — — 
Loss— — — — — — — — 
Total loans to financial institutions and acceptances— — — — — 13,332 — 13,332 
Consumer loans
Credit Risk Rating:
Nonclassified
Pass23,836 43,698 117,325 198,640 47 23 119,793 503,362 
Special Mention— — — — — — — — 
Classified
Substandard— — — — — 1 69 70 
Doubtful— — — — — — — — 
Loss— — — — — — — — 
Total consumer loans23,836 43,698 117,325 198,640 47 24 119,862 503,432 
Total loans held for investment, gross$1,120,674 $1,000,391 $1,536,117 $388,477 $331,945 $871,946 $1,917,466 $7,167,016 


















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Notes to Interim Consolidated Financial Statements (Unaudited)

December 31, 2022
Term Loans
Amortized Cost Basis by Origination Year
(in thousands)20222021202020192018PriorRevolving Loans
Amortized Cost
Basis		Total
Real estate loans
Commercial real estate
Nonowner occupied
Credit Risk Rating:
Nonclassified
Pass$177,852 $637,015 $34,525 $91,941 $82,385 $342,174 $221,333 $1,587,225 
Special Mention— — — — — 8,378 — 8,378 
Classified
Substandard— — — 20,113 — — — 20,113 
Doubtful— — — — — — — — 
Loss— — — — — — — — 
Total Nonowner occupied177,852 637,015 34,525 112,054 82,385 350,552 221,333 1,615,716 
Multi-family residential
Credit Risk Rating:
Nonclassified
Pass85,670 110,943 26,881 126,724 27,242 124,433 318,130 820,023 
Special Mention— — — — — — — — 
Classified
Substandard— — — — — — — — 
Doubtful— — — — — — — — 
Loss— — — — — — — — 
Total Multi-family residential85,670 110,943 26,881 126,724 27,242 124,433 318,130 820,023 
Land development and construction loans
Credit Risk Rating:
Nonclassified
Pass8,846 27,746 23,459 188 — 26,930 186,005 273,174 
Special Mention— — — — — — — — 
Classified
Substandard— — — — — — — — 
Doubtful— — — — — — — — 
Loss— — — — — — — — 
Total land development and construction loans8,846 27,746 23,459 188 — 26,930 186,005 273,174 
Single-family residential
Credit Risk Rating:
Nonclassified
Pass480,328 186,790 70,853 21,654 16,630 65,249 259,411 1,100,915 
Special Mention— — — — — — — — 
Classified
Substandard— — — — — 741 1,189 1,930 
Doubtful— — — — — — — — 
Loss— — — — — — — — 
Total Single-family residential480,328 186,790 70,853 21,654 16,630 65,990 260,600 1,102,845 
Owner occupied
Credit Risk Rating:
Nonclassified
Pass256,816 479,961 22,341 63,629 21,790 162,411 33,146 1,040,094 
Special Mention— — — — — — — — 
Classified
Substandard2,096 1,631 656 — 650 1,283 40 6,356 
Doubtful— — — — — — — — 
Loss— — — — — — — — 
Total owner occupied258,912 481,592 22,997 63,629 22,440 163,694 33,186 1,046,450 





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Amerant Bancorp Inc. and Subsidiaries
Notes to Interim Consolidated Financial Statements (Unaudited)

December 31, 2022
Term Loans Amortized Cost Basis by Origination Year
(in thousands)20222021202020192018PriorRevolving Loans
Amortized Cost
Basis		Total
Non-real estate loans
Commercial Loans
Credit Risk Rating:
Nonclassified
Pass400,781 95,470 19,815 42,936 32,248 16,297 761,489 1,369,036 
Special Mention— — — — 1,499 — 250 1,749 
Classified
Substandard— 84 267 194 27 984 8,890 10,446 
Doubtful— — — 3 — — — 3 
Loss— — — — — — — — 
Total commercial Loans400,781 95,554 20,082 43,133 33,774 17,281 770,629 1,381,234 
Loans to financial institutions and acceptances
Credit Risk Rating:
Nonclassified
Pass— — — — — 13,292 — 13,292 
Special Mention— — — — — — — — 
Classified
Substandard— — — — — — — — 
Doubtful— — — — — — — — 
Loss— — — — — — — — 
Total loans to financial institutions and acceptances— — — — — 13,292 — 13,292 
Consumer loans
Credit Risk Rating:
Nonclassified
Pass338,744 121,011 29,053 68 54 — 115,300 604,230 
Special Mention— — — — — — — — 
Classified
Substandard98 128 — — — 4 — 230 
Doubtful— — — — — — — — 
Loss— — — — — — — — 
Total consumer loans338,842 121,139 29,053 68 54 4 115,300 604,460 
Total loans held for investment, gross$1,751,231 $1,660,779 $227,850 $367,450 $182,525 $762,176 $1,905,183 $6,857,194 

















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Notes to Interim Consolidated Financial Statements (Unaudited)


The following table present gross charge-offs by year of origination for the periods presented:

Three Months Ended June 30, 2023
Term Loans Charge-offs by Origination Year
(in thousands)20232022202120202019PriorRevolving Loans
Charge-Offs		Total
Quarter-To-Date Gross Charge-offs
Real estate loans
Commercial real estate
Nonowner occupied$— $— $— $— $— $— $— $— 
Multi-family residential— — — — — — — — 
Land development and construction loans— — — — — — — — 
— — — — — — — — 
Single-family residential— — — — — 7 — 7 
Owner occupied— — — — — — — — 
— — — — — 7 — 7 
Commercial loans1,216 77 158 — 1 — 1,452 
Loans to financial institutions and acceptances— — — — — — — — 
Consumer loans and overdrafts399 3,172 3,364 553 13 125 — 7,626 
Total Quarter-To-Date Gross Charge-Offs$399 $4,388 $3,441 $711 $13 $133 $— $9,085 

Six Months Ended June 30, 2023
Term Loans Charge-offs by Origination Year
(in thousands)20232022202120202019PriorRevolving Loans
Charge-Offs		Total
Year-To-Date Gross Charge-offs
Real estate loans
Commercial real estate
Nonowner occupied$— $— $— $— $— $— $— $— 
Multi-family residential— — — — — — — — 
Land development and construction loans— — — — — — — — 
— — — — — — — — 
Single-family residential— — — — — 39 — 39 
Owner occupied— — — — — — — — 
— — — — — 39 — 39 
Commercial loans— 8,774 170 158 — 325 — 9,427 
Loans to financial institutions and acceptances— — — — — — — — 
Consumer loans and overdrafts399 6,062 6,243 846 13 385 — 13,948 
Total Year-To-Date Gross Charge-Offs$399 $14,836 $6,413 $1,004 $13 $749 $— $23,414 










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Amerant Bancorp Inc. and Subsidiaries
Notes to Interim Consolidated Financial Statements (Unaudited)

Three Months Ended June 30, 2022
Term Loans Charge-offs by Origination Year
(in thousands)20222021202020192018PriorRevolving Loans
Charge-Offs		Total
Quarter-To-Date Gross Charge-offs
Real estate loans
Commercial real estate
Nonowner occupied$— $— $— $— $— $— $— $— 
Multi-family residential— — — — — — — — 
Land development and construction loans— — — — — — — — 
— — — — — — — — 
Single-family residential— — — — — — — 
Owner occupied— — — — — — — — 
— — — — — — — — 
Commercial loans— — 3,679 541 — 385 — 4,605 
Loans to financial institutions and acceptances— — — — — — — — 
Consumer loans and overdrafts24 632 259 — — — — 915 
Total Quarter-To-Date Gross Charge-Offs$24 $632 $3,938 $541 $— $385 $— $5,520 



Six Months Ended June 30, 2022
Term Loans Charge-offs by Origination Year
(in thousands)20222021202020192018PriorRevolving Loans
Charge-Offs		Total
Year-To-Date Gross Charge-offs
Real estate loans
Commercial real estate
Nonowner occupied$— $— $— $— $— $— $— $— 
Multi-family residential— — — — — — — — 
Land development and construction loans— — — — — — — — 
— — — — — — — — 
Single-family residential— — — — — 14 — 14 
Owner occupied— — — — — — — — 
— — — — — 14 — 14 
Commercial loans2,523 — 4,429 541 — 387 — 7,880 
Loans to financial institutions and acceptances— — — — — — — — 
Consumer loans and overdrafts43 1,223 681 — — 1 — 1,948 
Total Year-To-Date Gross Charge-Offs$2,566 $1,223 $5,110 $541 $— $402 $— $9,842 






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Amerant Bancorp Inc. and Subsidiaries
Notes to Interim Consolidated Financial Statements (Unaudited)
Collateral -Dependent Loans

Loans are considered collateral-dependent when the repayment of the loan is expected to be provided by the sale or operation of the underlying collateral. The Company performs an individual evaluation as part of the process of calculating the allowance for credit losses related to these loans. The following tables present the amortized cost basis of collateral dependent loans related to borrowers experiencing financial difficulty by type of collateral as of June 30, 2023 and December 31, 2022:

As of June 30, 2023
Collateral Type
(in thousands)Commercial Real EstateResidential Real EstateOtherTotalSpecific Reserves
Real estate loans
Commercial real estate
Nonowner occupied (1)$1,821 $— $— $1,821 $— 
Multi-family residential24,306 — — 24,306 8,568 
Single-family residential (2)— 803 — 803 — 
Owner occupied (3)6,688 — — 6,688 — 
Commercial loans— — 11,709 11,709 5,707 
Total $32,815 $803 $11,709 $45,327 $14,275 
_________________
(1)Weighted-average loan-to-value was approximately 62.1% at June 30, 2023.
(2)Weighted-average loan-to-value was approximately 67.3% at June 30, 2023.
(3)Weighted-average loan-to-value was approximately 62.0% at June 30, 2023.



As of December 31, 2022
Collateral Type
(in thousands)Commercial Real EstateResidential Real EstateOtherTotalSpecific Reserves
Real estate loans
Commercial real estate
Nonowner occupied (1)$20,121 $— $— $20,121 $— 
Owner occupied (2)5,934 — — 5,934 — 
26,055 — — 26,055 — 
Commercial loans (3)1,998 — 6,401 8,399 5,179 
Total $28,053 $— $6,401 $34,454 $5,179 
_________________
(1)Weighted-average loan-to-value was approximately 92.7% at December 31, 2022.
(2)Weighted-average loan-to-value was approximately 62.7% at December 31, 2022.
(3)Includes loans with no specific reserves totaling $0.5 million with a weighted-average loan-to-value of approximately 42.0% at December 31, 2022.


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Amerant Bancorp Inc. and Subsidiaries
Notes to Interim Consolidated Financial Statements (Unaudited)

Collateral dependent loans are evaluated on an individual basis for purposes for determining expected credit losses. For collateral-dependent loans where the borrower is experiencing financial difficulty and the Company expects repayment of the financial asset to be provided substantially through the operation or sale of the collateral, the ACL is measured based on the difference between the fair value of the collateral and the amortized cost basis of the loan as of the measurement date. When repayment is expected to be from the operation of the collateral, expected credit losses are calculated as the amount by which the amortized cost basis of the loan exceeds the present value of expected cash flows from the operation of the collateral. When repayment is expected to be from the sale of the collateral, expected credit losses are calculated as the amount by which the amortized cost basis of the loan exceeds the fair value of the underlying collateral less estimated costs to sell. The ACL may be zero if the fair value of the collateral at the measurement date exceeds the amortized cost basis of the loan. In the six months ended June 30, 2023, the weighted-average loan-to-values related to existing owner-occupied collateral dependent loans with no specific reserves decreased approximately 4% since December 31, 2022.


6.Time Deposits
Time deposits in denominations of $100,000 or more amounted to approximately $1.2 billion at June 30, 2023 and $928 million at December 31, 2022, respectively. Time deposits in denominations of more than $250,000 amounted to approximately $638 million and $486 million at June 30, 2023 and December 31, 2022, respectively. As of June 30, 2023 and December 31, 2022, brokered time deposits amounted to $631 million and $609 million, respectively.

Large Time Deposits by Maturity

The following table sets forth the maturities of our time deposits with individual balances equal to or greater than $100,000 as of June 30, 2023 and December 31, 2022:
June 30, 2023December 31, 2022
(in thousands, except percentages)
Less than 3 months$126,406 10.5 %$140,292 15.1 %
3 to 6 months376,498 31.2 %148,137 16.0 %
6 to 12 months365,459 30.2 %497,436 53.6 %
1 to 3 years331,504 27.5 %135,663 14.6 %
Over 3 years8,628 0.6 %6,889 0.7 %
Total$1,208,495 100.0 %$928,417 100.0 %


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Amerant Bancorp Inc. and Subsidiaries
Notes to Interim Consolidated Financial Statements (Unaudited)

7.Advances from the Federal Home Loan Bank
At June 30, 2023 and December 31, 2022, the Company had outstanding advances from the FHLB as follows:
Outstanding Balance
Year of MaturityInterest
Rate		Interest
Rate Type		At June 30, 2023At December 31, 2022
(in thousands)
2023
0.61% to 4.84%
Fixed— 304,821 
2024
1.68%
Fixed— 100,000 
2025
1.40% to 3.07%
Fixed— 451,665 
2026
4.25%
Fixed100,000 — 
2027 and after (1)
1.82% to 4.40%
Fixed670,000 50,000 
$770,000 $906,486 
_______________
(1)There were no callable advances from the FHLB as of June 30, 2023 and December 31, 2022.
In the first quarter of 2023, the Company realized a pretax gain of $13.2 million on the early repayment of $565 million in advances from the FHLB. In the second quarter of 2023, the Company realized a pretax gain of $13.4 million on the early repayment of $355 million in advances from the FHLB. These early repayments are part of the Company’s asset/liability management strategies.
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Amerant Bancorp Inc. and Subsidiaries
Notes to Interim Consolidated Financial Statements (Unaudited)
8.Senior Notes
On June 23, 2020, the Company completed a $60.0 million offering of senior notes with a coupon rate of 5.75% and a maturity date of June 30, 2025 (the “Senior Notes”). The net proceeds, after direct issuance costs of $1.6 million, totaled $58.4 million. As of June 30, 2023 and December 31, 2022, these Senior Notes amounted to $59.4 million and $59.2 million, respectively, net of direct unamortized issuance costs of $0.6 million and $0.8 million, respectively. The Senior Notes are presented net of direct issuance costs in the consolidated financial statements. These costs have been deferred and are being amortized over the term of the Senior Notes of 5 years as an adjustment to yield. These Senior Notes are unsecured and unsubordinated, rank equally with all of our existing and future unsecured and unsubordinated indebtedness.

9.Subordinated Notes
On March 9, 2022, the Company entered into a Subordinated Note Purchase Agreement (the “Purchase Agreement”) with Amerant Florida Bancorp Inc (“Amerant Florida” or the “Guarantor”), and qualified institutional buyers pursuant to which the Company sold and issued $30.0 million aggregate principal amount of its 4.25% Fixed-to-Floating Rate Subordinated Notes due March 15, 2032 (the “Subordinated Notes”). Net proceeds were $29.1 million, after estimated direct issuance costs of approximately $0.9 million. Unamortized direct issuance costs are deferred and amortized over the term of the Subordinated Notes of 10 years. As of June 30, 2023 and December 31, 2022, these Subordinated Notes amounted to $29.4 million and $29.3 million, respectively, net of direct unamortized issuance costs of $0.6 million and $0.7 million, respectively.

The Subordinated Notes will initially bear interest at a fixed rate of 4.25% per annum, from and including March 9, 2022, to but excluding March 15, 2027, with interest payable semi-annually in arrears. From and including March 15, 2027, to but excluding the stated maturity date or early redemption date, the interest rate will reset quarterly to an annual floating rate equal to the then-current benchmark rate, which will initially be the three-month Secured Overnight Financing Rate (“SOFR”) plus 251 basis points, with interest during such period payable quarterly in arrears. If the three-month SOFR cannot be determined during the applicable floating rate period, a different index will be determined and used in accordance with the terms of the Subordinated Notes.

These Subordinated Notes are unsecured, subordinated obligations of the Company and rank junior in right of payment to all of the Company’s current and future senior indebtedness. Prior to March 15, 2027, the Company may redeem the Subordinated Notes, in whole but not in part, only under certain limited circumstances. On or after March 15, 2027, the Company may, at its option, redeem the Subordinated Notes, in whole or in part, on any interest payment date, subject to the receipt of any required regulatory approvals. The Subordinated Notes have been structured to qualify as Tier 2 capital of the Company for regulatory capital purposes, and rank equally in right of payment to all of our existing and future subordinated indebtedness.

The Subordinated Notes were offered and sold by the Company in a private placement offering in reliance on exemptions from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”), pursuant to Section 4(a)(2) of the Securities Act and Rule 506(b) of Regulation D under the Securities Act. In connection with the sale and issuance of the Subordinated Notes, the Company entered into a registration rights agreement, pursuant to which the Company agreed to take certain actions to provide for the exchange of the Subordinated Notes for subordinated notes that are registered under the Securities Act and will have substantially the same terms.

On June 21, 2022, the Company successfully completed the exchange of all of its outstanding Subordinated Notes for an equal principal amount of its registered 4.25% Fixed-to-Floating Rate Subordinated Notes due 2032 (the “Registered Subordinated Notes”). The terms of the Registered Subordinated Notes are substantially identical to the terms of the Subordinated Notes, except that the Registered Subordinated Notes are not subject to the transfer restrictions, registration rights and additional interest provisions (under the circumstances described in the registration rights agreement relating to our fulfillment of our registration obligations) applicable to the Subordinated Notes.
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Amerant Bancorp Inc. and Subsidiaries
Notes to Interim Consolidated Financial Statements (Unaudited)


On August 2, 2022, the Company completed an intercompany transaction of entities under common control, pursuant to which the Guarantor, merged with and into the Company, with the Company as sole survivor. See ”Amerant Florida Merger” in the 2022 Form 10-K for more details.


10. Junior Subordinated Debentures Held by Trust Subsidiaries
The following table provides information on the outstanding Trust Preferred Securities issued by, and the junior subordinated debentures issued to, each of the statutory trust subsidiaries as of June 30, 2023 and December 31, 2022:
June 30, 2023December 31, 2022
(in thousands)Amount of
Trust
Preferred
Securities
Issued by
Trust		Principal
Amount of
Debenture
Issued to
Trust		Amount of
Trust
Preferred
Securities
Issued by
Trust		Principal
Amount of
Debenture
Issued to
Trust		Year of
Issuance		Annual Rate of Trust
Preferred Securities
and Debentures		Year of
Maturity
Commercebank Capital Trust VI$9,250 $9,537 $9,250 $9,537 2002
3-M LIBOR + 3.35%
2033
Commercebank Capital Trust VII8,000 8,248 8,000 8,248 2003
3-M LIBOR + 3.25%
2033
Commercebank Capital Trust VIII5,000 5,155 5,000 5,155 2004
3-M LIBOR + 2.85%
2034
Commercebank Capital Trust IX25,000 25,774 25,000 25,774 2006
3-M LIBOR + 1.75%
2038
Commercebank Capital Trust X15,000 15,464 15,000 15,464 2006
3-M LIBOR + 1.78%
2036
$62,250 $64,178 $62,250 $64,178 
LIBOR Cessation and Expected Replacement Rate

The Trust Preferred Securities and the Debentures issued by the Company include calculations that are based on 3-month LIBOR. On March 15, 2022, the Adjustable Interest Rate (LIBOR) Act (the “LIBOR Act”) was signed into law. Under the LIBOR Act, on the first London banking day after June 30, 2023 (the “LIBOR Replacement Date”), a benchmark replacement recommended by the Federal Reserve will replace LIBOR in certain contracts, including those that contain no fallback provisions and other related aspects. The Federal Reserve issued its final regulations under the LIBOR Act. The final regulations: (i) address the applicability of the LIBOR Act to various LIBOR contracts, which include the Trust Preferred Securities and the Debentures, (ii) identify the benchmark replacements, (iii) include certain benchmark replacement conforming changes, (iv) address the issue of preemption and (v) provide other clarifications, definitions and information.

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Amerant Bancorp Inc. and Subsidiaries
Notes to Interim Consolidated Financial Statements (Unaudited)

Based on a review of the Trust Preferred Securities and the Debentures documents, these documents do not provide a replacement rate for 3-month LIBOR or include other fallback provisions which would apply on the LIBOR Replacement Date. Based on the U.K. Financial Conduct Authority’s current statements, it does not appear that a synthetic LIBOR benchmark will be applicable to the Trust Preferred Securities and Debentures. Accordingly, absent an amendment to the Trust Preferred Securities and Debenture documents, some other change in applicable law, rule, regulation, or some other development, on and after the LIBOR Replacement Date, 3-month CME term SOFR or 6-month CME Term SOFR (as defined in the regulations) as adjusted by the relevant spread adjustment of 0.26161%, shall be the benchmark replacement for 3-month LIBOR in the Trust Preferred Securities and Debentures documents, and all applicable benchmark replacement conforming changes as specified in the regulations will become an integral part of the Trust Preferred Securities and Debenture documents, without any action by any party. The Company will not seek to amend the Trust Preferred Securities and Debentures documents to reflect any other LIBOR benchmark replacement.
11.Derivative Instruments
At June 30, 2023 and December 31, 2022, the fair values of the Company’s derivative instruments were as follows:
June 30, 2023December 31, 2022
(in thousands)
Other Assets
Other Liabilities
Other Assets
Other Liabilities
Interest rate swaps designated as cash flow hedges$945 $817 $167 $45 
Interest rate swaps not designated as hedging instruments:
Customers532 63,834 603 66,439 
Third party broker63,834 532 66,439 603 
64,366 64,366 67,042 67,042 
Interest rate caps not designated as hedging instruments:
Customers— 9,243 — 10,002 
Third party broker9,610 — 10,207 — 
9,610 9,243 10,207 10,002 
Mortgage derivatives not designated as hedging instruments:
  Interest rate lock commitments721 — 727 — 
   Forward contracts118 39 107 71 
839 39 834 71 
$75,760 $74,465 $78,250 $77,160 


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Amerant Bancorp Inc. and Subsidiaries
Notes to Interim Consolidated Financial Statements (Unaudited)

Derivatives Designated as Hedging Instruments
Interest Rate Swaps On Debt Instruments
The Company enters into interest rate swap contracts on debt instruments which the Company designates and qualifies as cash flow hedges. These interest rate swaps are designed as cash flow hedges to manage the exposure that arises from differences in the amount of the Company’s known or expected cash receipts and the known or expected cash payments on designated debt instruments. These interest rate swap contracts involve the Company’s payment of fixed-rate amounts in exchange for the Company receiving variable-rate payments over the life of the contracts without exchange of the underlying notional amount.
At June 30, 2023 and December 31, 2022, the Company had five interest rate swap contracts on debt instruments with notional amounts totaling $64.2 million maturing in the third and fourth quarters of 2025. These contracts were designated as cash flow hedges to manage the exposure of variable rate interest payments on all of the Company’s outstanding variable-rate junior subordinated debentures with principal amounts at June 30, 2023 and December 31, 2022 totaling $64.2 million. The Company expects these interest rate swaps to be highly effective in offsetting the effects of changes in interest rates on cash flows associated with the Company’s variable-rate junior subordinated debentures. The Company recognized unrealized gains of $0.1 million and unrealized losses of $0.1 million in the three months ended June 30, 2023 and 2022, respectively, and unrealized gains of $0.2 million and unrealized losses of $0.4 million in the six months ended June 30, 2023 and 2022, respectively, related to these interest rate swap contracts. These unrealized losses were included as part of interest expense on junior subordinated debentures in the Company’s consolidated statement of operations and comprehensive (loss) income. As of June 30, 2023, the estimated net unrealized gains in accumulated other comprehensive income expected to be reclassified into expense in the next twelve months amounted to $1.0 million.

In 2019, the Company terminated 16 interest rate swaps on debt instruments that had been designated as cash flow hedges of variable rate interest payments on the outstanding and expected rollover of variable-rate advances from the FHLB. The Company is recognizing the contracts’ cumulative net unrealized gains of $8.9 million in earnings over the remaining original life of the terminated interest rate swaps ranging between one month and seven years. The Company recognized approximately $0.3 million in each of the three months ended June 30, 2023 and 2022 and $0.7 million in each of the six months ended June 30, 2023 and 2022 as a reduction of interest expense on FHLB advances as a result of this amortization.


Interest Rate Swaps On Loans

In the second quarter of 2023, the Company entered into an interest rate swap contract with a notional amount of $50.0 million, and maturity in the second quarter of 2025. The Company designated this interest rate swap as a cash flow hedge to manage interest rate risk exposure on variable rate interest receipts on the first $50 million principal balance of a pool of loans. This interest rate swap contract involves the Company’s payment of variable-rate amounts in exchange for the Company receiving fixed-rate payments over the life of the contract without exchange of the underlying notional amount. In the three and six month periods ended June 30, 2023, the Company did not recognize significant unrealized gains and losses in earnings related to this interest rate swap contract. Any unrealized losses or gains recognized in earnings in connection with this contract are included as part of interest income on loans in the Company’s consolidated statement of operations and comprehensive (loss) income. As of June 30, 2023, the estimated net unrealized losses in accumulated other comprehensive (loss) income expected to be reclassified into interest income in the next twelve months amounted to $0.7 million.


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Notes to Interim Consolidated Financial Statements (Unaudited)

Derivatives Not Designated as Hedging Instruments

Interest Rate Swaps
At June 30, 2023 and December 31, 2022, the Company had 144 and 143 interest rate swap contracts with customers, respectively, with total notional amounts of $920.0 million and $925.4 million, respectively. These instruments involve the Company’s payment of variable-rate amounts to customers in exchange for the Company receiving fixed-rate payments from customers over the life of the contracts without exchange of the underlying notional amount. In addition, as of June 30, 2023 and December 31, 2022, the Company had interest rate swap mirror contracts with third party brokers with similar terms.

The Company enters into swap participation agreements with other financial institutions to manage the credit risk exposure on certain interest rate swaps with customers. Under these agreements, the Company, as the beneficiary or guarantor, will receive or make payments from/to the counterparty if the borrower defaults on the related interest rate swap contract. As of June 30, 2023 and December 31, 2022, the Company had four swap participation agreements with total notional amounts of approximately $73.8 million and $74.0 million, respectively. The notional amount of these agreements is based on the Company’s pro-rata share of the related interest rate swap contracts. As of June 30, 2023 and December 31, 2022, the fair value of swap participation agreements was not significant.
Interest Rate Caps

At June 30, 2023 and December 31, 2022, the Company had 16 and 19 interest rate cap contracts with customers with total notional amounts of $384.5 million and $448.8 million, respectively. These instruments involve the Company making payments if an interest rate exceeds the agreed strike price. In addition, at June 30, 2023 and December 31, 2022, the Company had 14 and 16 interest rate cap mirror contracts, respectively, with a third party broker with total notional amounts of $332.4 million and $371.9 million, respectively.

In April 2022, the Company entered into 4 interest rate cap contracts with various third-party brokers with total notional amounts of $140.0 million. These interest rate caps initially served to partially offset changes in the estimated fair value of interest rate cap contracts with customers at December 31, 2022. At June 30, 2023 and December 31, 2022, there were 2 and 4 interest rate cap contracts, respectively, with total notional amounts of $70.0 million and $140.0 million, respectively, in connection with this transaction.


Mortgage Derivatives
The Company enters into interest rate lock commitments and forward sale contracts to manage the risk exposure in the mortgage banking area. At June 30, 2023 and December 31, 2022, the Company had interest rate lock commitments with notional amounts of $88.3 million and $77.0 million, respectively, and forward contracts with notional amounts of $41.0 million and $17.0 million, respectively. Interest rate lock commitments guarantee the funding of residential mortgage loans originated for sale, at specified interest rates and times in the future. Forward sale contracts consist of commitments to deliver mortgage loans, originated and/or purchased, in the secondary market at a future date. The change in the fair value of these instruments was an unrealized loss of $0.6 million and $0.1 million in the three months ended June 30, 2023 and 2022, respectively, and an unrealized gain of $36 thousand and $0.2 million in the six months ended June 30, 2023 and 2022, respectively. These amounts were recorded as part of other noninterest income in the consolidated statements of operations and comprehensive (loss) income.



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Amerant Bancorp Inc. and Subsidiaries
Notes to Interim Consolidated Financial Statements (Unaudited)

Credit Risk-Related Contingent Features
As of June 30, 2023 and December 31, 2022, the aggregate fair value of interest rate swaps in a liability position was $65.2 million and $67.1 million, respectively.

Some agreements may require pledging of securities when the valuation of a interest rate swap falls below a certain amount. There were no securities pledged as collateral for interest rate swaps in a liability position at June 30, 2023. At December 31, 2022, there were $0.5 million in debt securities held for sale pledged as collateral to secure interest rate swaps designated as cash flow hedges, with a fair value of $45 thousand. In addition, as of June 30, 2023 and December 31, 2022, the Company had cash held as collateral of $33.6 million and $41.6 million, respectively, for derivatives margin calls. See Note 2 “Interest Earning Deposits with Banks” for additional information about cash held as collateral. As of June 30, 2023, there were no collateral requirements related to interest rate swaps with third-party brokers not designated as hedging instruments.

12. Leases
The Company leases certain premises and equipment under operating leases. The leases have remaining lease terms ranging from less than one year to 43 years, some of which have renewal options reasonably certain to be exercised and, therefore, have been reflected in the total lease term and used for the calculation of minimum payments required. The Company had variable lease payments of $0.6 million and $0.4 million during the three months ended June 30, 2023 and 2022, respectively, and $1.1 million and $0.9 million during the six months ended June 30, 2023 and 2022, respectively, which include mostly common area maintenance and taxes, included in occupancy and equipment on the consolidated statements of income. In addition, the Company recorded right of use (“ROU”) asset impairment charges of $0.6 million and $1.6 million in the three months ended June 30, 2023 and 2022, respectively, and $1.1 million and $1.6 million in the six months ended June 30, 2023 and 2022, respectively. ROU asset impairment charges in the first half of 2023 were in connection with the closure of a branch in Houston, Texas in 2023, and with the decision to close another branch in Miami, Florida in 2023 (First half of 2022 - in connection with the closure of a branch in Pembroke Pines, Florida in 2022). These impairments were recorded as occupancy and equipment expense on the consolidated statements of operations and comprehensive (loss) income.
Lease costs for the three and six month periods ended June 30, 2023 and 2022 were as follows:
(in thousands)
Three months ended June 30,
Six months ended June 30,
2023202220232022
Lease cost
Operating lease cost$4,112 $4,368 $8,618 $8,730 
Short-term lease cost— 22 — 44 
Variable lease cost555 443 1,087 890 
Sublease income (1)(860)(866)(1,725)(1,637)
Total lease cost, net$3,807 $3,967 $7,980 $8,027 
_______________
(1)Primarily in connection with the subleasing of portions of the Company’s headquarters building and, to a lesser extent, the sublease of the New York office space.


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Amerant Bancorp Inc. and Subsidiaries
Notes to Interim Consolidated Financial Statements (Unaudited)

As of June 30, 2023 and December 31, 2022, the Company had an ROU asset of $116.2 million and $140.0 million and total operating lease liability of $123.3 million and $145.3 million, respectively. As of June 30, 2023 and December 31, 2022, the Company had a short-term lease liability of $3.3 million and $5.2 million, respectively, included as part of other liabilities in the consolidated balance sheet.
The following table provides supplemental information to leases as of and for the three and six month periods ended June 30, 2023 and 2022:
Three Months Ended June 30,Six Months Ended Ended June 30,
20232022
2023
2022
(in thousands, except weighted average data)
Cash paid for amounts included in the measurement of operating lease liabilities3,564 3,672 7,641 7,312 
Weighted average remaining lease term for operating leases17.4 years18.7 years17.4 years18.7 years
Weighted average discount rate for operating leases9.78 %5.92 %9.78 %5.92 %


The following table presents a maturity analysis and reconciliation of the undiscounted cash flows to the total operating lease liabilities as of June 30, 2023 for the remaining 6 months of 2023 and thereafter:

(in thousands)
For the remaining six months of 2023$7,026 
202414,219 
202514,285 
202614,515 
202714,814 
Thereafter198,287 
Total minimum payments required263,146 
Less: implied interest(139,885)
Total lease obligations$123,261 


The Company provides equipment financing through a variety of loan and lease structures, including direct or sale type finance leases and operating leases. As of June 30, 2023 and December 31, 2022, there were $2.5 million and $13.6 million, respectively, in direct or sale type finance leases included as part of loans held for investment, gross in the Company’s consolidated balance sheet, and included as part of commercial loans in our loan portfolio held for investment. As of June 30, 2023, there were $3.6 million in operating leases included as part of premises and equipment, net of accumulated depreciation, in the Company’s consolidated balance sheet.

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Table of Contents
Amerant Bancorp Inc. and Subsidiaries
Notes to Interim Consolidated Financial Statements (Unaudited)
13.Stock-based Incentive Compensation Plan
The Company sponsors the 2018 Equity and Incentive Compensation Plan (the “2018 Equity Plan”). See Note 14 to the Company’s audited consolidated financial statements in the 2022 Form 10-K for more information on the 2018 Equity Plan, the Long-Term Incentive (LTI) Plan and stock-based compensation awards for the year ended December 31, 2022, including restricted stock awards (“RSAs”), restricted stock units (“RSUs”) and performance stock units (“PSUs”).
Restricted Stock Awards
The following table shows the activity of restricted stock awards during the six months ended June 30, 2023:
Number of restricted sharesWeighted-average grant date fair value
Non-vested shares, beginning of year295,076 $25.83 
Granted10,440 27.42 
Vested(96,265)24.08 
Forfeited(27,826)22.69 
Non-vested shares at June 30, 2023181,425 $27.33 

In the first half of 2023, the Company granted an aggregate of 10,440 RSAs to various employees, under the LTI Plan. The fair value of the RSAs granted was based on the market price of the shares of the Company’s Class A common stock at the grant date which averaged $27.42 per RSA. These RSAs will vest in three equal installments on each of the first three anniversaries of the grant date.
The Company recorded compensation expense related to the RSAs of $0.5 million and $0.8 million during the three months ended June 30, 2023 and 2022, respectively, and $1.5 million and $1.6 million during the six months June 30, 2023 and 2022, respectively. The total unamortized deferred compensation expense of $2.1 million for all unvested restricted stock outstanding at June 30, 2023 will be recognized over a weighted average period of 1.4 years.
Restricted Stock Units and Performance Stock Units
The following table shows the activity of RSUs and PSUs during the six months ended June 30, 2023:
Stock-settled RSUsStock-settled PSUs
Number of RSUsWeighted-average grant date fair valueNumber of PSUsWeighted-average grant date fair value
Non-vested, beginning of year123,970 $22.83 137,199 $17.43 
Granted207,976 24.66 53,420 25.09 
Vested(64,181)22.65 (10,442)19.00 
Forfeited(8,220)26.21 (2,867)33.63 
Non-vested, at June 30, 2023259,545 $24.23 177,310 $19.38 


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Table of Contents
Amerant Bancorp Inc. and Subsidiaries
Notes to Interim Consolidated Financial Statements (Unaudited)
On February 16, 2023, the Company granted an aggregate of 113,297 RSUs to various executive officers under the LTI Plan. The fair value of the RSUs granted was based on the market price of the shares of the Company’s Class A common stock at the grant date which was $28.93 per RSU. These RSUs will vest in three equal installments on each of the first three anniversaries of the grant date.

On February 16, 2023, the Company granted a target of 38,049 PSUs to various executive officers under the LTI Plan. These PSUs generally vest at the end of a three-year performance period, but only result in the issuance of shares of Class A common stock if the Company achieves a performance target. The Company used an option pricing model to estimate fair value of the PSUs granted which was $29.11 per PSU.

In the second quarter of 2023, the Company granted an aggregate of 65,759 RSUs to various executive officers and employees. The fair values of the RSUs granted were based on the market price of the shares of the Company’s Class A common stock at the grant date. The weighted average fair value of these RSUs was $19.04 per RSU. These RSUs will vest in three equal installments on each of the first three anniversaries of the grant date.

In the second quarter of 2023, the Company granted a target of 15,371 PSUs to various executive officers under the LTI Plan. These PSUs generally vest at the end of a three-year performance period, but only result in the issuance of shares of Class A common stock if the Company achieves a performance target. The Company used an option pricing model to estimate fair value of the PSUs granted. The weighted average fair value of the PSUs granted was $15.60 per PSU.

On June 7, 2023, the Company granted 28,920 stock-settled RSUs to its independent directors. The fair value of the RSUs granted was based on the market price of the shares of the Company’s Class A common stock at the grant date which was $20.74 per RSU. These RSUs will vest within one year.

The Company recorded compensation expense related to RSUs and PSUs of $1.1 million and $0.5 million during the three months ended June 30, 2023 and 2022, respectively, and $2.0 million and $1.0 million during the six months June 30, 2023 and 2022, respectively. The total unamortized deferred compensation expense of $6.5 million for all unvested stock-settled RSUs and PSUs outstanding at June 30, 2023 will be recognized over a weighted average period of 1.6 years.



14.Income Taxes
The Company uses an estimated annual effective tax rate method in computing its interim tax provision. This effective tax rate is based on forecasted annual consolidated pre-tax income, permanent tax differences and statutory tax rates. Under this method, the tax effect of certain items that do not meet the definition of ordinary income or expense are computed and recognized as discrete items when they occur.
The effective combined federal and state tax rates for the six months ended June 30, 2023 and 2022 were 21.00% and 21.10%, respectively. Effective tax rates differ from the statutory rates mainly due to the impact of forecasted permanent non-taxable interest and other income, forecasted permanent non-deductible expenses, and the effect of corporate state taxes.

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Table of Contents
Amerant Bancorp Inc. and Subsidiaries
Notes to Interim Consolidated Financial Statements (Unaudited)
15.    Accumulated Other Comprehensive (loss) Income (“AOCL/AOCI”):
The components of AOCL/AOCI are summarized as follows using applicable blended average federal and state tax rates for each period:
June 30, 2023December 31, 2022
(in thousands)Before Tax
Amount		Tax
Effect		Net of Tax
Amount		Before Tax
Amount		Tax
Effect		Net of Tax
Amount
Net unrealized holding losses on debt securities available for sale $(119,627)$30,469 $(89,158)$(111,957)$28,605 $(83,352)
Net unrealized holding gains on interest rate swaps designated as cash flow hedges
3,004 (772)2,232 3,659 (942)$2,717 
Total (AOCL) AOCI$(116,623)$29,697 $(86,926)$(108,298)$27,663 $(80,635)
The components of other comprehensive loss for the periods presented are summarized as follows:
Three Months Ended June 30,
20232022
(in thousands)Before Tax
Amount		Tax
Effect		Net of Tax
Amount		Before Tax
Amount		Tax
Effect		Net of Tax
Amount
Net unrealized holding losses on debt securities available for sale:
Change in fair value arising during the period$(18,011)$4,524 $(13,487)$(35,546)$9,104 $(26,442)
Reclassification adjustment for net losses included in net income1,235 (314)921 — — — 
(16,776)4,210 (12,566)(35,546)9,104 (26,442)
Net unrealized holding losses (gains) on interest rate swaps designated as cash flow hedges:
Change in fair value arising during the period370 (94)276 73 (19)54 
Reclassification adjustment for net interest income included in net income (425)108 (317)(198)51 (147)
(55)14 (41)(125)32 (93)
Total other comprehensive loss$(16,831)$4,224 $(12,607)$(35,671)$9,136 $(26,535)

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Table of Contents
Amerant Bancorp Inc. and Subsidiaries
Notes to Interim Consolidated Financial Statements (Unaudited)
Six Months Ended June 30,
20232022
(in thousands)Before Tax
Amount		Tax
Effect		Net of Tax
Amount		Before Tax
Amount		Tax
Effect		Net of Tax
Amount
Net unrealized holding losses on debt securities available for sale:
Change in fair value arising during the period$(9,768)$2,398 $(7,370)$(88,539)$22,460 $(66,079)
Reclassification adjustment for net losses (gains) included in net income2,098 (534)1,564 (49)13 (36)
(7,670)1,864 (5,806)(88,588)22,473 (66,115)
Net unrealized holding losses on interest rate swaps designated as cash flow hedges:
Change in fair value arising during the period114 (26)88 317 (139)178 
Reclassification adjustment for net interest income included in net income (769)196 (573)(322)83 (239)
(655)170 (485)(5)(56)(61)
Total other comprehensive loss$(8,325)$2,034 $(6,291)$(88,593)$22,417 $(66,176)


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Table of Contents
Amerant Bancorp Inc. and Subsidiaries
Notes to Interim Consolidated Financial Statements (Unaudited)
16.    Contingencies
From time to time the Company and its subsidiaries may be exposed to loss contingencies. In the ordinary, course of business, those contingencies may include, known but unasserted claims, and legal/regulatory inquiries or examinations. The Company records these loss contingencies as a liability when the likehood of loss is probable and an amount or range of loss can be reasonably estimated. In the opinion of management, the Company maintains a liability that is in an estimated amount sufficient to cover said loss contingencies, if any, at the reporting dates.
Financial instruments whose contract amount represents off-balance sheet credit risk at June 30, 2023 are generally short-term and are as follows:
(in thousands)Approximate
Contract
Amount
Commitments to extend credit$1,243,158 
Standby letters of credit37,472 
Commercial letters of credit138 
$1,280,768 

The following table summarizes the changes in the allowance for credit losses for off-balance sheet exposures for the three and six month periods ended June 30, 2023 and 2022:
(in thousands)Three Months Ended June 30,Six Months Ended June 30,
2023202220232022
Balances at beginning of the period$2,002 $1,702 $1,702 $1,702 
Provision for credit losses— — 300 — 
Balances at end of period$2,002 $1,702 $2,002 $1,702 







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Table of Contents
Amerant Bancorp Inc. and Subsidiaries
Notes to Interim Consolidated Financial Statements (Unaudited)
17.    Fair Value Measurements
Assets and liabilities measured at fair value on a recurring basis are summarized below:
June 30, 2023
(in thousands)
Quoted
Prices in
Active
Markets
for Identical
Assets
(Level 1)		Third-Party
Models with
Observable
Market
Inputs
(Level 2)		Internal
Models
with
Unobservable
Market
Inputs
(Level 3)		Total
Carrying
Value in the
Consolidated
Balance
Sheet
Assets
Securities
Debt securities available for sale
U.S. government-sponsored enterprise debt securities
$— $414,925 $— $414,925 
Corporate debt securities
— 251,368 — 251,368 
U.S. government agency debt securities
— 336,028 — 336,028 
Collateralized loan obligations— 4,850 — 4,850 
Municipal bonds
— 1,673 — 1,673 
U.S treasury securities— 18,832 — 18,832 
— 1,027,676 — 1,027,676 
Trading securities298 — — 298 
Equity securities with readily determinable fair values not held for trading2,500 — — 2,500 
2,798 1,027,676 — 1,030,474 
Mortgage loans held for sale (at fair value)— 49,942 — 49,942 
Bank owned life insurance
— 231,253 — 231,253 
Other assets
Mortgage servicing rights (MSRs)— — 1,271 1,271 
Derivative instruments
— 75,760 — 75,760 
$2,798 $1,384,631 $1,271 $1,388,700 
Liabilities
Other liabilities
Derivative instruments
$— $74,465 $— $74,465 

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Table of Contents
Amerant Bancorp Inc. and Subsidiaries
Notes to Interim Consolidated Financial Statements (Unaudited)
December 31, 2022
(in thousands)Quoted
Prices in
Active
Markets
for Identical
Assets
(Level 1)		Third-Party
Models with
Observable
Market
Inputs
(Level 2)		Internal
Models
with
Unobservable
Market
Inputs
(Level 3)		Total
Carrying
Value in the
Consolidated
Balance
Sheet
Assets
Securities
Debt securities available for sale
U.S. government-sponsored enterprise debt securities
$— $437,674 $— $437,674 
Corporate debt securities
— 280,700 — 280,700 
U.S. government agency debt securities
— 330,821 — 330,821 
Collateralized loan obligations— 4,774 — 4,774 
U.S treasury securities— 1,996 — 1,996 
Municipal bonds
— 1,656 — 1,656 
— 1,057,621 — 1,057,621 
Equity securities with readily determinable fair values not held for trading11,383 — — 11,383 
11,383 1,057,621 — 1,069,004 
Mortgage loans held for sale (at fair value)— 62,438 — 62,438 
Bank owned life insurance— 228,412 — 228,412 
Other assets
Mortgage servicing rights (MSRs)— — 1,307 1,307 
Derivative instruments— 78,250 — 78,250 
$11,383 $1,426,721 $1,307 $1,439,411 
Liabilities
Other liabilities
Derivative instruments$— $77,160 $— $77,160 

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Table of Contents
Amerant Bancorp Inc. and Subsidiaries
Notes to Interim Consolidated Financial Statements (Unaudited)
Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis
The following tables present the major categories of assets measured at fair value on a non-recurring basis at June 30, 2023 and December 31, 2022:
June 30, 2023
(in thousands)Carrying AmountQuoted
Prices in
Active
Markets
for Identical
Assets
(Level 1)		Significant
Other
Observable
Inputs
(Level 2)		Significant
Unobservable
Inputs
(Level 3)		Total Write Downs
Description
Loans held for investment measured for impairments using the fair value of the collateral (1)$35,671 $— $— $35,671 $— 
Other Real Estate Owned (2)20,181 — — 20,181 — 
$55,852 $— $— $55,852 $— 
_______________
(1)Loans with specific reserves of $14.3 million at June 30, 2023. There were no write downs related to these loans at June 30, 2023.
(2)Consists of commercial real estate property.




December 31, 2022
(in thousands)Carrying AmountQuoted
Prices in
Active
Markets
for Identical
Assets
(Level 1)		Significant
Other
Observable
Inputs
(Level 2)		Significant
Unobservable
Inputs
(Level 3)		Total Write Downs
Description
Loans held for investment measured for impairments using the fair value of the collateral (1)$30,158 $— $— $30,158 $3,851 
_______________
(1)Loans with specific reserves of $5.2 million and total write downs of $3.9 million at December 31, 2022.


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Amerant Bancorp Inc. and Subsidiaries
Notes to Interim Consolidated Financial Statements (Unaudited)
The following table presents the significant unobservable inputs (Level 3) used in the valuation of assets measured at fair value on a nonrecurring basis.

Financial InstrumentUnobservable InputsValuation MethodsDiscount RangeTypical Discount
Collateral dependent loansDiscount to fair valueAppraisal value, as adjusted
0-30%
6-7%
Inventory
0-100%
30-50%
Accounts receivables
0-100%
20-30%
Equipment
0-100%
20-30%
Other Real Estate OwnedDiscount to fair valueAppraisal value, as adjustedN/A
6-7%

There were no other significant assets or liabilities measured at fair value on a nonrecurring basis at June 30, 2023 and December 31, 2022.

Collateral Dependent Loans Measured For Expected Credit Losses

The carrying amount of collateral dependent loans is typically based on the fair value of the underlying collateral. The Company primarily uses third party appraisals to assist in measuring expected credit losses on collateral dependent loans. The Company also uses third party appraisal reviewers for loans with an outstanding balance of $1 million and above. These appraisals generally use the market or income approach valuation technique and use market observable data to formulate an opinion of the fair value of the loan’s collateral. However, the appraiser uses professional judgment in determining the fair value of the collateral or properties and may also adjust these values for changes in market conditions subsequent to the appraisal date. When current appraisals are not available for certain loans, the Company uses judgment on market conditions to adjust the most current appraisal. The sales prices may reflect prices of sales contracts not closed and the amount of time required to sell out the real estate project may be derived from current appraisals of similar projects. As a consequence, the fair value of the collateral is considered a Level 3 valuation.

Other Real Estate Owned (“OREO”) and Repossessed Assets

The Company values OREO at the lower of cost or fair value of the property, less cost to sell. The fair value of the property is generally based upon recent appraisal values of the property, less cost to sell. The Company primarily uses third party appraisals to assist in measuring the valuation of OREO. Period revaluations are classified as level 3 as the assumptions used may not be observable. The fair value of non-real estate repossessed assets is provided by a third party based on their assumptions and quoted market prices for similar assets, when available. At March 31, 2023, the Company had other repossessed assets with a carrying value of $6.4 million. In the three and six month periods ended June 30, 2023, the Company sold these repossessed assets and recognized a loss on sale of $2.6 million which is included in the result of operations for those periods.

The Company had no OREO or repossessed asset balances as of December 31, 2022.


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Amerant Bancorp Inc. and Subsidiaries
Notes to Interim Consolidated Financial Statements (Unaudited)
Fair Value of Financial Instruments
The estimated fair value of financial instruments where fair value differs from carrying value are as follows:
June 30, 2023December 31, 2022
(in thousands)Carrying
Value		Estimated
Fair
Value		Carrying
Value		Estimated
Fair
Value
Financial assets:
Debt securities held to maturity$234,369 $209,546 $242,101 $217,609 
Loans3,482,426 3,369,283 3,314,553 3,181,696 
Financial liabilities:
Time deposits1,450,532 1,437,522 1,119,510 1,099,294 
Advances from the FHLB770,000 760,912 906,486 873,852 
Senior notes59,368 55,652 59,210 58,755 
Subordinated notes29,369 28,481 29,284 28,481 
Junior subordinated debentures64,178 63,299 64,178 64,182 
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Amerant Bancorp Inc. and Subsidiaries
Notes to Interim Consolidated Financial Statements (Unaudited)

18.Earnings Per Share
The following table shows the calculation of basic and diluted earnings per share:
Three Months Ended June 30,Six Months Ended June 30,
(in thousands, except share data and per share amounts)2023
2022 (1)
2023
2022 (1)
Numerator:
Net income before attribution of noncontrolling interest (1)$7,046 $8,352 $26,988 $22,655 
Noncontrolling interest(262)(72)(506)(1,148)
Net income attributable to Amerant Bancorp Inc. (1)$7,308 $8,424 $27,494 $23,803 
Net income available to common stockholders (1)$7,308 $8,424 $27,494 $23,803 
Denominator:
Basic weighted average shares outstanding33,564,770 33,675,930 33,562,258 34,244,797 
Dilutive effect of share-based compensation awards152,932 238,599 224,604 266,329 
Diluted weighted average shares outstanding33,717,702 33,914,529 33,786,862 34,511,126 
Basic earnings per common share (1)$0.22 $0.25 $0.82 $0.70 
Diluted earnings per common share (1)$0.22 $0.25 $0.81 $0.69 
_______________
(1)Amounts reflect the impact of the adoption of CECL effective as of January 1, 2022. See Note 1 “Business, Basis of Presentation and Summary of Significant Accounting Policies” for additional information.

As of June 30, 2023 and 2022, potential dilutive instruments consisted of unvested shares of restricted stock, RSUs and PSUs totaling 542,745 and 521,162, respectively. In the three and six month periods ended June 30, 2023 and 2022, potential dilutive instruments were included in the diluted earnings per share computation because, when the unamortized deferred compensation cost related to these shares was divided by the average market price per share in those periods, fewer shares would have been purchased than restricted shares assumed issued. Therefore, in those periods, such awards resulted in higher diluted weighted average shares outstanding than basic weighted average shares outstanding, and had a dilutive effect on per share earnings.
58

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis is designed to provide a better understanding of various factors related to Amerant Bancorp Inc.’s (the “Company,” “Amerant,” “our” or “we”) results of operations and financial condition and its wholly and partially owned subsidiaries, including its principal subsidiary, Amerant Bank, N.A. (the “Bank”). The Bank has three main operating subsidiaries, Amerant Investments, Inc., a securities broker-dealer (“Amerant Investments”), Amerant Mortgage, LLC (“Amerant Mortgage”), a majority-owned mortgage lending company domiciled in Florida, and Elant Bank & Trust, a Grand-Cayman based trust company (the “Cayman Bank”).
This discussion is intended to supplement and highlight information contained in the accompanying unaudited interim consolidated financial statements and related footnotes included in this Quarterly Report on Form 10-Q (the “Form 10-Q”), as well as the information contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 (the “2022 Form 10-K”).

Cautionary Note Regarding Forward-Looking Statements
Various of the statements made in this Form 10-Q, including information incorporated herein by reference to other documents, are “forward-looking statements” within the meaning of, and subject to, the protections of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
Forward-looking statements include statements with respect to our beliefs, plans, objectives, goals, expectations, anticipations, assumptions, estimates, intentions and future performance and condition, and involve known and unknown risks, uncertainties and other factors, which may be beyond our control, and which may cause the actual results, performance, achievements, or financial condition of the Company to be materially different from future results, performance, achievements, or financial condition expressed or implied by such forward-looking statements. You should not expect us to update any forward-looking statements, except as required by law. These forward-looking statements should be read together with the “Risk Factors” included in the 2022 Form 10-K, in the Form 10-Q for the quarter ended March 31, 2023, and in our other reports filed with the Securities and Exchange Commission (the “SEC”).
All statements other than statements of historical fact are statements that could be forward-looking statements. You can identify these forward-looking statements through our use of words such as “may,” “will,” “anticipate,” “assume,” “seek,” “should,” “indicate,” “would,” “believe,” “contemplate,” “consider”, “expect,” “estimate,” “continue,” “plan,” “point to,” “project,” “could,” “intend,” “target” and other similar words and expressions of the future. These forward-looking statements may not be realized due to a variety of factors, including, without limitation:
•Liquidity risks could affect our operations and jeopardize our financial condition and certain funding sources could increase our interest rate expense;
•We may not be able to develop and maintain a strong core deposit base or other low-cost funding sources;
•We may elect or be compelled to seek additional capital in the future, but that capital may not be available when it is needed or on acceptable terms and, as a result, our ability to expand our operations could be materially impaired;
•Our ability to receive dividends from our subsidiaries could affect our liquidity and our ability to pay dividends;
•Our profitability is subject to interest rate risk;
•Our allowance for credit losses may prove inadequate and our business, financial condition and profitability may suffer;
•Our concentration of CRE loans could result in increased loan losses, and adversely affect our business, earnings, and financial condition;
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•Many of our loans are to commercial borrowers, which have unique risks compared to other types of loans;
•Our valuation of securities and the determination of credit impairment in our investment securities portfolio are subjective and, if changed, could materially adversely affect our results of operations or financial condition;
•Nonperforming and similar assets take significant time to resolve and may adversely affect our results of operations and financial condition;
•We are subject to environmental liability risk associated with lending activities;
•Deterioration in the real estate markets, including the secondary market for residential mortgage loans, can adversely affect us;
•We may not effectively manage risks associated with the replacement of LIBOR as a reference rate;
•Many of our major systems depend on and are operated by third-party vendors, and any systems failures or interruptions could adversely affect our operations and the services we provide to our customers;
•Our information systems are exposed to cybersecurity threats and may experience interruptions and security breaches that could adversely affect our business and reputation;
•Our strategic plan and growth strategy may not be achieved as quickly or as fully as we seek;
•Defaults by or deteriorating asset quality of other financial institutions could adversely affect us;
•New lines of business, new products and services, or strategic project initiatives may subject us to additional risks;
•We may not have the ability or resources to keep pace with rapid technological changes in the financial services industry or implement new technology effectively;
•Conditions in Venezuela could adversely affect our operations;
•Our ability to achieve our environmental, social and governance goals are subject to risks, many of which are outside of our control, and our reputation could be harmed if we fail to meet such goals;
•We may be unable to attract and retain key people to support our business;
•Severe weather, natural disasters, global pandemics, acts of war or terrorism, theft, civil unrest, government expropriation or other external events could have significant effects on our business;
•Any failure to protect the confidentiality of customer information could adversely affect our reputation and subject us to financial sanctions and other costs that could have a material adverse effect on our business, financial condition and results of operations;
•We could be required to write down our goodwill;
•We have a net deferred tax asset that may or may not be fully realized;
•We may incur losses due to minority investments in fintech and specialty finance companies;
•We are subject to risks associated with sub-leasing portions of our corporate headquarters building;
•Our success depends on our ability to compete effectively in highly competitive markets;
•Potential gaps in our risk management policies and internal audit procedures may leave us exposed to unidentified or unanticipated risk, which could negatively affect our business;
•Any failure to maintain effective internal control over financial reporting could impair the reliability of our financial statements, which in turn could harm our business, impair investor confidence in the accuracy and completeness of our financial reports and our access to the capital markets and cause the price of our common stock to decline and subject us to regulatory penalties;
•Material and negative developments adversely impacting the financial services industry at large and causing volatility in financial markets and the economy may have materially adverse effects on our liquidity, business, financial condition and results of operations;
•Our business activities, results of operations and financial condition are subject to adverse effects from the outbreak and spread of contagious diseases such as COVID-19, which adverse effects may continue;
•Our business may be adversely affected by economic conditions in general and by conditions in the financial markets;
•We are subject to extensive regulation that could limit or restrict our activities and adversely affect our earnings;
•Litigation and regulatory investigations are increasingly common in our businesses and may result in significant financial losses and/or harm to our reputation;
•We are subject to capital adequacy and liquidity standards, and if we fail to meet these standards our financial condition and operations would be adversely affected;
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•Increases in FDIC deposit insurance premiums and assessments could adversely affect our financial condition;
•Federal banking agencies periodically conduct examinations of our business, including our compliance with laws and regulations, and our failure to comply with any regulatory actions, if any, could adversely impact us;
•The Federal Reserve may require us to commit capital resources to support the Bank;
•We may face higher risks of noncompliance with the Bank Secrecy Act and other anti-money laundering statutes and regulations than other financial institutions;
•Failures to comply with the fair lending laws, CFPB regulations or the Community Reinvestment Act, or CRA, could adversely affect us;
•Certain of our existing shareholders could exert significant control over the Company;
•The rights of our common shareholders are subordinate to the holders of any debt securities that we have issued or may issue from time to time;
•The stock price of financial institutions, like Amerant, may fluctuate significantly;
•We have the ability to issue additional equity securities, which would lead to dilution of our issued and outstanding Class A common stock;
•Certain provisions of our amended and restated articles of incorporation and amended and restated bylaws, Florida law, and U.S. banking laws could have anti-takeover effects;
•We may not be able to generate sufficient cash to service all of our debt, including the Senior Notes, the Subordinated Notes and the Debentures;
•We are a holding company with limited operations and depend on our subsidiaries for the funds required to make payments of principal and interest on the Senior Notes, Subordinated Notes and the Debentures;
•We may incur a substantial level of debt that could materially adversely affect our ability to generate sufficient cash to fulfill our obligations under the Senior Notes, the Subordinated Notes and the Debentures; and
•The other factors and information included in the 2022 Form 10-K and other filings that we make with the SEC under the Exchange Act and Securities Act. See “Risk Factors” in the 2022 Form 10-K, and the Form 10-Q for the quarter ended March 31, 2023.

The foregoing factors should not be construed as exhaustive and should be read together with the other cautionary statements included in the 2022 Form 10-K. Because of these risks and other uncertainties, our actual future financial condition, results, performance or achievements, or industry results, may be materially different from the results indicated by the forward-looking statements in this Form 10-Q. In addition, our past results of operations are not necessarily indicative of our future results of operations. You should not rely on any forward-looking statements as predictions of future events.
Any forward-looking statement speaks only as of the date on which it is made, and we do not undertake any obligation to update, revise or correct any forward-looking statement, whether as a result of new information, future developments or otherwise, except as required by law. All written or oral forward-looking statements that are made by us or are attributable to us are expressly qualified in their entirety by this cautionary notice, together with those risks and uncertainties described in “Risk Factors” in the 2022 Form 10-K, in the Form 10-Q for the quarter ended March 31, 2023, and in our other filings with the SEC, which are available at the SEC’s website www.sec.gov.

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OVERVIEW

Our Company
We are a bank holding company headquartered in Coral Gables, Florida. We provide individuals and businesses a comprehensive array of deposit, credit, investment, wealth management, retail banking, mortgage services, and fiduciary services. We serve customers in our United States markets and select international customers. These services are offered through Amerant Bank, N.A, or the Bank, which is also headquartered in Coral Gables, Florida, and its subsidiaries. Fiduciary, investment, wealth management and mortgage services are provided by the Bank, the Bank’s securities broker-dealer, Amerant Investments Inc., or Amerant Investments, the Bank’s Grand-Cayman based trust company, Elant Bank & Trust Ltd., or the Cayman Bank, and Amerant Mortgage, LLC. or Amerant Mortgage. The Bank’s primary markets are South Florida, where we are headquartered and operate seventeen banking centers in Miami-Dade, Broward and Palm Beach counties, and Houston, Texas, where we operate six banking centers that serve the nearby areas of Harris, Montgomery, Fort Bend and Waller counties. In addition, we have a loan production office (“LPO”) in Tampa, Florida.
The Bank intends to open several additional banking centers in 2023, including new locations in Tampa, FL, downtown Miami, FL, Fort Lauderdale, FL, and River Oaks in Houston, TX. The Bank has obtained OCC approval to proceed with each location.
Business Developments
For more information on the progress of our strategic initiatives in 2022, see Item 1. Business section included in the 2022 Form 10-K.
Progress on our Strategic Initiatives

The Company is dedicated to finding new ways to increase efficiencies and profitable growth across the Company while simultaneously providing an enhanced banking experience for customers. Below is a summary of actions taken by the Company in the first six months of 2023:

Growing our core deposits. We continue to focus on organic deposit growth and work on improving deposit mix to generate more core deposits. The loan to deposit ratio at June 30, 2023 was 95.22% compared to 97.64% at December 31, 2022. The ratio of non-interest bearing deposits to total deposits ratio was 17.07% at June 30, 2023 compared to 19.42% at December 31, 2022, which reflects growing consumer and business awareness of the rising interest rates and seeking better returns.
Provide a superior customer experience. During the first quarter of 2023, we launched a new Amerant website which provides improved user experience with enhanced navigation and ease of access to information across all device types. In the second quarter of 2023, we decided to delay the FIS conversion, and we now estimate it will be launched in early November. We believe this action will provide a smoother digital experience for our customers.
Improving Amerant's brand awareness. Our campaign "Imagine a Bank", which we launched in the fourth quarter of 2021, continued in 2023 with greater emphasis on our partnerships with sports teams across South Florida, which includes the Miami Heat, the Florida Panthers, and the University of Miami Hurricanes. Most recently, during the second quarter of 2023, we announced the multi-year partnership with Rice University, making us the “Official Bank of Rice University Athletics”. We also continued to focus on raising brand awareness through impactful campaigns, such as out-of-home advertising and various campaigns via social media and public relations.

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Lines of business and geographies. Our banking center rationalization continues. As we announced in the first quarter, we have signed a five-year lease for our first banking center in Tampa with an estimated opening in the fourth quarter of 2023 along with the new branch in downtown Miami and downtown Fort Lauderdale. Most recently during the second quarter, we have received approval from the OCC for a private banking location in the River Oaks area in Houston, TX.
During the first quarter of 2023, we optimized our international banking structure with the intent to drive favorable core deposit growth. The previously separate groups of international retail, private and commercial banking are now reporting to a single leader dedicated to solely focus on growing international deposits. We also continued to add key personnel in Amerant Mortgage and business development personnel at the Bank. In addition, we recruited two executives for the previously open positions for a new Head of Commercial Banking and a new Houston market president. Amerant Mortgage grew its national footprint with the addition beginning early in the quarter of a Midwest hub, adding business development personnel in the quarter to generate conforming mortgages for sale into the secondary market. This growth resulted in the recognition of $1.0 million to preliminary goodwill. The final purchase price allocation, which will adjust goodwill, is expected to be finalized by December 31, 2023.
We also opened our new operations center in Miramar, Florida during the first quarter of 2023. This reduced the size of our operations center by approximately 42,000 square feet from 100,000 square feet to approximately 58,000 square feet at our new location, and our annual rental expense will decrease by nearly $1 million. In the first quarter of 2023, the Company ended its pre-existing lease agreement on its former operations center.
During the second quarter of 2023, we merged the business banking group with the retail banking group as part of our ongoing efforts to streamline our organizational structure. We continued to selectively add key business development personnel in all three markets we serve including the hire of the private banking leader in Houston who started in the beginning of the third quarter of 2023. We also rationalized the organization in several support areas which will result in future period efficiency and personnel expense savings and improve ratio of customer facing versus support positions, including two executive positions that are not being replaced. As previously announced, we also opened our full-service branch in Key Biscayne in June 2023. Lastly, we closed the FM 1960 banking center and merged it with the Champions banking center in Houston. We also announced the closure of the Edgewater location in Miami, FL to coincide with the opening of the downtown Miami branch.
Lastly, we announced the appointment of our new Chief Financial Officer, which completed all expected executive-level changes in management, as our former CFO has now assumed the role of Chief Operating Officer.
Improve operational efficiency. The Company continues to work on optimizing its operating structure to support its business activities. In the first quarter of 2023, staff reduction costs include severance expenses, primarily related to severance expenses in connection with employment terminations and changes in certain positions. With respect to our balance sheet composition, during the six months ended June 30, 2023 the Company repaid $1.2 billion in FHLB advances, which includes early repayment of $920 million. In addition, in the six months ended June 30, 2023, the Company borrowed $1.1 billion in FHLB advances. These activities are part of the Company’s asset/liability management strategies intended to maximize value on its assets and liabilities.
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Integrate Sustainability into our DNA. In the second quarter of 2023, we issued our annual report for the year ended December 31, 2022, which is now available on Amerant’s investor relations website. We also evolved our Environmental, Social and Governance (“ESG”) program to Sustainability Program to reflect the scope of our ultimate goal, and in accordance with industry trends. During the second quarter of 2023, we completed a series of activities within the scope of the program. Those activities included: i) implementing data management tools in our loan and core systems to code and monitor for Environmentally Conscious Financing (“ECF”); ii) started our 2023 Summer Internship Program in partnership with local colleges and universities in South Florida, which serves as a diverse source of talent; iii) launched Amerant’s Down-payment Assistance Program (“ADAP”) for first-time home buyers through our subsidiary Amerant Mortgage; and iv) established a partnership with the Everglades Foundation in South Florida, among other activities.
Other Relevant Matters. In the three months ended June 30, 2023 and March 31, 2023, we repurchased 95,262 and 22,403 shares of Class A common stock under the $25 million share repurchase program, respectively. Lastly, the Company appointed a new independent director, Ashaki Rucker, who officially joined the Board of Directors effective April 17, 2023. She is now a member of the Compensation and Human Capital Committee, and Risk Committee.
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Primary Factors Used to Evaluate Our Business

Results of Operations. In addition to net income or loss, the primary factors we use to evaluate and manage our results of operations include net interest income, noninterest income and expenses, and indicators of financial performance including return on assets (“ROA”) and return on equity (“ROE”). We also use certain non-GAAP financial measures in the internal evaluation and management of our businesses.

Net Interest Income. Net interest income represents interest income less interest expense. We generate interest income from interest, dividends and fees received on interest-earning assets, including loans and investment securities we own. We incur interest expense from interest paid on interest-bearing liabilities, including interest-bearing deposits, and borrowings such as FHLB advances and other borrowings such as repurchase agreements, notes, debentures and other funding sources we may have from time to time. Net interest income typically is the most significant contributor to our revenues and net income. To evaluate net interest income, we measure and monitor: (i) yields on our loans and other interest-earning assets; (ii) the costs of our deposits and other funding sources; (iii) our net interest spread; (iv) our net interest margin, or NIM; and (v) our provisions for credit losses. Net interest spread is the difference between rates earned on interest-earning assets and rates paid on interest-bearing liabilities. NIM is calculated by dividing net interest income for the period by average interest-earning assets during that same period. Because noninterest-bearing sources of funds, such as noninterest-bearing deposits and stockholders’ equity, also fund interest-earning assets, NIM includes the benefit of these noninterest-bearing sources of funds. Non-refundable loan origination fees, net of direct costs of originating loans, as well as premiums or discounts paid on loan purchases, are deferred and recognized over the life of the related loan as an adjustment to interest income in accordance with generally accepted accounting principles in the United States of America (“GAAP”).

Changes in market interest rates and the interest we earn on interest-earning assets, or which we pay on interest-bearing liabilities, as well as the volumes and the types of interest-earning assets, interest-bearing and noninterest-bearing liabilities and stockholders’ equity, usually have the largest impact on periodic changes in our net interest spread, NIM and net interest income. We measure net interest income before and after the provision for loan losses.

Noninterest Income. Noninterest income consists of, among other revenue streams: (i) service fees on deposit accounts; (ii) income from brokerage, advisory and fiduciary activities; (iii) benefits from and changes in cash surrender value of bank-owned life insurance, or BOLI, policies; (iv) card and trade finance servicing fees; (v) securities gains or losses; (vi) net gains and losses on early extinguishment of FHLB advances; (vii) income from derivative transaction with customers; (viii) derivative gains or losses; (ix) gains or losses on the sale of properties; and (x) other noninterest income which includes mortgage banking revenue.

Our income from service fees on deposit accounts is affected primarily by the volume, growth and mix of deposits we hold and volume of transactions initiated by customers (i.e. wire transfers). These are affected by prevailing market pricing of deposit services, interest rates, our marketing efforts and other factors.

Our income from brokerage, advisory and fiduciary activities consists of brokerage commissions related to our customers’ trading volume, fiduciary and investment advisory fees generally based on a percentage of the average value of assets under management and custody (“AUM”), and account administrative services and ancillary fees during the contractual period.

Income from changes in the cash surrender value of our BOLI policies represents the amounts that may be realized under the contracts with the insurance carriers, which are nontaxable.

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Interchange fees, other fees and revenue sharing are recognized when earned. Trade finance servicing fees, which primarily include commissions on letters of credit, are generally recognized over the service period on a straight line basis. Card servicing fees include credit and debit card interchange fees and other fees. We have also entered into referral arrangements with recognized U.S.-based card issuers, which permit us to serve our customers and earn referral fees and share interchange revenue without exposure to credit risk.
Our gains and losses on sales of securities are derived from sales from our securities portfolio and are primarily dependent on changes in U.S. Treasury interest rates and asset liability management activities. Generally, as U.S. Treasury rates increase, our securities portfolio decreases in market value, and as U.S. Treasury rates decrease, our securities portfolio increases in value. We also recognize unrealized gains or losses on changes in the valuation of marketable equity securities not held for trading.

Our fee income generated on customer interest rate swaps and other loan level derivatives are primarily dependent on volume of transactions completed with customers and are included in noninterest income.

Derivatives unrealized net gains and derivatives unrealized net losses are primarily derived from changes in market value of uncovered interest rate caps with clients.

Other noninterest income includes mortgage banking income related to Amerant Mortgage, which consists of gain on sale of loans, gain on loans market valuation, other fees and smaller sources of income. Mortgage banking income was $1.6 million and $2.4 million in the three months ended June 30, 2023 and 2022, respectively, and $3.4 million and $3.1 million in the six months ended June 30, 2023 and 2022, respectively.

Noninterest Expense. Noninterest expenses generally increase as our business grows and whenever necessary to implement or enhance policies and procedures for regulatory compliance, and other purposes.

Noninterest expense consists of: (i) salaries and employee benefits; (ii) occupancy and equipment expenses; (iii) professional and other services fees; (iv) loan-level derivative expenses; (v) FDIC deposit and business insurance assessments and premiums; (vi) telecommunication and data processing expenses; (vii) depreciation and amortization; (viii) advertising and marketing expenses; (ix) other real estate and repossessed assets, net (x) contract termination costs , and (xi) other operating expenses.

Salaries and employee benefits include compensation (including severance expenses), employee benefits and employer tax expenses for our personnel. Salaries and employee benefits are partially offset by costs directly related to the origination of loans, which are deferred and amortized over the life of the related loans as adjustments to interest income in accordance with GAAP.

Occupancy expense consists of lease expense on our leased properties, including right-of-use or ROU asset impairment charges, and other occupancy-related expenses. Equipment expense includes furniture, fixtures and equipment related expenses. Rental income, primarily associated with the subleasing of portions of the Company’s headquarters building and the subleasing of the New York office space, is included as a reduction to rent expense under lease agreements under occupancy and equipment cost.

Professional and other services fees include legal, accounting, consulting fees, internal audit fees, card processing fees, director’s fees, regulatory agency fees, such as OCC examination fees, and other fees related to our business operations.

Loan-level derivative expenses are incurred in back-to-back derivative transactions with commercial loan clients and with brokers. The Company pays a fee upon inception of the back-to-back derivative transactions, corresponding to the spread between a wholesale rate and a retail rate.

Contract termination costs represent estimated expenses to terminate contracts before the end of their terms, and are recognized when the Company terminates a contract in accordance with its terms, generally considered the time when the Company gives written notice to the counterparty within the notification period contractually established.
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Contract termination costs also include expenses associated with the abandonment of existing capitalized projects which are no longer expected to be completed as a result of a contract termination. Changes to initial estimated expenses to terminate contracts resulting from revisions to timing or the amount of estimated cash flows are recognized in the period of the changes.

Advertising expenses include the costs of promoting the Amerant brand to create positive awareness, as well as the costs associated with promoting the Company’s products and services to promote consideration to buy the Company’s products and services. These costs include expenses to produce, deliver and communicate advertisements using available media and technologies, primarily streaming and other digital advertising platforms. Advertising expenses are expensed as incurred, except for media production costs which are expensed upon the first airing of the advertisement.

FDIC deposit and business insurance assessments and premiums include deposit insurance, net of any credits applied against these premiums, corporate liability and other business insurance premiums.

Telecommunication and data processing expenses include expenses paid to our third-party data processing system providers and other telecommunication and data service providers, as well as expenses related to the disposition of fixed assets due to the write off of in-development software in 2023.

Depreciation and amortization expense includes the value associated with the depletion of the value on our owned properties and equipment, including leasehold improvements made to our leased properties.

OREO and repossessed assets expense includes expenses and revenue (rental income) from the operation of foreclosed property/assets as well as fair value adjustments and gains/losses from the sale of OREO and repossessed assets. In the three months ended June 30, 2023, other real estate owned (“OREO”) and repossessed assets expense is presented separately in the Company’s consolidated statement of operations and comprehensive (loss) income. In 2022, while OREO valuation expense was presented separately, all other OREO-related expenses were presented as part of other operating expenses in the Company’s consolidated statement of operations and comprehensive (loss) income. We had no other repossessed assets in 2022.

Other operating expenses include community engagement and other operational expenses. In addition, in each of the three and six month periods ended June 30, 2023, other operating expenses include an impairment charge of $2.0 million on an investment carried at cost and included as part of other assets. Other operating expenses are partially offset by other operating expenses directly related to the origination of loans, which are deferred and amortized over the life of the related loans as adjustments to interest income in accordance with GAAP.

Noninterest expenses in the three and six month periods ended June 30, 2023 and 2022 include salaries and employee benefits, mortgage lending costs and professional and other service fees in connection with Amerant Mortgage’s ongoing business.

Non-routine noninterest expense items include restructuring expenses and other non-routine noninterest expenses. Restructuring expenses are those incurred for actions designed to implement the Company’s business strategy. These actions include, but are not limited to reductions in workforce, streamlining operational processes, rolling out the Amerant brand, implementation of new technology system applications, decommissioning of legacy technologies, enhanced sales tools and training, expanded product offerings and improved customer analytics to identify opportunities. Other non-routine noninterest expenses include the effect of non-core banking activities such as the valuation of OREO and loans held for sale, the sale of repossessed assets, and impairment of investments.

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The table below shows a detail of non-routine noninterest expenses for the periods presented.
Three Ended Months Ended June 30,Six Months Ended June 30,

(in thousands)		2023202220232022
Non-routine noninterest expense items
Restructuring costs:
Staff reduction costs (1)
$2,184 $674 $2,397 $1,439 
Contract termination costs (2)
1,550 2,802 1,550 6,814 
Consulting and other professional fees (3)
2,060 80 4,750 1,326 
Disposition of fixed assets (4)
1,419 — 1,419 — 
Branch closure expenses and related charges (5)
1,558 1,565 2,027 1,612 
Digital transformation expenses— — — 45 
Total restructuring costs$8,771 $5,121 $12,143 $11,236 
Other non-routine noninterest expense items:
Loss on sale of repossessed assets and other real estate owned valuation expense(6)
2,649 3,174 2,649 3,174 
Impairment charge on investment carried at cost1,963 — 1,963 — 
Loans held for sale valuation (reversal) expense (7)
— (300)— 159 
Total non-routine noninterest expense items$13,383 $7,995 $16,755 $14,569 
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(1)    Staff reduction costs in the three and six month periods ended June 30, 2023 and 2022 consist of severance expenses related to organizational rationalization.
(2)    Contract termination and related costs associated with third party vendors resulting from the engagement of our new technology provider.
(3) In the three and six month periods ended June 30, 2023, includes expenses in connection with the engagement of FIS of $2.0 million and $4.6 million, respectively. In the six months ended June 30, 2022, includes: (i) $0.8 million in connection with the engagement of FIS; (ii) an aggregate of $0.3 million in connection with information technology projects and certain search and recruitment expenses, and (iii) $0.1 million of costs associated with the subleasing of the New York office space.
(4) In the three and six month periods ended June 30, 2023, includes expenses in connection with the disposition of fixed assets due to the write off of in-development software.
(5) In each of the three and six month periods ended June 30, 2023, includes expenses associated with the decision to close a branch in Miami, Florida in 2023, including $0.9 million of accelerated amortization of leasehold improvements and $0.6 million of right-of-use, or ROU asset impairment. In addition, the six months ended June 30, 2023, includes $0.5 million of ROU asset impairment associated with the closure of a branch in Houston, Texas in 2023. In each of the three and six month periods ended June 30, 2022, includes ROU asset impairment changes of $1.6 million in connection with the closure of a branch in Pembroke Pines, Florida in 2022.
(6)    In the three and six month periods ended June 30, 2023, amounts represent the loss on sale of repossessed assets in connection with equipment-financing activities. In the three and six month periods ended June 30, 2022, amounts represent the fair value adjustment related to one OREO property in New York.
(7)    Fair value adjustment related to the New York loan portfolio held for sale carried at the lower of cost or fair value in 2022.


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Primary Factors Used to Evaluate Our Financial Condition
The primary factors we use to evaluate and manage our financial condition include asset quality, capital and liquidity.
Asset Quality. We manage the diversification and quality of our assets based upon factors that include the level, distribution and risks in each category of assets. Problem assets may be categorized as classified, delinquent, nonaccrual and nonperforming assets. We also manage the adequacy of our allowance for credit losses (“ACL”), or the allowance, the diversification and quality of loan and investment portfolios, the extent of counterparty risks, credit risk concentrations and other factors.
On January 1, 2022, the Company adopted ASC Topic 326 - Financial Instruments - Credit Losses, which replaced the incurred loss methodology with an expected loss methodology that is referred to as the current expected credit loss (“CECL”) methodology. See Note 1 to the audited consolidated financial statements in the 2022 Form 10-K and the unaudited interim consolidated financial statements in this Form 10-Q for more details on the adoption of CECL by the Company. We review and update our allowance for expected credit losses periodically to calibrate loss estimation models based on our loan volumes, and credit and economic conditions in our markets. The models may differ among our loan segments to reflect their different asset types, and includes qualitative factors, which are updated periodically based on the type of loan and other factors.

Capital. Financial institution regulators have established minimum capital ratios for banks and bank holding companies. We manage capital based upon factors that include: (i) the level and quality of capital and our overall financial condition; (ii) the trend and volume of problem assets; (iii) the adequacy of reserves; (iv) the level and quality of earnings; (v) the risk exposures in our balance sheet under various scenarios, including stressed conditions; (vi) the Tier 1 capital ratio, the total capital ratio, the Tier 1 leverage ratio, and the CET1 capital ratio; (vii) the tangible common equity ratio; and (viii) other factors, including market conditions.
Liquidity. Our deposit base consists primarily of personal and commercial accounts maintained by individuals and businesses in our primary markets and select international core depositors. The Company is focused on relationship-driven core deposits. The Company may also use third party providers of domestic sources of deposits as part of its balance sheet management strategies. We define core deposits as total deposits excluding all time deposits. This definition of core deposits differs from the Federal Financial Institutions Examination Council’s (the “FFIEC”) Uniform Bank Performance Report (the “UBPR”) definition of “core deposits,” which exclude brokered time deposits and retail time deposits of more than $250,000. See “Core Deposits” discussion for more details.
We manage liquidity based upon factors that include the amount of core deposit relationships as a percentage of total deposits, the level of diversification of our funding sources, the allocation and amount of our deposits among deposit types, the short-term funding sources used to fund assets, the amount of non-deposit funding used to fund assets, the availability of unused funding sources, off-balance sheet obligations, the amount of cash and liquid securities we hold, the availability of assets readily convertible into cash without undue loss, the characteristics and maturities of our assets when compared to the characteristics of our liabilities and other factors.
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Summary Results
The summary results for the three and six months ended June 30, 2023 include the following:
•Total assets were $9.5 billion at June 30, 2023, up $391.7 million, or 4.3%, compared to $9.1 billion at December 31, 2022.

•Total gross loans, which includes loans held for sale at fair value, were $7.22 billion at June 30, 2023, up $297.3 million, or 4.3%, compared to $6.92 billion at December 31, 2022.

•Cash and cash equivalents were $445.1 million, up $154.5 million or 53.2%, compared to $290.6 million at December 31, 2022.

•Total deposits were $7.58 billion at June 30, 2023, up $535.4 million, or 7.6%, compared to $7.04 billion at December 31, 2022.

•Total advances from the FHLB were $770.0 million, down $136.5 million or 15.1%, compared to $906.5 million as of December 31, 2022, this was primarily a result of early repayments of $355 million and $920 million in the second quarter and first half of 2023, respectively, in connection with asset/liability management strategies. An additional $2.1 billion remained available under credit facilities from FHLB as of June 30, 2023.

•Average yield on loans increased to 6.79% in the three months ended June 30, 2023 compared to 4.38% in the three months ended June 30, 2022. Average yield on loans increased to 6.58% in the six months ended June 30, 2023 compared to 4.27% in the six months ended June 30, 2022.

•Total non-performing assets increased to $67.4 million at June 30, 2023, up $29.8 million, or 79.2%, compared to $37.6 million at December 31, 2022.

•The ACL as of June 30, 2023 was $106.0 million, up $22.5 million, or 26.9%, compared to $83.5 million as of December 31, 2022.

•Core deposits were $5.50 billion at June 30, 2023, up $182.1 million, or 3.4%, compared to $5.32 billion at December 31, 2022.

•Average cost of total deposits increased to 2.40% in the three months ended June 30, 2023 compared to 0.48% in the three months ended June 30, 2022. Average cost of total deposits increased to 2.16% in the six months ended June 30, 2023 compared to 0.43% in the six months ended June 30, 2022.

•Loan to deposit ratio improved to 95.22% at June 30, 2023 compared to 98.23% at December 31, 2022.

•AUM totaled $2.15 billion, as of June 30, 2023, up $151.8 million, or 7.6%, from $2.00 billion as of December 31, 2022.

•Pre-provision net revenue (“PPNR”)(2) was $38.3 million in the three months ended June 30, 2023, an increase of $28.6 million or 294.1%, compared to $9.7 million in the three months ended June 30, 2022. PPNR(2) was $75.4 million in the six months ended June 30, 2023, an increase of $55.8 million or 284.2% from $19.6 million in the six months ended June 30, 2022.

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•Core Pre-Provision Net Revenue (“Core PPNR”)(2) was $39.2 million in the three months ended June 30, 2023, an increase of $19.7 million, or 101.6%, from $19.4 million in the three months ended June 30, 2022. Core PPNR (2) was $76.3 million in the six months ended June 30, 2023, an increase of $39.0 million or, 104.5% from $37.3 million in the six months ended June 30, 2022.

•Net Interest Margin (“NIM”) increased to 3.83% in the three months ended June 30, 2023 compared to 3.28% in the three months ended June 30, 2022. NIM increased to 3.86% in the six months ended June 30, 2023 compared to 3.23% in the six months ended June 30, 2022.

•Net Interest Income (“NII”) was $83.9 million in the three months ended June 30, 2023, up $24.9 million, or 42.3%, from $58.9 million in the three months ended June 30, 2022. NII was $166.2 million in the six months ended June 30, 2023, up $51.6 million or 45.0%, compared to $114.6 million in the six months ended June 30, 2022.

•Provision for credit losses was $29.1 million in the three months ended June 30, 2023, compared to a release from ACL of $1.0 million in the three months ended June 30, 2022 (1). The provision for credit losses in the three months ended June 30, 2023 was comprised of $15.7 million in connection with charge-offs and credit quality, $1.4 million related to loan growth and $12.0 million to reflect updated economic factors. The provision for credit losses was $40.8 million in the six months ended June 30, 2023, compared to a release from ACL of $10.2 million in the six months ended June 30, 2022 (1).

•Non-interest income was $26.6 million in the three months ended June 30, 2023, up $13.7 million or 105.9%, from $12.9 million in the three months ended June 30, 2022. Non-interest income was $46.0 million in the six months ended June 30, 2023, up $19.0 million or 70.5%, from $27.0 million in the six months ended June 30, 2022.

•Non-interest expense was $72.5 million in the three months ended June 30, 2023, down $10.3 million, or 16.5%, from $62.2 million in the three months ended June 30, 2022. Non-interest expense was $137.2 million in the six months ended June 30, 2023, up $14.2 million or 11.5%, from $123.1 million in the six months ended June 30, 2022.

•The efficiency ratio was 65.6% in the three months ended June 30, 2023 compared to 86.6% in the three months ended June 30, 2022. The efficiency ratio was 64.7% in the six months ended June 30, 2023, compared to 86.9% in the six months ended June 30, 2022.

•Return on Assets (“ROA”) was 0.31% in the three months ended June 30, 2023, compared to 0.43% in the three months ended June 30, 2022 (1). ROA was 0.59% in the six months ended June 30, 2023 compared to 0.62% in the six months ended June 30, 2022(1).

•Return on average equity (“ROE”) was 3.92% in the three months ended June 30, 2023 compared to 4.54% in the three months ended June 30, 2022 (1). ROE was 7.48% in the six months ended June 30, 2023 compared to 6.22% in the six months ended June 30, 2022(1).


    1 The Company adopted the new guidance on accounting for current expected credit losses on financial instruments (“CECL”) in the fourth quarter of 2022, effective as of January 1, 2022. See the 2022 Form 10-K for more details of the CECL adoption and related effects to quarterly results for each quarter in the year ended December 31, 2022.
    2 Non-GAAP measure, see “Non-GAAP Financial Measures” for more information and for a reconciliation to GAAP.
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Results of Operations - Comparison of Results of Operations for the Three and Six Month Periods Ended June 30, 2023 and 2022

Net income
The table below sets forth certain results of operations data for the three and six month periods ended June 30, 2023 and 2022:
Three Months Ended June 30,ChangeSix Months Ended June 30, Change
(in thousands, except per share amounts and percentages)202320222023 vs 2022202320222023 vs 2022
(1)(1)
Net interest income$83,877 $58,945 $24,932 42.3 %$166,210 $114,590 $51,620 45.1 %
Provision for (reversal of) credit losses (1)29,077 (951)30,028 NM40,777 (10,226)51,003 498.8 %
Net interest income after provision (reversal of) for credit losses (1)54,800 59,896 (5,096)(8.5)%125,433 124,816 617 0.5 %
Noninterest income26,619 12,931 13,688 105.9 %45,962 26,956 19,006 70.5 %
Noninterest expense72,500 62,241 10,259 16.5 %137,233 123,059 14,174 11.5 %
Income before income tax expense (1)8,919 10,586 (1,667)(15.8)%34,162 28,713 5,449 19.0 %
Income tax expense (1)(1,873)(2,234)361 16.2 %(7,174)(6,058)(1,116)(18.4)%
Net income before attribution of noncontrolling interest (1)7,046 8,352 (1,306)(15.6)%26,988 22,655 4,333 19.1 %
Less: noncontrolling interest(262)(72)(190)(263.9)%(506)(1,148)642 55.9 %
Net income attributable to Amerant Bancorp Inc. (1)$7,308 $8,424 $(1,116)(13.3)%$27,494 $23,803 $3,691 15.5 %
Basic earnings per common share (1)$0.22 $0.25 $(0.03)(12.0)%$0.82 $0.70 $0.12 17.1 %
Diluted earnings per common share (1) (2)$0.22 $0.25 $(0.03)(12.0)%$0.81 $0.69 $0.12 17.4 %
__________________
(1)    Amounts reflect the impact of the adoption of CECL effective as of January 1, 2022. See Note 1 to our unaudited interim consolidated financial statements in this Form 10-Q for additional information.
(2)    In the three and six month periods ended June 30, 2023 and 2022, potential dilutive instruments consisted of unvested shares of restricted stock, restricted stock units and performance share units. See Note 18 to our unaudited interim consolidated financial statements in this Form 10-Q for details on the dilutive effects of the issuance of restricted stock, restricted stock units and performance share units on earnings per share for the three and six month periods ended June 30, 2023 and 2022.
NM - means not meaningful


Three Months Ended June 30, 2023 and 2022
In the three months ended June 30, 2023, net income attributable to the Company was $7.3 million, or $0.22 per diluted share, compared to net income attributable to the Company of $8.4 million, or $0.25 per diluted share, in the same quarter of 2022. The decrease of $1.1 million, or 13.3%, in the three months ended June 30, 2023 was primarily driven by: (i) a provision for credit losses of $29.1 million in the second quarter of 2023, compared to reversal of credit losses of $1.0 million in the same period one year ago, and (ii) higher non-interest expenses. These results were partially offset by higher net interest income and noninterest income.

In the three months ended June 30, 2023 and 2022, net income excludes a loss of $0.3 million and $0.1 million, respectively, attributable to a noncontrolling interest in Amerant Mortgage. See the 2022 Form 10-K for more information on changes in noncontrolling interest in Amerant Mortgage in 2022. There were no significant changes in the first half of 2023.
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Net interest income was $83.9 million in the three months ended June 30, 2023, an increase of $24.9 million, or 42.3%, from $58.9 million in the three months ended June 30, 2022. This was primarily driven by: (i) an increase of 237 basis points in the yield on total interest earning assets, and (ii) increases of $1.4 billion, or 25.4%, $154.4 million, or 68.7%, and $58.8 million, or 33.1%, in the average balance of loans, interest earning deposits with banks and debt securities held to maturity, respectively. The increase in net interest income was partially offset by: (i) higher cost of total deposits, FHLB advances and junior subordinated debentures; (ii) higher average balance of total deposits, mainly time deposits and interest bearing demand deposits, and (iii) lower average balance of debt securities available for sale. See “Net Interest Income” for more details.

Noninterest income was $26.6 million in the three months ended June 30, 2023, an increase of $13.7 million, or 105.9%, compared to $12.9 million in the three months ended June 30, 2022. This increase was mainly driven by: (i) higher net gains on the early extinguishment of advances from the FHLB; (ii) lower losses on securities, and (iii) higher deposit and service fees. These increases were partially offset by: (i) a decrease of $0.6 million in net unrealized gains on derivative valuation related to interest rate caps with clients; (ii) lower loan-level derivative income, (iii) lower mortgage banking income; and (iv) lower brokerage, advisory and fiduciary fees. See “Noninterest Income” for more details.


Noninterest expense was $72.5 million in the three months ended June 30, 2023, an increase of $10.3 million, or 16.5%, compared to $62.2 million in the same period in 2022. This increase was mainly due to higher salary and employee benefits, other operating expenses, professional and other service fees, telecommunication and data processing expenses, FDIC assessments and insurance expenses, advertising expenses, and depreciation and amortization expenses. In addition, in the three months ended June 30, 2023, there was an increase in noninterest expenses compared to the same period last year resulting from the absence of a $0.3 million reversal from the valuation allowance related to the change in fair value of New York loans held for sale. These increases were partially offset by: (i) lower loan level-derivative expenses; (ii) a decrease of $1.3 million in costs associated with the termination of technology contracts resulting from the transition to FIS supported systems and applications; (iii) lower occupancy and equipment expenses, and (iv) lower other real estate owned and repossessed assets expense. See “Noninterest Expense” for more details.

In the three months ended June 30, 2023 and 2022, noninterest expense included non-routine items of $13.4 million and $8.0 million, respectively. Non-routine items in noninterest expense include $8.8 million and $5.1 million of restructuring costs in the three months ended June 30, 2023 and 2022, respectively. Other non-routine items in noninterest expense in the three months ended June 30, 2023 included a $2.0 million impairment charge on an investment carried at cost and included as part of other assets, and a $2.6 million loss on sale of repossessed assets in connection with our equipment-financing activities, compared to other non-routine items in noninterest expense in the three month ended June 30, 2022 which included a $3.2 million valuation expense related to the fair value adjustment of an OREO property in New York and $0.3 million reversal from the valuation allowance related to the change in fair value of New York loans held for sale. See “Our Company - Primary Factors Used to Evaluate Our Business” for detailed information on non-routine items in noninterest expense.

In the three months ended June 30, 2023 and 2022, the Company incurred noninterest expenses of $4.0 million and $3.7 million, respectively, related to Amerant Mortgage which consists of salaries and employee benefits expense, mortgage lending costs and professional and other services fees. Amerant Mortgage had 93 full time equivalent employees (“FTEs”) at June 30, 2023 compared to 67 at June 30, 2022.

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Six Months Ended June 30, 2023 and 2022
In the six months ended June 30, 2023, net income was $27.5 million, or $0.81 per diluted share, compared to net income of $23.8 million, or $0.69 per diluted share, in the same period of 2022. The increase of $3.7 million or 15.5%, was primarily due to higher net interest income and noninterest income. This was partially offset by: (i) a provision for credit losses of $40.8 million in the first half of 2023, compared to reversal of credit losses of $10.2 million in the same period one year ago, and (ii) higher non-interest expenses.

In the six months ended June 30, 2023 and 2022, net income excludes a loss of $0.5 million and $1.1 million, respectively, attributable to a noncontrolling interest in Amerant Mortgage.

Net interest income was $166.2 million in the six months ended June 30, 2023, an increase of $51.6 million, or 45.1%, from $114.6 million in the same period one year ago. This was primarily driven by: (i) an increase of 229 basis points in the yield on total interest earning assets, and (ii) increases of $1.4 billion, or 25.5%, $99.3 million, or 41.0% and $92.2 million, or 63.1%, in the average balance of loans, interest earning deposits with banks, and debt securities held to maturity, respectively. The increase in net interest income was partially offset by: (i) higher cost of total deposit, FHLB advances and junior subordinated debentures; (ii) higher average balance of total deposits, mainly interest bearing demand and time deposits; (iii) lower average balance of debt securities available for sale, and (iv) the cost of the Subordinated Notes issued in March 2022. See “Net Interest Income” for more details.

Noninterest income was $46.0 million in the six months ended June 30, 2023, an increase of $19.0 million, or 70.5%, compared to $27.0 million in the same period of 2022, mainly due to: (i) higher net gains on the early extinguishment of advances from the FHLB; (ii) higher mortgage banking income; (iii) higher net unrealized gains on derivative valuation related to interest rate caps with clients, and (iv) higher deposit and service fees. These increases were partially offset by: (i) net losses on the sale of securities totaling $11.0 million in the six months ended June 30, 2023, mainly driven by losses on the sale of debt securities available for sale, and marketable equity securities not held for trading; (ii) lower loan-level derivative income, and (iii) lower brokerage, advisory and fiduciary fees. See “Noninterest Income” for more details.

Noninterest expense was $137.2 million in the six months ended June 30, 2023, an increase of $14.2 million, or 11.5%, compared to $123.1 million in the same period in 2022, mainly due to higher salary and employee benefits, other operating expenses, professional and other service fees, FDIC assessments and insurance expenses, depreciation and amortization expense, telecommunication and data processing expenses, and advertising expenses. These increases were partially offset by: (i) a decrease of $5.3 million in costs associated with the termination of technology contracts resulting from the transition to FIS supported systems and applications; (ii) lower loan-level derivative expenses; (iii) lower occupancy and equipment expenses; (iv) lower other real estate owned and repossessed assets expense, and (v) the absence of valuation allowance of $0.2 million in the first half of 2022 related to the change in fair value of New York loans held for sale. See “Noninterest Expense” for more details.


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In the six months ended June 30, 2023 and 2022, noninterest expense included non-routine items of $16.8 million and $14.6 million, respectively. Non-routine items in noninterest expense include $12.1 million and $11.2 million of restructuring costs in the three months ended June 30, 2023 and 2022, respectively. Other non-routine items in noninterest expense in the six months ended June 30, 2023 included a $2.0 million impairment charge on an investment carried at cost and included as part of other assets, and a $2.6 million loss on sale of repossessed assets in connection with our equipment-financing activities compared to the six months ended June 30, 2022 which included a $3.2 million valuation expense related to the fair value adjustment of an OREO property in New York and $0.2 million valuation expense related to the change in fair value of New York loans held for sale). See “Our Company - Primary Factors Used to Evaluate Our Business” for detailed information on non-routine items in noninterest expense.

In the six months ended June 30, 2023 and 2022, the Company incurred noninterest expenses of $7.9 million and $7.1 million, respectively, related to Amerant Mortgage which consists of salaries and employee benefits expense, mortgage lending costs and professional and other services fees.
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Average Balance Sheet, Interest and Yield/Rate Analysis
The following tables present average balance sheet information, interest income, interest expense and the corresponding average yields earned and rates paid for the three and six month periods ended June 30, 2023 and 2022. The average balances for loans include both performing and non-performing balances. Interest income on loans includes the effects of discount accretion and the amortization of non-refundable loan origination fees, net of direct loan origination costs as well as the amortization of net premiums/discounts on loan purchases, accounted for as yield adjustments. Average balances represent the daily average balances for the periods presented.
Three Months Ended June 30,
20232022
(in thousands, except percentages) Average
Balances		Income/
Expense		Yield/
Rates		Average
 Balances		Income/
Expense		Yield/
Rates
Interest-earning assets:
Loan portfolio, net (1)(2)$7,068,034 $119,570 6.79 %$5,635,147 $61,514 4.38 %
Debt securities available for sale (3) (4)1,041,039 10,397 4.01 %1,113,994 7,614 2.74 %
Debt securities held to maturity (5)236,297 1,976 3.35 %177,483 981 2.22 %
Debt securities held for trading 262 3 4.59 %101 1 3.97 %
Equity securities with readily determinable fair value not held for trading 27 — — %12,407 — — %
Federal Reserve Bank and FHLB stock52,917 857 6.50 %49,476 539 4.37 %
Deposits with banks379,123 5,694 6.02 %224,751 518 0.92 %
Total interest-earning assets8,777,699 138,497 6.33 %7,213,359 71,167 3.96 %
Total non-interest-earning assets (6)710,404 635,871 
Total assets$9,488,103 $7,849,230 








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Three Months Ended June 30,
20232022
(in thousands, except percentages) Average
Balances		Income/
Expense		Yield/
Rates		Average
 Balances		Income/
Expense		Yield/
Rates
Interest-bearing liabilities:
Checking and saving accounts
Interest bearing DDA $2,641,746 $16,678 2.53 %$1,654,232 $1,034 0.25 %
Money market1,169,047 9,401 3.23 %1,262,566 1,351 0.43 %
Savings287,493 36 0.05 %318,967 14 0.02 %
Total checking and saving accounts4,098,286 26,115 2.56 %3,235,765 2,399 0.30 %
Time deposits2,045,747 18,528 3.63 %1,256,112 4,503 1.44 %
Total deposits6,144,033 44,643 2.91 %4,491,877 6,902 0.62 %
Securities sold under agreements to repurchase60 1 6.68 %60 — — %
Advances from the FHLB (7)828,301 7,621 3.69 %867,573 3,341 1.54 %
Senior notes59,330 941 6.36 %59,013 942 6.40 %
Subordinated notes29,348 362 4.95 %29,178 361 4.96 %
Junior subordinated debentures64,178 1,052 6.57 %64,178 676 4.22 %
Total interest-bearing liabilities7,125,250 54,620 3.07 %5,511,879 12,222 0.89 %
Non-interest-bearing liabilities:
Non-interest-bearing demand deposits1,332,189 1,309,520 
Accounts payable, accrued liabilities and other liabilities283,653 283,721 
Total non-interest-bearing liabilities1,615,842 1,593,241 
Total liabilities8,741,092 7,105,120 
Stockholders’ equity747,011 744,110 
Total liabilities and stockholders' equity$9,488,103 $7,849,230 
Excess of average interest-earning assets over average interest-bearing liabilities$1,652,449 $1,701,480 
Net interest income$83,877 $58,945 
Net interest rate spread3.26 %3.07 %
Net interest margin (8)3.83 %3.28 %
Cost of total deposits (9)2.40 %0.48 %
Ratio of average interest-earning assets to average interest-bearing liabilities123.19 %130.87 %
Average non-performing loans/ Average total loans0.54 %0.56 %


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Six Months Ended June 30,
20232022
(in thousands, except percentages)Average
Balances		Income/
Expense		Yield/
Rates		Average
 Balances		Income/
Expense		Yield/
Rates
Interest-earning assets:
Loan portfolio, net (1)(2)$6,985,153 $228,071 6.58 %$5,564,362 $117,852 4.27 %
Debt securities available for sale (3) (4)1,049,886 20,568 3.95 %1,142,087 14,992 2.65 %
Debt securities held to maturity (5)238,450 4,088 3.46 %146,243 1,684 2.32 %
Debt securities held for trading141 4 5.72 %68 2 5.93 %
Equity securities with readily determinable fair value not held for trading2,443 — — %6,885 — — %
Federal Reserve Bank and FHLB stock55,346 1,872 6.82 %50,485 1,085 4.33 %
Deposits with banks341,168 9,024 5.33 %241,893 650 0.54 %
Total interest-earning assets8,672,587 263,627 6.13 %7,152,023 136,265 3.84 %
Total non-interest-earning assets (6)725,675 626,501 
Total assets$9,398,262 $7,778,524 
Interest-bearing liabilities:
Checking and saving accounts
Interest bearing DDA $2,493,009 $29,533 2.39 %$1,605,626 $1,324 0.17 %
Money market1,250,801 17,281 2.79 %1,257,955 2,084 0.33 %
Savings293,464 83 0.06 %322,027 26 0.02 %
Total checking and saving accounts4,037,274 46,897 2.34 %3,185,608 3,434 0.22 %
Time deposits1,907,443 31,362 3.32 %1,275,587 8,784 1.39 %
Total deposits5,944,717 78,259 2.65 %4,461,195 12,218 0.55 %
Securities sold under agreements to repurchase30 1 6.72 %30 — — %
Advances from the FHLB (7)893,484 14,384 3.25 %892,170 5,822 1.32 %
Senior notes59,290 1,883 6.40 %58,974 1,884 6.44 %
Subordinated notes29,327 723 4.97 %18,375 449 4.93 %
Junior subordinated debentures64,178 2,167 6.81 %64,178 1,302 4.09 %
Total interest-bearing liabilities6,991,026 97,417 2.81 %5,494,922 21,675 0.80 %
Non-interest-bearing liabilities:
Non-interest-bearing demand deposits1,354,951 1,254,948 
Accounts payable, accrued liabilities and other liabilities310,716 257,559 
Total non-interest-bearing liabilities1,665,667 1,512,507 
Total liabilities8,656,693 7,007,429 
Stockholders’ equity741,569 771,095 
Total liabilities and stockholders' equity$9,398,262 $7,778,524 
Excess of average interest-earning assets over average interest-bearing liabilities$1,681,561 $1,657,101 
Net interest income$166,210 $114,590 
Net interest rate spread3.32 %3.04 %
Net interest margin (8)3.86 %3.23 %
Cost of total deposits (9)2.16 %0.43 %
Ratio of average interest-earning assets to average interest-bearing liabilities124.05 %130.16 %
Average non-performing loans/ Average total loans0.50 %0.63 %
__________________
(1) Includes loans held for investment net of the allowance for credit losses, and loans held for sale. The average balance of the allowance for credit losses was $84.6 million and $55.9 million in the three months ended June 30, 2023 and 2022, respectively, and $83.0 million and $61.7 million in the six months ended June 30, 2023 and 2022, respectively. The average balance of total loans held for sale was $85.1 million and $112.2 million in the three months ended June 30, 2023 and 2022, respectively, and $75.8 million and $123.6 million in the six months ended June 30, 2023 and 2022, respectively.
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(2)    Includes average non-performing loans of $38.5 million and $32.7 million for the three months ended June 30, 2023 and 2022, respectively, and $35.2 million and $36.0 million in the six months ended June 30, 2023 and 2022, respectively. Interest income that would have been recognized on outstanding non-performing loans at June 30, 2023 and 2022 was $0.8 million and $0.1 million in the three months ended June 30, 2023 and 2022, respectively, and $1.2 million and $0.6 million in the six months ended June 30, 2023 and 2022, respectively.
(3)    Includes the average balance of accumulated net unrealized gains and losses in the fair value of debt securities available for sale. The average balance includes average accumulated net unrealized losses of $106.7 million and $58.0 million in the three months ended June 30, 2023 and 2022, respectively, and $105.8 million and $28.0 million in the six months ended June 30, 2023 and 2022, respectively.
(4)    Includes nontaxable securities with average balances of $19.5 million and $14.8 million for the three months ended June 30, 2023 and 2022, respectively, and $19.4 million and $15.7 million in the six months ended June 30, 2023 and 2022, respectively. The tax equivalent yield for these nontaxable securities was 4.53% and 2.97% for the three months ended June 30, 2023 and 2022, respectively, and 4.59% and 2.85% for the six months ended June 30, 2023 and 2022, respectively. In 2023 and 2022, the tax equivalent yields were calculated by assuming a 21% tax rate and dividing the actual yield by 0.79.
(5) Includes nontaxable securities with average balances of $50.1 million and $42.7 million for the three months ended June 30, 2023 and 2022, respectively, and $50.4 million and $43.4 million in the six months ended June 30, 2023 and 2022, respectively. The tax equivalent yield for these nontaxable securities was 4.16% and 3.31% for the three months ended June 30, 2023 and 2022, respectively, and 4.18% and 3.22% for the six months ended June 30, 2023 and 2022, respectively. In 2023 and 2022, the tax equivalent yields were calculated by assuming a 21% tax rate and dividing the actual yield by 0.79.
(6) Excludes the allowance for credit losses.
(7)    The terms of the FHLB advance agreements require the Bank to maintain certain investment securities or loans as collateral for these advances.
(8)    NIM is defined as net interest income divided by average interest-earning assets, which are loans, securities, deposits with banks and other financial assets which yield interest or similar income.
(9)    Calculated based upon the average balance of total noninterest bearing and interest bearing deposits.


Net Interest Income
Three Months Ended June 30, 2023 and 2022
In the three months ended June 30, 2023, net interest income was $83.9 million, an increase of $24.9 million, or 42.3%, from $58.9 million in the same period of 2022. This was primarily driven by: (i) an increase of 237 basis points in the yield on total interest earning assets, and (ii) increases of $1.4 billion, or 25.4%, $154.4 million, or 68.7%, and $58.8 million, or 33.1%, in the average balance of loans, interest earnings deposits with banks and debt securities held to maturity, respectively. The increase in net interest income was partially offset by: (i) higher cost of total deposits, FHLB advances and junior subordinated debentures, and (ii) higher average balance of total deposits, mainly time deposits and interest bearing demand deposits, and (iii) a decrease of $73.0 million, or 6.5% in the average balance of debt securities available for sale. The increase in average yields on interest earning assets includes the effect of 475 basis points in the Federal Reserve’s benchmark interest rate since the end of the first quarter of 2022. Net interest margin was 3.83% in the three months ended June 30, 2023, an increase of 55 basis points from 3.28% in the three months ended June 30, 2022. See discussions further below for more details.
During the second quarter of 2023, our asset sensitive position enabled us to offset, via repricing of variable-rate loans, the incremental cost of deposits and borrowings we recorded during the second quarter of 2023. In addition, we had higher average balance of loans in the second quarter of 2023 compared to the same period last year. See discussions further below for more details.
Interest Income
Total interest income was $138.5 million in the three months ended June 30, 2023, an increase of $67.3 million, or 94.6%, compared to $71.2 million for the same period of 2022. This was primarily driven by a 237 basis points increase in the average yield on total interest earning assets. In addition, there were increases of $1.4 billion, or 25.4%, $154.4 million, or 68.7%, and $58.8 million, or 33.1%, in the average balance of loans, interest earnings deposits with banks and debt securities held to maturity, respectively. These increases were partially offset by a decrease of $73.0 million, or 6.5%, in the average balance of debt securities available for sale.

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Interest income on loans in the three months ended June 30, 2023 was $119.6 million, an increase of $58.1 million, or 94.4%, compared to $61.5 million in the same period last year, primarily due to: (i) a 241 basis points increase in average yields, mainly attributable to higher market rates, and (ii) an increase of $1.4 billion, or 25.4%, in the average balance of loans. The increase in average yields and volumes also includes the effect of higher-yielding consumer loans purchased under indirect lending programs throughout 2022. In addition, the increase in the average balance of loans includes: (i) originations of CRE and owner-occupied loans; (ii) originations and purchases of single-family residential and construction loans through Amerant Mortgage; (iii) originations of commercial loans, including loans and leases under a new white label equipment finance solution launched in the second quarter of 2022 and other specialty finance loans, and (iv) originations of consumer loans under a separate white label program. See “-Average Balance Sheet, Interest and Yield/Rate Analysis” for detailed information.
Interest income on debt securities available for sale was $10.4 million in the three months ended June 30, 2023, an increase of $2.8 million, or 36.6%, compared to $7.6 million in the same period of 2022. This was mainly due to an increase of 127 basis points in average yields, primarily driven by higher market rates. This was partially offset by a decrease of $73.0 million, or 6.5%, in the average balance of these securities. The decline in the average balance was primarily due to a decrease in carrying value due to market rates increasing throughout 2022 and the first half of 2023. In the three months ended June 30, 2023, the average balance of accumulated net unrealized loss included in the carrying value of these securities was $106.7 million compared to $58.0 million in the same period last year. As of June 30, 2023, corporate debt securities comprised 24.5% of the available-for-sale portfolio, down from 29.7% at June 30, 2022.
As of June 30, 2023, floating rate investments represent 15.4% of our total investment portfolio compared to 15.3% at June 30, 2022. In addition, the overall duration increased to 5.1 years at June 30, 2023 from 4.9 years at June 30, 2022, as the model anticipates longer duration due to recent higher mortgage rates and therefore slower prepayments.
Interest income on debt securities held to maturity was $2.0 million in the three months ended June 30, 2023, an increase of $1.0 million, or 101.4%, compared to $1.0 million in the same period of 2022. This was mainly due to an increase of $58.8 million, or 33.1% in the average balance of these securities. In addition, there was an increase of 113 basis points in average yields, primarily driven by higher market rates.

Interest Expense
Interest expense was $54.6 million in the three months ended June 30, 2023, an increase of $42.4 million, or 346.9%, compared to $12.2 million in the same period of 2022. This was primarily due to: (i) higher cost of total deposits, advances from FHLB and junior subordinated debentures. In addition, there was an increase of $1.6 billion, or 29.3%, in the average balance of total interest bearing liabilities, mainly time deposits and interest bearing demand deposits.
Interest expense on interest-bearing deposits was $44.6 million in the three months ended June 30, 2023, an increase of $37.7 million, or 546.8%, compared to $6.9 million for the same period of 2022. This was mainly driven by an increase of 229 basis points in the average rates paid on total deposits, and an increase of $1.7 billion, or 36.8%, in their average balance. See below for a detailed explanation of changes by major deposit category:
•Time deposits. Interest expense on total time deposits increased $14.0 million, or 311.5%, in the three months ended June 30, 2023 compared to the same period in 2022. This was mainly due to an increase of 219 basis points in the average cost of total time deposits. In addition, there was an increase of $789.6 million, or 62.9%, in the average balance of these deposits, including $391.9 million and $397.6 million in the average balance of brokered time deposits and customer certificate of deposits (“CDs”), respectively.

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•Interest bearing checking and savings accounts. Interest expense on checking and savings accounts increased $23.7 million, or 988.6% in the three months ended June 30, 2023 compared to the same period one year ago, mainly due to an increase of 226 basis points in the average costs on these deposits. In addition, there was an increase of $862.5 million, or 26.7% in the average balance of total interest bearing checking and savings accounts in the three months ended June 30, 2023 compared to the same period in 2022. This was mainly driven by: (i) higher average domestic personal accounts; (ii) new domestic deposits from escrow accounts, municipalities, and from domestic individuals and businesses through large fund providers as well as new large customer relationships throughout 2022 and the six months ended June 30, 2023, and (iii) increased reciprocal deposits in the first half of 2023. These increases were partially offset by a decrease of $168.4 million, or 7.8%, in the average balance of international accounts, including a decrease of $233.0 million, or 13.1%, in international personal accounts, partially offset by an increase of $65.6 million, or 17.1%, in international commercial accounts. In addition, there was a decline of $36.5 million in the average balance of third-party interest-bearing domestic brokered deposits in the three months ended June 30, 2023 compared to the same period in 2022.
Interest expense on advances from the FHLB increased $4.3 million, or 128.1%, in the three months ended June 30, 2023 compared to the same period of 2022, primarily driven by an increase of 215 basis points in the average rate paid on these borrowings. This was partially offset by a decline of $39.3 million, or 4.5%, in the average balance on this funding source. In the first half of 2023, the Company borrowed $1.1 billion, and repaid $1.2 billion of advances from the FHLB, including early repayments. See “Capital Resources and Liquidity Management” for more details on the early repayment of advances from the FHLB.
Interest expense on junior subordinated debentures increased $0.4 million, or 55.6%, in the three months ended June 30, 2023 compared to the same period of 2022, primarily driven by an increase of 235 basis points in the average rate paid on these borrowings.
Six Months Ended June 30, 2023 and 2022

In the six months ended June 30, 2023, net interest income was $166.2 million, an increase of $51.6 million, or 45.0%, from $114.6 million in the same period of 2022. This was primarily driven by: (i) an increase of 229 basis points in the yield on total interest earning assets, and (ii) $1.4 billion, or 25.5%, $99.3 million, or 41.0% and $92.2 million, or 63.1%, in the average balance of loans, interest earning deposits with banks, and debt securities held to maturity, respectively. The increase in net interest income was partially offset by: (i) higher cost of total deposits, FHLB advances and junior subordinated debentures; (ii) higher average balance of total deposits, primarily time and interest bearing demand deposits; (iii) lower average balance of debt securities available for sale, and (iv) the cost of the Subordinated Notes issued in March 2022. The increase in average yields on interest earning assets includes the effect of 475 basis points in the Federal Reserve’s benchmark interest rate since the end of the first quarter of 2022. Net interest margin was 3.86% in the six months ended June 30, 2023, an increase of 63 basis points from 3.23% in the six months ended June 30, 2022. See discussions further below for more details.


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Interest Income
Total interest income was $263.6 million in the six months ended June 30, 2023, an increase of $127.4 million, or 93.5%, compared to $136.3 million for the same period of 2022. This was primarily driven by a 229 basis points increase in the average yield on total interest earning assets. In addition, there were increases of $1.4 billion, or 25.5%, $99.3 million, or 41.0% and $92.2 million, or 63.1%, in the average balance of loans, interest earning deposits with banks, and debt securities held to maturity, respectively. These increases were partially offset by a decrease of $92.2 million, or 8.1%, in the average balance of debt securities available for sale.

Interest income on loans in the six months ended June 30, 2023 was $228.1 million, an increase of $110.2 million, or 93.5%, compared to $117.9 million in the same period last year, primarily due to: (i) a 231 basis points increase in average yields, mainly attributable to higher market rates, and (ii) an increase of $1.4 billion, or 25.5%, in the average balance of loans. The increase in the average balance of loans includes: (i) originations of CRE and owner-occupied loans; (ii) originations and purchases of single-family residential and construction loans through Amerant Mortgage; (iii) originations of commercial loans, including loans and leases under a new white label equipment finance solution launched in the second quarter of 2022 and other specialty finance loans, and (iv) originations of consumer loans under a separate white label program. See “-Average Balance Sheet, Interest and Yield/Rate Analysis” for detailed information.
Interest income on debt securities available for sale was $20.6 million in the six months ended June 30, 2023, an increase of $5.6 million, or 37.2%, compared to $15.0 million in the same period of 2022. This was mainly due to an increase of 130 basis points in average yields, primarily driven by higher market rates. This was partially offset by a decrease of $92.2 million, or 8.1%, in the average balance of these securities. The decline in the average balance was primarily due to a decrease in carrying value due to market rates increasing throughout 2022 and the first half of 2023. In the six months ended June 30, 2023, the average balance of accumulated net unrealized loss included in the carrying value of these securities was $105.8 million compared to $28.0 million in the same period last year.
Interest income on debt securities held to maturity was $4.1 million in the six months ended June 30, 2023, an increase of $2.4 million, or 142.8%, compared to $1.7 million in the same period of 2022. This was mainly due to an increase of $92.2 million, or 63.1%, in the average balance of these securities. In addition, there was an increase of 114 basis points in average yields, primarily driven by higher market rates.

Interest Expense

Interest expense was $97.4 million in the six months ended June 30, 2023, an increase of $75.7 million, or 349.4%, compared to $21.7 million in the same period of 2022. This was primarily due to: (i) higher cost of total deposits, advances from FHLB and junior subordinated debentures. In addition, there was an increase of $1.5 billion, or 27.23%, in the average balance of total interest bearing liabilities, mainly time deposits and interest bearing demand deposits, and subordinated notes as these were issued in March 2022.
Interest expense on interest-bearing deposits was $78.3 million in the six months ended June 30, 2023, an increase of $66.0 million, or 540.5%, compared to $12.2 million for the same period of 2022. This was mainly driven by an increase of 210 basis points in the average rates paid on total deposits, and an increase of $1.5 billion, or 33.3%, in their average balance. See below for a detailed explanation of changes by major deposit category:
•Time deposits. Interest expense on total time deposits increased $22.6 million, or 257.0%, in the six months ended June 30, 2023 compared to the same period in 2022. This was mainly due to an increase of 193 basis points in the average cost of total time deposits. In addition, there was an increase of $631.9 million, or 49.5%, in the average balance of these deposits, including $358.5 million and $286.1 million in brokered time deposits and customer certificate of deposits (“CDs”), respectively. The increase in the average balance of time deposits was partially offset by a decline of $12.7 million in online deposits.

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•Interest bearing checking and savings accounts. Interest expense on checking and savings accounts increased $43.5 million in the six months ended June 30, 2023 to $46.9 million compared to $3.4 million in the same period one year ago. This increase was primarily due to an increase of 212 basis points in the average costs on these deposits. In addition, there was an increase of $851.7 million, or 26.7% in the average balance of total interest bearing checking and savings accounts in the six months ended June 30, 2023 compared to the same period in 2022. This was mainly driven by: (i) higher average domestic personal accounts; (ii) new domestic deposits from escrow accounts, municipalities, and from domestic individuals and businesses through large fund providers as well as new large customer relationships throughout 2022 and the six months ended June 30, 2023, and (iii) increased reciprocal deposits in the first half of 2023. These increases were partially offset by a decrease of $147.9 million, or 6.9%, in the average balance of international accounts, including a decrease of $197.0 million, or 11.1%, in international personal accounts, partially offset by an increase of $49.0 million, or 12.9%, in international commercial accounts. In addition, there was a decline of $39.5 million in the average balance of third-party interest-bearing domestic brokered deposits in the six months ended June 30, 2023 compared to the same period in 2022.
Interest expense on advances from the FHLB increased $8.6 million, or 147.1%, in the six months ended June 30, 2023 compared to the same period of 2022, primarily driven by an increase of 193 basis points in the average rate paid on these borrowings. See “Capital Resources and Liquidity Management” for more details on the early repayment of advances from the FHLB.
On March 9, 2022, the Company sold and issued $30.0 million aggregate principal amount of its 4.25% Fixed-to-Floating Rate Subordinated Notes due on March 15, 2032. The Subordinated Notes will initially bear interest at a fixed rate of 4.25% per annum, from and including March 9, 2022, to but excluding March 15, 2027, with interest payable semi-annually in arrears. In the six months ended June 30, 2023 and 2022, interest expense on these subordinated notes was $0.7 million and $0.4 million, respectively. See the 2022 Form 10-K for additional information.
Interest expense on junior subordinated debentures increased $0.9 million, or 66.4%, in the six months ended June 30, 2023 compared to the same period of 2022, primarily driven by an increase of 272 basis points in the average rate paid on these borrowings.
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Analysis of the Allowance for Credit Losses
Set forth in the table below are the changes in the allowance for credit losses for each of the periods presented.
Three Months Ended June 30,Six Months Ended June 30,
(in thousands)2023202220232022
(1)(1)
Balance at the beginning of the period$84,361 $75,450 $83,500 $69,899 
Cumulative effect of adoption of accounting principle (1)— — — 18,674 
Charge-offs
Domestic Loans:
Real estate loans
Single-family residential(7)— (39)(10)
Commercial(1,452)(4,605)(9,427)(7,880)
Consumer and others (7,626)(915)(13,945)(1,948)
(9,085)(5,520)(23,411)(9,838)
International Loans (2):
Real estate loans
Single-family residential— — — (4)
Consumer and others— — (3)— 
— — (3)(4)
Total Charge-offs$(9,085)$(5,520)$(23,414)$(9,842)
Recoveries
Domestic Loans:
Real estate loans
Commercial Real Estate (CRE)
Non-Owner occupied$116 $— $116 $— 
Land development and construction loans24 10 163 14 
140 10 279 14 
Single-family residential33 76 49 110 
Commercial405 1,058 3,551 1,259 
Consumer and others384 2 385 132 
962 1,146 4,264 1,515 
International Loans (2):
Commercial640 338 827 437 
Consumer and others1 12 2 18 
641 350 829 455 
Total Recoveries$1,603 $1,496 $5,093 $1,970 
Net charge-offs(7,482)(4,024)(18,321)(7,872)
Provision for (reversal of) credit losses (1)29,077 (951)40,777 (10,226)
Balance at the end of the period$105,956 $70,475 $105,956 $70,475 
__________________
(1)    Amounts reflect the impact of the adoption of CECL effective as of January 1, 2022. See Note 1 to our unaudited interim consolidated financial statements in this Form 10-Q for additional information.
(2)     Includes transactions in which the debtor or the customer is domiciled outside the U.S., even when the collateral is located in the U.S.
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Three Months Ended June 30, 2023 and 2022
The Company recorded a provision for credit losses of $29.1 million in the three months ended June 30, 2023, compared to a release from the ACL of $1.0 million in the same period last year. During the second quarter of 2023, the provision for credit losses includes $15.7 million in additional reserve requirements for loan charge-offs and credit quality ($8.6 million related to a downgraded multi-family residential CRE loan in New York City), $1.4 million to account for loan growth in the quarter and $12.0 million to reflect updated macro economic factors.
During the three months ended June 30, 2023, charge-offs increased $3.6 million, or 64.6%, compared to the same period of the prior year. In the three months ended June 30, 2023, charge-offs included $7.6 million related to multiple consumer loans, primarily purchased indirect consumer loans, and $1.5 million related to multiple commercial loans. In the three months ended June 30, 2022, charge-offs included: (i) $4.1 million related to two commercial loans, primarily including $3.6 million related to a loan relationship with a Miami-based U.S. coffee trader (“the Coffee Trader”), and (ii) an aggregate of $0.9 million in consumer loans. The ratio of net charge-offs over the average total loan portfolio held for investment was 0.42% in the second quarter of 2023, compared to 0.29% in the second quarter of 2022. See the 2022 Form 10-K for more information on charge-offs for the year ended December 31, 2022.
During the three months ended June 30, 2023 and 2022, consistent with the Company’s applicable policy, the Company obtained independent third-party collateral valuations on all real estate securing non-performing loans with existing valuations older than 12-months, to support current ACL levels. No additional provision for credit losses were deemed necessary as a result of these valuations.

We continue to proactively and carefully monitor the Company’s credit quality practices, including examining and responding to patterns or trends that may arise across certain industries or regions.
Six Months Ended June 30, 2023 and 2022

The Company recorded a provision for credit losses of $40.8 million in the six months ended June 30, 2023, compared to a release from the ACL of $10.2 million in the same period last year. In the first half of 2023, the provision for credit losses includes $23.2 million in additional reserve requirements for loan charge-offs and credit quality, $3.6 million to account for loan growth in the quarter and $14.0 million to reflect updated macro economic factors.
During the six months ended June 30, 2023, charge-offs increased $13.6 million, or 137.9%, compared to the same period of the prior year. In the six months ended June 30, 2023, charge-offs included: (i) $6.5 million related to an equipment-financing commercial loan relationship that was transferred to other repossessed assets in the first quarter of 2023 and subsequently sold in the second quarter of 2023; (ii) $13.9 million related to multiple consumer loans, primarily purchased indirect consumer loans, and (iii) $2.9 million in connection with multiple commercial and real estate loans. Charge-offs in the first half of 2023, were partially offset primarily by a $2.7 million recovery from the Coffee Trader charged-off last year. In the six months ended June 30, 2022, charge-offs included: (i) $7.4 million related to four commercial loans, including $3.6 million related to the Coffee Trader and $2.5 million related to a nonaccrual loan paid off during the period, and (ii) an aggregate of $1.9 million in consumer loans. The ratio of net charge-offs over the average total loan portfolio held for investment was 0.53% in the first half of 2023, compared to 0.29% in the first half of 2022.
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Noninterest Income
The table below sets forth a comparison for each of the categories of noninterest income for the periods presented.
Three Months Ended June 30,Change
202320222023 vs 2022
(in thousands, except percentages)Amount % Amount%Amount%
Deposits and service fees$4,944 18.6 %$4,577 35.4 %$367 8.0 %
Brokerage, advisory and fiduciary activities4,256 16.0 %4,439 34.3 %(183)(4.1)%
Change in cash surrender value of bank owned life insurance (“BOLI”)(1)1,429 5.4 %1,334 10.3 %95 7.1 %
Cards and trade finance servicing fees562 2.1 %508 3.9 %54 10.6 %
Loan-level derivative income (2)476 1.8 %1,009 7.8 %(533)(52.8)%
Gain on early extinguishment of FHLB advances, net13,440 50.5 %2 — %13,438 NM
Derivative gains, net (3)242 0.9 %855 6.6 %(613)(71.7)%
Securities losses, net (4)(1,237)(4.7)%(2,602)(20.1)%1,365 (52.5)%
Other noninterest income (5)2,507 9.4 %2,809 21.8 %(302)(10.8)%
     Total noninterest income$26,619 100.0 %$12,931 100.0 %$13,688 105.9 %

Six Months Ended June 30,Change
202320222023 vs 2022
(in thousands, except percentages)Amount % Amount%Amount%
Deposits and service fees$9,899 21.5 %$9,197 34.1 %$702 7.6 %
Brokerage, advisory and fiduciary activities8,438 18.4 %9,035 33.5 %(597)(6.6)%
Change in cash surrender value of bank owned life insurance (“BOLI”)(1)2,841 6.2 %2,676 9.9 %165 6.2 %
Cards and trade finance servicing fees1,095 2.4 %1,098 4.1 %(3)(0.3)%
Loan-level derivative income (2)2,547 5.5 %4,161 15.4 %(1,614)(38.8)%
Gain (loss) on early extinguishment of FHLB advances, net26,613 57.9 %(712)(2.6)%27,325 NM
Derivative gains (losses), net (3)256 0.6 %(490)(1.8)%746 (152.2)%
Securities losses, net (4)(10,968)(23.9)%(1,833)(6.8)%(9,135)498.4 %
Other noninterest income (5)5,241 11.4 %3,824 14.2 %1,417 37.1 %
     Total noninterest income$45,962 100.0 %$26,956 100.0 %$19,006 70.5 %

___________
(1)    Changes in cash surrender value of BOLI are not taxable.
(2)    Income from interest rate swaps and other derivative transactions with customers. The Company incurred expenses related to derivative transactions with customers of $0.1 million and $2.0 million in the three months ended June 30, 2023 and 2022, respectively, and $1.7 million and $3.1 million in the six months ended June 30, 2023 and 2022, respectively, which are included as part of noninterest expenses under loan-level derivative expense.
(3)    Net unrealized gains and losses related to uncovered interest rate caps with clients.
(4)    Includes net loss on sale of debt securities available for sale of $1.2 million in the three months ended June 30, 2023, and net loss and gain on the sale of debt securities available for sale of $10.8 million and $49 thousand in the six months ended June 30, 2023 and 2022, respectively. There were no gains or losses on the sale of debt securities available for sale in the three months ended June 30, 2022. In addition, includes unrealized losses of $2.6 million and $1.9 million in the three and six month periods ended June 30, 2022, respectively, related to the change in fair value of equity securities with readily available fair value not held for trading which are recorded in results of the period. There were no significant unrealized losses related to equity securities with readily available fair value not held for trading in the three and six month periods ended June 30, 2023. Also, in the three months ended June 30, 2023, the Company sold all of its equity securities with readily available fair value not held for trading, with a total fair value of $11.2 million at the time of sale, and recognized a net loss of $0.2 million in connection with this transaction.
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(5)    Includes mortgage banking revenue of $1.6 million and $2.4 million in the three months ended June 30, 2023 and 2022, respectively, and $3.4 million and $3.1 million in the six months ended June 30, 2023 and 2022, respectively, related to Amerant Mortgage. Mortgage banking revenue primarily consisting of gain on sale of loans, gain on loans market valuation, other fees and smaller sources of income. Other sources of income in the periods shown include income from foreign currency exchange transactions with customers and valuation income on the investment balances held in the non-qualified deferred compensation plan.
NM - means not meaningful


Three Months Ended June 30, 2023 and 2022
Total noninterest income increased $13.7 million, or 105.9%, in the three months ended June 30, 2023, compared to the same period of 2022, mainly due to: (i) higher net gains on the early extinguishment of advances from the FHLB; (ii) lower losses on securities, and (iii) higher deposit and service fees. These increases were partially offset by: (i) a decrease of $0.6 million in net unrealized gains on derivative valuation related to interest rate caps with clients; (ii) lower loan-level derivative income; (iii) lower other noninterest income, and (iv) lower brokerage, advisory and fiduciary fees.

In the three months ended June 30, 2023, the Company recorded a net gain of $13.4 million on the early repayment of approximately $355 million of advances from the FHLB. These early repayments of advances from the FHLB are part of the Company’s asset/liability management strategies. There were no significant gains or losses in connection with the early termination of advances from the FHLB in the three months ended June 30, 2022.

Deposits and service fees increased $0.4 million, or 8.0%, in the three months ended June 30, 2023 compared to the same period last year, primarily due to higher service charge fee income as well as higher wire transfer fees.

Loan-level derivative income decreased $0.5 million, or 52.8%, in the three months ended June 30, 2023 compared to the same period in 2022, mainly driven by a lower volume of interest rate swap transactions with clients.

Other noninterest income decreased $0.3 million, or 10.8%, in the three months ended June 30, 2023 compared to the same period in 2022, primarily driven by a decrease of $0.8 million or 33.9% in mortgage banking income.This was partially offset by new rental income from operating leases of approximately $0.4 million in the three months ended June 30, 2023.

Brokerage, advisory and fiduciary activities decreased $0.2 million, or 4.1%, in the three months ended June 30, 2023 compared to the same period last year. This was primarily driven by lower brokerage fees as a result of lower equity trading volumes and commissions.

Our AUM totaled $2.15 billion at June 30, 2023, an increase of $151.8 million, or 7.6%, from $2.0 billion at December 31, 2022, primarily driven by increased market valuations as well as net new assets as we continue to execute on our relationship-focused strategy.



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Six Months Ended June 30, 2023 and 2022

Total noninterest income increased $19.0 million, or 70.5%, in the six months ended June 30, 2023, compared to the same period of 2022, mainly due to: (i) higher net gains on the early extinguishment of advances from the FHLB; (ii) higher other noninterest income; (iii) higher net unrealized gains on derivative valuation related to interest rate caps with clients, and (iv) higher deposit and service fees. These increases were partially offset by: (i) net losses on the sale of certain securities totaling $11.0 million in the six months ended June 30, 2023, mainly driven by losses on the sale of certain debt securities available for sale, and marketable equity securities not held for trading; (ii) lower loan-level derivative income, and (iii) lower brokerage, advisory and fiduciary fees.

In the six months ended June 30, 2023, the Company recorded net gains of $26.6 million on the early repayment of approximately $920 million of advances from the FHLB. In the six months ended June 30, 2022, the Company recorded a net loss of $0.7 million on the early extinguishment of approximately $180 million of advances from the FHLB. These early repayments of advances from the FHLB are part of the Company’s asset/liability management strategies.

Other noninterest income increased $1.4 million, or 37.1%, in the six months ended June 30, 2023 compared to the same period in 2022, primarily driven by: (i) an increase of $0.3 million or 11.3% in mortgage banking income compared to the first half of 2022; (ii) new rental income from operating leases in the first half of 2023, and (iii) higher income from foreign currency exchange transactions with customers.

Deposits and service fees increased $0.7 million, or 7.6%, in the six months ended June 30, 2023 compared to the same period last year, primarily due to higher service charge fee income as well as higher wire transfer fees.

In May 2023, the Company sold a portion of its investment in a corporate debt security held for sale issued by a financial institution, to reduce single point exposure. The Company received proceeds of $0.8 million and realized a pre-tax loss of $1.2 million in connection with this transaction. This loss was recorded in the consolidated statement of comprehensive (loss) income. Additionally, on March 27, 2023, the Company sold one corporate debt security held for sale issued by Signature Bank, N.A in an open market transaction. In the three months ended March 31, 2023, the Company realized a pretax loss on sale of approximately $9.5 million in connection with this transaction which is recorded in the consolidated statement of comprehensive (loss) income. See “Securities” for additional information.

Loan-level derivative income decreased $1.6 million, or 38.8%, in the six months ended June 30, 2023 compared to the same period in 2022, mainly driven by a lower volume of interest rate swap transactions with clients.

Brokerage, advisory and fiduciary activities decreased $0.6 million, or 6.6%, in the six months ended June 30, 2023 compared to the same period last year. This was primarily driven by: (i) lower brokerage fees as a result of lower equity trading volumes/commissions and trailer fees, and (ii) lower advisory fees mainly as result of lower trailer fees. These decreases were partially offset by higher fixed income trading revenue.


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Noninterest Expense
The table below presents a comparison for each of the categories of noninterest expense for the periods presented.
Three Months Ended June 30,Change
202320222023 vs 2022
(in thousands, except percentages)Amount %Amount %Amount %
Salaries and employee benefits (1)$34,247 47.2 %$30,212 48.5 %$4,035 13.4 %
Professional and other services fees (2)7,415 10.2 %4,734 7.6 %2,681 56.6 %
Occupancy and equipment (3)6,737 9.3 %7,760 12.5 %(1,023)(13.2)%
Telecommunications and data processing (4)5,027 6.9 %3,214 5.2 %1,813 56.4 %
Advertising expenses4,332 6.0 %3,253 5.2 %1,079 33.2 %
FDIC assessments and insurance2,739 3.8 %1,526 2.5 %1,213 79.5 %
Other real estate owned and repossessed assets expense, net (5) (6)2,431 3.4 %3,174 5.1 %(743)(23.4)%
Depreciation and amortization (7)2,275 3.1 %1,294 2.1 %981 75.8 %
Contract termination costs (8)1,550 2.1 %2,802 4.5 %(1,252)(44.7)%
Loan-level derivative expense (9)110 0.2 %2,012 3.2 %(1,902)(94.5)%
Loans held for sale valuation expense (reversal) (10)— — %(300)(0.5)%300 (100.0)%
Other operating expenses (11)5,637 7.8 %2,560 4.1 %3,077 120.2 %
     Total noninterest expenses (12)$72,500 100.0 %$62,241 100.0 %$10,259 16.5 %
Six Months Ended June 30,Change
202320222023 vs 2022
(in thousands, except percentages)Amount %Amount %Amount %
Salaries and employee benefits (1)$69,123 50.4 %$60,615 49.3 %$8,508 14.0 %
Professional and other services fees (2)15,043 11.0 %10,873 8.8 %4,170 38.4 %
Occupancy and equipment (3)13,535 9.9 %14,485 11.8 %(950)(6.6)%
Telecommunications and data processing (4)8,091 5.9 %7,252 5.9 %839 11.6 %
Advertising expenses6,918 5.0 %6,225 5.1 %693 11.1 %
FDIC assessments and insurance5,476 4.0 %2,922 2.4 %2,554 87.4 %
Other real estate owned and repossessed assets expense, net (5)(6)2,431 1.8 %3,174 2.6 %(743)(23.4)%
Depreciation and amortization (7)3,567 2.6 %2,446 2.0 %1,121 45.8 %
Contract termination costs (8)1,550 1.1 %6,814 5.5 %(5,264)(77.3)%
Loan-level derivative expense (9)1,710 1.3 %3,055 2.5 %(1,345)(44.0)%
Loans held for sale valuation expense (10)— — %159 0.1 %(159)(100.0)%
Other operating expenses (11)9,789 7.0 %5,039 4.0 %4,750 94.3 %
     Total noninterest expenses (12)$137,233 100.0 %$123,059 100.0 %$14,174 11.5 %
_______
(1)    Includes staff reduction costs of $2.2 million and $0.7 million in the three months ended June 30, 2023 and 2022, respectively, and $2.4 million and $1.4 million in the six months ended June 30, 2023 and 2022, respectively, which consists of severance costs primarily related to organizational rationalization.
(2) In the three and six month periods ended June 30, 2023, includes expenses in connection with the engagement of FIS of $2.0 million and $4.6 million, respectively. In the six months ended June 30, 2022, includes: (i) $0.8 million in connection with the engagement of FIS; (ii) an aggregate of $0.3 million in connection with information technology projects and certain search and recruitment expenses, and (iii) $0.1 million of costs associated with the subleasing of the New York office space.
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(3) In each of the three and six month periods ended June 30, 2023, includes $0.6 million related to ROU asset impairment in connection with the decision to close a branch in Miami, Florida in 2023. In addition, in the six month ended June 30, 2023, includes $0.5 million related to ROU asset impairment in connection with the closure of a branch in Houston, Texas in 2023. In each of the three and six month periods ended June 30, 2022, includes ROU asset impairment changes of $1.6 million in connection with the closure of a branch in Pembroke Pines, Florida in 2022.
(4) Includes a charge of $1.4 million in each of the three and six month periods ended June 30, 2023 related to the disposition of fixed assets due to the write off of in-development software .
(5)     In each of the three and six month periods ended June 30, 2023, includes a loss on sale of repossessed assets in connection with our equipment-financing activities of $2.6 million. In each of the three and six month periods ended June 30, 2022, includes $3.2 million related to the fair value adjustment related to one OREO property in New York. In addition, in each of the three and six month periods ended June 30, 2023, includes OREO rental income of $0.4 million. We had no OREO rental income in the three and six month periods ended June 30, 2022.
(6) In the three months ended June 30, 2023, other real estate owned (“OREO”) and repossessed assets expense is presented separately in the Company’s consolidated statement of operations and comprehensive (loss) income. In 2022, while OREO valuation expense was presented separately, all other OREO-related expenses were presented as part of other operating expenses in the Company’s consolidated statement of operations and comprehensive (loss) income. We had no other repossessed assets in 2022.
(7)    In each of the three and six month periods ended June 30, 2023, includes $0.9 million of the accelerated depreciation of leasehold improvements in connection with the decision to close a branch in Miami, Florida in 2023.
(8) Contract termination and related costs associated with third party vendors resulting from the Company’s transition to our new technology provider.
(9)    Includes service fees in connection with our loan-level derivative income generation activities.
(10)    Valuation allowance as a result of changes in the fair value of loans held for sale carried at the lower of cost or fair value.
(11)    In each of the three and six months period ended June 30, 2023, includes an impairment charge of $2.0 million related to an investment carried at cost and included in other assets. In addition, in all the periods shown, includes charitable contributions, community engagement, postage and courier expenses, and debits which mirror the valuation income on the investment balances held in the non-qualified deferred compensation plan in order to adjust our liability to participants of the deferred compensation plan.
(12)    Includes $4.0 million and $3.7 million in the three months ended June 30, 2023 and 2022, respectively, and $7.9 million and $7.1 million in the six months ended June 30, 2023 and 2022, respectively, related to Amerant Mortgage, primarily consisting of salaries and employee benefits, mortgage lending costs and professional and other services fees.


Three Months Ended June 30, 2023 and 2022
Noninterest expense increased $10.3 million, or 16.5%, in the three months ended June 30, 2023 compared to the same period in 2022, mainly due to higher salary and employee benefits, other operating expenses, professional and other service fees, telecommunication and data processing expenses, FDIC assessments and insurance expenses, advertising expenses, and depreciation and amortization expenses. In addition, in the three months ended June 30, 2023, there was an increase in noninterest expenses compared to the same period last year resulting from the absence of a $0.3 million reversal from the valuation allowance related to the change in fair value of New York loans held for sale. These increases were partially offset by: (i) lower loan level-derivative expenses; (ii) a decrease of $1.3 million in costs associated with the termination of technology contracts resulting from the transition to FIS supported systems and applications; (iii) lower occupancy and equipment expenses, and (iv) lower other real estate owned and repossessed assets expense.

Salaries and employee benefits increased $4.0 million, or 13.4%, in the three months ended June 30, 2023 compared to the same period one year ago, mainly by: (i) salary increases mainly in connection with new hires during the first half of 2023, primarily in the mortgage banking area; (ii) higher severance expenses; (iii) higher commissions, and (iv) higher equity variable compensation in connection with the long term incentive program. These results were partially offset by: (i) decreases in salaries and employee benefits related to staff reductions resulting from our ongoing transformation and efficiency improvement efforts, and (ii) lower non-equity variable compensation. At June 30, 2023, our FTEs were 710, a net increase of 30 FTEs, or 4.4% compared to 680 FTEs at June 30, 2022.
Other operating expenses increased $3.1 million, or 120.2%, in the three months ended June 30, 2023, mainly driven by: (i) an impairment charge of $2.0 million related to an investment carried at cost in the second quarter of 2023, and (ii) higher indirect loan costs and loan servicing fees, and (iii) an aggregate increase in other smaller expenses.
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Professional and other services fees increased $2.7 million, or 56.6%, in the three months ended June 30, 2023 compared to the same period last year, primarily driven by higher consulting and other professional fees in connection with the Company’s transition to our new technology provider.
Telecommunication and data processing expenses increased $1.8 million, or 56.4%, in the three months ended June 30, 2023 compared to the same period last year, primarily driven by: (i) a charge of $1.4 million in connection with the disposition of fixed assets due to the write off of in-development software in the second quarter of 2023, and (ii) higher computer software and technology support services.

FDIC assessments and insurance increased $1.2 million, or 79.5%, in the three months ended June 30, 2023 compared to the same period last year, primarily driven by higher FDIC assessment rates and higher average assets.
Advertising expenses increased $1.1 million, or 33.2%, in the three months ended June 30, 2023 compared to the same period last year, mainly due to higher expenses resulting from campaigns in connection with our partnerships with professional sports teams which advanced to the finals of their respective leagues.

Depreciation and amortization expenses increased $1.0 million, or 75.8%, in the three months ended June 30, 2023 compared to the same period last year mainly driven by $0.9 million of accelerated depreciation of leasehold improvements resulting from the decision to close of a branch in Miami, Florida in 2023.


Loan-level derivative expenses decreased $1.9 million, or 94.5%, in the three months ended June 30, 2023 compared to the same period last year, mainly driven by a lower volume of derivative transactions with clients.

Occupancy and equipment expenses decreased $1.0 million, or 13.2%, in the three months ended June 30, 2023 compared to the same period one year ago mainly driven by lower ROU asset impairment charges in connection with branch closures.

Other real estate owned and repossessed assets expense decreased $0.7 million, or 23.4%, in the three months ended June 30, 2023 compared to the same period last year, mainly driven by: (i) the absence of a fair value adjustment of $3.2 million in connection with an OREO property in New York in the second quarter of 2022, and (ii) new OREO rental income in the second quarter of 2023. This was partially offset by a loss on sale of repossessed assets in connection with equipment-financing activities of $2.6 million in the second quarter of 2023.



Six Months Ended June 30, 2023 and 2022

Noninterest expense increased $14.2 million, or 11.5%, in the six months ended June 30, 2023 compared to the same period in 2022, mainly due to higher salary and employee benefits, other operating expenses, professional and other service fees, FDIC assessments and insurance expenses, depreciation and amortization expense, telecommunication and data processing expenses, and advertising expenses. These increases were partially offset by: (i) a decrease of $5.3 million in costs associated with the termination of technology contracts resulting from the transition to FIS supported systems and applications; (ii) lower loan-level derivative expenses; (iii) lower occupancy and equipment expenses; (iv) lower other real estate owned and repossessed assets expense, and (v) the absence of valuation allowance of $0.2 million in the first half of 2022 related to the change in fair value of New York loans held for sale.
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Salaries and employee benefits increased $8.5 million, or 14.0%, in the six months ended June 30, 2023 compared to the same period one year ago, mainly by: (i) salary increases mainly in connection with new hires during the first half of 2023, primarily in the mortgage banking area; (ii) higher non-equity variable compensation; (iii) severance expenses; (iv) higher commissions, and (v) higher equity variable compensation in connection with the long term incentive program . These results were partially offset by decreases in salaries and employee benefits related to staff reductions resulting from our ongoing transformation and efficiency improvement efforts.

Other operating expenses increased $4.8 million, or 94.3%, in the six months ended June 30, 2023, mainly driven by: (i) an impairment charge of $2.0 million related to an invesment carried at cost in the first half of 2023; (ii) higher indirect loan costs and loan servicing fees, and (iii) an aggregate increase in other smaller expenses.
Professional and other services fees increased $4.2 million, or 38.4%, in the six months ended June 30, 2023 compared to the same period last year, primarily driven by higher consulting and other professional fees in connection with the Company’s transition to our new technology provider.
FDIC assessments and insurance increased $2.6 million, or 87.4%, in the six months ended June 30, 2023 compared to the same period last year, primarily driven by higher FDIC assessment rates and higher average assets.


Depreciation and amortization expenses increased $1.1 million, or 45.8%, in the six months ended June 30, 2023 compared to the same period last year mainly driven by $0.9 million of accelerated depreciation of leasehold improvements resulting from the decision to close a branch in Miami, Florida in 2023.

Telecommunication and data processing expenses increased $0.8 million, or 11.6%, in the six months ended June 30, 2023 compared to the same period last year, primarily driven a charge of $1.4 million in connection with the disposition of fixed assets due to the write off of in-development software in the first half of 2023. This increase was partially offset by lower computer software and technology support services.

Advertising expenses increased $0.7 million, or 11.1%, in the six months ended June 30, 2023 compared to the same period last year, mainly due to higher expenses resulting from campaigns in connection with our partnerships with professional sports teams which advanced to the finals of their respective leagues.

Loan-level derivative expenses decreased $1.3 million, or 44.0%, in the six months ended June 30, 2023 compared to the same period last year, mainly driven by a lower volume of interest rate swap transactions with clients. This was partially offset by additional expenses in the first half of 2023 as a result of transitioning interest rate swap and cap contracts with clients from LIBOR to a new replacement index.
Occupancy and equipment expenses decreased $1.0 million, or 6.6%, in the six months ended June 30, 2023 compared to the same period one year ago mainly driven by: (i) lower ROU asset impairment charges, and (ii) lower equipment and maintenance repair costs.

Other real estate owned and repossessed assets expense decreased $0.7 million, or 23.4%, in the six months ended June 30, 2023 compared to the same period last year, mainly driven by: (i) the absence of a fair value adjustment of $3.2 million in connection with an OREO property in New York in the first half of 2022, and (ii) new OREO rental income in the first half of 2023. This was partially offset by a loss on sale of repossessed assets in connection with equipment-financing activities of $2.6 million in the first half of 2023.
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Income Taxes
The table below sets forth information related to our income taxes for the periods presented.
Three Months Ended June 30,ChangeSix Months Ended June 30,Change
20232022 (1)2023 vs 202220232022 (1)2023 vs 2022
(in thousands, except effective tax rates and percentages)
Income before income tax expense (1)$8,919$10,586 $(1,667)(15.8)%$34,162$28,713 $5,44919.0 %
Income tax expense (1)$1,873$2,234 $(361)(16.2)%$7,174 $6,058 $1,11618.4 %
Effective income tax rate21.00 %21.10 %(0.10)%(0.5)%21.00 %21.10 %(0.10)%(0.5)%
__________________
(1)    Amounts reflect the impact of the adoption of CECL effective as of January 1, 2022. See Note 1 to our unaudited interim consolidated financial statements in this Form 10-Q for additional information.

In the second quarter of 2023, income tax expense decreased to $1.9 million from $2.2 million in the second quarter of 2022, mainly driven by lower income before income taxes in the second quarter of 2023 compared to the same period last year. In the first half of 2023, income tax expense increased to $7.2 million from $6.1 million in the first half of 2022, primarily driven by higher income before income taxes in the first half of 2023 compared to the same period last year.
As of June 30, 2023, the Company’s net deferred tax assets were $56.8 million, an increase of $8.1 million, or 16.6%, compared to $48.7 million as of December 31, 2022. This result was mainly driven by the net increase of $22.5 million in the allowance for credit losses recorded in the first half of 2023, which increased the related net deferred tax asset by $5.8 million in the first half of 2023. In addition, there was an increase of $1.9 million in connection with the $7.7 million in pretax net unrealized holding losses on debt securities available for sale during the six months ended June 30, 2023.
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Non-GAAP Financial Measures
The Company supplements its financial results that are determined in accordance with Generally Accepted Accounting Principles (GAAP) with non-GAAP financial measures, such as “pre-provision net revenue (PPNR)”, “core pre-provision net revenue (Core PPNR)”, “tangible stockholders’ equity (book value) per common share”, “tangible common equity ratio, adjusted for unrealized losses on debt securities held to maturity”, and “tangible stockholders' equity (book value) per common share, adjusted for unrealized losses on debt securities held to maturity”. This supplemental information is not required by or is not presented in accordance with GAAP. The Company refers to these financial measures and ratios as “non-GAAP financial measures” and they should not be considered in isolation or as a substitute for the GAAP measures presented herein.

We use certain non-GAAP financial measures, including those mentioned above, both to explain our results to shareholders and the investment community and in the internal evaluation and management of our businesses. Our management believes that these non-GAAP financial measures and the information they provide are useful to investors since these measures permit investors to view our performance using the same tools that our management uses to evaluate our past performance and prospects for future performance, especially in light of the additional costs we have incurred in connection with the Company’s restructuring activities that began in 2018 and continued in 2023, including the effect of non-core banking activities such as the sale of loans and securities and other repossessed assets, the valuation of securities, derivatives, loans held for sale and other real estate owned and repossessed assets, the early repayment of FHLB advances, impairment of investments, and other non-routine actions intended to improve customer service and operating performance. While we believe that these non-GAAP financial measures are useful in evaluating our performance, this information should be considered as supplemental and not as a substitute for or superior to the related financial information prepared in accordance with GAAP. Additionally, these non-GAAP financial measures may differ from similar measures presented by other companies.
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The following table is a reconciliation of the Company’s PPNR and Core PPNR, non-GAAP financial measures, as of the dates presented:
Three Months Ended,Six Months Ended,
(in thousands)
June 30, 2023June 30, 2022June 30, 2023June 30, 2022
Net income attributable to Amerant Bancorp Inc. (1)$7,308 $8,424 $27,494 $23,803 
Plus: provision for credit losses (1)29,077 (951)40,777 (10,226)
Plus: provision for income tax expense (1)1,873 2,234 7,174 6,058 
Pre-provision net revenue (PPNR)38,258 9,707 75,445 19,635 
Plus: non-routine noninterest expense items13,383 7,995 16,755 14,569 
Less: non-routine noninterest income items(12,445)1,745 (15,901)3,112 
Core pre-provision net revenue (Core PPNR)$39,196 $19,447 $76,299 $37,316 
Non-routine noninterest income items:
Derivatives gains (losses), net242 855 256 (490)
Securities losses, net(1,237)(2,602)(10,968)(1,833)
Gains (loss) on early extinguishment of FHLB advances, net13,440 2 26,613 (712)
Loss on sale of loans— — — (77)
Total non-routine noninterest income items$12,445 $(1,745)$15,901 $(3,112)
Non-routine noninterest expense items
Restructuring costs (2):
Staff reduction costs (3)2,184 674 2,397 1,439 
Consulting and other professional fees (4)2,060 80 4,750 1,326 
Contract termination costs (5)1,550 2,802 1,550 6,814 
Disposition of fixed assets (6)1,419 — 1,419 — 
Branch closure expenses and related charges (7)1,558 1,565 2,027 1,612 
     Digital transformation expenses— — — 45 
Total restructuring costs$8,771 $5,121 $12,143 $11,236 
Other non-routine noninterest expense items:
Loss on sale of repossessed assets and other real estate owned valuation expense (8)2,649 3,174 2,649 3,174 
Impairment charge on investment carried at cost (9)1,963 — 1,963 — 
Loans held for sale valuation (reversal) expense (10)— (300)— 159 
Total non-routine noninterest expense items$13,383 $7,995 $16,755 $14,569 
(1)      As previously disclosed, the Company adopted CECL in the fourth quarter of 2022, effective as of January 1, 2022. See the 2022 Form 10-K for more details of the CECL adoption and related effects to quarterly results for each quarter in the year ended December 31, 2022.
(2)     Expenses incurred for actions designed to implement the Company’s business strategy. These actions include, but are not limited to reductions in workforce, streamlining operational processes, rolling out the Amerant brand, implementation of new technology system applications, decommissioning of legacy technologies, enhanced sales tools and training, expanded product offerings and improved customer analytics to identify opportunities.
(3)    Staff reduction costs in the three and six month periods ended June 30, 2023 and 2022 consist of severance expenses related to organizational rationalization.
(4) In the three and six month periods ended June 30, 2023, includes expenses in connection with the engagement of our new technology provider of $2.0 million and $4.6 million, respectively. In the six months ended June 30, 2022, includes: (i) $0.8 million in connection with the engagement of FIS; (ii) an aggregate of $0.3 million in connection with information technology projects and certain search and recruitment expenses and (iii) $0.1 million of costs associated with the subleasing of the New York office space. There were no additional expenses related to the engagement of our new technology provider in the three months ended June 30, 2022.
(5)    Contract termination and related costs associated with third party vendors resulting from the engagement of our new technology provider.
(6) In the three and six month periods ended June 30, 2023, includes expenses in connection with the disposition of fixed assets due to the write off of in-development software .
(7) In each of the three and six month periods ended June 30, 2023, includes expenses associated with the decision to close a branch in Miami, Florida in 2023, including $0.9 million of accelerated amortization of leasehold improvements and $0.6 million of right-of-use, or ROU asset impairment. In addition, the six months ended June 30, 2023, includes $0.5 million of ROU asset impairment associated with the closure of a branch in Houston, Texas in 2023. In each of the three and six month periods ended June 30, 2022, includes ROU asset impairment changes of $1.6 million in connection with the closure of a branch in Pembroke Pines, Florida in 2022.
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(8)    In the three and six month periods ended June 30, 2023, amounts represent the loss on sale of repossessed assets in connection with equipment-financing activities. In the three and six month periods ended June 30, 2022, amounts represent the fair value adjustment related to one OREO property in New York.
(9)    In each of the three and six months period ended June 30, 2023, includes an impairment charge of $2.0 million related to an investment carried at cost and included in other assets.
(10) Fair value adjustment related to the New York loan portfolio held for sale carried at the lower of cost or fair value.

The following table is a reconciliation of the Company’s tangible common equity and tangible assets, non- GAAP financial measures, to total equity and total assets, respectively, as of the dates presented:
(in thousands, except percentages, share data and per share amounts)
As of June 30, 2023As of December 31, 2022
Stockholders' equity$720,956$705,726
Less: goodwill and other intangibles (1)(24,124)(23,161)
Tangible common stockholders' equity$696,832$682,565
Total assets9,519,5269,127,804
Less: goodwill and other intangibles (1)(24,124)(23,161)
Tangible assets$9,495,402$9,104,643
Common shares outstanding33,736,15933,815,161
Tangible common equity ratio7.34 %7.50 %
Stockholders' book value per common share$21.37$20.87
Tangible stockholders' equity book value per common share$20.66$20.19
Tangible common stockholders' equity$696,832$682,565
Less: Net unrealized accumulated losses on debt securities held to maturity, net of tax (2)(18,503)(18,234)
Tangible common stockholders' equity, adjusted for net unrealized accumulated losses on debt securities held to maturity$678,329$664,331
Tangible assets$9,495,402$9,104,643
Less: Net unrealized accumulated losses on debt securities held to maturity, net of tax (2)(18,503)(18,234)
Tangible assets, adjusted for net unrealized accumulated losses on debt securities held to maturity$9,476,899$9,086,409
Common shares outstanding33,736,15933,815,161
Tangible common equity ratio, adjusted for net unrealized accumulated losses on debt securities held to maturity7.16 %7.31 %
Tangible stockholders' book value per common share, adjusted for unrealized accumulated losses on debt securities held to maturity$20.11$19.65
(1)    Other intangible assets consist primarily of mortgage servicing rights (“MSRS”) of $1.3 million at June 30, 2023 and December 31, 2022, and are included in other assets in the Company’s consolidated balance sheets.
(2)    At June 30, 2023 and December 31, 2022, amounts were calculated based upon the fair value on debt securities held to maturity, and assuming a tax rate of 25.46% and 25.55%, respectively.
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Financial Condition - Comparison of Financial Condition as of June 30, 2023 and December 31, 2022
Assets. Total assets were $9.5 billion as of June 30, 2023, an increase of $391.7 million, or 4.3%, compared to $9.1 billion at December 31, 2022. This result was primarily driven by increases of: (i) $274.9 million, or 4.0%, in total loans held for investment, net of the ACL, and loans held for sale; (ii) $154.5 million, or 53.2%, in cash and cash equivalents, (iii) $23.7 million, or 15.2%, in accrued interest receivable and other assets primarily driven by new OREO balances. These increases were partially offset by decreases of: (i) $51.4 million, or 3.8% in total securities, mainly debt securities available for sale, and (ii) $23.8 million, or 17.0%, in operating lease right-of-use assets resulting from the modification of a lease in the first quarter of 2023. See “-Average Balance Sheet, Interest and Yield/Rate Analysis” for detailed information, including changes in the composition of our interest-earning assets. See “Loan Quality” for more details on OREO and repossessed assets.

Cash and Cash Equivalents. Cash and cash equivalents increased to $445.1 million at June 30, 2023 from $290.6 million at December 31, 2022, primarily as a result of higher cash balances held at the Federal Reserve Bank which were $381 million and $228 million, respectively. At June 30, 2023 and December 31, 2022, the Company’s cash and cash equivalents included restricted cash of $34.2 million and $42.2 million, respectively, which was held primarily to cover margin calls on derivative transactions with certain brokers.
Cash and cash equivalents used in operating activities were $7.8 million in the six months ended June 30, 2023, primarily driven by originations and purchases of mortgage loans held for sale during the period.
Net cash used in investing activities was $253.5 million during the six months ended June 30, 2023, mainly driven by: (i) a net increase in loans of $291.8 million, (ii) purchases of investment securities totaling $77.8 million, and (iii) net purchases of premises and equipment of $7.2 million. These disbursements were partially offset by: (i) maturities, sales, calls and paydowns of investment securities totaling $108.4 million; (ii) proceeds from sale of loans held for investment of $14.5 million, and (iii) proceeds from the sale of repossessed assets in connection with our equipment-financing activities of $2.5 million.

In the six months ended June 30, 2023, net cash provided by financing activities was $415.8 million. These activities included: (i) a net increase of $353.3 million in time deposits, and (ii) a net increase of $182.1 million in total demand, savings and money market deposit balances. These proceeds were partially offset by: (i) net repayments of FHLB advances of $110.4 million; (ii) $6.0 million of dividends declared and paid by the Company in the first half of 2023, and (iii) an aggregate $2.2 million in connection with the repurchase of shares of Class A common stock under a stock repurchase program launched in the first quarter of 2023. See “-Capital Resources and Liquidity Management” for more details on changes in FHLB advances in the first half of 2023 and the stock repurchase programs.
97



Loans
Loans are our largest component of interest-earning assets. The table below depicts the trend of loans as a percentage of total assets and the allowance for loan losses as a percentage of total loans for the periods presented.
June 30, 2023December 31, 2022
(in thousands, except percentages)
Total loans, gross (1)$7,216,958 $6,919,632 
Total loans, gross / total assets75.8 %75.8 %
Allowance for credit losses$105,956 $83,500 
Allowance for credit losses / total loans held for investment, gross (1) (2)1.48 %1.22 %
Total loans, net (3)$7,111,002 $6,836,132 
Total loans, net / total assets74.7 %74.9 %
_______________
(1)    Total loans, gross is the principal balance of outstanding loans, including loans held for investment and loans held for sale, net of unamortized deferred nonrefundable loan origination fees and loan origination costs, and unamortized premiums paid on purchased loans, excluding the allowance for credit losses. At June 30, 2023 and December 31, 2022, there were $49.9 million and $62.4 million, respectively, in mortgage loans held for sale carried at fair value in connection with the Company’s mortgage banking activities through its subsidiary Amerant Mortgage.
(2)    See Note 5 of our audited consolidated financial statements included in the 2022 Form 10-K and our unaudited interim consolidated financial statements included in this Form 10-Q for more details on our credit loss estimates.
(3)    Total loans, net is the principal balance of outstanding loans, including loans held for investment and held for sale, net of unamortized deferred nonrefundable loan origination fees and loan origination costs, and unamortized premiums paid on purchased loans, excluding the allowance for credit losses.

98

The table below summarizes the composition of our loans held for investment by type of loan as of the end of each period presented. International loans include transactions in which the debtor or customer is domiciled outside the U.S., even when the collateral is U.S. property. All international loans are denominated and payable in U.S. Dollars.
(in thousands)June 30, 2023December 31, 2022
Domestic Loans:
Real Estate Loans
Commercial real estate (CRE)
Non-owner occupied (1)$1,645,224 $1,615,716 
Multi-family residential764,712 820,023 
Land development and construction loans314,010 273,174 
2,723,946 2,708,913 
Single-family residential (2)1,236,217 1,048,396 
Owner occupied1,063,240 1,046,450 
5,023,403 4,803,759 
Commercial loans (3)1,540,423 1,338,157 
Loans to depository institutions and acceptances (4)13,332 13,292 
Consumer loans and overdrafts (5) (6)502,252 602,793 
Total Domestic Loans7,079,410 6,758,001 
International Loans:
Real Estate Loans
Single-family residential (7)49,640 54,449 
Commercial loans36,786 43,077 
Consumer loans and overdrafts (8)1,180 1,667 
Total International Loans87,606 99,193 
Total Loans held for investment$7,167,016 $6,857,194 

__________________
(1)    As of June 30, 2023 and December 31, 2022, includes $140.7 million and $84.8 million, respectively, in specialty properties (marinas, nursing and residential care facilities, and other specialty type CRE properties).
(2)    As of June 30, 2023 and December 31, 2022, includes $247.0 million and $230.3 million, respectively, in single-family residential loans purchased by the Company through Amerant Mortgage.
(3)    As of June 30, 2023 and December 31, 2022, includes $625.4 million and $420.3 million, respectively, in specialty finance loans. These specialty finance loans include $47.7 million and $45.3 million at June 30, 2023 and December 31, 2022, respectively, in commercial loans and leases originated under a white-label equipment financing solution launched in the second quarter of 2022.
(4)    Mostly comprised of loans secured by cash or U.S. Government securities.
(5)    Includes customers’ overdraft balances totaling $1.2 million and $4.7 million as of June 30, 2023 and December 31, 2022, respectively.
(6)    Includes indirect lending loans purchased with an outstanding balance of $312.3 million and $433.3 million at June 30, 2023 and December 31, 2022, respectively. In addition, as of June 30, 2023 and December 31, 2022, includes $61.8 million and $43.8 million, respectively, in consumer loan originated under a white-label program. As of June 30, 2023 and December 31, 2022, the outstanding balance of indirect lending loans includes unamortized premiums paid of $6.2 million and $10.9 million, respectively.
(7)    Secured by real estate properties located in the U.S.
(8)    International customers’ overdraft balances were de minimis at each of the dates presented.

99

The composition of our CRE loan portfolio held for investment by industry segment at June 30, 2023 and December 31, 2022 is depicted in the following table:
(in thousands)June 30, 2023December 31, 2022
Retail (1)$700,530 $731,229 
Multifamily764,712 820,023 
Office Space352,655 342,248 
Specialty (2)140,669 84,791 
Land and Construction314,010 273,174 
Hospitality318,346 324,881 
Industrial and Warehouse133,024 132,567 
 Total CRE (3)$2,723,946 $2,708,913 
_________
(1)    Includes loans generally granted to finance the acquisition or operation of non-owner occupied properties such as retail shopping centers, free-standing single-tenant properties, and mixed-use properties primarily dedicated to retail, where the primary source of repayment is derived from the rental income generated from the use of the property by its tenants.
(2)    Includes marinas, nursing and residential care facilities, and other specialty type CRE properties.
(3)     Includes loans held for investment in the NY loan portfolio, which were $294 million at June 30, 2023 and $330 million at December 31, 2022.


The table below summarizes the composition of our loans held for sale by type of loan as of the end of each period presented:
(in thousands)June 30, 2023December 31, 2022
Loans held for sale at fair value
Land development and construction loans (1)3,726 9,424 
Single-family residential (2)46,216 53,014 
Total loans held for sale at fair value (3)(4)49,942 62,438 
_______________
(1) In the first half of 2023, the Company transferred approximately $13 million in land development and construction loans held for sale to the loans held for investment category.
(2) In the first half of 2023, the Company transferred approximately $64 million in single-family residential loans held for sale to the loans held for investment category.
(3)Loans held for sale in connection with Amerant Mortgage’s ongoing business.
(4)Remained current and in accrual status as of June 30, 2023 and December 31, 2022.



At June 30, 2023 and December 31, 2022, there were $49.9 million and $62.4 million, respectively, of primarily single-family residential loans held for sale carried at their estimated fair value. In the six months ended June 30, 2023, in connection with mortgage loans held for sale, we originated and purchased approximately $189.9 million, and had proceeds of approximately $128.5 million, mainly from the sale of these loans.


100

As of June 30, 2023, total loans held for investment were $7.2 billion, up $309.8 million, or 4.5%, compared to $6.9 billion at December 31, 2022. Domestic loans held for investment increased $321.4 million, or 4.8%, as of June 30, 2023, compared to December 31, 2022. The increase in total domestic loans held for investment includes net increases of $202.3 million, or 15.1%, $187.8 million, or 17.9%, $16.8 million, or 1.6% and $15.0 million, or 0.6%, in domestic commercial loans, single-family residential loans, owner occupied loans and CRE loans respectively. These increases were partially offset by a decrease of $100.5 million, or 16.7%, in domestic consumer loans as the Company discontinued the purchases of indirect consumer loans in the first half of 2023 and such indirect lending portfolio is set to runoff over time.

The increase in our domestic loan portfolio held for investment in the six months ended June 30, 2023 includes the effect of: (i) originations of commercial loans, including $16.4 million of loans originated through a new white label equipment financing solution launched in the second quarter of 2022 as well as other specialty finance loans; (ii) originations of single-family residential loans; (iii) originations of CRE and owner-occupied loans; (iv) approximately $6.2 million of single-family residential loans purchased by the Company through its subsidiary Amerant Mortgage, and (v) originations of consumer loans of approximately $26.5 million through a new white-label program launched in the third quarter of 2022. These results were partially offset primarily by loan pay downs and payoffs during the period.

In the six months ended June 30, 2023, the Company has added approximately $200 million in single-family residential and construction loans through Amerant Mortgage, which includes loans originated and purchased from different channels.

Loans to international customers, primarily from Venezuela and other customers in Latin America, decreased $11.6 million, or 11.7%, in the six months ended June 30, 2023, mainly driven by decreases of (i) $6.3 million or 14.6%, in commercial loans, and (ii) $4.8 million or 8.8%, in single family residential loans, including a reduction of $4.6 million or 9.8%, in loans related to Venezuelan customers.

As of June 30, 2023, loans under syndication facilities, included in loans held for investment, were $402.7 million, an increase of $35.8 million, or 9.8%, compared to $367.0 million at December 31, 2022. This increase was primarily driven by an aggregate of $88.8 million in new loans and increased balance of existing loans, including: (i) $20.7 million of commercial loans primarily in the retail trade sector; (ii) $18.6 million in commercial loans in the accommodation and food services industry; (iii) $16.8 million in the finance and insurance industry; (iv) $14.2 million in food and apparel manufacturing; (v) $8.8 million in the professional, scientific, and technical services industry; (vi) $3.9 million in the administrative and support and waste management and remediation services industry, and (vii) other smaller loans. This was partially offset by the pay downs totaling $52.9 million, mainly $16.1 million in real estate loans, $10.9 million in construction loans, $7.1 million in food and apparel manufacturing, and other smaller paydowns related to loans in other industries. At June 30, 2023 and December 31, 2022, loans under syndication facilities include Shared National Credit facilities of $195 million and $143 million, respectively. As of June 30, 2023, syndicated loans that financed highly leveraged transactions were $6.0 million, or 0.1%, of total loans, compared to $8.5 million, or 0.1%, of total loans as of December 31, 2022.



101

Foreign Outstanding
The table below summarizes the composition of our international loan portfolio by country of risk for the periods presented. All of our foreign loans are denominated in U.S. Dollars, and bear fixed or variable rates of interest based upon different market benchmarks plus a spread.
June 30, 2023December 31, 2022
Net Exposure (1)
%
Total Assets
Net Exposure (1)
%
Total Assets
(in thousands, except percentages)
Venezuela (2)$42,433 0.5 %$47,037 0.5 %
Other (3)45,173 0.5 %52,156 0.6 %
Total$87,606 1.0 %$99,193 1.1 %
_________________
(1)    Consists of outstanding principal amounts, net of collateral of cash, cash equivalents or other financial instruments totaling $6.6 million and $6.3 million as of June 30, 2023 and December 31, 2022, respectively.
(2)    Includes mortgage loans for single-family residential properties located in the U.S. totaling $42.4 million and $47.0 million as of June 30, 2023 and December 31, 2022, respectively.
(3)    Includes loans to borrowers in other countries which do not individually exceed one percent of total assets in any of the periods shown.

The maturities of our outstanding international loans were:
June 30, 2023December 31, 2022
Less than 1 year1-3 Years More than 3 years Total (1)Less than 1 year 1-3 Years More than 3 years Total (1)
(in thousands)
Venezuela (2)$2,078 $— $40,355 $42,433 $3,507 $295 $43,235 $47,037 
Other (3)14,679 7,174 23,320 45,173 13,221 13,647 25,288 52,156 
Total $16,757 $7,174 $63,675 $87,606 $16,728 $13,942 $68,523 $99,193 
_________________
(1)    Consists of outstanding principal amounts, net of collateral of cash, cash equivalents or other financial instruments totaling $6.6 million and $6.3 million as of June 30, 2023 and December 31, 2022, respectively.
(2)    Includes mortgage loans for single-family residential properties located in the U.S.
(3)    Includes loans to borrowers in other countries which do not individually exceed one percent of total assets in any of the periods shown.

102

Loan Quality
Allocation of Allowance for Credit Losses
In the following table, we present the allocation of the ACL by loan segment at the end of the periods presented. The amounts shown in this table should not be interpreted as an indication that charge-offs in future periods will occur in these amounts or percentages. These amounts represent our best estimates of expected credit losses to be collected throughout the life of the loans, at the reported dates, derived from historical events, current conditions and reasonable and supportable forecasts at the dates reported. Our allowance for credit losses is established using estimates and judgments, which consider the views of our regulators in their periodic examinations. Re-evaluation of the ACL estimate in future periods, in light of changes in composition and characteristics of the loan portfolio, changes in the reasonable and supportable forecast and other factors then prevailing may result in material changes in the amount of the ACL and credit loss expense in those future periods. We also show the percentage of each loan class, which includes loans in nonaccrual status.
June 30, 2023December 31, 2022
Allowance% of Loans in Each Category to Total Loans Held for InvestmentAllowance% of Loans in Each Category to Total Loans Held for Investment
(in thousands, except percentages)
Domestic Loans
Real estate$42,238 40.3 %$25,237 42.2 %
Commercial36,326 36.6 %25,483 34.7 %
Financial institutions— 0.2 %— 0.2 %
Consumer and others (1)26,411 21.7 %31,569 21.5 %
104,975 98.8 %82,289 98.6 %
International Loans (2)
Commercial300 0.5 %405 0.6 %
Consumer and others (1)681 0.7 %806 0.8 %
981 1.2 %1,211 1.5 %
Total Allowance for Loan Losses$105,956 100.0 %$83,500 100.0 %
% of Total Loans held for investment1.48 %1.22 %
__________________
(1)     Includes (i) unsecured indirect consumer loans (domestic) to qualified individuals purchased in 2022, 2021 and 2020; and (ii) mortgage loans for and secured by single-family residential properties located in the U.S.
(2)     Includes transactions in which the debtor or customer is domiciled outside the U.S. and all collateral is located in the U.S.


The ACL was determined utilizing a reasonable and supportable forecast period. The ACL was determined using a weighted-average of various macroeconomic scenarios provided by a third-party, and incorporated qualitative components. There has not been material changes in our policies and methodology to estimate the ACL in the six months ended June 30, 2023.

In the six months ended June 30, 2023, the changes in the allocation of the ACL were primarily attributed to reserve requirements for loan charge-offs, loan growth and downgrades as well as updated macroeconomic factors.


103

Non-Performing Assets
In the following table, we present a summary of our non-performing assets by loan class, which includes non-performing loans by portfolio segment, both domestic and international, and other real estate owned, or OREO and other repossessed assets, at the dates presented. Non-performing loans consist of: (i) nonaccrual loans where the accrual of interest has been discontinued, and (ii) accruing loans 90 days or more contractually past due as to interest or principal.
June 30, 2023December 31, 2022
(in thousands)
Non-Accrual Loans (1)
Domestic Loans:
Real Estate Loans
Commercial real estate (CRE)
Non-owner occupied$1,696 $20,057 
Multi-family residential24,306 — 
26,002 20,057 
Single-family residential1,322 1,307 
Owner occupied6,890 6,270 
34,214 27,634 
Commercial loans (2)12,241 9,271 
Consumer loans and overdrafts (3)1 1 
Total Domestic46,456 36,906 
International Loans: (4)
Real Estate Loans
Single-family residential359 219 
Consumer loans and overdrafts— 3 
Total International359 222 
Total Non-Accrual Loans$46,815 $37,128 
Past Due Accruing Loans (5)
Domestic Loans:
Real Estate Loans
Single-family residential$253 $253 
Commercial— 183 
Consumer loans and overdrafts78 35 
Total Domestic331 471 
International Loans:
Real Estate Loans
Single-family residential49 — 
Total International49 — 
Total Past Due Accruing Loans380 471 
Total Non-Performing Loans$47,195 $37,599 
OREO and other repossessed assets20,181 — 
Total Non-Performing Assets$67,376 $37,599 

104

_______________
(1)    Prior to the first quarter of 2023, included loan modifications that met the definition of troubled debt restructurings, or TDR, which may be performing in accordance with their modified loan terms.
(2) In the second quarter of 2023, we collected $2.8 million in full satisfaction of a commercial loan relationship in nonaccrual status and classified as Substandard at March 31, 2023.
(3)    In the fourth quarter of 2022, the Company changed its charge-off policy for unsecured consumer loans from 120 to 90 days past due. This change resulted in an additional $3.4 million in charge-offs for unsecured consumer loans in the fourth quarter of 2022.
(4)    Includes transactions in which the debtor or customer is domiciled outside the U.S., but where all collateral is located in the U.S.
(5)    Loans past due 90 days or more but still accruing.

The following table presents the activity of non-performing assets by type of loan in the six months ended June 30, 2023:

Six Months Ended June 30, 2023
(in thousands)Commercial Real EstateSingle-family ResidentialOwner-occupiedCommercialFinancial InstitutionsConsumer and OthersOREO and Other Repossessed AssetsTotal
Balance at beginning of period$20,057 $1,779 $6,270 $9,454 $— $39 $— $37,599 
Plus:
Loans placed in nonaccrual status26,126 1,306 1,316 22,158 — 13,947 — 64,853 
Less:
Nonaccrual loan charge-offs— (39)— (9,427)— (13,948)— (23,414)
Nonaccrual loans sold, net of charge offs— — — — — — — — 
Nonaccrual loan collections and others(124)(987)(696)(3,591)— 41 124 (5,233)
Loans returned to accrual status— (76)— — — — — (76)
Transferred from Loans to OREO and Other Repossessed Assets(20,057)— — (6,353)— — 26,410 — 
Other repossessed assets sold— — — — — — (6,353)(6,353)
Balances at end of period$26,002 $1,983 $6,890 $12,241 $— $79 $20,181 $67,376 

In the second quarter of 2023, the Company placed in nonaccrual status and further downgraded to Substandard a New York-based CRE multi-family residential loan of $24.3 million.

In the first quarter of 2023, the Company received one CRE property guaranteeing a New York based non-owner-occupied loan with a carrying amount of $20.1 million, and transferred it to OREO at the net of its fair value less cost to sell of approximately $20.2 million. This loan was among the loans placed in non-accrual status in 2022. There was no impact on the consolidated results of operations in the six months ended June 30, 2023 as a result of this transaction.


105

In the first quarter of 2023, the Company placed in nonaccrual status a $12.9 million equipment-financing commercial loan relationship, charged-off $6.5 million related to the portion of the balance deemed uncollectible, and transferred the remaining balance of $6.4 million to other repossessed assets. In the second quarter of 2023, the Company sold these repossessed assets and recognized a loss on sale of $2.6 million which is included in the result of operations for the period.
We recognized no interest income on non accrual loans during the six months ended June 30, 2023 and 2022.

The Company’s loans by credit quality indicators are summarized in the following table. We have no purchased-credit-impaired loans.

June 30, 2023December 31, 2022
(in thousands)Special MentionSubstandardDoubtfulTotal (1)Special MentionSubstandardDoubtfulTotal (1)
Real Estate Loans
Commercial Real
Estate (CRE)
Non-owner
occupied		$8,301 $1,753 $— $10,054 $8,378 $20,113 $— $28,491 
Multi-family residential— 24,306 — 24,306 — — — — 
Land development
and
construction
 loans		6,497 — — 6,497 — — — — 
14,798 26,059 — 40,857 8,378 20,113 — 28,491 
Single-family residential— 2,154 — 2,154 — 1,930 — 1,930 
Owner occupied2,236 6,972 — 9,208 — 6,356 — 6,356 
17,034 35,185 — 52,219 8,378 28,399 — 36,777 
Commercial loans (2)13,029 13,312 3 26,344 1,749 10,446 3 12,198 
Consumer loans and
overdrafts		— 70 — 70 — 230 — 230 
$30,063 $48,567 $3 $78,633 $10,127 $39,075 $3 $49,205 
__________
(1) There are no loans categorized as a “Loss” as of the dates presented.
(2) In the second quarter of 2023, we collected $2.8 million in full satisfaction of a commercial loan relationship in nonaccrual status and classified as Substandard at March 31, 2023.


106

Classified Loans. Classified loans includes substandard and doubtful loans. The following table presents the activity of classified loans by type of loan in the six months ended June 30, 2023:


(in thousands)Six Months Ended June 30, 2023
Commercial Real EstateSingle-family ResidentialOwner-occupiedCommercialFinancial InstitutionsConsumer and OthersTotal
Balance at beginning of period$20,113 $1,930 $6,356 $10,449 $— $230 $39,078 
Plus:
Loans downgraded to substandard and doubtful26,126 1,781 1,330 22,179 — 14,015 65,431 
Less:— 
Classified loan charge-offs— (39)— (9,427)— (13,948)(23,414)
Classified loans sold, net of charge offs— — — — — — — 
Classified loan collections and others(123)(1,442)(714)(3,533)— (227)(6,039)
Loans upgraded— (76)— — — — (76)
Transferred from Loans to OREO and Other Repossessed Assets(20,057)— — (6,353)— — (26,410)
Balances at end of period$26,059 $2,154 $6,972 $13,315 $— $70 $48,570 

107

Special Mention Loans. Special mention loans as of June 30, 2023 totaled $30.1 million, an increase of $19.9 million, or 196.9%, from $10.1 million as of December 31, 2022. This increase was primarily driven by an aggregate of $47.7 million in downgrades, including: (i) $24.3 million related to a New York CRE multi-family residential loan; (ii) $15.3 million corresponding to a borrower in the seafood wholesale industry, including two commercial loans totaling $13.1 million and an owner-occupied loan $2.2 million; (iii) $6.5 million to related to a land development and construction loan in Texas that was subsequently paid off in July 2023, and (iv) a $1.6 million commercial loan to an acute care facility. These increases were partially offset by: (i) the further downgrade to Classified of the aforementioned $24.3 million New York CRE multi-family residential loan and $1.6 million commercial loan to an acute care facility, and (ii) an aggregate of $1.8 million in upgrades of two commercial loans. All special mention loans remained current at June 30, 2023.

Potential problem loans, which are accruing loans classified as substandard and are less than 90 days past due, at June 30, 2023 and December 31, 2022, are as follows:

(in thousands)June 30, 2023December 31, 2022
Real estate loans
Single-family residential (1)472 150 
Owner occupied82 86 
554 236 
Commercial loans1,073 1,178 
Consumer loans and overdrafts 69 226 
$1,696 $1,640 
__________
(1) Corresponds to international single-family residential loans.


At June 30, 2023, total potential problem loans increased $0.1 million, or 3.4%, compared to December 31, 2022. This was mainly due to a $0.4 million single-family residential loan downgraded to Substandard during the period partially offset by total payoffs of $0.3 million.

108

Securities
The following table sets forth the book value and percentage of each category of securities at June 30, 2023 and December 31, 2022. The book value for debt securities classified as available for sale, equity securities with readily determinable fair value not held for trading and trading securities represents fair value. The book value for debt securities classified as held to maturity represents amortized cost less ACL if required. The Company determined that an ACL on its debt securities available for sale as of June 30, 2023 and December 31, 2022 was not required. The Company adopted CECL in 2022. See the 2022 Form 10-K for details.
June 30, 2023December 31, 2022
Amount%Amount%
(in thousands, except percentages)
Debt securities available for sale:
U.S. government-sponsored enterprise debt securities$414,925 31.5 %$437,674 32.0 %
Corporate debt securities (1) (2) (3)251,368 19.1 %280,700 20.6 %
U.S. government agency debt securities336,028 25.5 %330,821 24.2 %
U.S. treasury securities18,832 1.4 %1,996 0.1 %
Municipal bonds1,673 0.1 %1,656 0.1 %
Collateralized loan obligations4,850 0.5 %4,774 0.4 %
$1,027,676 78.1 %$1,057,621 77.4 %
Debt securities held to maturity (4)$234,369 17.8 %$242,101 17.7 %
Equity securities with readily determinable fair value not held for trading (5)$2,500 0.2 %$11,383 0.8 %
Trading securities$298 — %$— — %
Other securities (6):$50,460 3.9 %$55,575 4.1 %
$1,315,303 100.0 %$1,366,680 100.0 %
__________________
(1)    As of June 30, 2023 and December 31, 2022 corporate debt includes $9.9 million and $9.7 million, respectively, of debt securities issued by foreign corporate entities. The securities’ issuers were from Canada in two different sectors at June 30, 2023, and from Canada in two different sectors at December 31, 2022. The Company limits exposure to foreign investments based on cross border exposure by country, risk appetite and policy. All foreign investments are denominated in U.S. Dollars.
(2)    As of June 30, 2023 and December 31, 2022, debt securities in the financial services sector issued by domestic corporate entities represent 1.9% and 2.3% of our total assets, respectively.
(3)    As of June 30, 2023 and December 31, 2022, includes $120.8 million and $143.0 million, respectively, in subordinated debt securities issued by financial institutions. Additionally, as of June 30, 2023 and December 31, 2022, there were $59.1 million and $63.3 million in unsecured senior notes issued by financial institutions.
(4)    Includes securities issued by the U.S. government or U.S. government sponsored agencies.
(5)    In the three months ended March 31, 2023, the Company sold its marketable equity securities with a total fair value of $11.2 million at the time of sale, and recognized a net loss of $0.2 million in connection with this transaction. In the three months ended June 30, 2023, the Company purchased an investment in an open-end fund incorporated in the U.S with an original cost of $2.5 million. The Fund's objective is to provide a high level of current income consistent with the preservation of capital and investments deemed to be qualified under the Community Reinvestment Act.
(6)    Includes investments in FHLB and Federal Reserve Bank stock. Amounts correspond to original cost at the date presented. Original cost approximates fair value because of the nature of these investments.
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As of June 30, 2023, total securities decreased $51.4 million, or 3.8%, to $1.32 billion compared to $1.37 billion at December 31, 2022. The decrease in the six months ended June 30, 2023 was mainly driven by maturities, sales, calls and pay downs, totaling $108.4 million, and (ii) net pre-tax unrealized holding losses, on debt securities available for sale of $7.7 million primarily attributable to changes in market interest rates during the period. These decreases were partially offset by purchases of $77.8 million.

In May 2023, the Company sold a portion of its investment in a corporate debt security held for sale issued by a financial institution, to reduce single point exposure. The Company had proceeds of $0.8 million and realized a pre-tax loss of $1.2 million in connection with this transaction. This loss was recorded in the consolidated statement of comprehensive (loss) income for the three and six months ended June 30, 2023.
At December 31, 2022, the Bank had one corporate debt security held for sale (the “Signature Bond”) issued by Signature Bank, N.A. (“Signature”) with a fair value of $9.1 million and unrealized loss of $0.9 million. At December 31, 2022, the Signature Bond was in an unrealized loss position for less one than year. On March 12, 2023, Signature was closed by the New York State Department of Financial Services, which appointed the FDIC as receiver. The FDIC, as receiver, announced that shareholders and certain unsecured debt holders will not be protected. On March 27, 2023, the Bank sold the Signature Bond in an open market transaction and realized a pretax loss on sale of approximately $9.5 million which is recorded in the consolidated statement of comprehensive (loss) income for the six months ended June 30, 2023.

Debt securities available for sale had net unrealized holding losses of $120.2 million and net unrealized holding gains of $0.6 million at June 30, 2023, compared to December 31, 2022 when net unrealized holding losses were $113.0 million and net unrealized holding gains were $1.0 million. During the six months ended June 30, 2023, the Company recorded net after-tax unrealized holding losses of $5.8 million which are included in accumulated other comprehensive loss for the period. This was attributable to changes in market interest rates during the period. The Company does not intend to sell these debt securities and it is more likely than not that it will not be required to sell the securities before their anticipated recovery. The Company believes these securities are not credit-impaired because the change in fair value is attributable to changes in interest rates and investment securities markets, generally, and not credit quality. As a result, the Company did not record an allowance for credit losses on these securities as of June 30, 2023 and December 31, 2022.
The Company considers that all debt securities held to maturity issued or sponsored by the U.S. government are considered to be risk-free as they have the backing of the U.S. government. The Company considers there are not current expected credit losses on these securities and, therefore, did not record an ACL on any of its debt securities held to maturity as of June 30, 2023 and December 31, 2022. The Company monitors the credit quality of held to maturity securities through the use of credit ratings. Credit ratings are monitored by the Company on at least a quarterly basis. As of June 30, 2023 and December 31, 2022, all held to maturity securities held by the Company were rated investment grade.



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The following tables set forth the book value, scheduled maturities and weighted average yields for our securities portfolio at June 30, 2023 and December 31, 2022. Similar to the table above, the book value for securities available for sale. equity securities with readily determinable fair value not held for trading and trading securities is equal to fair market value and the book value for debt securities held to maturity is equal to amortized cost less an ACL if required.
June 30, 2023
(in thousands, except percentages)TotalLess than a yearOne to five yearsFive to ten yearsOver ten yearsNo maturity
AmountYieldAmountYieldAmountYieldAmountYieldAmountYieldAmountYield
Debt securities available for sale
U.S. Government sponsored enterprise debt$414,925 3.44 %$23 5.33 %$23,570 2.92 %$36,121 3.94 %$355,211 3.42 %$— — %
Corporate debt-domestic241,442 4.35 %— — %79,658 5.31 %150,943 3.88 %10,841 3.87 %— — %
U.S. Government agency debt336,028 3.61 %35 3.55 %3,021 4.01 %6,775 5.94 %326,197 3.56 %— — %
Municipal bonds1,673 2.46 %— — %— — %346 1.96 %1,327 2.59 %— — %
Corporate debt-foreign9,926 3.63 %— — %7,926 3.81 %2,000 2.90 %— — %— — %
Collateralized loan obligations4,850 6.60 %— — %— — %— — %4,850 6.60 %— — %
U.S. treasury securities18,832 4.93 %16,856 4.98 %1,976 4.47 %— — %— — %— — %
$1,027,676 3.75 %$16,914 4.98 %$116,151 4.67 %$196,185 3.95 %$698,426 3.51 %$— — %
Debt securities held to maturity$234,369 3.46 %$— — %$6,562 2.50 %$12,916 2.91 %$214,891 3.52 %$— — %
Equity securities with readily determinable fair value not held for trading2,500 — %— — — — — — — — 2,500 — %
Trading securities298 4.90 %— — 294 4.88 %— — %4 6.63 %— — %
Other securities$50,460 6.39 %$— — %$— — %$— — %$— — %$50,460 6.39 %
$1,315,303 3.79 %$16,914 4.98 %$123,007 4.56 %$209,101 3.88 %$913,321 3.51 %$52,960 6.09 %

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December 31, 2022
(in thousands, except percentages)TotalLess than a yearOne to five yearsFive to ten yearsOver ten yearsNo maturity
AmountYieldAmountYieldAmountYieldAmountYieldAmountYieldAmountYield
Debt securities available for sale
U.S. Government sponsored enterprise debt$437,674 3.32 %$37 5.27 %$21,136 2.89 %$38,540 3.34 %$377,961 3.34 %$— — %
Corporate debt-domestic270,979 3.97 %9,108 4.47 %45,293 3.88 %205,628 3.98 %10,950 3.74 %— — %
U.S. Government agency debt330,821 3.18 %136 4.05 %2,806 3.16 %8,433 4.59 %319,446 3.14 %— — %
Municipal bonds1,656 2.49 %— — %— — %342 2.01 %1,314 2.61 %— — %
Corporate debt-foreign9,721 3.64 %— — %— — %9,721 3.64 %— — %— — %
Collateralized loan obligations4,774 6.49 %— — %— — %— — %4,774 6.49 %— — %
U.S. treasury securities1,996 4.47 %— — %1,996 4.47 %— — %— — %— — %
$1,057,621 3.46 %$9,281 4.47 %$71,231 3.57 %$262,664 3.89 %$714,445 3.28 %$— — %
Debt securities held to maturity$242,101 3.44 %$— — %$6,480 2.50 %$13,130 2.90 %$222,491 3.50 %$— — %
Equity securities with readily determinable fair value not held for trading11,383 — %— — %— — %— — %— — %11,383 — %
Other securities$55,575 5.16 %$— — %$— — %$— — %$— — %$55,575 5.16 %
$1,366,680 3.50 %$9,281 4.47 %$77,711 3.48 %$275,794 3.84 %$936,936 3.33 %$66,958 4.28 %

The investment portfolio’s weighted average effective duration increased to 5.1 years June 30, 2023 compared to 4.9 years at December 31, 2022, as the model anticipates longer duration due to recent higher mortgage rates and therefore slower prepayments.


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Liabilities
Total liabilities were $8.80 billion at June 30, 2023, an increase of $376.5 million, or 4.5%, compared to $8.42 billion at December 31, 2022. This was primarily driven by net increases of $535.4 million, or 7.6%, in total deposits, mainly due to an increase in interest bearing demand deposits and time deposits. These increases were partially offset by: (i) a net decrease of $136.5 million, or 15.1%, in advances from the FHLB, including the repayment of $1.2 billion which was partially offset by the addition of $1.1 billion of these borrowings in the first half of 2023, and (ii) 20.2 million, or 14.4%, in long-term lease liability resulting from the modification of a lease in the first half of 2023. See “Capital Resources and Liquidity Management” and “Deposits” for more details on the changes in advances from the FHLB and total deposits.
Deposits
We continue with our efforts in growing our deposits. Our efforts include the additions of retail, private and commercial banking team members, which contributed to increasing deposit levels in the first half of 2023. See “Our Company- Business Developments” for additional information.

Total deposits were $7.58 billion at June 30, 2023, an increase of $535.4 million, or 7.6%, compared to December 31, 2022. The increase in deposits in the six months ended June 30, 2023 was mainly due to net increases of $353.3 million, or 20.4%, in time deposits and $182.1 million, or 3.4%, in core deposits. The $353.3 million, or 20.4%, increase in time deposits includes increases of $331.0 million, or 29.6%, in customer CDs and $22.3 million, or 3.7%, in brokered time deposits. The increase of $182.1 million, or 3.4%, in core deposits was primarily driven by an increase of $472.7 million, or 20.5%, in interest bearing transaction accounts, primarily due to: (i) an increase in reciprocal deposits during the period; (ii) increased deposits from municipalities and from domestic businesses through large fund providers in the first half of 2023, and (iii) an increase of $39.3 million in brokered interest bearing demand deposits.These increases were partially offset by decreases of: (i) $211.5 million, or 13.0%, in savings and money market transaction accounts, including a decrease of $4.9 million in brokered money market deposits, and (ii) $74.1 million, or 5.4%, in noninterest bearing transaction accounts. As of June 30, 2023 total brokered deposits were $685.9 million, an increase of $56.6 million, or 9.0%, compared to $629.3 million at December 31, 2022.

At June 30, 2023 and December 31, 2022, approximately 71% and 65%, respectively, of our total deposits were FDIC insured. In addition, at June 30, 2023 and December 31, 2022, we carried $275.0 million and $261.8 million, respectively, in qualified public deposits, which are subject to collateral maintenance requirements by the state of Florida.

At June 30, 2023 and December 31, 2022, reciprocal deposits, which are 100% insured by the FDIC primarily through a deposit network, were $1.0 billion and over 200 customers as of the end of June 30, 2023, compared to $418 million and just over 27 customers at December 31, 2022. We are actively offering this alternative to our high balance customers.



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Deposits by Country of Domicile
The following table shows deposits by country of domicile of the depositor as of the dates presented and the changes during the period.
Change
(in thousands, except percentages)June 30, 2023December 31, 2022Amount%
Deposits
Domestic (1) (2)$5,113,604 $4,620,906 $492,698 10.7 %
Foreign:
Venezuela (3)1,912,994 1,911,551 1,443 0.1 %
Others (4)552,973 511,742 41,231 8.1 %
Total foreign2,465,967 2,423,293 42,674 1.8 %
Total deposits$7,579,571 $7,044,199 $535,372 7.6 %
_________________
(1)    Includes brokered deposits of $685.9 million and $629.3 million at June 30, 2023 and December 31, 2022, respectively.
(2)    Domestic deposits, excluding brokered, increased $436.1 million, or 10.9%, compared to December 31, 2022.
(3)    Based upon the diligence we customarily perform to "know our customers" for anti-money laundering, OFAC and sanctions purposes, we believe that the U.S. economic embargo on certain Venezuelan persons will not adversely affect our Venezuelan customer relationships, generally.
(4) As of June 30, 2023 and December 31, 2022, deposits from Spain represent 1.2% of our total assets. All other foreign deposits included here, excluding deposits from Venezuelan resident customers, did not exceed 1% of of our total assets.

Our domestic deposits increased $492.7 million, or 10.7%, in the six months ended June 30, 2023, primarily driven by increases of: (i) $516.3 million in domestic interest bearing demand transaction accounts, including an increase of $39.3 million in domestic brokered interest bearing demand deposits; (ii) $241.1 million in domestic customer CDs, and (iii) $22.3 million in domestic brokered time deposits. These increases were partially offset by decreases of: (i) $194.8 million in domestic savings and money market transaction accounts, including a decrease of $4.9 million in domestic brokered money market deposits, and (ii) $92.1 million in noninterest bearing demand deposits.
During the six months ended June 30, 2023, total foreign deposits increased $42.7 million, or 1.8%, including $41.2 million, or 8.1%, in deposits from countries other than Venezuela and $1.4 million, or 0.1%, in deposits from customers domiciled in Venezuela and In the first quarter of 2023, we reorganized international banking to simplify the structure and drive favorable cost deposit growth. See “Our Company- Business Developments” for additional information.


Core Deposits
Our core deposits were $5.50 billion and $5.32 billion as of June 30, 2023 and December 31, 2022, respectively. Core deposits represented 72.5% and 75.5% of our total deposits at those dates, respectively. The increase of $182.1 million, or 3.4%, in core deposits in the six months ended June 30, 2023 was mainly driven by the previously mentioned increase in interest bearing demand deposits. We define “core deposits” as total deposits excluding all time deposits.

114

Brokered Deposits
We utilize brokered deposits primarily as an asset/liability management tool. As of June 30, 2023, we had $685.9 million in brokered deposits, which represented 9.0% of our total deposits at that date (8.90% as of December 31, 2022). As of June 30, 2023, brokered deposits increased $56.6 million, or 9.0%, compared to $629.3 million as of December 31, 2022, mainly due to an increase in brokered interest bearing demand deposits and, to a lesser extend, brokered time deposits. As of June 30, 2023 and December 31, 2022, brokered deposits included time deposits of $631.0 million and $608.7 million, respectively, and brokered interest bearing demand and money market deposits of $54.9 million and $20.5 million, respectively. The Company has not historically sold brokered CDs in individual denominations over $100,000.
Large Fund Providers
Large fund providers consists of third party relationships with balances over $20 million. At June 30, 2023 and December 31, 2022, our large fund providers, included 21 and 22 deposit relationships, respectively, with total balances of $1.3 billion and $1.2 billion, respectively. The increase in large fund providers in the six months ended June 30, 2023 compared to December 31, 2022 was mainly driven by increased deposit balances from domestic businesses during the period. At June 30, 2023 and December 31, 2022, approximately 77% and 60%, respectively, of these deposit balances from large fund providers were insured by the FDIC, as most of these funds are acquired via deposit networks.

Large Time Deposits by Maturity
The following table sets forth the maturities of our time deposits with individual balances equal to or greater than $100,000 as of June 30, 2023 and December 31, 2022:
June 30, 2023December 31, 2022
(in thousands, except percentages)
Less than 3 months$126,406 10.5 %$140,292 15.1 %
3 to 6 months376,498 31.2 %148,137 16.0 %
6 to 12 months365,459 30.2 %497,436 53.6 %
1 to 3 years331,504 27.5 %135,663 14.6 %
Over 3 years8,628 0.6 %6,889 0.7 %
Total$1,208,495 100.0 %$928,417 100.0 %

Short-Term Borrowings
In addition to deposits, we use short-term borrowings from time to time, such as advances from the FHLB and borrowings from other banks, as a source of funds to meet the daily liquidity needs of our customers and fund growth in earning assets. Short-term borrowings have maturities of 12 months or less as of the reported period-end.
There were no outstanding short-term borrowings at June 30, 2023 and all of our outstanding short-term borrowings at December 31, 2022 corresponded to advances from the FHLB. There were no other borrowings or repurchase agreements outstanding at June 30, 2023 and December 31, 2022.
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The following table sets forth information about the outstanding amounts of our short-term borrowings at the close of, and for the six months ended June 30, 2023 and year ended December 31, 2022.
June 30,
2023		December 31,
2022
(in thousands, except percentages)
Outstanding at period-end$— $304,821 
Average amount 69,144 111,448 
Maximum amount outstanding at any month-end204,863 304,821 
Weighted average interest rate:
  During period 3.76 %1.98 %
  End of period — %3.17 %
116

Return on Equity and Assets
The following table shows annualized return on average assets, return on average equity, and average equity to average assets ratio for the periods presented:
Three Months Ended June 30,Six Months Ended June 30,
2023202220232022
(in thousands, except percentages and per share data)(1)(1)
Net income attributable to the Company (1)$7,308$8,424$27,494$23,803
Basic earnings per common share (1)0.220.250.820.70
Diluted earnings per common share (1)(2)0.220.250.810.69
Average total assets$9,488,103 $7,849,230$9,398,262$7,778,524
Average stockholders' equity747,011744,110741,569771,095
Net income attributable to the Company / Average total assets (ROA) (1)0.31 %0.43 %0.59 %0.62 %
Net income attributable to the Company / Average stockholders' equity (ROE) (1)3.92 %4.54 %7.48 %6.22 %
Average stockholders' equity / Average total assets ratio7.87 %9.48 %7.89 %9.91 %
__________________
(1)Amounts reflect the impact of the adoption of CECL effective as of January 1, 2022. See Note 1 to our unaudited interim consolidated financial statements in this Form 10-Q for additional information.
(2)In the three and six month periods ended June 30, 2023 and 2022, potential dilutive instruments consisted of unvested shares of restricted stock, restricted stock units and performance share units. See Note 18 to our unaudited interim consolidated financial statements in this Form 10-Q for details on the dilutive effects of the issuance of restricted stock, restricted stock units and performance share units on earnings per share for the three and six month periods ended June 30, 2023 and 2022.
During the three months ended June 30, 2023, basic and diluted earnings per share decreased compared to same period one year ago, primarily driven by lower net income earned. This was partially offset by lower weighted average number of basic and diluted shares primarily as a result of our capital structure optimization efforts. In the six months ended June 30, 2023, basic and diluted earnings per share increased compared to same period one year ago, mainly due to higher net income earned and the aforementioned capital structure optimization efforts.

Capital Resources and Liquidity Management
Capital Resources 
Stockholders’ equity is influenced primarily by earnings, dividends, if any, and changes in accumulated other comprehensive income or loss (AOCI/AOCL) caused primarily by fluctuations in unrealized holding gains or losses, net of taxes, on debt securities available for sale and derivative instruments. AOCI or AOCL are not included in stockholders’ equity for purposes of determining our capital for bank regulatory purposes.
Total stockholders’ equity was $721.0 million as of June 30, 2023, an increase of $15.2 million, or 2.2%, compared to $705.7 million as of December 31, 2022. This increase was primarily driven by: (i) net income of $27.5 million in the first half of 2023, and (ii) $0.7 million in connection with Class A common stock issued under the employee stock purchase plan. These increases were partially offset by: (i) after-tax net unrealized holding losses of $6.3 million primarily from the change in the market value of debt securities available for sale; (ii) $6.0 million of dividends declared and paid by the Company in the first half of 2023; and (iii) an aggregate of $2.2 million of Class A common stock repurchased in the first half of 2023, under a stock repurchase program launched in the first quarter of 2023. See more details on the stock repurchase program launched in the first quarter of 2023 further below.
117


Non-controlling Interest
The Company records net loss attributable to non-controlling interests in its condensed consolidated statement of operations equal to the percentage of the economic or ownership interest retained in the interest of Amerant Mortgage, and presents non-controlling interests as a component of stockholders’ equity on the consolidated balance sheets. Equity attributable to the non-controlling interest was a net loss of $2.6 million as of June 30, 2023, compared to a net loss of $2.1 million as of December 31, 2022. Net loss attributable to the non-controlling interest was approximately $0.3 million and $0.1 million in the three months ended June 30, 2023 and 2022, respectively, and $0.5 million and $1.1 million in the six months ended June 30, 2023 and 2022, respectively. See the 2022 Form 10-K for details on changes to non-controlling interest in 2022. There were no changes to noncontrolling interest in the first half of 2023.

Common Stock Transactions
Class A Common Stock Repurchases and Cancellation of Treasury Shares. On December 19, 2022, the Company announced that the Board of Directors authorized a new repurchase program pursuant to which the Company may purchase, from time to time, up to an aggregate amount of $25 million of its shares of Class A common stock (the “2023 Class A Common Stock Repurchase Program”). The 2023 Class A Common Stock Repurchase Program is effective from January 1, 2023 until December 31, 2023. In the six months ended June 30, 2023, the Company repurchased an aggregate of 117,665 shares of Class A common stock at a weighted average price of $18.91 per share, under the 2023 Class A Common Stock Repurchase Program. The aggregate purchase price for these transactions was approximately $2.2 million, including transaction costs.
For more information about the repurchase program, see Note 17 to the Company’s consolidated financial statements on the 2022 Form 10-K.

In the six months ended June 30, 2023, the Company’s Board of Directors authorized the cancellation of all shares of Class A common stock repurchased in the first half of 2023. As of June 30, 2023 and December 31, 2022, there were no shares of Class A common stock held as treasury stock.

Employee Stock Purchase Plan.The Company offers an Employee Stock Purchase Plan (“ESPP”). The number of shares of Class A common stock issued in the first half of 2023 under the ESPP was 30,557. See the 2022 Form 10-K for more details on the ESPP.
Dividends. On January 18, 2023, the Company’s Board of Directors declared a cash dividend of $0.09 per share of the Company’s Class A common stock. The dividend was paid on February 28, 2023 to shareholders of record at the close of business on February 13, 2023. The aggregate amount in connection with this dividend was $3.0 million.
On April 19, 2023, the Company’s Board of Directors declared a cash dividend of $0.09 per share of the Company’s Class A common stock. The dividend was paid on May 31, 2023, to shareholders of record on May 15, 2023. The aggregate amount paid in connection with this dividend was approximately $3.0 million.




118

Liquidity Management
We manage our liquidity based on several factors that include the amount of core deposit relationships as a percentage of total deposits, the level of diversification of our funding sources, the allocation and amount of our deposits among deposit types, the short-term funding sources used to fund assets, the amount of non-deposit funding used to fund assets, the availability of unused funding sources, off-balance sheet obligations, the amount of cash and liquid securities we hold, the availability of assets readily convertible into cash without undue loss, the characteristics and maturities of our assets when compared to the characteristics of our liabilities and other factors.
Liquidity risk management is a relevant element of our asset/liability management. Our contingency funding plan is constantly monitored by our Assets and Liabilities Committee and serves as the basis to identify our liquidity needs. The contingency funding plan models several liquidity stress scenarios to evaluate different potential liquidity outflows or funding gaps resulting from economic disruptions and volatility in the financial markets, among other factors.

Customer deposits have been our principal source of funding, supplemented by our investment securities portfolio, our shot-term and long-term borrowings as well as loan repayments and amortizations. The Company’s liquidity position includes cash and cash equivalents of $445.1 million at June 30, 2023, compared to $290.6 million at December 31, 2022.

At June 30, 2023 and December 31, 2022, the Company had $770.0 million and $906.5 million, respectively, of outstanding advances from the FHLB. At June 30, 2023 and December 31, 2022, we had an additional $2.1 billion, of remaining credit availability with the FHLB, and $1.3 billion of FHLB borrowing capacity, including both securities and loans. In the six months ended June 30, 2023, the Company repaid $1.2 billion in advances from the FHLB, and borrowed $1.1 billion from this source. In the six months ended June 30, 2023, the Company recorded net gains of $26.6 million on the early repayment of approximately $920 million of advances from the FHLB. These early repayments are part of the Company’s asset/liability management strategies.
There were no new other borrowings as of June 30, 2023 and December 31, 2022.

We also have available uncommitted federal funds lines with several banks.We had no outstanding borrowings under uncommitted federal funds lines with banks at June 30, 2023 and December 31, 2022.
Holding and Intermediate Holding Subsidiaries

We are a corporation separate and apart from the Bank and, therefore, must provide for our own liquidity. Historically, our main source of funding has been dividends declared and paid to us by the Bank. In addition, we issued the Senior Notes in 2020 and Subordinated notes in 2022. Also, as a result of the Amerant Florida Merger in 2022, the Company is now the obligor and guarantor on our junior subordinated debt and the guarantor of the Senior Notes and Subordinated Notes. The Company held cash and cash equivalents at the Bank of $60.5 million as of June 30, 2023 and $64.9 million as of December 31, 2022, in funds available to service its Senior Notes, Subordinated Notes and junior subordinated debt and for general corporate purposes, as a separate stand-alone entity. See the 2022 Form 10-K for more details on the Amerant Florida Merger.

119

Subsidiary Dividends
There are statutory and regulatory limitations that affect the ability of the Bank to pay dividends to the Company. These limitations exclude the effects of AOCI/AOCL. Management believes that these limitations will not affect the Company’s ability to meet their ongoing short-term cash obligations. See “Supervision and Regulation” in the 2022 Form 10-K. The Company did not receive any dividends from the Bank in the the first half of 2023.
Based on our current outlook, we believe that net income, advances from the FHLB, available other borrowings and any dividends paid to us by the Bank will be sufficient to fund liquidity requirements for the foreseeable future.

Regulatory Capital Requirements
The Company’s consolidated regulatory capital amounts and ratios are presented in the following table:
ActualRequired for Capital Adequacy PurposesRegulatory Minimums To be Well Capitalized
(in thousands, except percentages)AmountRatioAmountRatioAmountRatio
June 30, 2023
Total capital ratio$982,157 12.39 %$634,041 8.00 %$792,552 10.00 %
Tier 1 capital ratio853,609 10.77 %475,531 6.00 %634,041 8.00 %
Tier 1 leverage ratio853,609 8.91 %383,187 4.00 %478,984 5.00 %
Common Equity Tier 1 (CET1)792,704 10.00 %356,648 4.50 %515,159 6.50 %
December 31, 2022
Total capital ratio$947,505 12.39 %$611,733 8.00 %$764,666 10.00 %
Tier 1 capital ratio833,078 10.89 %458,799 6.00 %611,733 8.00 %
Tier 1 leverage ratio833,078 9.18 %363,130 4.00 %453,913 5.00 %
Common Equity Tier 1 (CET1)772,105 10.10 %344,100 4.50 %497,033 6.50 %
120

The Bank’s consolidated regulatory capital amounts and ratios are presented in the following table:
ActualRequired for Capital Adequacy PurposesRegulatory Minimums to be Well Capitalized
(in thousands, except percentages)AmountRatioAmountRatioAmountRatio
June 30, 2023
Total capital ratio$973,524 12.30 %$633,351 8.00 %$791,689 10.00 %
Tier 1 capital ratio874,452 11.05 %475,013 6.00 %633,351 8.00 %
Tier 1 leverage ratio874,452 9.15 %382,428 4.00 %478,035 5.00 %
Common Equity Tier 1 (CET1)874,452 11.05 %356,260 4.50 %514,598 6.50 %
December 31, 2022
Total capital ratio$923,113 12.10 %$610,149 8.00 %$762,686 10.00 %
Tier 1 capital ratio837,970 10.99 %457,612 6.00 %610,149 8.00 %
Tier 1 leverage ratio837,970 9.27 %361,655 4.00 %452,069 5.00 %
Common Equity Tier 1 (CET1)837,970 10.99 %343,209 4.50 %495,746 6.50 %

121

Contractual Obligations
In the normal course of business, we and our subsidiaries enter into various contractual obligations that may require future cash payments. Significant commitments for future cash obligations include capital expenditures related to operating leases, and other borrowing arrangements. Set forth below are significant changes to our existing contractual obligations previously disclosed in the 2022 Form 10-K. Other than the changes discussed herein, there have been no material changes to the contractual obligations previously disclosed in the 2022 Form 10-K.
In the six months ended June 30, 2023, the Company borrowed $1.1 billion in advances from the FHLB and repaid $1.2 billion of these borrowings. In the six months ended June 30, 2023, the Company recorded net gains of $26.6 million on the early repayment of approximately $920 million of advances from the FHLB. These early repayments are part of the Company’s asset/liability management strategies.
In the six months ended June 30, 2023, total time deposits increased $353.3 million, or 20.4%, including increases of $331.0 million in customer time deposits and $22.3 million in brokered time deposits. See “Deposits” for additional information.
Critical Accounting Policies and Estimates
For our critical accounting policies and estimates disclosure, see the 2022 Form 10-K where such matters are disclosed for the Company’s latest fiscal year ended December 31, 2022.
Recently Issued Accounting Pronouncements. Except as discussed below, there are no recently issued accounting pronouncements that have recently been adopted by us. For a description of accounting standards issued that are pending adoption, see Note 1 “Business, Basis of Presentation and Summary of Significant Accounting Policies” in the Company’s interim consolidated financial statements in this Form 10-Q.

In 2022, the Company adopted ASC Topic 326 on CECL. The Company adopted the CECL guidance as of the beginning of the reporting period of adoption, January 1, 2022, using a modified retrospective approach for all its financial assets measured at amortized cost and off-balance sheet credit exposures. For more details on the adoption of CECL, see the 2022 Form 10-K.

In March 2022, the Financial Accounting Standards Board (“FASB”) issued guidance that eliminates the recognition and measurement guidance on troubled debt restructurings, or TDR, for creditors, and aligns it with existing guidance to determine whether a loan modification results in a new loan or a continuation of an existing loan. This guidance also requires enhanced disclosures about certain loan modifications by creditors when a borrower is experiencing financial difficulty. The amended guidance is effective in periods beginning after December 15, 2022 using either a prospective or modified retrospective transition approach. Early adoption was permitted if an entity had already adopted the guidance on accounting for credit losses on financial instruments (“CECL”). The Company adopted this new guidance as of January 1, 2023, and determined that its adoption had no material impact to the Company’s consolidated financial statements.

In March 2022, the FASB issued amended guidance to expand and clarify existing guidance on fair value hedge accounting of interest rate risk for portfolios of financial assets. The amendments clarify, among others, the “last-of-layer” method for making the fair value hedge accounting for these portfolios more accessible. The amendment also improves the last-of-layer concepts and expands them to nonprepayable financial assets, allowing more flexibility in the structure of derivatives used to hedge interest rate risk. The amended guidance is effective for public business entities for fiscal years beginning after December 15, 2022, and interim periods within those fiscal years. For all other entities, the amended guidance is effective for fiscal years beginning after December 15, 2023. The amended guidance is available for early adoption. The Company adopted this guidance as of January 1, 2023, and determined that its adoption had no material impact to its consolidated financial statements.

122

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We believe interest rate and price risks are the most significant market risks impacting us. We monitor and evaluate these risks using sensitivity analyses to measure the effects on earnings, equity and the available for sale portfolio mark-to-market exposure, of changes in market interest rates. Exposures are managed to a set of limits previously approved by our Board of Directors and monitored by management. See discussions below for material changes in our market risk exposure as compared to those discussed in our 2022 Form 10-K, Part II, Item 7A, “Quantitative and Qualitative Disclosures About Market Risk”.

Earnings Sensitivity
The following table shows the sensitivity of our net interest income as a function of modeled interest rate changes:
Change in earnings (1)
June 30,December 31,
(in thousands, except percentages)20232022
Change in Interest Rates (Basis points)
Increase of 200$34,074 9.8 %$27,580 7.9 %
Increase of 10022,408 6.4 %18,320 5.3 %
Decrease of 50 (5,817)(1.7)%(5,683)(1.6)%
Decrease of 100(12,093)(3.5)%(11,548)(3.3)%
Decrease of 200(25,487)(7.3)%(34,279)(9.8)%
__________________
(1) Represents the change in net interest income, and the percentage that change represents of the base scenario net interest income. The base scenario assumes (i) flat interest rates over the next 12 months, (ii) that total financial instrument balances are kept constant over time and (iii) that interest rate shocks are instant and parallel to the yield curve, for the various interest rates and indices that affect our net interest income.


Net interest income in the base scenario, decreased to approximately $348 million in the three months ended June 30, 2023 compared to $349 million as of December 31, 2022. This decrease is mainly due to higher cost of total deposits and borrowings. This was partially offset by: (i) higher floating loan rates on existing loans due to higher short term market rates repricing higher through the first half of 2023; and (ii) the growth in the size of the balance sheet as total assets increased $391.7 million, or 4.3%, in the first half of 2023 compared to December 31, 2022.

The Company periodically reviews the scenarios used for earnings sensitivity to reflect market conditions.

123

Economic Value of Equity (EVE) Analysis
The following table shows the sensitivity of our EVE as a function of interest rate changes as of the periods presented:
Change in equity (1)
June 30,December 31,
20232022
Change in Interest Rates (Basis points)
Increase of 200(3.44)%(7.97)%
Increase of 100(0.85)%(3.06)%
Decrease of 502.76 %3.08 %
Decrease of 1002.27 %4.11 %
Decrease of 2003.53 %4.95 %
__________________
(1) Represents the percentage of equity change in a static balance sheet analysis assuming interest rate shocks are instant and parallel to the yield curves for the various interest rates and indices that affect our net interest income.


During the periods reported, the modeled effects on the EVE remained within established Company risk limits.

Available for Sale Portfolio mark-to-market exposure

The Company measures the potential change in the market price of its investment portfolio, and the resulting potential change on its equity for different interest rate scenarios. This table shows the result of this test as of June 30, 2023 and December 31, 2022:

Change in market value (1)
June 30,December 31,
(in thousands)20232022
Change in Interest Rates
(Basis points)
Increase of 200$(86,896)$(116,288)
Increase of 100(45,051)(59,755)
Decrease of 5024,049 30,527 
Decrease of 100
47,427 60,578 
Decrease of 200
92,886 115,225 
__________________
(1) Represents the amounts by which the investment portfolio mark-to-market would change assuming rate shocks that are instant and parallel to the yield curves for the various interest rates and indices that affect our net interest income.

124

The average duration of our investment portfolio increased to 5.1 years at June 30, 2023 compared to 4.9 years at December 31, 2022, as the model anticipates longer duration due to recent higher mortgage rates and therefore slower prepayments. Additionally, the floating rate portfolio increased to 15.4% at June 30, 2023 from 13.2% at December 31, 2022.


Limits Approval Process
The following table sets forth information regarding our interest rate sensitivity due to the maturities of our interest bearing assets and liabilities as of June 30, 2023. This information may not be indicative of our interest rate sensitivity position at other points in time.

June 30, 2023
(in thousands except percentages)TotalLess than one yearOne to three yearsFour to Five YearsMore than five yearsNon-rate
Earning Assets
Cash and cash equivalents$445,061 $365,672 $— $— $— $79,389 
Securities:
Debt available for sale1,027,676 241,987 283,855 135,100 366,734 — 
Debt held to maturity234,369 — — — 234,369 — 
Federal Reserve and FHLB stock50,460 33,273 — — — 17,187 
Marketable equity securities2,500 2,500 — — — — 
Trading securities298 298 — — — — 
Loans held for sale49,942 49,942 — — — — 
Loans held for investment-performing (1)
7,119,821 4,537,335 1,040,482 708,090 833,914 — 
Earning Assets$8,930,127 $5,231,007 $1,324,337 $843,190 $1,435,017 $96,576 
Liabilities
Interest bearing demand deposits2,773,120 2,773,120 — — — — 
Saving and money market1,431,375 1,431,375 — — — — 
Time deposits2,081,554 1,306,591 693,566 80,818 579 — 
FHLB advances770,000 — 100,000 670,000 — — 
Senior Notes59,368 — 59,368 — — — 
Subordinated Notes29,369 — — — 29,369 — 
Junior subordinated debentures64,178 64,178 — — — — 
Interest bearing liabilities$7,208,964 $5,575,264 $852,934 $750,818 $29,948 $— 
Interest rate sensitivity gap(344,257)471,403 92,372 1,405,069 96,576 
Cumulative interest rate sensitivity gap(344,257)127,146 219,518 1,624,587 1,721,163 
Earnings assets to interest bearing liabilities (%)93.8 %155.3 %112.3 %4,791.7 %N/M
__________________
(1)     “Loan held for investment-performing” excludes $47.2 million of non-performing loans (non-accrual loans and loans 90 days or more past-due and still accruing).
N/M    Not meaningful


125

Off-Balance Sheet Arrangements
The following table shows the outstanding balance of financial instruments whose contracts represent off-balance sheet credit risk as of the end of the periods presented. Except as disclosed below, we are not involved in any other off-balance sheet contractual relationships that are reasonably likely to have a current or future material effect on our financial condition, a change in our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources. For more details on the Company’s off-balance sheet arrangements, see Note 19 to our audited consolidated financial statements included in the 2022 Form 10-K.
(in thousands)June 30, 2023December 31, 2022
Commitments to extend credit$1,243,158 $1,165,701 
Letters of credit37,610 20,726 
$1,280,768 $1,186,427 

ITEM 4. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
The Company maintains a set of disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) designed to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), as appropriate, to allow timely decisions regarding required disclosures.
As required by Rule 13a-15 under the Exchange Act, we carried out an evaluation under the supervision and with the participation of our management, including our CEO and CFO, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report. Based on such evaluation, our CEO and CFO have concluded that, due to the material weakness in the Company's internal control over financial reporting that was described in Part II, Item 9A of our annual report on Form 10-K for the year ended December 31, 2022, the Company's disclosure controls and procedures were not effective as of the end of the period covered by this Form 10-Q.

Notwithstanding the material weakness, management believes, based on its procedures in preparing this report, that the consolidated financial statements included in this report fairly present, in all material respects, the Company’s financial position, results of operations and cash flows as of and for the periods presented in conformity with generally accepted accounting principles in the United States of America.

Remediation

As previously indicated in Part II, Item 9A of our annual report on Form 10-K for the year ended December 31, 2022, we developed a remediation plan to address the material weaknesses in our internal controls over financial reporting. Such weaknesses will not be considered fully remediated until the applicable controls have been fully designed, documented, implemented and operate for a sufficient period of time for management to conclude, through testing, that these controls are operating effectively. While we intend to complete the remediation of the material weakness in 2023, there can be no assurance that we will be able to successfully complete the remediation within the contemplated timeline.


126

Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the period covered by this Form 10-Q that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

127

PART II. OTHER INFORMATION


ITEM 1. LEGAL PROCEEDINGS
We are, from time to time, in the ordinary course of business, engaged in litigation, and we have a small number of unresolved claims pending. In addition, as part of the ordinary course of business, we are parties to litigation involving claims to the ownership of funds in particular accounts, the collection of delinquent accounts, credit relationships, challenges to security interests in collateral and foreclosure interests, that are incidental to our regular business activities. While the ultimate liability with respect to these litigation matters and claims cannot be determined at this time, we believe that potential liabilities relating to pending matters are not likely to be material to our financial position, results of operations or cash flows. Where appropriate, reserves for these various matters of litigation are established, under FASB ASC Topic 450, Contingencies, based in part upon management’s judgment and the advice of legal counsel.
ITEM 1A. RISK FACTORS
For detailed information about certain risk factors that could materially affect our business, financial condition or future results see "Risk Factors" in Part I, Item 1A of the 2022 Form 10-K and the Form 10-Q for the quarter ended March 31, 2023. Other than the risk factor set forth in Part II, Item 1A of our Form 10-Q for the quarter ended March 31, 2023, there have been no material changes to the risk factors previously disclosed in the 2022 Form 10-K.


ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The following table provides information regarding repurchases of the Company’s common stock by the Company during the three months ended June 30, 2023:

(a)(b)(c)(d)
PeriodTotal Number of Shares PurchasedAverage Price Paid Per Share
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1)
Maximum Dollar Value of Shares that May Yet Be Purchased Under the Current Program
April 1 - April 30— $— — $24,434,398 
May 1 - May 3173,720 17.19 73,720 23,167,346 
June 1 - June 3021,542 18.20 21,542 22,775,278 
Total95,262 $17.42 95,262 $22,775,278 
________________
(1) On December 19, 2022, the Company announced that the Board of Directors authorized a new repurchase program pursuant to which the Company may purchase, from time to time, up to an aggregate amount of $25 million of its shares of Class A common stock (the “2023 Class A Common Stock Repurchase Program”). The 2023 Class A Common Stock Repurchase Program is effective from January 1, 2023 until December 31, 2023. In the three months ended June 30, 2023, the Company repurchased an aggregate of 95,262 shares of Class A common stock at a weighted average price of $17.42 per share, under the 2023 Class A Common Stock Repurchase Program.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.

ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
128


ITEM 5. OTHER INFORMATION
Securities Trading Plans of Directors and Executive Officers
During the quarter ended June 30, 2023, none of our directors or executive officers adopted or terminated a Rule 10b5-1 trading plan or a non-Rule 10b5-1 trading arrangement (as defined in Item 408(c) of Regulation S-K).    
129

ITEM 6. EXHIBITS
Exhibit
Number
Description
10.1
10.2
10.3
31.1
31.2
32.1
32.2
101.INSXBRL Instance Document
101.SCHXBRL Taxonomy Extension Schema Document
101.CALXBRL Taxonomy Extension Calculation Linkbase Document
101.LABXBRL Taxonomy Extension Label Linkbase Document
101.PREXBRL Taxonomy Extension Presentation Linkbase Document
101.DEFXBRL Taxonomy Extension Definition Linkbase Document
104Cover Page Interactive Data (embedded within XBRL documents)
*Furnished herewith
130

SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
AMERANT BANCORP INC.
(Registrant)
Date:July 31, 2023By:
/s/ Gerald P. Plush
Gerald P. Plush
Chairman, President and Chief Executive Officer
(Principal Executive Officer)
Date:July 31, 2023By:/s/ Sharymar Calderon
Sharymar Calderon
Executive Vice-President, Chief Financial Officer
(Principal Financial Officer)
131

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