Amerant Bancorp Inc. · NYSE:AMTB
Amerant Bancorp — Q1 2020 Earnings Presentation
34 slides from Amerant Bancorp's earnings presentation, Apr 28, 2020
Slide 1: First Quarter 2020 Financial Review Earnings Call
First Quarter 2020 Financial Review Earnings Call April 28, 2020
Slide 2: Important Notices and Disclaimers
2 Important Notices and Disclaimers Forward-Looking Statements This presentation contains “forward-looking statements” within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934, including, without limitation, future financial and operating results; costs and revenues;
Slide 3: Business Continuity Plan Status
Business Continuity Plan Status 3 • Ensuring all operational processes are being executed on a daily basis with minimal impact to customers Operations, • Surveying critical vendor/suppliers readiness Technology & • Ensuring systems stability and bandwidth capacity to accommodate significant levels o
Slide 4: Relief Programs to Support Our Clients and Communities
4 Relief Programs to Support Our Clients 2 and Communities * The following credit programs and initiatives started in March and continue into April: • Convert P&I loans to IO for a 90 day period w/o escrow deferral Deferral • Convert P&I loans to IO for a 90 day period with escrow deferral Programs
Slide 5: Relief Requests
5 Relief Requests 25 As of April 24th, 2020 • $1,120 MM or 20% of total loans, 57% 90-day int. only, 40% 90-day no payments, 3% 180-day int. only • 73% FL / 20% TX / 7% NY Relief Requests • 92% of relief requests are on loans secured with RE collateral Summary • 20 largest relief requests account fo
Slide 6: Protective Measures & Mitigants
6 26 Protective Measures & Mitigants 6 • Maintaining high cash position at the Federal Reserve with $271.0 million in cash and equivalents as of the end of the first quarter, more than double our usual position • $1.2 billion available under the FHLB credit line • $200 million available through FED’
Slide 7: Performance Highlights 1Q20
Performance Highlights 1Q20 7 • Net income decreased 74.9% in 1Q20 over 4Q19, and 74.1% compared to same period last year; Operating income(1) was $16.7 million in 1Q20, up 12.5% from $14.8 million in 4Q19, and flat from $16.6 million in the same period of 2019. • Noninterest income increased 37.2%
Slide 8: First Quarter 2020 Results
First Quarter 2020 Results 8 ($ in millions, except per share items and Return on Equity(5) (ROE) Adjusted ROE(1)(5) percentages) 1Q19 4Q19 1Q20 Net Interest Income $55.4 $51.3 $49.2 6.87% 6.44% 7.25% Net Interest Margin (NIM) 2.96% 2.74% 2.65% 5.45% (Reversal of) Provision for Loan Losses — (0.3) 2
Slide 9: Investment Portfolio
Investment Portfolio 9 Investment Securities Balances and Yields (1) Highlights ($ in millions) 1,750 • Leveraging opportunities for higher-yield, longer duration $24.2 investments $23.8 $70.3 $23.5 $73.9 $83.9 • Effective duration of 3.0 years as expected prepayment 1,500 speeds accelerated in the
Slide 10: Loan Portfolio Highlights
10 Loan Portfolio Highlights (1) Loan Composition Geographic Mix (Domestic) (Domestic) 1.9% 1.8% 1.8% 1.5% 2.5% 6,000 0.5% 0.4% 0.4% 0.3% 0.3% 9.3% 9.2% 9.2% 9.4% 10.0% 5,000 $775 $812 $808 $772 $752 14.0% 14.4% 14.4% 15.6% 16.3% $943 $1,010 $965 $1,029 4,000 $1,040 20.3% 19.6% 21.6% 21.5% 19.1% 3,0
Slide 11: Credit Quality
Credit Quality 11 Non-Performing Assets (1) / Total Assets Allowance for Loan Losses ($ in millions) $72.9 0.41% 0.42% 0.41% 0.41% $60.3 $57.4 0.26% 1.29% $53.6 $52.2 1.05% 0.99% 0.93% 0.91% 1Q19 2Q19 3Q19 4Q19 1Q20 1Q19 2Q19 3Q19 4Q19 1Q20 Allowance for Loan Losses ALL as a % of Total Loans (3) All
Slide 12: Interest-Earning Assets
12 Interest-Earning Assets(1) ($ in millions, except for percentages ) 9,000 8,000 7,000 $1,701 $1,651 $1,633 $1,739 $1,770 6,000 $5,744 $5,813 $5,754 $5,744 $5,668 5,000 4.74% 4.75% 4.64% 4,000 4.47% 4.31% 3,000 2,000 2.98% 2.85% 2.73% 2.66% 2.59% 1,000 0 1Q19 2Q19 3Q19 4Q19 1Q20 Loans Investments
Slide 13: Wholesale Funding
Wholesale Funding 13 FHLB and Other Borrowings(1) by Maturity Advances from the Federal Home Loan Bank and Other March 31, 2020 Borrowings(1) ($ in millions) Year of Maturity Interest Rate 1Q19 4Q19 1Q20 2021 16.6% 2019 1.80% to 3.86% $ 385 $ — $ — 2020 2022 17.0% 13.4% 2020 0.44% to 2.63% 265 285 2
Slide 14: Deposit Highlights
Deposit Highlights 14 Deposit Composition Mix by Country of Domicile ($ in millions, except for percentages) International Deposits 7,000 ($ in millions) ~12% Compound Annual Decline Rate $5,888 6,000 $5,819 $5,693 $5,757 $5,842 $589 $619 $566 $682 $647 5,000 $1,770 $4,490 $1,721 $1,714 $1,758 $1,89
Slide 15: Net Interest Income and NIM
15 Net Interest Income and NIM Net Interest Income (NII) and NIM (%) Commentary ($ in millions, except for percentages ) • NIM down in 1Q20 primarily on: 60 – Lower prepayment penalties in the current quarter as $55.4 loan payoffs slowed $53.8 $52.6 $51.3 $49.2 – Higher average volume of time deposi
Slide 16: Noninterest Income Mix
16 Noninterest Income Mix Noninterest Income Mix Commentary ($ in millions) $21.9 • Other noninterest income in the first quarter of 2020 includes: 22 – $9.2 million net gain on securities sold in order to replace 20 them with longer duration bonds to mitigate higher expected prepayments on mortgage
Slide 17: Noninterest Expense
Noninterest Expense 17 Noninterest Expense Mix Commentary ($ in millions, except for FTEs) • Decline in salaries and employee benefits expense in 1Q20 reflects: – Changes to various variable compensation programs as Amerant continues its comprehensive review of total employee compensation 60 – A dec
Slide 18: Adjusted Noninterest Expense
18 Adjusted Noninterest Expense(1) Adjusted Noninterest Expense Mix Commentary • Restructuring expenses of $0.4 million in 1Q20 due to staff reduction and ($ in millions, except for FTEs) digital transformation expenses, as we moved forward with the 60 implementation stage of Salesforce® and nCino®
Slide 19: Interest Rate Sensitivity
Interest Rate Sensitivity 19 Commentary Loan Portfolio & Repricing Detail • The Company continues to be asset sensitive as over half of loans have floating rate structures or mature within a year (As of March 31, 2020) • Actively managing investment portfolio seeking to reduce asset By Rate Type By
Slide 20: FY20-21 Goals
20 FY20-21 Goals • Continue focus on domestic commercial deposit growth via cross Net Interest • Increase loan portfolio yield while containing funding costs Deposits sale and by targeting new verticals/ Income to improve NIM niches for deposits • Increase domestic deposits and share of wallet from
Slide 21: Supplemental Loan Portfolio Information
Supplemental Loan Portfolio Information
Slide 22: Operational Response & Continuity
* Operational Response & Continuity 22 Remote Capabilities Working Status of Amerant Locations on site 14% Location Status Operations Center Open: Minimum staff Working remotely 86% Headquarters Open: Minimum staff NY/Dallas LPOs Closed: Working Remotely Transactions by Channel 80% 70% 89% Digital T
Slide 23: Loan portfolio by industry
Loan portfolio by industry 23 (As of 03/31/2020) Real Non-Real % Total Unfunded Highlights ($ in millions) Estate Estate Total Loans Commitments(8) (1) Financial Sector $ 5 $ 69 $ 74 1.6% $ 17 • Diversified portfolio - highest Construction and Real Estate & Leasing: sector concentration, other Comme
Slide 24: Industries with escalated monitoring: Oil and Gas, Travel, Entertainment and Dining
Industries with escalated monitoring 24 Oil and Gas, Travel, Entertainment and Dining (As of March 31, 2020) Real Non-Real % Total Unfunded Highlights ($ in millions) Estate Estate Total Loans Commitments(1) Extraction/Support $ 1 $ 22 $ 23 0.4% $ 5 Very limited exposure: Petrochemical 5 10 15 0.3%
Slide 25: Industries with escalated monitoring: Commercial Real Estate
Industries with escalated monitoring 25 Commercial Real Estate (CRE) (As of March 31, 2020) % Total % Total Income Land and CRE Type FL TX NY Other Total CRE Loans Producing Construction Retail $ 656 $ 198 $ 302 $ — $ 1,155 39.4% 20.4% $ 1,144 $ 11 Multifamily 410 254 312 — 975 33.2% 17.2% 834 141 O
Slide 26: Industries with escalated monitoring: CRE Hotels
Industries with escalated monitoring 26 CRE Hotels (As of 03/31/2020) Hotels 60% Hotels - LTV 50% 47% Boutique 40% 29% 30% Full 18% Service 20% 17% 37% 12% Limited 10% 5% Service 34% 0% 50% 50-60% 60-70% 70-80% 80% or or less more Highlights • CRE Hotel portfolio is limited to 27 properties majority
Slide 27: Industries with escalated monitoring: CRE Retail
Industries with escalated monitoring 27 CRE Retail (As of 03/31/2020) CRE Retail(1) CRE Retail - Single Retail - LTV Tenant(1)(2) Theme/Festival Center Groceries 60% Education 12% 3% 9% Vacant Restaurant 3% 48% Community 4% 50% Center 14% 40% Neighbor hood Banking 8% Center 30% 19% Food and Health 2
Slide 28: Appendices
Appendices
Slide 29: Non-GAAP Financial Measures Reconciliations
Appendix 1 29 Non-GAAP Financial Measures Reconciliations The following table sets forth selected financial information derived from the Company’s interim unaudited consolidated financial statements, adjusted for certain costs incurred by the Company in the periods presented related primarily to tax
Slide 30: Non-GAAP Financial Measures Reconciliations (cont'd)
Appendix 1 30 Non-GAAP Financial Measures Reconciliations (cont’d) Three Months Ended, ($ in thousands, except per share amounts) March 31, 2020 December 31, 2019 March 31, 2019 Net income $ 3,382 $ 13,475 $ 13,071 Plus after-tax restructuring costs: Restructuring costs before income tax effect 354
Slide 31: Non-GAAP Financial Measures Reconciliations (cont'd)
Appendix 1 31 Non-GAAP Financial Measures Reconciliations (cont’d) Three Months Ended, March 31, 2020 December 31, 2019 March 31, 2019 Diluted earnings per share (2) $ 0.08 $ 0.31 $ 0.30 Plus: after tax impact of restructuring costs 0.01 — 0.02 Less: after tax gain on sale of vacant Beacon land — (0
Slide 32: Non-GAAP Financial Measures Reconciliations (cont'd)
Appendix 1 32 Non-GAAP Financial Measures Reconciliations (cont’d) Three Months Ended, ($ in thousands, except per share amounts and percentages) March 31, 2020 December 31, 2019 March 31, 2019 Salaries and employee benefits / Average total assets 1.48 % 1.81 % 1.66 % Less: impact of restructuring c
Slide 33: Non-GAAP Financial Measures Reconciliations (cont'd)
Appendix 1 33 Non-GAAP Financial Measures Reconciliations (cont’d) (1) Expenses incurred for actions designed to implement the Company’s strategy as a new independent company. These actions include, but are not limited to reductions in workforce, streamlining operational processes, rolling out the A
Slide 34: Thank you
Thank you Investor Relations InvestorRelations@amerantbank.com