Amerant Bancorp Inc. · NYSE:AMTB
Amerant Bancorp — Q2 2020 Earnings Presentation
31 slides from Amerant Bancorp's earnings presentation, Jul 24, 2020
Slide 1: Second Quarter 2020 Financial Review Earnings Call
Second Quarter 2020 Financial Review Earnings Call July 24, 2020
Slide 2: Important Notices and Disclaimers
Important Notices and Disclaimers 2 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 Update Related to COVID-19
Business Update Related to COVID-19 3 • Amerant’s Business Continuity Plan (“BCP”), activated on March 16, 2020, successfully supports approximately 86% of employees with remote work capabilities Business Continuity • Phased opening approach started June 3rd to re-introduce employees back to the wor
Slide 4: Performance Highlights 2Q20
Performance Highlights 2Q20 4 • Net loss of $15.3 million in 2Q20, compared to net income of $3.4 million in 1Q20 and $12.9 million in 2Q19; Operating income(1) was $21.6 million in 2Q20, up 29.7% from $16.7 million in 1Q20, and up 53.8% from $14.0 million in the same period of 2019. • Noninterest i
Slide 5: Second Quarter 2020 Results
Second Quarter 2020 Results 5 ($ in millions, except per share items and Return on Equity(5) (ROE) Adjusted ROE(1)(5) percentages) 2Q19 1Q20 2Q20 7.66% Net Interest Income $53.8 $49.2 $46.3 6.56% Net Interest Margin (NIM) 2.92% 2.65% 2.44% 1.61% 1.74% (Reversal of) Provision for Loan Losses (1.4) 22
Slide 6: Investment Portfolio
Investment Portfolio 6 Investment Securities Balances and Yields (1) Highlights ($ in millions) 1,750 • Effective duration of 2.6 years as expected prepayment $24.2 speeds stabilized in the mortgage securities portfolio $70.3 $24.4 $23.8 $65.6 • Floating portion of the portfolio at 16.9% of the tota
Slide 7: Loan Portfolio Highlights
7 Loan Portfolio Highlights Loan Composition Geographic Mix (Domestic) (Domestic)(1) 1.8% 1.8% 1.5% 2.5% 2.2% 6,000 0.4% 0.4% 0.3% 0.3% 0.3% 9.2% 9.2% 9.4% 10.0% 10.1% $756 5,000 $812 $808 $772 $752 14.4% 14.4% 15.6% 16.3% 16.0% $1,046 $1,010 $965 $1,029 4,000 $1,040 20.3% 19.6% 21.5% 19.1% 21.2% 3,
Slide 8: Credit Quality
Credit Quality 8 Non-Performing Assets (1) / Total Assets Allowance for Loan Losses ($ in millions) $119.7 0.95% $72.9 2.04% 0.41% 0.42% 0.41% 0.41% $57.4 $53.6 $52.2 1.29% 0.99% 0.93% 0.91% 2Q19 3Q19 4Q19 1Q20 2Q20 2Q19 3Q19 4Q19 1Q20 2Q20 Allowance for Loan Losses ALL as a % of Total Loans (2) All
Slide 9: Interest-Earning Assets
9 Interest-Earning Assets(1) ($ in millions, except for percentages ) 9,000 8,000 7,000 $1,651 $1,633 $1,739 $1,770 $1,675 6,000 $5,813 $5,754 $5,744 $5,668 $5,872 5,000 4.75% 4.64% 4,000 4.47% 4.31% 3,000 3.77% 2,000 2.85% 2.73% 2.66% 2.59% 2.50% 1,000 0 2Q19 3Q19 4Q19 1Q20 2Q20 Loans Investments L
Slide 10: Wholesale Funding
Wholesale Funding 10 FHLB advances, Senior Notes and Other Advances from the Federal Home Loan Bank, Senior Notes and Borrowings(1) by Maturity Other Borrowings(1) June 30, 2020 ($ in millions) Year of Maturity Interest Rate 2Q19 1Q20 2Q20 2023 and 2019 1.80% to 3.86% $ 350 $ — $ — after 95.5% 2020
Slide 11: Deposit Highlights
Deposit Highlights 11 Deposit Composition Mix by Country of Domicile ($ in millions, except for percentages) International Deposits 7,000 ($ in millions) $6,024 ~11% Compound Annual Decline Rate 6,000 $5,819 $5,693 $5,757 $5,842 $588 $619 $566 $682 $647 $1,846 5,000 $4,490 $1,721 $1,714 $1,758 $1,89
Slide 12: Net Interest Income and NIM
12 Net Interest Income and NIM Net Interest Income (NII) and NIM (%) Commentary ($ in millions, except for percentages ) • NII down in 2Q20 primarily on: 60 – Full repricing effect of lower rates on variable-rate loans following Federal Reserve’s emergency rate cuts in 1Q20 $53.8 $52.6 $51.3 $49.2 –
Slide 13: Noninterest Income Mix
13 Noninterest Income Mix Noninterest Income Mix Commentary ($ in millions) • $7.5 million net gain on debt securities sold, mostly 30-year Treasuries $21.9 purchased during 1Q20 as buffer against the impact of low market rates on 22 NIM, which together with decreased funding costs helped compensate
Slide 14: Noninterest Expense
Noninterest Expense 14 Noninterest Expense Mix Commentary ($ in millions, except for FTEs) • $8.1 million decline in noninterest expense in 2Q20 mostly reflects a deferral of expenses related to the origination of loans under the PPP program including: 60 – $7.8 million in salaries and benefits expe
Slide 15: Adjusted Noninterest Expense
15 Adjusted Noninterest Expense(1) Adjusted Noninterest Expense Mix Commentary • Restructuring expenses in 2Q20 includes $1.0 million in digital ($ in millions, except for FTEs) transformation expenses, as we moved forward with the implementation 60 stage of Salesforce® and nCino® and staff reductio
Slide 16: Interest Rate Sensitivity
Interest Rate Sensitivity 16 Commentary Loan Portfolio & Repricing Detail • The Company continues to be asset sensitive as over half of (As of June 30, 2020) loans have floating rate structures or mature within a year By Rate Type By Interest Type • Actively implementing floor rates in the loan port
Slide 17: FY20-21 Goals
17 FY20-21 Goals • Continue focus on domestic commercial deposit growth via cross Net Interest • Protect loan portfolio yield while proactively reducing funding Deposits sale and by targeting new verticals/ Income costs to improve NIM niches for deposits • Increase domestic deposits and share of wal
Slide 18: Supplemental Loan Portfolio Information
Supplemental Loan Portfolio Information
Slide 19: Operational Response & Continuity
* Operational Response & Continuity 19 Remote Capabilities Working Status of Amerant Locations on site 14% Location Status Headquarters, Open under phase 1 on voluntary basis; Operation Centers Working limited maximum capacity remotely & LPOs 86% FL & TX: operating under regular Transactions by Chan
Slide 20: Loan portfolio by industry
Loan portfolio by industry 20 (As of 06/30//2020) Real Non-Real % Total Unfunded Highlights ($ in millions) Estate Estate Total Loans Commitments(8) (1) Financial Sector $ 5 $ 74 $ 79 1.3% $ 17 • Diversified portfolio - highest Construction and Real Estate & Leasing: sector concentration, other Comm
Slide 21: Industries with escalated monitoring: Oil and Gas, Travel, Entertainment and Dining
Industries with escalated monitoring 21 Oil and Gas, Travel, Entertainment and Dining (As of June 30, 2020) Real Non-Real % Total Unfunded Highlights ($ in millions) Estate Estate Total Loans Commitments(1) Extraction/Support $ 1 $ 21 $ 22 0.4% $ 7 Very limited exposure: Petrochemical 5 1 6 0.2% — T
Slide 22: Industries with escalated monitoring: Commercial Real Estate
Industries with escalated monitoring 22 Commercial Real Estate (CRE) (As of June 30, 2020) % Total % Total Income Land and CRE Type FL TX NY Other Total CRE Loans Producing Construction Retail $ 630 $ 202 $ 297 $ — $ 1,129 38.3% 19.2% $ 1,116 $ 12 Multifamily 404 275 317 — 996 33.7% 16.9% 823 172 Of
Slide 23: Industries with escalated monitoring: CRE Hotels
Industries with escalated monitoring 23 CRE Hotels (As of 06/30/2020) Hotels 50% Hotels - LTV 38% 40% Boutique 29% 29% 30% Full Service 20% 15% 38% 12% Limited 10% Service 5% 33% 0% 50% 50-60% 60-70% 70-80% 80% or Total: $263 million or less more Loan Portfolio Percentage: 4.5% Highlights • CRE Hote
Slide 24: Industries with escalated monitoring: CRE Retail
Industries with escalated monitoring 24 CRE Retail (As of 06/30/2020) CRE Retail(1) CRE Retail - Single Retail - LTV Tenant(1) 60% Theme/Festival Center Education Groceries 11% Restaurant 9% 4% Community 5% 50% Center 45% 14% 40% Neighbor Banking hood 8% Center 30% 20% Food and 21% 22% Health Retail
Slide 25: Appendices
Appendices
Slide 26: Non-GAAP Financial Measures Reconciliations
Appendix 1 26 Non-GAAP Financial Measures Reconciliations The following table sets forth selected financial information derived from the Company’s interim unaudited consolidated financial statements, adjusted for certain costs incurred by the Company in the periods presented related primarily to tax
Slide 27: Non-GAAP Financial Measures Reconciliations (cont'd)
Appendix 1 27 Non-GAAP Financial Measures Reconciliations (cont’d) Three Months Ended, Six Months Ended June 30, ($ in thousands, except per share amounts) June 30, 2020 March 31, 2020 June 30, 2019 2020 2019 Net (loss) income $ (15,279) $ 3,382 $ 12,857 $ (11,897) $ 25,928 Plus after-tax restructur
Slide 28: Non-GAAP Financial Measures Reconciliations (cont'd)
Appendix 1 28 Non-GAAP Financial Measures Reconciliations (cont’d) Three Months Ended, Six Months Ended June 30, June 30, 2020 March 31, 2020 June 30, 2019 2020 2019 Diluted (loss) earnings per share (2) $ (0.37) $ 0.08 $ 0.30 $ (0.28) $ 0.60 Plus: after tax impact of restructuring costs 0.03 0.01 0
Slide 29: Non-GAAP Financial Measures Reconciliations (cont'd)
Appendix 1 29 Non-GAAP Financial Measures Reconciliations (cont’d) Three Months Ended, Six Months Ended June 30, ($ in thousands, except per share amounts and percentages) June 30, 2020 March 31, 2020 June 30, 2019 2020 2019 Salaries and employee benefits / Average total assets 1.06 % 1.48 % 1.74 %
Slide 30: Non-GAAP Financial Measures Reconciliations (cont'd)
Appendix 1 30 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 31: Thank you
Thank you Investor Relations InvestorRelations@amerantbank.com