Amerant Bancorp Inc.: Form 10-Q for the period ended Mar 31, 2025

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 subsidiaries, including its principal subsidiary, Amerant Bank, N.A. (the “Bank”) .The Bank has two operating subsidiaries: Amerant Investments, Inc., a securities broker-dealer (“Amerant Investments”) and Amerant Mortgage, LLC, a mortgage lending company domiciled in Florida (“Amerant Mortgage”).

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, 2024 filed on March 5, 2025 (the “2024 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”).

All statements other than statements of historical fact are statements that could be forward-looking statements. Forward-looking statements include statements with respect to our beliefs, plans, objectives, goals, expectations, anticipations, assumptions, estimates, intentions and future performance and condition. Examples of forward-looking statements include but are not limited to: our future operating or financial performance, including revenues, expenses, expense savings, income or loss and earnings or loss per share, and other financial items; statements regarding expectations, plans or objectives for future operations, products or services, and our expectations on our securities repositioning and loan recoveries or reaching positive resolutions on problem loans. Forward-looking statements 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 2024 Form 10-K , and in our other filings with the U.S. Securities and Exchange Commission (the “SEC”), which are available at the SEC’s website www.sec.gov (http://www.sec.gov).

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;
• 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;
• Our concentration of CRE loans could result in increased loan losses;
• 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 a credit loss allowance 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 business, financial condition, results of operations, or cash flows;
• We are subject to environmental liability risk associated with lending activities;
• Weakness in the demand for mortgage loans or in the secondary market for residential mortgage loans can adversely affect us.
• 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 are susceptible to operational risks in general and fraudulent risk in particular;
• 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;
• We are subject to environmental, social and governance, or ESG, risks, many of which are outside of our control, that could harm our reputation, our business, operations, financial condition, and/or the price of our common stock;
• 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 adversely affect our business, financial condition, results of operations, or cash flows;
• We could be required to write down our goodwill or other intangible assets;
• 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;
• Changes in accounting standards could materially impact our financial statements;
• 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 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;
• There is uncertainty surrounding the potential legal, regulatory and policy changes by the presidential administration in the United States that may directly affect financial institutions;
• Changes in federal, state or local tax laws, or audits from tax authorities, could negatively affect our business, financial condition, results of operations or cash flows;
• 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, whether due to losses, growth opportunities or an inability to raise additional capital or otherwise, our business, financial condition, results of operations, or cash flows would be adversely affected;
• 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;
• Our principal shareholders and management own a significant percentage of our shares of voting common stock and will be able to exert significant control over matters subject to shareholder approval;
• 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 can 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 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 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 Subordinated Notes and the Debentures; and
• The other factors and information included in the 2024 Form 10-K and other filings that we make with the SEC under the Exchange Act and Securities Act. *See “*Risk Factors” in the 2024 Form 10-K.

The foregoing factors should not be construed as exhaustive and should be read together with the other cautionary statements included in the 2024 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 2024 Form 10-K, and in our other filings with the SEC, which are available at the SEC’s website www.sec.gov (http://www.sec.gov).

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 the Bank, which is also headquartered in Coral Gables, Florida, and its operating subsidiaries, Amerant Investments and Amerant Mortgage. Fiduciary, investment, wealth management and mortgage lending services are provided by the Bank, the Bank’s securities broker-dealer, Amerant Investments, and the mortgage company, Amerant Mortgage. The Bank’s primary markets are South Florida, where we are headquartered and operate 20 banking centers in Miami-Dade, Broward and Palm Beach counties; and Tampa, Florida where we have a regional headquarters office and currently operate one banking center that serve the greater Tampa markets.

The Cayman Bank is a subsidiary of the Bank. The Company is executing a plan for the dissolution of the Cayman Bank and, as of the end of the third quarter of 2024, the Cayman Bank no longer had any trust relationships, many of which were transferred to the Bank. The dissolution of the Cayman Bank, is expected to be completed in 2025, once regulatory approval from the applicable regulatory agency is received.

Business Developments

For more information on the progress of our business strategy and strategic initiatives in 2024, see Item 1. Business section included in the 2024 Form 10-K.

Other Actions

In the first quarter of 2025, we had strategic additions to our leadership team, particularly our risk management function. We hired a new Chief Credit Officer who started in mid-March 2025, leading a focused assessment of our current credit functions and credit quality overall. He is also now a part of our Executive Management Committee. We also hired a new Head of Treasury Management who will help expand our treasury management services and grow core deposit relationships. Lastly, our Chief Business Development Officer, who had joined the Company last year has now assumed additional responsibilities as Chief Consumer Banking Officer, where he will leverage his extensive business development, private banking and wealth management experience to further elevate the Company’s consumer banking strategy.

In April 2025, we opened our new regional headquarters office and our new banking center in West Palm Beach. We currently have two planned openings in Miami Beach, FL and a second location in downtown Tampa, FL in the coming months.

Amerant Mortgage Updates

In April 2025, the Company announced its strategic decision to transition from being a national mortgage originator to focusing on in-footprint mortgage lending to support the Company’s retail and private banking customer base. In the next 120 days, the Company plans to progressively reduce the FTE count from 77 FTEs to 20, transfer loans owned into our core platform, and exit and/or modify existing vendor contracts.

We believe these strategic actions will support our ongoing efforts in becoming the bank of choice in the markets we serve.

Macroeconomic Outlook

The economy is currently experiencing heightened uncertainty, primarily due to market reactions to changes in tariff policies. Throughout the first quarter of 2025, the Federal Reserve has maintained steady interest rates, despite inflation remaining above its 2% target. Tariffs have the potential to exacerbate inflationary pressures, although the duration of their impact—whether temporary or prolonged—remains uncertain.

In terms of employment, data has remained relatively stable, with the unemployment rate slightly increasing to just above 4%. Federal Reserve officials, including Chairman Powell, have indicated a willingness to exercise patience at current levels of inflation and unemployment to better understand how policy changes affect economic indicators..

Overall, the economic data presents a mixed picture. While the manufacturing sector continues to contract, the services sector is expanding, albeit at a slower pace compared to the previous two quarters. Additionally, consumer spending in the United States appears to be decelerating. Historical data suggests signs of an economic slowdown are emerging. Coupled with forward-looking concerns over tariffs, a growing number of economists anticipate that the United States could enter a recession in the latter half of 2025. The severity of the downturn is expected to depend on tariff rates and the potential escalation of trade disputes.

This macroeconomic environment has contributed to volatility across the banking industry and other sectors. Consequently, we continuously face challenges in executing our business strategy. These include expanding our assets (especially loans and deposits) amid fierce competition, adapting to fluctuating interest rates, and complying with evolving regulatory requirements.

While these are widespread challenges for the banking industry, the Company has not experienced a material impact to our business, financial condition, results of operations, or cash flows.

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 advances from the Federal Home Loan Bank of Atlanta (“FHLB”) 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 (“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 credit 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 which we may execute from time to time as part of asset/liability management activities; (vii) income from derivative transaction with customers; (viii) derivative gains or losses; and (ix) other noninterest income which includes mortgage banking revenue and gains or losses on the sale of loans originated for investment.

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. In the fourth quarter of 2023, the Company restructured certain of its BOLI contracts, by surrendering existing lower-yielding policies and reinvesting the proceeds in higher-yielding policies. This transaction is expected to increase income from this source prospectively.

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 is primarily dependent on the 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 generated through our subsidiary, Amerant Mortgage, and consists of gain on sale of loans, gain on loans market valuation, other fees and smaller sources of income. Mortgage banking income was $0.4 million and $1.1 million in the three months ended March 31, 2025 and 2024, respectively. Other income in the three months ended March 31, 2025, includes approximately $2.8 million of net gain on sale of loans originated for investment.

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; (xi) losses on sale of assets, and (xii) other operating expenses.

Salaries and employee benefits include compensation (including severance expenses which we generally consider non-routine), 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 associated with subleasing portions of the Company’s headquarters building and the subleasing of the New York office space, primarily, is included as a reduction to rent expense under lease agreements under occupancy and equipment cost.

Professional and other services fees include the cost of outsourced services, including technology infrastructure and banking processing services from our new technology provider, and other professional consulting fees associated with our transition to a new core banking platform, legal, accounting and related consulting 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.

Advertising expenses include the costs of promoting the Amerant brand, as well as the costs associated with promoting the Company’s products and services to create positive awareness, or 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.

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.

Other operating expenses include community engagement, earnings credits, mortgage loan origination and servicing expenses, charitable contributions, postage and courier expenses, debits which mirror the valuation income on the investment balances held in the non-qualified deferred compensation plan in order to adjust the liability to participants of the deferred compensation plan, and other small operational expenses. Earnings credits are provided to certain commercial depositors in the mortgage banking industry to help offset deposit service charges incurred.

Non-routine noninterest expense items include other non-routine noninterest expenses. Other non-routine noninterest expenses include the effect of items such as OREO and loans held for sale valuation allowances, sale of repossessed assets, impairment of investments, gains on sale of loans, amongst others items non-recurrent in nature. *See “*Non-GAAP Financial Measures” for more information on non-routine noninterest expense items.

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, nonperforming and restructured assets. We also manage the adequacy of our allowance for credit losses, or the allowance, the diversification and quality of loan and investment portfolios, the extent of counterparty risks, credit risk concentrations 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.

Seasonality. Our loan production, generally, is subject to seasonality, with the lowest volume typically in the first quarter of each year.

Summary Results

The summary results for the three months ended March 31, 2025 include the following:

• Total assets were $10.2 billion at March 31, 2025, up $268.0 million, or 2.7%, compared to $9.9 billion at December 31, 2024.
• Total gross loans, which includes all loans held for sale, were $7.2 billion at March 31, 2025, down $52.2 million, or 0.7%, compared to $7.3 billion at December 31, 2024.
• Cash and cash equivalents were $648.4 million, up $58.0 million or 9.8%, compared to $590.4 million at December 31, 2024.
• Total deposits were $8.2 billion at March 31, 2025, up $300.4 million, or 3.8%, compared to $7.9 billion at December 31, 2024.
• Total advances from the FHLB were $715.0 million, down $30.0 million or 4.0%, compared to $745.0 million as of December 31, 2024. The Bank had an aggregate borrowing capacity of $3.0 billion from the Federal Reserve or FHLB as of March 31, 2025.
• Net Interest Margin (“NIM”) was 3.75% in the three months ended March 31, 2025 compared to 3.51% in the three months ended March 31, 2024.
• Average yield on loans was 6.84% in the three months ended March 31, 2025 compared to 7.05% in the three months ended March 31, 2024.
• Average cost of total deposits was 2.60% in the three months ended March 31, 2025 compared to 3.00% in the three months ended March 31, 2024.
• Loan to deposit ratio was 88.5% at March 31, 2025 compared to 92.6% at December 31, 2024.
• Total non-performing assets were $140.8 million at March 31, 2025, up $18.6 million, or 15.2%, compared to $122.2 million at December 31, 2024. As of March 31, 2025, non-performing assets consist of $123.2 million in non-performing loans and $17.5 million in real estate owned. Non-performing loans increased by $19.1 million from $104.1 million at December 31, 2024, while classified loans increased from $166.5 million at December 31, 2024 to $206.1 million at March 31, 2025.
• The allowance for credit losses (“ACL”) as of March 31, 2025 was $98.3 million, up $13.3 million, or 15.7%, compared to $85.0 million as of December 31, 2024.
• Assets Under Management and custody (“AUM”) totaled $2.9 billion, as of March 31, 2025, up $42.6 million, or 1.5%, from $2.9 billion as of December 31, 2024.
• Pre-provision net revenue (“PPNR”)(1) was $33.9 million in the three months ended March 31, 2025, an increase of $8.0 million, or 31.0% , compared to $25.9 million in the three months ended March 31, 2024.
• Net Interest Income (“NII”) was $85.9 million in the three months ended March 31, 2025, up $7.9 million, or 10.2%, from $78.0 million in the three months ended March 31, 2024.
• Provision for credit losses was $18.4 million in the three months ended March 31, 2025, up $6.0 million, or 48.76% compared to $12.4 million in the three months ended March 31, 2024.
• Non-interest income was $19.5 million in the three months ended March 31, 2025, up $5.0 million or 34.8%, from $14.5 million in the three months ended March 31, 2024.
• Non-interest expense was $71.6 million in the three months ended March 31, 2025, up $5.0 million, or 7.4%, from $66.6 million in the three months ended March 31, 2024.
• The efficiency ratio was 67.9% in the three months ended March 31, 2025 compared to 72.0% in the three months ended March 31, 2024.
• Return on average Assets (“ROA”) was 0.48% in the three months ended March 31, 2025, compared to 0.44% in the three months ended March 31, 2024.
• Return on average equity (“ROE”) was 5.32% in the three months ended March 31, 2025 compared to 5.69% in the three months ended March 31, 2024.

1Non-GAAP measure, see “Non-GAAP Financial Measures” for more information and for a reconciliation to GAAP.

Results of Operations - Comparison of Results of Operations for the Three Month Periods Ended March 31, 2025 and 2024

Net income

The table below sets forth certain results of operations data for the three month periods ended March 31, 2025 and 2024:

(in thousands, except per share amounts and percentages)

(1) In the three month periods ended March 31, 2025 and 2024, potential dilutive instruments consisted of unvested shares of restricted stock, restricted stock units and performance share units. See Note 13 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.

Three Months Ended March 31, 2025 and 2024

In the three months ended March 31, 2025, net income attributable to the Company was $12.0 million, or $0.28 income per diluted share, compared to net income of $10.6 million, or $0.31 income per diluted share, in the same quarter of 2024. The increase of $1.4 million, or 13.2%, in the three months ended March 31, 2025 was primarily driven by higher net interest income and noninterest income. These results were partially offset by higher provision for credit losses as well as higher noninterest expense.

Net interest income was $85.9 million in the three months ended March 31, 2025, an increase of $7.9 million, or 10.2%, from $78.0 million in the three months ended March 31, 2024. This was primarily driven by an increase of $233.4 million, or 18.8%, $178.2 million or 2.5%, and $157.6 million or 37.3%, in the average balances of debt securities available for sale, the loan portfolio, and deposits with banks, respectively, during the period. Additionally. the cost of interest-bearing liabilities decreased 34 basis points in the current quarter compared to the period last year. These improvements were partially offset by: (i) a decrease of $224.9 million, or 100.0%, in the average balance of debt securities held to maturity; (ii) an 11 basis points decrease in the average yield on total interest earning assets; and (iii) an increase of 60.6 million, or 0.8%, in the average balance of total interest-bearing liabilities in the current quarter compared to the same period last year.

Noninterest income was $19.5 million in the three months ended March 31, 2025 compared to noninterest income of $14.5 million in the three months ended March 31, 2024. The increase was mainly driven by: (i) other noninterest income; (ii) loan-level derivative income; (iii) higher deposits and service fees; and (iv) higher total brokerage, advisory and fiduciary activities *See “*Noninterest Income” for more details.

In the three months ended March 31, 2025 and 2024, noninterest income included non-routine items of $2.8 million and $22.8 million. *See “*Our Company - Primary Factors Used to Evaluate Our Business” for detailed information on non-routine items in noninterest income.

Noninterest expense was $71.6 million in the three months ended March 31, 2025, an increase of $5.0 million, or 7.5%, compared to $66.6 million in the same period in 2024. This increase was mainly due to: (i) higher professional and other service fees; (ii) higher advertising expenses; (iii) higher net OREO and repossessed assets expenses; (iv) higher salary and employee benefits; (v) higher loan-level derivative expenses; and (vi) higher FDIC assessments and insurance expenses. These increases were partially offset by: (i) lower other operating expenses; (ii) lower occupancy and equipment expenses; and (iii) lower telecommunication and data processing expenses. *See “*Noninterest Expense” for more details.

In the three months ended March 31, 2025, noninterest expense included total non-routine items of $0.5 million while there were no non-routine noninterest expenses in the three months ended March 31, 2024. *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 March 31, 2025 and 2024, the Company incurred noninterest expenses of $3.2 million and $3.1 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 77 full time equivalent employees (“FTEs”) at March 31, 2025 compared to 65 at March 31, 2024.

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 month periods ended March 31, 2025 and 2024. 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.

(in thousands, except percentages)

61

(in thousands, except percentages)

(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 $83.5 million and $92.3 million in the three months ended March 31, 2025 and 2024, respectively. The average balance of total loans held for sale was $46.2 million and $180.5 million in the three months ended March 31, 2025 and 2024, respectively.

(2) Includes average non-performing loans of $103.6 million and $32.6 million for the three months ended March 31, 2025 and 2024, respectively.

(3) Includes the average balance of net unrealized gains and losses in the fair value of debt securities available for sale. The average balance includes average net unrealized losses of $47.0 million and $101.5 million in the three months ended March 31, 2025 and 2024, respectively.

(4) Includes nontaxable securities with average balances of $54.3 million and $18.3 million for the three months ended March 31, 2025 and 2024, respectively. The tax equivalent yield for these nontaxable securities was 4.77% and 4.68% for the three months ended March 31, 2025 and 2024, respectively. In 2025 and 2024, the tax equivalent yields were calculated by assuming a 21% tax rate and dividing the actual yield by 0.79.

(5) We had no average held to maturity balances in the three months ended March 31, 2025. Includes nontaxable securities with average balances of $48.5 million for the three months ended March 31, 2024. The tax equivalent yield for these nontaxable securities was 4.25% for the three months ended March 31, 2024. In 2024, the tax equivalent yields were calculated by assuming a 21% tax rate and dividing the actual yield by 0.79. There were no held to maturity securities in 2025.

(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 March 31, 2025 and 2024

Net interest income in the three months ended March 31, 2025, was $85.9 million, an increase of $7.9 million, or 10.2%, from $78.0 million in the three months ended March 31, 2024. This was primarily driven by an increase of $233.4 million, or 18.8%, $178.2 million or 2.5%, and $157.6 million or 37.3%, in the average balances of debt securities available for sale, the loan portfolio, and deposits with banks, respectively, during the period. Additionally. the cost of interest-bearing liabilities decreased 34 basis points in the current quarter compared to the period last year. These improvements were partially offset by (i) an 11 basis points decrease in the average yield on total interest earning assets; and (ii) an increase of $60.6 million or 0.8%, in the average balance of total interest-bearing liabilities in the current quarter compared to the same period last year . Net interest margin was 3.75% in the three months ended March 31, 2025, an increase of 24 basis points from 3.51% in the three months ended March 31, 2024. See discussions further below for more details.

During the first quarter of 2025 we had higher average balance of loans and debt securities available for sale compared to the same period last year. In addition, we had no debt securities held to maturity at March 31, 2025, compared to $224.9 million at March 31, 2024. The Company was able to reprice the cost of its interest-bearing deposits to offset lower yields on the loan portfolio we recorded during the first quarter of 2025 compared to the same period last year. Additionally, we continued investing in higher-yielding, fixed rate, debt securities available for sale, and maintaining a high average balance in funds at the Federal Reserve. See discussions further below for more details.

Interest Income

Total interest income was $146.4 million in the three months ended March 31, 2025, an increase of $1.8 million, or 1.2%, compared to $144.6 million for the same period of 2024. This was primarily driven by an increase of $233.4 million, or 18.8%, $178.2 million, or 2.5%, and $157.6 million or 37.3%, in the average balances of debt securities available for sale, the loan portfolio, and deposits with banks, respectively, during the period. These increases were partially offset by: (i) a decrease of $224.9 million, or 100.0%, in the average balance of debt securities held to maturity and ii) an 11 basis points decrease in the average yield on total interest earning assets.

Interest income on loans in the three months ended March 31, 2025 was $121.0 million, a decrease of $1.7 million, or 1.4%, compared to $122.7 million in the same period last year, primarily due to a 21 basis points decrease in average yields as well as having fewer days in the quarter compared to the same period last year. The decrease in interest income on loans was partially offset by an increase in the average balance of loans which include increases in commercial loans during the quarter compared to the same period 2024. See “-Average Balance Sheet, Interest and Yield/Rate Analysis” for detailed information.

Interest income on debt securities available for sale was $18.0 million in the three months ended March 31, 2025, an increase of $4.8 million, or 36.2%, compared to $13.2 million in the same period of 2024. This was mainly due to an increase of $233.4 million, or 18.8% in the average balance of these securities as well as an increase of 67 basis points in average yields, primarily as a result of the investment portfolio repositioning that was completed in October 2024. In the three months ended March 31, 2025, the average balance of accumulated net unrealized loss included in the carrying value of these securities was $47.0 million compared to $101.5 million in the same period last year. As of March 31, 2025, corporate debt securities comprised 0.9% of the available-for-sale portfolio, down from 24.4% at March 31, 2024.

As of March 31, 2025, floating rate investments represent 22.4% of our total investment portfolio compared to 12.9% at March 31, 2024. In addition, the expected overall duration decreased to 4.4 years at March 31, 2025 from 5.2 years at March 31, 2024 due to higher prepayment assumptions due to projections of lower market rates and higher composition of variable-rate investments that result in a lower weighted average duration.

Interest Expense

Interest expense was $60.5 million in the three months ended March 31, 2025, a decrease of $6.2 million or 9.2%, compared to $66.7 million in the same period of 2024. This was primarily due to a decrease of 34 basis points in total interest-bearing liabilities mainly due to a decrease of 44 basis points in the average rates paid on total deposits as well as a lower average balance of total deposits mainly in interest-bearing deposits, time deposits and savings accounts.

Interest expense on interest-bearing deposits was $51.0 million in the three months ended March 31, 2025, a decrease of $7.7 million, or 13.2%, compared to $58.7 million for the same period of 2024. This was mainly driven by a decrease of 44 basis points in the average rates paid on total deposits, and a decrease of $18.8 million, or 0.3%, in their average balance. See below for a detailed explanation of changes by major deposit category:

• Time deposits. Interest expense on total time deposits decreased $2.3 million, or 8.7%, in the three months ended March 31, 2025 compared to the same period in 2024. This was mainly due to a decrease of 25 basis points in the average cost of total time deposits. In addition, there was a decrease of $62.7 million, or 2.7%, in the average balance of these deposits, which includes a decrease of $43.1 million in the average balance of customer CDs and a decrease of $19.6 million in the average balance of brokered time deposits.
• Interest bearing checking and savings accounts. Interest expense on checking and savings accounts decreased $5.5 million, or 16.8% in the three months ended March 31, 2025 compared to the same period one year ago, mainly due to a decrease of 54 basis points in the average costs on these deposits. In addition, there was a decrease of $311.6 million, or 12.7%, and $22.7 million, or 8.6%, in the average balances of interest bearing demand deposits and savings accounts, respectively. The decreases in interest bearing demand deposits and savings accounts were partially offset by an increase of $378.2 million, or 26.4%, in the average balance of money market accounts in the three months ended March 31, 2025 compared to the same period in 2024.
• Interest expense on advances from the FHLB increased $1.6 million, or 29.1%, in the three months ended March 31, 2025 compared to the same period of 2024, primarily driven by an increase of $78.9 million, or 12.2%, in the average balance on this funding source compared to the same period in 2024. In the first three months of 2025, the Company repaid $30.0 million of advances from the FHLB and did not have any new borrowings during the period. *See “*Capital Resources and Liquidity Management” for more details on the repayment of advances from the FHLB.

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.

(in thousands)

65

Three Months Ended March 31, 2025 and 2024

The Company recorded a provision for credit losses on loans of $17.2 million in the three months ended March 31, 2025, compared to $12.4 million in the same period last year. In the first quarter of 2025, the provision for credit losses on loans includes $13.9 million for specific reserves for five commercial loans, $3.8 million to cover net charge-offs, $4.7 million due to enhancements to model macroeconomic factors, partially offset by releases of $4.4 million due to credit quality and other macroeconomic updates and $0.9 million due to loan growth.

During the three months ended March 31, 2025, charge-offs decreased $7.8 million, or 59.2%, compared to the same period of the prior year. In the three months ended March 31, 2025, charge-offs include: $2.1 million related to purchased indirect consumer loans and $3.2 million related to retail and business banking loans. This was offset by $1.5 million in recoveries.

In the three months ended March 31, 2024, charge-offs included $10.4 million related to multiple consumer loans, primarily purchased indirect consumer loans, $2.4 million related to multiple commercial loans, and $0.6 million related to the sale of a CRE loan in New York. Charge-offs in the first quarter of 2024, were partially offset by $1.3 million in recoveries, $0.7 million in consumer loans, primarily purchased indirect consumer loans and $0.6 million related to multiple commercial loans.

The ratio of net charge-offs over the average total loan portfolio held for investment was 0.22% in the first quarter of 2025, compared to 0.69% in the first quarter of 2024.

During the three months ended March 31, 2025 and 2024, consistent with the Company’s applicable policy, the Company has requested independent third-party collateral valuations on all real estate securing non-performing loans with existing valuations older than 12-months and outstanding balances in excess of $1.0 million. As of March 31, 2025, there were 3 loans recently downgraded totaling $22.1 million with appraisals older than 12 month, for which new appraisals have been ordered. No additional provision for credit losses were deemed necessary as a result of these valuations.

In April 2025, the Company decided to sell and sold a participation in a Quick Service Restaurant “(QSR”)-related loan with carrying value of $6.9 million and ACL of $4.8 million as of March 31, 2025. Proceeds from the sale were $2.2 million which resulted in a charge off against the ACL of $4.8 million in April 2025.

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.

Noninterest Income

The table below sets forth a comparison for each of the categories of noninterest income for the periods presented.

(in thousands, except percentages)

(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 incurs expenses related to derivative transactions with customers which are included as part of noninterest expenses under loan-level derivative expense. See Noninterest Expense section for more details.

(3) Net unrealized gains and losses related to uncovered interest rate caps with clients.

(4) Amounts are primarily in connection with losses and gains on the sale of securities.

(5) Includes mortgage banking income of $0.4 million and $1.1 million in the three months ended March 31, 2025 and March 31, 2024, respectively, primarily consisting of net gains on sale, valuation and derivative transactions associated with mortgage loans held for sale activity, and other smaller sources of income related to the operations of Amerant Mortgage. Other sources of income in the periods shown include net gains/(losses) on sales of loans that are originated for investment, foreign currency exchange transactions with customers and valuation income on the investment balances held in the non-qualified deferred compensation plan.

Three Months Ended March 31, 2025 and 2024

Total noninterest income increased $5.0 million, or 34.8%, in the three months ended March 31, 2025, compared to the three months ended March 31, 2024 mainly due to: (i) other noninterest income; (ii) loan-level derivative income; (iii) higher deposits and service fees; and (iv) higher total brokerage, advisory and fiduciary activities.

Other noninterest income increased $2.2 million, or 111.1%, in the three months ended March 31, 2025 compared to the same period in 2024, primarily driven by a net gain of $2.8 million primarily from a loan note sale that was previously charged-off, which was partially offset by a $0.6 million decrease in mortgage banking income.

Loan-level derivative income increased $1.0 million, or 223.6%, in the three months ended March 31, 2025 compared to the same period in 2024, mainly driven by new swap contracts during the period compared to the same period last year. Additionally, we recognized income associated with swap terminations during the period.

Deposits and service fees increased $0.8 million, or 18.8%, in the three months ended March 31, 2025, compared to the same period in 2024, primarily driven by an increase in statement fees on non-personal accounts and an increase on commission income on wire transfers.

Our AUM totaled $2.93 billion at March 31, 2025, an increase of $42.6 million, or 1.5%, from $2.89 billion at December 31, 2024, primarily driven by net new assets which was partially offset by market volatility which resulted in lower market valuations.

Noninterest Expense

The table below presents a comparison for each of the categories of noninterest expense for the periods presented.

(in thousands, except percentages)

(1) Includes recurring service fees in connection with the engagement of the Company’s outsourced technology provider, FIS®, in all periods shown.

(2) Includes $0.5 million of OREO valuation expense in the three months ended March 31, 2025.

(3) Includes service fees in connection with our loan-level derivative income generation activities.

(4) Includes $3.2 million and $3.1 million in the three months ended March 31, 2025 and March 31, 2024, respectively, related to Amerant Mortgage, primarily consisting of salaries and employee benefits, mortgage lending costs and professional and other services fees.

N/M Not meaningful

Three Months Ended March 31, 2025 and 2024

Noninterest expense increased $5.0 million, or 7.5%, in the three months ended March 31, 2025 compared to the same period in 2024, mainly due to: (i) higher professional and other service fees; (ii) higher advertising expenses; (iii) higher net OREO and repossessed assets expenses; (iv) higher salary and employee benefits; (v) higher loan-level derivative expenses; and (vi) higher FDIC assessments and insurance expenses. These increases were partially offset by: (i) lower other operating expenses; and (ii) lower occupancy and equipment expenses,

Professional and other services fees increased $3.7 million, or 33.9%, in the three months ended March 31, 2025 compared to the same period last year. This was mainly driven by an overall increase in other professional fees related to outsourced core software and technology services, mortgage servicing expenses, accounting fees in connection with outsourced audit fees and consulting and legal fees related to various projects.

Advertising expenses increased $0.6 million, or 18.1%, in the three months ended March 31, 2025 compared to the same period last year. This was mainly driven by higher expenses related to traditional media agreements, higher expenses related to professional sports agreements as well as higher expenses related to community engagement events.

Other real estate owned and repossessed assets expenses increased $0.5 million, or 146.3%, in the three months ended March 31, 2025, compared to the same period last year. This was mainly due to the $0.5 million valuation expense related to one OREO property.

Loan-level derivative expenses increased $0.4 million in the three months ended March 31, 2025, compared to the same period last year due to higher expenses during the period associated with payments for opening of new swaps.

FDIC assessments and insurance expenses increased $0.2 million, or 7.6%, in the three months ended March 31, 2025, compared to the same period last year due to the period having higher average assets which contributed to higher FDIC assessment expenses.

Salaries and employee benefits increased $0.4 million, or 1.2%, in the three months ended March 31, 2025 compared to the same period one year ago, mainly driven by: (i) higher severance expenses; (ii) higher salary expense as a result of the new hires and higher average FTEs during the period; and (iii) higher bonus variable compensation mainly attributable to better performance, as well as higher average FTEs, in the quarter compared to the same period last year. This was partially offset by lower equity variable compensation in connection with the long-term incentive program mainly attributable to the effect of forfeitures during the period. At March 31, 2025, our FTEs were 726, a net increase of 30 FTEs, or 4.3% compared to 696 FTEs at March 31, 2024.

Other operating expenses decreased $0.5 million, or 9.5%, in the three months ended March 31, 2025 compared to the same period in 2024, mainly driven by lower operating charge-offs and other loan servicing expenses as well as lower donations and postage and carrier fees during the period. These decreases were partially offset by earnings credits paid to certain commercial deposit customers on their noninterest bearing accounts.

Occupancy and equipment expenses decreased $0.3 million, or 5.3%, in the three months ended March 31, 2025 compared to the same period one year ago primarily due to fewer banking centers as a result of the Houston Sale Transaction, and an increase in sublease income from additional subleasing of portions of the headquarter building.

Income Taxes

The table below sets forth information related to our income taxes for the periods presented.

(in thousands, except effective tax rates and percentages)

In the first quarter of March 31, 2025, income tax expense increased to $3.5 million from $2.9 million, mainly driven by higher income before income taxes in the current period compared to the same period last year.

As of March 31, 2025, the Company’s net deferred tax assets were $53.4 million, a decrease of $0.1 million, or 0.2%, compared to $53.5 million as of December 31, 2024. This was primarily driven by a decrease of $4.4 million in connection with $17.0 million in net unrealized holding gains on debt securities available for sale during the period, partially offset by the tax effect of an increase in the allowance for credit losses.

Non-GAAP Financial Measures

The Company supplements its financial results that are determined in accordance with accounting principles generally accepted in the United States of America (“GAAP”) with non-GAAP financial measures, such as “pre-provision net revenue (PPNR)”, “core pre-provision net revenue (Core PPNR)”, “core noninterest income”, “core noninterest expense”, “core net income”, “core earnings per share (basic and diluted)”, “core return on assets (Core ROA)”, “core return on equity (Core ROE)”, “core efficiency ratio”, “tangible stockholders’ equity (book value) per common share”, “tangible common equity ratio, adjusted for net unrealized accumulated losses on debt securities held to maturity”, and “tangible stockholders' equity (book value) per common share, adjusted for net unrealized accumulated 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”.

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 business. Management believes that these supplementary 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. These non-GAAP financial measures have been adjusted for the effect of non-core banking activities such as the sale of loans and securities, valuations of loans held for sale and other real estate owned. 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.

The following table is a reconciliation of the Company’s PPNR, Core PPNR, core noninterest income and core noninterest expense, non-GAAP financial measures, as of the dates presented:

(in thousands)

(1) Includes provision for credit losses on loans and provision for loan contingencies. *See “*Analysis of the Allowance for Credit Losses” for details.

(2) In the three months ended March 31, 2025, includes a gain on sale of $3.2 million, related to the sale of a loan that had been charged off in prior periods.

(3) Includes $0.5 million of OREO valuation expense in the three months ended March 31, 2025.

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)

(1) At March 31, 2025 and December 31, 2024, other intangible assets consist primarily of naming rights of $1.9 million and $2.0 million, respectively, and mortgage servicing rights (“MSRs”) of $1.4 million and $1.5 million, respectively.

Financial Condition - Comparison of Financial Condition as of March 31, 2025 and December 31, 2024

Assets. Total assets were $10.2 billion as of March 31, 2025, an increase of $268.0 million, or 2.7%, compared to $9.9 billion at December 31, 2024. This result was primarily driven by increases of: (i) $263.8 million, or 17.6%, in total securities, mainly debt securities available for sale; (ii) $58.0 million, or 9.8%, in cash and cash equivalents; (iii) $9.5 million, or 3.9%, in BOLI mainly driven by a newly purchased policy during the first period of 2025; and (iv) $4.6 million, or 4.5%, in operating lease right-of-use assets. The increases were partially offset by decreases of: (i) $65.5 million, or 0.9%, in total loans held for investment and loans held for sale, net of the ACL; and (ii) $2.2 million, or 1.3%, in accrued interest receivable and other assets. See “-Average Balance Sheet, Interest and Yield/Rate Analysis” for detailed information, including changes in the composition of our interest-earning assets.

Cash and Cash Equivalents. Cash and cash equivalents increased to $648.4 million at March 31, 2025 from $590.4 million at December 31, 2024, primarily as a result of an increase in interest earning cash balances.

At March 31, 2025 and December 31, 2024, interest earning deposits with banks, mainly cash balances held at the Federal Reserve, were $587.7 million and $519.9 million, respectively. In addition, at March 31, 2025 and December 31, 2024, the Company’s cash and cash equivalents included restricted cash of $13.4 million and $24.4 million, respectively, which was held primarily to cover margin calls on derivative transactions with certain brokers. Furthermore, at March 31, 2025 and December 31, 2024, the Company’s cash and cash equivalents included other short-term investments of $7.0 million and $6.9 million, respectively, which consist of US Treasury Bills that mature in 90 days or less.

Cash and cash equivalents provided by operating activities were $20.2 million in the three months ended March 31, 2025, mainly driven by:(i) net sales of $18.3 million in loans held for sale at a fair value; (ii) a non-cash adjustment of $18.4 million for the provision for credit losses, and (iii) net income of $12.0 million, These were partially offset by a net decrease of $22.1 million in operating assets and liabilities.

Net cash used in investing activities was $223.1 million during the three months ended March 31, 2025, mainly driven by: (i) purchases of investment securities totaling $288.5 million, mainly comprised of debt securities available for sale; (ii) proceeds from the sale of loans originated for investment of $8.0 million; and (iii) purchases of BOLI of $7.0 million. These disbursements were partially offset by: (i) maturities, sales, calls and paydowns of investment securities totaling $41.3 million; and (ii) a net decrease in loans originated for investment of $25.3 million.

In the three months ended March 31, 2025, net cash provided by financing activities was $260.9 million, mainly due to an increase in total demand, savings and money market deposit balances of $372.9 million. This was partially offset by: (i) a net decrease of $72.5 million in time deposits; (ii) net repayments from advances from the FHLB of $30.0 million; (iii) $3.9 million of dividends declared and paid by the Company in the three months ended March 31, 2025; and (iv) an aggregate of $5.0 million of Class A common stock repurchased in the three months ended March 31, 2025. See “-Capital Resources and Liquidity Management” for more details on changes in FHLB advances and common stock transactions in the three months ended March 31, 2025.

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.

(in thousands, except percentages)

(1) Total loans, gross is the principal balance of outstanding loans, including loans held for investment, loans held for sale at the lower of cost or fair value, and mortgage 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 on loans. At March 31, 2025 and December 31, 2024, there were $20.7 million and $42.9 million, respectively, in mortgage loans held for sale carried at fair value in connection with the Company’s mortgage banking activities.

(2) See Note 5 of our audited consolidated financial statements included in the 2024 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, loans held for sale carried at the lower of cost or fair value, and mortgage 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.

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)

(1) Includes customers’ overdraft balances totaling $0.6 million and $4.4 million as of March 31, 2025 and December 31, 2024, respectively.

(2) Secured by real estate properties located in the U.S.

(3) International customers’ overdraft balances were de minimis at each of the dates presented.

(4) Mainly consist of loans for which the country of risk is Venezuela.

The composition of our CRE loan portfolio held for investment by industry segment at March 31, 2025 and December 31, 2024 is depicted in the following table:

(in thousands)

(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 $221.0 million at March 31, 2025 and $221.8 million at December 31, 2024.

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)

(1) Classified as Substandard and in accrual status at March 31, 2025. Includes one loan with no valuation allowance recorded as of March 31, 2025. In April 2025, the Company determined that it no longer plans the sale of this loan and, therefore, in April 2025, reclassified the loan to its held for investment loan portfolio.

(2) In the first three months of 2025, the Company transferred an aggregate of $4.4 million of land development and construction loans and single-family residential loans, from the loans held for sale to the loans held for investment category. See 2024 Form 10-K on transfer activities in 2024.

(3) Mortgage loans held for sale in connection with Amerant Mortgage’s ongoing business.

(4) All loans remained in accrual status at each of the periods shown.

As of March 31, 2025, the Company had $40.6 million in a loan carried at the lower of cost or fair value, which was previously recorded as loans held for investment, compared to none at December 31, 2024. In the first quarter of 2025, the Company transferred this loan to the held for sale category and no valuation allowance was recorded as part of this transaction. In April 2025, the Company determined that it no longer plans the sale of this loan and, therefore, in April 2025, reclassified the loan to its held for investment loan portfolio.

As of March 31, 2025, total loans held for investment were $7.2 billion, down $70.6 million, or 1.0%, compared to $7.2 billion at December 31, 2024. Domestic loans held for investment decreased $67.8 million, or 0.9%, as of March 31, 2025, compared to December 31, 2024. The decrease in total domestic loans held for investment includes: (i) $55.8 million, or 5.5%, in domestic owner occupied loans, including $40.6 million in a loan transferred to held for sale as discussed above; (ii) $37.0 million, or 2.1%, in domestic commercial loans; (iii) $25.2 million, or 9.3%, in domestic consumer loans, mainly purchased indirect consumer loans as the Company discontinued purchases of these loans in 2023 and this portfolio is set to runoff over time, and (iv) $17.1 million in loans to financial institutions and acceptances. These decreases were partially offset by net increases of: (i) $43.3 million, or 1.7% in domestic CRE loans; and (ii) $23.9 million, or 1.6% in domestic single-family residential loans.

In the three months ended March 31, 2025, the Company has added approximately $35.0 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 $2.7 million, or 6.7%, in the three months ended March 31, 2025, mainly driven by pay downs totaling $2.3 million to existing single family residential loans.

As of March 31, 2025, loans under syndication facilities, included in loans held for investment, were $389.6 million, a decrease of $4.1 million, or 1.0%, compared to $393.7 million at December 31, 2024. This was mainly driven by the paydown of one commercial loan totaling $19.1 million offset by an increase of three construction loans, two owner-occupied loans and one commercial loan totaling $6.0 million, $3.9 million and $1.4 million, respectively, and other minor balance changes totaling approximately $1.8 million. As of March 31, 2025 and December 31, 2024, there were no SNC loans that financed highly leveraged transactions.

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.

(in thousands, except percentages)

(1) Includes (i) indirect consumer loans purchased; 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. As of March 31, 2025, the Company enhanced certain of its modeled macroeconomic factors to improve the stability of the model.

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.

(in thousands)

(1) 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 three months ended March 31, 2025:

(in thousands)

(1) Includes loans with individual balances over $1 million totaling $39.0 million, and loans with individual balances below $1 million totaling $6.1 million.

The increase in nonperforming loans during the three months ended March 31, 2025 was primarily due to downgrades based on receipt of year-end 2024 financials.

See discussion on Classified and Special Mention Loans below for more details.

We recognized no interest income on nonaccrual loans during the three months ended March 31, 2025 and 2024.

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

(in thousands)

(1) There are no loans categorized as a “Loss” as of the dates presented.

Classified Loans. Classified loans include substandard and doubtful loans. The following table presents the activity of classified loans in the three months ended March 31, 2025:

(in thousands)

Classified loans increased $39.6 million, or 23.8%, primarily due to one CRE loan totaling $21.0 million downgraded to substandard accrual due to the loss of a large tenant, 5 loans totaling $33.7 million downgraded to non-performing loan status, based on receipt of year-end 2024 financials, and the remaining downgrades included other smaller classified loans.

Classified loans include 3 loans totaling $83.5 million that remain in accruing status. Classified accruing loans include: (i) a $21.3 million CRE loan to a customer in the hospitality service sector in Florida; (ii) a $21.0 million CRE retail property loan in Florida; and (iii) a $40.6 million owner-occupied loan to a customer in the restaurant service sector in Florida..

In February 2025, the Company decided to sell the aforementioned $40.6 million substandard accruing owner-occupied loan. The Company transferred this loan from loans held for investment to loans held for sale, at the lower of cost or fair value, and determined no valuation allowance was required at the time of the transfer. In April 2025, the Company determined that it no longer plans the sale of this loan and, therefore, in April 2025, reclassified the loan to its held for investment loan portfolio.

Special Mention Loans. The following table presents the activity of special mention loans by type of loan in the three months ended March 31, 2025:

(in thousands)

All special mention loans remained current at March 31, 2025.

Special mention loans increased primarily driven by three CRE NYC loans totaling $48.8 million. While certain milestones were missed by the borrowers, there are acceptable mitigating factors in place, such as adequate loan-to-value, interest reserves or other structural enhancements. The increase in special mention loans primarily include five commercial loans in multiple industries totaling $48.5 million downgraded based on receipt of year-end 2024 financials. These increases were partially offset by $3 million in payoffs.

Potential problem loans, which are accruing loans classified as substandard and are less than 90 days past due, at March 31, 2025 and December 31, 2024, are as follows:

(in thousands)

(1) Corresponds to both domestic and international single-family residential loans.

(2) Classified as held for sale at the lower of cost or fair value at March 31, 2025. In April 2025, the Company determined that it no longer plans the sale of this loan and, therefore, in April 2025, reclassified the loan to its held for investment loan portfolio

At March 31, 2025 total potential problem loans increased $82.9 million compared to $62.5 million at December 31, 2024. This was mainly due to a downgrade to substandard of a $21 million CRE retail property loan in Florida.

Securities

The following table sets forth the book value and percentage of each category of securities at March 31, 2025 and December 31, 2024. The book value for debt securities classified as available for sale and equity securities with readily determinable fair value not held for trading represents fair value. The Company determined that an ACL on its debt securities available for sale at March 31, 2025 and December 31, 2024 was not required. There are no debt securities held to maturity as of March 31, 2025.

(in thousands, except percentages)

(1) Issued by a financial institution.

(2) In 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.

(3) Includes investments in FHLB and Federal Reserve stock. Amounts correspond to original cost at the date presented. Original cost approximates fair value because of the nature of these investments.

As of March 31, 2025, total securities increased $263.8 million, or 17.6%, to $1.76 billion compared to $1.50 billion at December 31, 2024. The increase in the three months ended March 31, 2025 was mainly driven by: (i) purchases of debt securities held for sale and FHLB stock totaling $288.5 million; and (ii) net pre-tax unrealized gains of $17.0 million on debt securities available for sale primarily attributable to changes in market interest rates during the current period . This increase was partially offset by: maturities, sales, calls and pay downs, totaling $41.3 million.

Debt securities available for sale had net unrealized holding losses of $41.2 million and net unrealized holding gains of $3.4 million at March 31, 2025, compared to December 31, 2024 when net unrealized holding losses were $55.7 million and net unrealized holding gains were $0.9 million.

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 ACL on these securities as of March 31, 2025 and December 31, 2024.

The Company does not have any debt securities classified as held to maturity at March 31, 2025.

The following tables set forth the book value, scheduled maturities and weighted average yields for our securities portfolio at March 31, 2025 and December 31, 2024. Similar to the table above, the book value for securities available for sale and equity securities with readily determinable fair value not held for trading 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.

(in thousands, except percentages)

86

(in thousands, except percentages)

The investment portfolio’s weighted expected average effective duration decreased to 4.4 years at March 31, 2025 compared to 5.2 years at December 31, 2024, due to higher prepayment assumptions due to projections of lower market rates and higher composition of variable-rate investments that result in a lower weighted average duration.

Liabilities

Total liabilities were $9.26 billion at March 31, 2025, an increase of $252.2 million, or 2.8%, compared to $9.0 billion at December 31, 2024. This was primarily driven by an increase of $300.4 million, or 3.8%, in total deposits, mainly due to an increase in core deposits. This increase was partially offset by decreases of : (i) $30.0 million, or 4.0%, in advances from the FHLB; and (ii) $23.3 million, or 15.3%, in accounts payable, accrued liabilities and other liabilities. *See “*Capital Resources and Liquidity Management” and “Deposits” for more details on the changes in advances from the FHLB and total deposits. *See “*Our Company- Business Developments” for additional information.

Deposits

We continue with our efforts in growing our deposits. Our efforts include the additions of new team members to our business development teams across South Florida and Tampa in the first three months of 2025.

Total deposits were $8.15 billion at March 31, 2025, an increase of $300.4 million, or 3.8%, compared to December 31, 2024. The increase in deposits in the three months ended March 31, 2025 was mainly due to an increase of: (i) $181.5 million, or 9.6%, in savings and money market deposits; (ii) $160.7 million, or 10.7%, in noninterest bearing demand deposits; and (iii) $30.7 million, or 1.4%, in interest-bearing deposits. These increases were partially offset by a decrease of $72.5 million, or 3.2%, in time deposits.

The $72.5 million, or 3.2%, net decrease in time deposits includes decreases of (i) $67.3 million, or 9.6%, in brokered time deposits; and (ii) $5.2 million, or 0.3% in customer CDs.

As of March 31, 2025 total brokered deposits were $694.7 million, a decrease of $7.2 million, or 1.0%, compared to $701.9 million at December 31, 2024.

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.

(in thousands, except percentages)

(1) Includes brokered deposits of $694.7 million and $701.9 million at March 31, 2025 and December 31, 2024, respectively.

(2) 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.

(3) Our other foreign deposits do not include deposits from Venezuelan resident customers.

Our domestic deposits increased $314.3 million, or 5.6%, in the three months ended March 31, 2025, primarily driven by increases of: (i) $176.4 million in savings and money market accounts; (ii) $173.3 million in domestic noninterest bearing accounts; and (iii) $43.7 million in domestic interest bearing accounts. These increases were partially offset by decreases of: (i) $77.3 million in domestic brokered time deposits; and (ii) $1.8 million in domestic customer time deposits.

During the three months ended March 31, 2025, total foreign deposits decreased $13.9 million, or 0.5%, primarily driven by a decrease of $26.7 million, or 1.4%, in deposits from customers domiciled in Venezuela, mostly in time deposits, interest bearing deposits and noninterest bearing deposits. The decrease was partially offset by an increase of $12.8 million, or 1.8%, in deposits from countries other than Venezuela.

Core Deposits

Our core deposits were $6.0 billion and $5.6 billion as of March 31, 2025 and December 31, 2024, respectively. Core deposits represented 73.5% and 71.6% of our total deposits at those dates, respectively. The increase of $372.9 million, or 6.6%, in core deposits in the three months ended March 31, 2025 was mainly driven by increases in savings and money market deposits, noninterest bearing demand deposits as well as interest bearing demand deposits. We define “core deposits” as total deposits excluding all time deposits.

Brokered Deposits

We utilize brokered deposits primarily as an asset/liability management tool. As of March 31, 2025, we had $694.7 million in brokered deposits, which represented 8.5% of our total deposits at that date (8.9% as of December 31, 2024). As of March 31, 2025, brokered deposits decreased $7.2 million, or 1.0%, compared to $701.9 million as of December 31, 2024, mainly due to maturities of brokered time deposits, partially offset by an increase in brokered non-time deposits during the period. As of March 31, 2025 and December 31, 2024, brokered deposits included time deposits of $634.6 million and $701.9 million, respectively. As of March 31, 2025, there were $60.1 million in brokered non-time deposits which consists of $47.9 million interest bearing brokered deposits and $12.1 million in noninterest bearing brokered deposits, while there were no brokered non-time deposits as of December 31, 2024. The Company has not historically sold brokered CDs in individual denominations over $100,000.

Large Fund Providers

Large fund providers consist of third party relationships with balances over $20 million. At March 31, 2025 and December 31, 2024, our large fund providers included 19 and 20 deposit relationships, respectively, with total balances of $1.1 billion and $942.3 million, respectively. The increase in balances from large fund providers in the three months ended March 31, 2025 was mainly driven by an increase in large deposits from commercial customers as the Company continues its focus on depository relationships.

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 March 31, 2025 and December 31, 2024:

(in thousands, except percentages)

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 as of March 31, 2025. Short-term borrowings outstanding at December 31, 2024 matured in January 2025. All of our outstanding short-term borrowings at December 31, 2024 corresponded to advances from the FHLB. There were no other borrowings or repurchase agreements outstanding at March 31, 2025 and December 31, 2024.

The following table sets forth information about the outstanding amounts of our short-term borrowings at the close of, and for the year ended December 31, 2024.

(in thousands, except percentages)

90

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:

(in thousands, except percentages and per share data)

(1) In the three month periods ended March 31, 2025 and 2024, potential dilutive instruments consisted of unvested shares of restricted stock, restricted stock units and performance share units. See Note 13 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 month periods ended March 31, 2025 and 2024.

During the three months ended March 31, 2025, basic and diluted earnings per share decreased compared to the same period one year ago, primarily driven by an increase in the weighted average number of shares as a result of the Company’s public offering of its Class A common stock that was completed in September 2024. This was partially offset by improved net income in the quarter compared to the same period last year.

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 $906.3 million as of March 31, 2025, an increase of $15.8 million, or 1.8%, compared to $890.5 million as of December 31, 2024. This increase was primarily driven by: (i) $12.5 million in other comprehensive income; and (ii) a net income of $12.0 million in the first three months of 2025. This was partially offset by: (i) an aggregate of $5.0 million of Class A common stock repurchased in the first three months of 2025; and (ii) $3.9 million of dividends declared and paid by the Company in the first three months of 2025.

Common Stock Transactions

In the three months ended March 31, 2025, the Company repurchased an aggregate of 215,427 shares of Class A common stock at a weighted average price of $23.21 per share, under the 2023 Class A Common Stock Repurchase Program. The aggregate purchase price for these transactions was $5.0 million in the three months ended March 31, 2025, including transaction costs.

Dividends

Set forth below are the details of dividends declared and paid by the Company for the first three months ended March 31, 2025:

On April 23, 2025, the Company’s Board of Directors declared a cash dividend of $0.09 per share of the Company’s common stock. The dividend is payable on May 30, 2025, to shareholders of record at the close of business on May 15, 2025.

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 short-term and long-term borrowings as well as loan repayments and amortizations. The Company’s liquidity position includes cash and cash equivalents of $648.4 million at March 31, 2025, compared to $590.4 million at December 31, 2024.

At March 31, 2025 and December 31, 2024, the Company had $715.0 million and $745.0 million, respectively, of outstanding advances from the FHLB. At March 31, 2025 and December 31, 2024, we had an additional $1.9 billion and $1.6 billion, respectively, of remaining borrowing capacity with the FHLB. This additional borrowing capacity is determined by the FHLB. In the three months ended March 31, 2025, the Company repaid $30.0 million in advances from the FHLB, and did not have any new borrowings from this source. In the three months ended March 31, 2025, the Company had no significant gains or losses on the repayments of the advances from the FHLB. These repayments are part of the Company’s asset/liability management strategies.

There were no other borrowings as of March 31, 2025 and December 31, 2024.

We also have available uncommitted federal funds lines with several banks. We had no outstanding borrowings under uncommitted federal funds lines with banks at March 31, 2025 and December 31, 2024.

Holding Company

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. The Company is 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 mainly at the Bank of $86.8 million as of March 31, 2025 and $99.5 million as of December 31, 2024, 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.

On April 1, 2025, the Company redeemed $60 million in aggregate principal amount of its 5.75% Senior Notes that were due June 30, 2025. The Notes were redeemed in full at a redemption price equal to 100% of the principal amount of the Notes, plus accrued and unpaid interest. The aggregate redemption price, including accrued interest, totaled approximately $60.9 million.

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 its ongoing short-term cash obligations. See “Supervision and Regulation” in the 2024 Form 10-K.

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:

(in thousands, except percentages)

93

The Bank’s consolidated regulatory capital amounts and ratios are presented in the following table:

(in thousands, except percentages)

94

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 2024 Form 10-K.

(in thousands)

95

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, certain binding agreements we have entered into for services including outsourcing of technology services, advertising and other services, and other borrowing arrangements which are not material to our liquidity needs. We currently anticipate that our available funds, credit facilities, and cash flows from operations will be sufficient to meet our operational cash needs for the foreseeable future. Other than the changes discussed herein, there have been no material changes to the contractual obligations previously disclosed in the 2024 Form 10-K.

In the three months ended March 31, 2025, the Company repaid $30.0 million of FHLB advances and did not have new borrowings during the period.

In the three months ended March 31, 2025, total time deposits decreased $72.5 million, or 3.2%. *See “*Deposits” for additional information.

Critical Accounting Policies and Estimates

For our critical accounting policies and estimates disclosure, see the 2024 Form 10-K where such matters are disclosed for the Company’s latest fiscal year ended December 31, 2024.

Recently Issued Accounting Pronouncements. For a description of recently issued accounting pronouncements, see Note 1 to the Company’s audited consolidated financial statements in the 2024 Form 10-K.

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 2024 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:

(in thousands, except percentages)

(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 increased to approximately $367.0 million in the three months ended March 31, 2025 compared to $361.0 million as of December 31, 2024. This increase is mainly due to (i) the growth in the size of the balance sheet as total assets increased $268.0 million, or 2.7%, in the first three months of 2025 compared to December 31, 2024; and (ii) a decrease in the cost of total deposits and borrowings.

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

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:

(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 March 31, 2025 and December 31, 2024:

(in thousands)

(1) Represents the amounts by which the investment portfolio mark-to-market would change assuming rate shocks are instant and parallel to the yield curves for the various interest rates and indices that affect our net interest income.

The estimated average effective duration of our investment portfolio decreased to 4.4 years at March 31, 2025 compared to 5.2 years at December 31, 2024, due to higher prepayment assumptions due to projections of lower market rates and higher composition of variable-rate investments that result in a lower weighted average duration.

Additionally, the floating rate portfolio increased to 22.4% at March 31, 2025 from 16.8% at December 31, 2024.

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 March 31, 2025. This information may not be indicative of our interest rate sensitivity position at other points in time.

(in thousands except percentages)

(1) “Loan held for investment-performing” excludes $123.2 million of non-performing loans (non-accrual loans and loans 90 days or more past-due and still accruing).

N/M Not meaningful

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. The CEO and the CFO, with assistance from other members of management, have evaluated the effectiveness of our disclosure controls and procedures as of March 31, 2025, and, based on their evaluation, have concluded that the disclosure controls and procedures were effective as of such date.

Limitations on Effectiveness of Controls and Procedures

In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable, not absolute, assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.

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.

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 2024 Form 10-K. There have been no material changes to the risk factors previously disclosed in the 2024 Form 10-K.